10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2014

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT

For the transition period from             TO          

Commission file number 333-180736

ARMORED AUTOGROUP INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	27-3620112
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)

44 Old Ridgebury Road, Suite 300
Danbury, Connecticut	06810
(Address of principal executive officers)	(Zip Code)

(203) 205-2900

 (Registrant’s Telephone Number, Including Area Code)

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes  o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.05 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

The aggregate number of shares of the registrant’s common stock outstanding on November 1, 2014 was 1,000 shares of common stock $.01 par value.

Armored AutoGroup Inc.

INDEX

	PAGE
PART I — FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013	5
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Month Periods Ended September 30, 2014 and 2013	6
Condensed Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2014 and 2013	7
Notes to Condensed Consolidated Financial Statements	8
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3 Quantitative and Qualitative Disclosures About Market Risk	29
Item 4 Controls and Procedures	29
PART II — OTHER INFORMATION	30
Item 1 Legal Proceedings	30
Item 1A Risk Factors	30
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3 Defaults Upon Senior Securities	30
Item 4 Mine Safety Disclosures	30
Item 5 Other Information	30
Item 6 Exhibits	31

1

Cautionary Note Regarding Forward-Looking Statements

Some of the statements contained in this Quarterly Report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, including, in particular, statements about our plans, strategies, prospects and industry estimates. These statements identify prospective information and can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. Examples of forward-looking statements include, but are not limited to, statements we make regarding: (i) our liquidity, including our belief that our existing cash, cash equivalents and anticipated revenues are sufficient to fund our existing operating expenses, capital expenditures and liquidity requirements for at least the next twelve months; (ii) our outlook and expectations including, without limitation, statements made regarding continued market expansion and penetration for our products and (iii) expected new product launch dates and market exclusivity periods. The foregoing is not an exclusive list of all forward-looking statements we make. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. The matters referred to in the forward-looking statements contained in this Quarterly Report may not in fact occur. We caution you therefore against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and the following:

·Our historical financial information may not be indicative of our future financial performance.

·Our operating results and net earnings may not meet expectations.

·Our quarterly results of operations are subject to fluctuations due to the seasonality of our business and other events and, accordingly, period-to-period comparisons should not be relied upon as an indication of future performance.

·Our financial results could suffer if we are unable to implement and successfully manage our core strategic initiatives or if our core strategic initiatives do not achieve the intended results.

·Sales growth may be difficult to achieve.

·We face intense competition in our business, which could lead to reduced profitability if we cannot compete effectively.

·A significant portion of our net sales and net earnings is derived from a few key customers. The loss of any one or more of these customers could cause a material decline in our operating results.

·Changes in marketing distributor relationships that are not managed successfully could result in a disruption in one or more of the affected markets.

·Customer support of our marketing and advertising programs and new product launches is critical for our success.

·Providing price concessions or trade terms that are acceptable to our customers, or the failure to do so, could adversely affect our sales and profitability.

·We may not successfully develop and introduce new products and line extensions.

·Our dependence upon third parties for the manufacture and supply of a substantial portion of our products could prevent us from delivering our products to our customers in the required quantities or within the required timeframe, which could result in order cancellations and decreased net sales.

·Volatility and cost increases in raw materials, energy, shipping and transportation and other necessary supplies or services could harm our financial condition and results of operations.

·We are exposed to commodity fluctuation risk and may not be able to adequately hedge our exposure, if at all.

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·Reliance on a limited base of third party contract manufacturers, logistics, procurement and information systems service providers may result in disruption to our business.

·Our facilities and those of our suppliers, service providers and common use facilities operators such as ports are subject to disruption by events beyond our control.

·We may not be able to hire or retain the number of qualified personnel required for our business, which would harm the development and sales of our products and limit our ability to grow.

·If we lose the services of our key personnel, our business could be adversely affected.

·Global economic conditions may negatively impact the Company’s financial condition and results of operations.

·Operations outside the United States expose us to uncertain conditions and other risks in international markets.

·Because we operate and sell our products in foreign countries, changes in currency exchange rates could adversely affect our operations and financial results.

·Harm to our reputation or the reputation of one or more of our leading brands could have an adverse effect on our business.

·We may not be able to attain synergies for our business and the IDQ business following our investment in IDQ Acquisition Corp.

·Acquisitions, new venture investments and divestitures may not be successful.

·Our substantial indebtedness, including the terms of our credit agreement governing the Credit Facilities and the indenture that governs the Senior Notes, restricts our current and future operations and could adversely affect our ability to raise additional capital to fund our operations or to exploit business opportunities, limits our ability to respond to changes in the economy or our industry and prevents us from making debt service payments.

·Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more indebtedness. This could further exacerbate the risks to our financial condition.

·We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

·Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

·Goodwill, intangible and other long lived assets are subject to impairment risk.

·Failure to protect our intellectual property rights could impact our competitiveness, allow our competitors to develop and market products with features similar to our products and demand for our products could decline.

·If we are found to have infringed the intellectual property rights of others or cannot obtain necessary intellectual property rights from others, our competitiveness could be adversely impacted.

·In the ordinary course of business, we may be subject to product liability claims and lawsuits, including potential class actions, alleging that our products have resulted in or could result in unsafe condition or injury.

·We operate under an FTC consent order, which requires certain compliance policies and procedures. Should we violate our requirements thereunder, we may face significant fines and penalties.

·Compliance with environmental law and other government regulations could impose material costs.

·Litigation may adversely affect our business, financial condition and results of operations.

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·Changes in tax laws could adversely affect the taxes we pay and our profitability.

·Our judgments regarding the accounting for tax positions and the resolution of tax disputes may impact the Company’s earnings and cash flow.

·Changes in our effective tax rate may adversely affect our earnings and cash flow.

·A failure of a key information technology system could adversely impact our ability to conduct business.

·Our continued growth and expansion and increasing reliance on third party service providers could adversely affect our internal control over financial reporting, which could harm our business and financial results.

·We may incur increased ongoing costs as a result of being obligated to file reports with the SEC and our management may be required to devote substantial time to new compliance initiatives.

·Compliance with changing regulations and standards for accounting, corporate governance and public disclosure may result in additional expenses and this could negatively impact the Company’s business, financial condition and results of operations.

·The estimates and assumptions on which our financial statements are based may prove to be inaccurate, which may adversely affect the Company’s financial condition and results of operations.

·We can be adversely affected by the implementation of new, or changes in, accounting principles generally accepted in the United States of America.

·As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.

Any forward-looking statement made by us in this Quarterly Report speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

As used herein, “Company”, “AAG”, “we”, “us” or “our” and similar terms refer to Armored AutoGroup Inc. and its subsidiaries unless the context in which the term is used indicates otherwise.

4

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

Armored AutoGroup Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share amounts)

	September 30, 2014			December 31, 2013
ASSETS
Current assets:
Cash	$	13,431		$	21,253
Accounts receivable, net	73,977			60,324
Inventories	45,883			34,043
Other current assets	10,565			11,676
Total current assets	143,856			127,296
Property, plant and equipment, net	25,351			28,936
Goodwill	358,647			358,826
Intangible assets, net	284,380			313,470
Investment in affiliate	10,000			—
Deferred financing costs and other assets, net	2,363			3,719
Total assets	$	824,597		$	832,247
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	19,365		$	6,989
Accrued expenses and other current liabilities	35,554			24,594
Due to Clorox	22			91
Due to Parent	251			745
Current portion of long-term debt, less discount	1,318			71
Total current liabilities	56,510			32,490
Long-term debt, less discount and current portion	543,161			553,511
Other liability	2,500			2,500
Deferred income taxes	80,446			89,610
Total liabilities	682,617			678,111
Commitments and contingencies (Note 4)
Shareholder’s Equity:
Common stock ($0.01 par value, one thousand shares authorized, one thousand shares issued and outstanding at September 30, 2014 and December 31, 2013)	—			—
Additional paid-in capital	260,200			261,040
Accumulated deficit	(105,888		)	(98,955		)
Accumulated other comprehensive (loss)	(12,332		)	(7,949		)
Total shareholder’s equity	141,980			154,136
Total liabilities and shareholder’s equity	$	824,597		$	832,247

The accompanying notes are an integral part of these consolidated financial statements.

5

Armored AutoGroup Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In thousands)

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Net sales	$	70,459		$	71,007		$	232,914		$	225,495
Cost of products sold	38,756			38,483			125,020			121,307
Gross profit	31,703			32,524			107,894			104,188
Operating expenses:
Selling and administrative expenses	9,492			9,854			32,075			29,202
Advertising costs	7,028			6,767			21,128			24,487
Research and development costs	653			626			1,887			1,839
Amortization of acquired intangible assets	9,133			9,175			27,377			27,526
Total operating expenses	26,306			26,422			82,467			83,054
Operating profit	5,397			6,102			25,427			21,134
Non-operating expenses:
Interest expense	11,892			12,049			35,722			35,976
Other expense (income), net	174			(68		)	(181		)	447
Loss before benefit for income taxes	(6,669		)	(5,879		)	(10,114		)	(15,289		)
Benefit for income taxes	(2,548		)	(3,604		)	(3,179		)	(7,222		)
Net loss	$	(4,121	)	$	(2,275	)	$	(6,935	)	$	(8,067	)
Other comprehensive income (loss):
Foreign currency translation gain (loss)	(5,542		)	2,336			(4,383		)	(5,994		)
Comprehensive income (loss)	$	(9,663	)	$	61		$	(11,318	)	$	(14,061	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

Armored AutoGroup Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Nine months ended September 30,
	2014			2013
Cash flows from operating activities:
Net loss	$	(6,935	)	$	(8,067	)
Adjustments to reconcile net loss to net cash provided by operating activities, net of effects of acquisitions:
Depreciation and amortization	35,796			35,713
Share-based compensation	(840		)	216
Other	2			—
Deferred income taxes	(9,154		)	(12,996		)
Cash effect of changes in:
Accounts receivable, net	(13,188		)	1,778
Inventories	(11,323		)	6,287
Prepaid taxes	1,268			3,329
Other current assets	(130		)	(1,902		)
Accounts payable and accrued liabilities	22,175			5,079
Due to Clorox	(69		)	(134		)
Other	(171		)	(771		)
Net cash provided by operating activities	17,431			28,532
Cash flows from investing activities:
Capital expenditures	(1,519		)	(2,894		)
Acquisition, net	(1,797		)	(3,755		)
Investment in affiliate	(10,000		)	—
Net cash used in investing activities	(13,316		)	(6,649		)
Cash flows from financing activities:
Borrowings under revolver	11,000			23,000
Payments on revolver	(11,000		)	(23,000		)
Principal payments on term loan	(11,250		)	(2,250		)
Payment on advance from Parent	(494		)	(50		)
Net cash used in by financing activities	(11,744		)	(2,300		)
Effect of exchange rate changes on cash	(193		)	(57		)
Net (decrease) increase in cash	(7,822		)	19,526
Cash at beginning of period	21,253			4,206
Cash at end of period	$	13,431		$	23,732
Supplemental cash flow disclosures:
Cash paid for interest	$	26,126		$	26,567
Cash paid for income taxes	$	4,743		$	3,226

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

Armored AutoGroup Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — The Company and Summary of Significant Accounting Policies

The Company

Armored AutoGroup Inc. is a consumer products company consisting primarily of Armor All® and STP®, two of the most recognizable brands in the automotive aftermarket appearance products and performance chemicals categories, respectively. Armored AutoGroup Inc. delivers its products to distributors, resellers and end customers (collectively, “the customers”) through its direct operations in the United States, Canada, Mexico, Australia, China and the United Kingdom and distributor relationships in approximately 50 countries. The Armor All and STP brands offer multiple automotive appearance and performance chemical products that can be found in most of the major developed countries around the world.

In September 2010, Viking Acquisition Inc., an entity owned by affiliates of Avista Capital Holdings, L.P. (“Avista”), entered into an agreement to acquire the AutoCare Products Business, Armor All, STP and certain other brands from The Clorox Company (“Clorox”) pursuant to the terms of a Purchase and Sale Agreement dated September 21, 2010 (the “Acquisition”).  The Acquisition closed on November 5, 2010 and included employees in the United States and other countries dedicated to the Company, related product patent and developed technology and certain other assets, including the manufacturing facilities located in Painesville, Ohio and Wales, United Kingdom.  Viking Acquisition Inc. was subsequently renamed Armored AutoGroup Inc. (“AAG”).  Armored AutoGroup Parent Inc. (“AAG Parent” or “Parent”) indirectly owns all of AAG’s issued and outstanding capital stock through its direct subsidiary and AAG’s direct parent, Armored AutoGroup Intermediate Inc. (“Intermediate”).

Basis of Presentation

The interim condensed consolidated financial statements for the three and nine month periods ended September 30, 2014 and 2013 are unaudited but, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of the Company for the periods presented. The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ materially from the estimates and assumptions made. During the quarter ended September 30, 2014, management revised its estimated compensation expense resulting in a reduction of $1.0 million in selling and administrative expense for the quarter. Further, the results for the interim periods ended September 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2014, or for any future period.

The Company’s business is moderately seasonal and can be impacted by weather. Sales are typically higher in the first half of the calendar year as the Company’s customers in the northern hemisphere purchase inventory for the spring and summer seasons when weather is warmer than in the fall and winter months.  This pattern is largely reflective of our customers’ seasonal purchasing patterns, as well as the timing of our promotional activities. Weather can also influence consumer behavior, especially for appearance products. Our appearance products sell best during warm, dry weather, and less if weather is cold and wet.  For these reasons, among others, the Company’s results for any quarter are not necessarily indicative of future quarterly results and, accordingly, period-to-period comparisons should not be relied upon as an indication of future performance.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2013, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies. The consolidated balance sheet at December 31, 2013 has been derived from the Company’s audited financial statements at that date, but does not include all of the financial information or disclosures required by U.S. GAAP for complete financial statements.

Revenue Recognition

Sales are recognized when title to the product, ownership and risk of loss transfer to the customer, which can be on the date of shipment or the date of receipt by the customer and when all of the following have occurred: a firm sales arrangement exists, pricing is fixed and determinable, and collection is reasonably assured. Revenue includes shipping and handling costs, when these costs are included in the list price to the customer. Taxes collected from customers and remitted to

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governmental authorities are not included in sales. A provision for payment discounts and product return allowances is recorded as a reduction of sales in the same period that the revenue is recognized.

The Company routinely commits to trade promotion programs with customers, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons offered through various programs to customers and consumers. Accruals for expected payouts under these programs are included as accrued marketing and promotion in the accrued expenses and other current liabilities line item in the Condensed Consolidated Balance Sheets and are recorded as a reduction of sales in the Condensed Statements of Comprehensive Income (Loss).

Amounts received by the Company from the licensing of certain trademarks are recognized as revenue on a straight-line basis over the term of the licensing agreement when the underlying royalties are earned.

Cost of Products Sold

Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacturing of product, as well as manufacturing labor, depreciation expense, direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product, contract manufacturing costs, and provisions for inventory losses (including losses relating to excess and obsolete inventory). Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, internal transfer costs, warehousing costs and other shipping and handling activity as well as costs associated with developing and designing new packaging.

Income Taxes

The Company uses the asset and liability method to account for income taxes. For purposes of the unaudited interim condensed consolidated financial statements, the Company calculates tax with reference to the anticipated effective tax rate for the annual financial period. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to the differences between the financial statement amounts and their respective tax bases. Management reviews the Company’s deferred tax assets to determine whether their value can be realized based upon available evidence. A valuation allowance is established when management believes that it is more likely than not that some portion or all of its deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the Company’s tax provision in the period of change. In addition to valuation allowances, the Company provides for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards prescribed by accounting guidance on the accounting for uncertainty in income taxes. Amounts for uncertain tax positions are adjusted when new information becomes available or when positions are effectively settled.

None of the Company’s goodwill is expected to be deductible for tax purposes.

The Company files consolidated federal and certain state income tax returns with its Parent.  Income taxes have been prepared on a separate return basis.  The Company pays its tax liability on behalf of its Parent.

Foreign Currency Translation

Local currencies are the functional currencies for substantially all of the Company’s foreign operations. When the transactional currency is different than the functional currency, transaction gains and losses are included as a component of other expense (income), net.  Assets and liabilities of foreign operations are translated into U.S. dollars using the exchange rates in effect at the respective balance sheet reporting date. Income and expenses are translated at the average exchange rate during the period. Gains and losses on foreign currency translation are reported as a component of accumulated other comprehensive (loss). Deferred taxes are not provided on cumulative translation adjustments where the Company expects earnings of a foreign subsidiary to be indefinitely reinvested.

Goodwill and Intangible Assets

The Company tests its goodwill and trademark and brand intangible assets with indefinite lives annually as of October 1st unless there are indications during an interim period that these assets may have become impaired.  Goodwill impairment occurs when the carrying amount of one of the Company’s reporting unit’s goodwill exceeds its implied fair value. The Company would then record an impairment charge being the difference between the carrying amount and the implied fair value of the reporting unit’s goodwill. For trademarks and brand intangible assets with indefinite lives, impairment occurs when the carrying amount of an asset is greater than its estimated fair value and an impairment charge is

9

recorded for the difference between the carrying amount and the fair value. The Company’s estimates of fair value are based primarily on a discounted cash flow approach as supplemented by a market based approach. Significant judgment is necessary in the preparation of assumptions and estimates inherent in such valuation approaches, particularly with respect to the determination of future volumes, revenue and expense growth rates, changes in working capital use, foreign-exchange rates, inflation, the selection of an appropriate discount rate and the calculation of an average earnings before interest, tax, depreciation and amortization (“EBITDA”) multiple of a selected public-company peer group. In particular, the discount rates the Company utilizes in these analyses, as well as expectations for future cash flows, may be influenced by such factors as changes in interest rates, rates of inflation and changes in regional risk.  During the nine months ended September 30, 2014, goodwill decreased by $0.2 million due to currency translation of $2.1 million and partially offset by the preliminary purchase accounting related to a small acquisition in our international region of $1.9 million.

Property, Plant & Equipment and Finite-Lived Intangible Assets

Property, plant and equipment and finite-lived intangible assets are stated at cost less accumulated depreciation and amortization. The Company calculates depreciation and amortization expense by the straight-line method using estimated useful lives of the related assets. The Company reviews property, plant and equipment and finite-lived intangible assets for impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset or asset group may not be recoverable. The Company’s impairment review is based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist and impairment occurs when the book value of the asset group exceeds the estimated future undiscounted cash flows generated by the asset group. When impairment is indicated, a charge is recorded for the difference between the book value of the asset group and its fair value. Depending on the asset or asset group, estimated fair value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in a similar condition.

Reclassification

Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss or comprehensive (loss) income.

Recent Accounting Pronouncements

In August 2014 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15—Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  The ASU requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued and, if so, to disclose that fact.  The ASU requires management to make this evaluation for both the annual and interim reporting periods, if applicable.  Management is also required to evaluate and disclose whether its plans alleviate that doubt.  The ASU is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016.  The Company is assessing the impact of the adoption of the ASU on its disclosure requirements.

In June 2014 the FASB issued ASU No. 2014-12—Compensation-Stock Compensation.  The ASU is intended to resolve diverse accounting treatment for accounting for share-based payments when the terms of an award provide that the performance target could be achieved after the requisite service period.  The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.  The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.  Earlier adoption is permitted.  The Company is assessing the impact on the adoption of the ASU on its financial statements.

In May 2014 the FASB issued ASU No. 2014-09—Revenue from Contracts with Customers.  The ASU clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”) that removes inconsistencies and weaknesses in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, provides more useful information to users of the financial statements through improved disclosure requirements and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.  The amendments in this update are effective for the annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  Full or modified retrospective adoption is required and early application is not permitted.  The Company is assessing the impact of the adoption of the ASU on its financial statements, disclosure requirements and methods of adoption.

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Note 2 — Inventories

Inventories consisted of the following (in thousands):

	September 30, 2014			December 31, 2013
Finished goods	$	38,764		$	28,400
Raw materials and packaging	9,476			7,896
Allowances for obsolescence	(2,357		)	(2,253		)
	$	45,883		$	34,043

Note 3 - Fair Value Measurement of Assets and Liabilities

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value which is intended to increase consistency and comparability and related disclosures. An asset or liability’s classification is based on the lowest level of input that is significant to the fair value measurement and is disclosed in one of the following three categories:

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3—Unobservable inputs reflecting the reporting entity’s own assumptions.

The Company’s financial instruments consist of cash, trade accounts receivable, trade accounts payable and long-term debt.  Due to their short-term maturity, the carrying amounts of cash, trade accounts receivable and trade accounts payable approximate their fair market values.  The carrying and fair values of the Company’s long-term debt were as follows (in thousands):

	September 30, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
Term loan	$	275,946	$	279,051	$	285,982	$	291,000
Senior notes	268,533		280,500		267,600		267,438

The fair value of the Term Loan and the Senior Notes was determined using broker quotes, which use discounted cash flows, an income approach, and the then applicable forward LIBOR rates and, therefore, meets the definition of Level 2 fair value, as defined above.

Note 4 — Commitments and Contingencies

Litigation and Other Legal Matters

In connection with the Acquisition, Clorox retained liability associated with a potential contract claim and the Company agreed to indemnify and reimburse Clorox for 50% of the first $5,000,000 in settlement costs related to the contract claim. As of September 30, 2014 and December 31, 2013, the Company has accrued $2.5 million in long-term liabilities related to this contingency.

The Company is subject to various lawsuits and claims relating to issues such as contract disputes, product liability, patents and trademarks, advertising, employee and other matters. Although the results of claims and litigation cannot be predicted with certainty, it is the opinion of management that the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, individually or in the aggregate, on the Company’s financial statements taken as a whole.

11

Note 5 — Income taxes

The Company’s effective tax benefit rate was as follows:

	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Effective tax benefit rate	38.2	%	61.3	%	31.4	%	47.2	%

The Company’s effective tax benefit rate for the three month period ended September 30, 2014 differs from the statutory tax rate primarily due to U.S. federal manufacturing benefits recognized and state taxes, which both increase the benefit rate. Further, the Company’s effective tax benefit rate has decreased for the three month period ended September 30, 2014 as compared to the corresponding period in 2013, as a result of a discrete tax benefit of $0.2 million recorded during the three month period ending September 30, 2014.  The discrete tax benefit is primarily the result of a change in the uncertain tax positions recorded by Clorox, for which the Company has recorded a corresponding benefit in income from operations due to the indemnification agreement between the entities, a change in the Company’s blended state tax rate, and true-ups related to the filing of the Company’s 2013 income tax returns.

The Company’s effective tax benefit rate for the nine month period ended September 30, 2014 differs from the statutory tax rate primarily due to U.S. federal manufacturing benefits recognized and state taxes. Further, the Company’s effective tax benefit rate has decreased for the nine month period ended September 30, 2014 as compared to the corresponding period in 2013 primarily as a result of a discrete tax charge of $0.6 million recorded during the nine month period ending September 30, 2014.  The discrete tax charge is primarily the result of a change in the uncertain tax positions recorded by Clorox, for which the Company has recorded a corresponding benefit in income from operations due to the indemnification agreement between the entities, a change in the Company’s blended state tax rate, and true-ups related to the filing of the Company’s 2013 income tax returns.

Note 6 — Segment Data

The Company manages its business through two geographic segments: North America and International.

·North America—consists of auto-care products marketed and sold in the United States and Canada. Products within this segment include auto-care products primarily under the Armor All and STP brands.

·International—consists of products sold outside North America, including Australia, Europe and other international locations. Products within this segment include auto-care products primarily under the Armor All and STP brands.

The Company does not allocate its amortization of intangible assets or interest expense between its North America and International segments but includes them in the tables below under Corporate in order to reconcile the North America and International segments’ performance to the Company’s Statements of Comprehensive (Loss) Income. All intersegment sales are eliminated and are not included in the Company’s reportable segments’ net sales.

12

The following summarizes the financial performance of the Company’s operating segments (in thousands):

	Three months ended September 30, 2014
	North America		International		Corporate			Consolidated
Net sales	$	50,503	$	19,956	$	—		$	70,459
Earnings (loss) before income taxes	14,092		262		(21,023		)	(6,669		)
Capital expenditures	669		138		—			807
Depreciation of property, plant and equipment and amortization of intangible assets	1,558		122		9,133			10,813

	Three months ended September 30, 2013
	North America		International		Corporate			Consolidated
Net sales	$	50,886	$	20,121	$	—		$	71,007
Earnings (loss) before income taxes	11,421		3,924		(21,224		)	(5,879		)
Capital expenditures	1,049		95		—			1,144
Depreciation of property plant and equipment and amortization of intangible assets	1,556		127		9,175			10,858

	Nine months ended September 30, 2014
	North America		International		Corporate			Consolidated
Net sales	$	175,172	$	57,742	$	—		$	232,914
Earnings (loss) before income taxes	49,330		3,653		(63,097		)	(10,114		)
Capital expenditures	1,250		269		—			1,519
Depreciation of property, plant and equipment and amortization of intangible assets	4,720		365		27,377			32,462

	Nine months ended September 30, 2013
	North America		International		Corporate			Consolidated
Net sales	$	169,505	$	55,990	$	—		$	225,495
Earnings (loss) before income taxes	41,724		6,489		(63,502		)	(15,289		)
Capital expenditures	2,652		242		—			2,894
Depreciation of property plant and equipment and amortization of intangible assets	4,577		404		27,525			32,506

Note 7 — Financial Information for the Company and Its Subsidiaries

The Company’s payment obligations under the Senior Notes are guaranteed, jointly and severally, by all of the Company’s wholly owned domestic subsidiaries that guarantee the obligations of the Company under the Credit Facility. These guarantees are full and unconditional, subject, in the case of the subsidiary guarantors, to customary release provisions. The Company conducts substantially all of its business through its subsidiaries. In servicing payments to be made on the Senior Notes and other indebtedness, and to satisfy other liquidity requirements, the Company will rely, in large part, on cash flows from these subsidiaries, mainly in the form of dividends, royalties and advances or payments on account of intercompany loan arrangements. The ability of these subsidiaries to make dividend payments to the Company will be affected by, among other factors, the obligations of these entities to their creditors, requirements of corporate and other law, and restrictions contained in agreements entered into by or relating to these entities.

The following supplemental consolidating financial information sets forth, on a combining basis, balance sheets, statements of comprehensive (loss) income and statements of cash flows for the Company, the guarantor subsidiaries, the non-guarantor subsidiaries and elimination entries necessary to consolidate the Company and its subsidiaries. This information is presented in lieu of

13

separate financial statements and other related disclosures pursuant to Regulation S-X Rule 3-10 of the Securities Exchange Act of 1934, as amended, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.”

The operating and investing activities of the separate legal entities are fully interdependent and integrated. Accordingly, the results of the separate legal entities are not representative of what the operating results would be on a standalone basis.

Condensed Consolidating Balance Sheet

September 30, 2014

	Issuer		Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash	$	7,302	$	—		$	6,129		$	—		$	13,431
Accounts receivable, net	—		57,541			16,436			—			73,977
Inventories	—		33,175			12,708			—			45,883
Other current assets	81,798		(74,559		)	3,326			—			10,565
Total current assets	89,100		16,157			38,599			—			143,856
Property, plant and equipment, net	7,264		15,675			2,412			—			25,351
Goodwill	—		310,576			48,071			—			358,647
Intangible assets, net	—		253,820			32,211			(1,651		)	284,380
Investment in subsidiaries	595,664		109,047			—			(704,711		)	—
Investment in affiliate	10,000		—			—			—			10,000
Deferred financing costs and other assets, net	2,276		87			—			—			2,363
Total assets	$	704,304	$	705,362		$	121,293		$	(706,362	)	$	824,597
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	933	$	14,418		$	4,014		$	—		$	19,365
Accrued expenses and other current liabilities	17,389		9,976			8,189			—			35,554
Payable to parent	251		—			—			—			251
Due to Clorox	—		23			(1		)	—			22
Current portion of long-term debt, less discount	1,318		—			—			—			1,318
Total current liabilities	19,891		24,417			12,202			—			56,510
Long-term debt, less discount and current portion	543,161		—			—			—			543,161
Other liability	2,500		—			—			—			2,500
Deferred income taxes	5,121		75,281			44			—			80,446
Total liabilities	570,673		99,698			12,246			—			682,617
Shareholder’s equity	133,631		605,664			109,047			(706,362		)	141,980
Total liabilities and shareholder’s equity	$	704,304	$	705,362		$	121,293		$	(706,362	)	$	824,597

14

Condensed Consolidating Balance Sheet

Year Ended December 31, 2013

	Issuer		Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
Current assets:
Cash	$	14,843	$	—		$	6,410		$	—		$	21,253
Accounts receivable	—		43,784			16,540			—			60,324
Inventory	—		24,553			9,490			—			34,043
Other current assets	53,931		(43,971		)	1,716			—			11,676
Total current assets	68,774		24,366			34,156			—			127,296
Property, plant and equipment	8,061		18,037			2,838			—			28,936
Goodwill	—		310,576			48,250			—			358,826
Intangible assets	—		276,461			38,198			(1,189		)	313,470
Investment in subsidiaries	647,107		115,394			—			(762,501		)	—
Other assets	3,632		87			—			—			3,719
Total assets	$	727,574	$	744,921		$	123,442		$	(763,690	)	$	832,247
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	169	$	4,413		$	2,407		$	—		$	6,989
Accrued expenses and other current liabilities	10,063		8,953			5,578			—			24,594
Due to Clorox	69		23			(1		)	—			91
Due to Parent	745		—			—			—			745
Notes payable, current portion	71		—			—			—			71
Total current liabilities	11,117		13,389			7,984						32,490
Notes payable, less current portion and discount	553,511		—			—			—			553,511
Other liabilities	2,500		—			—			—			2,500
Deferred income taxes	5,121		84,425			64			—			89,610
Total liabilities	572,249		97,814			8,048			—			678,111
Shareholder’s equity	155,325		647,107			115,394			(763,690		)	154,136
Total liabilities and shareholder’s equity	$	727,574	$	744,921		$	123,442		$	(763,690	)	$	832,247

15

Condensed Consolidating Statement of Comprehensive (Loss) Income

Three Months Ended September 30, 2014

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	58,123		$	19,924		$	(7,588	)	$	70,459
Cost of products sold	—			30,636			15,708			(7,588		)	38,756
Gross profit	—			27,487			4,216			—			31,703
Operating expenses:
Selling and administrative expenses	3,624			2,683			3,185			—			9,492
Advertising costs	—			5,127			1,901			—			7,028
Research and development costs	—			653			—			—			653
Amortization of acquired intangible assets	—			7,546			1,587			—			9,133
Total operating expenses	3,624			16,009			6,673			—			26,306
Operating (loss) profit	(3,624		)	11,478			(2,457		)	—			5,397
Non-operating expenses:
Interest expense	11,888			—			4			—			11,892
Other expense, net	66			—			108			—			174
(Loss) earnings before (benefit) provision for income taxes	(15,578		)	11,478			(2,569		)	—			(6,669		)
(Benefit) provision for income taxes	(6,016		)	3,291			177			—			(2,548		)
Equity earnings of subsidiaries, net of taxes	5,441			(2,746		)	—			(2,695		)	—
Net (loss) earnings	$	(4,121	)	$	5,441		$	(2,746	)	$	(2,695	)	$	(4,121	)
Other comprehensive loss:
Foreign currency translation	(5,542		)	(5,542		)	(5,542		)	11,084			(5,542		)
Comprehensive (loss) income	$	(9,663	)	$	(101	)	$	(8,288	)	$	8,389		$	(9,663	)

16

Condensed Consolidating Statement of Comprehensive Income (Loss)

Three months ended September 30, 2013

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	57,639		$	19,164		$	(5,796	)	$	71,007
Cost of products sold	—			28,534			15,745			(5,796		)	38,483
Gross profit	—			29,105			3,419			—			32,524
Operating expenses:
Selling and administrative expenses	4,532			2,916			2,406			—			9,854
Advertising costs	—			5,396			1,371			—			6,767
Research and development costs	—			625			1			—			626
Amortization of acquired intangible assets	—			7,545			1,630			—			9,175
Total operating expenses	4,532			16,482			5,408			—			26,422
Operating (loss) profit	(4,532		)	12,623			(1,989		)	—			6,102
Non-operating expenses:
Interest expense	12,044			—			5			—			12,049
Other expense, net	3			1			(72		)	—			(68		)
(Loss) earnings before (benefit) provision for income taxes	(16,579		)	12,622			(1,922		)	—			(5,879		)
(Benefit) provision for income taxes	(5,360		)	1,255			501			—			(3,604		)
Equity earnings (loss) of subsidiaries, net of taxes	8,944			(2,423		)	—			(6,521		)	—
Net (loss) earnings	$	(2,275	)	$	8,944		$	(2,423	)	$	(6,521	)	$	(2,275	)
Other comprehensive loss:
Foreign currency translation	2,336			2,336			2,336			(4,672		)	2,336
Comprehensive income (loss)	$	61		$	11,280		$	(87	)	$	(11,193	)	$	61

17

Condensed Consolidating Statement of Comprehensive (Loss) Income

Nine months ended September 30, 2014

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	193,967		$	61,123		$	(22,176	)	$	232,914
Cost of products sold	—			102,126			45,070			(22,176		)	125,020
Gross profit	—			91,841			16,053			—			107,894
Operating expenses:
Selling and administrative expenses	14,840			8,141			9,094			—			32,075
Advertising costs	—			15,804			5,324			—			21,128
Research and development costs	—			1,887			—			—			1,887
Amortization of acquired intangible assets	—			22,636			4,741			—			27,377
Total operating expenses	14,840			48,468			19,159			—			82,467
Operating (loss) profit	(14,840		)	43,373			(3,106		)	—			25,427
Non-operating expenses (income):
Interest expense	35,713			—			9			—			35,722
Other expense, net	(402		)	—			221			—			(181		)
(Loss) earnings before (benefit) provision for income taxes	(50,151		)	43,373			(3,336		)	—			(10,114		)
(Benefit) provision for income taxes	(18,600		)	14,809			612			—			(3,179		)
Equity earnings of subsidiaries, net of taxes	24,616			(3,948		)	—			(20,668		)	—
Net (loss) earnings	$	(6,935	)	$	24,616		$	(3,948	)	$	(20,668	)	$	(6,935	)
Other comprehensive (loss) income:
Foreign currency translation	(4,383		)	(4,383		)	(4,383		)	8,766			(4,383		)
Comprehensive (loss) income	$	(11,318	)	$	20,233		$	(8,331	)	$	(11,902	)	$	(11,318	)

18

Condensed Consolidating Statement of Comprehensive (Loss) Income

Nine months ended September 30, 2013

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	185,441		$	57,342		$	(17,288	)	$	225,495
Cost of products sold	—			97,799			40,796			(17,288		)	121,307
Gross profit	—			87,642			16,546			—			104,188
Operating expenses:
Selling and administrative expenses	13,020			8,662			7,520			—			29,202
Advertising costs	—			19,310			5,177			—			24,487
Research and development costs	—			1,828			11			—			1,839
Amortization of acquired intangible assets	—			22,636			4,890			—			27,526
Total operating expenses	13,020			52,436			17,598			—			83,054
Operating (loss) profit	(13,020		)	35,206			(1,052		)	—			21,134
Non-operating expenses (income):
Interest expense	35,968			—			8			—			35,976
Other expense, net	119			7			321			—			447
(Loss) earnings before (benefit) provision for income taxes	(49,107		)	35,199			(1,381		)	—			(15,289		)
(Benefit) provision for income taxes	(17,634		)	9,905			507			—			(7,222		)
Equity earnings (loss) of subsidiaries, net of taxes	23,406			(1,888		)	—			(21,518		)	—
Net (loss) earnings	$	(8,067	)	$	23,406		$	(1,888	)	$	(21,518	)	$	(8,067	)
Other comprehensive (loss) income:
Foreign currency translation	(5,994		)	(5,994		)	(5,994		)	11,988			(5,994		)
Comprehensive (loss) income	$	(14,061	)	$	17,412		$	(7,882	)	$	(9,530	)	$	(14,061	)

19

Condensed Consolidating Statement of Cash Flows

Nine months ended September 30, 2014

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss) earnings	$	(6,935	)	$	24,616		$	(3,948	)	$	(20,668	)	$	(6,935	)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	4,632			25,750			5,414			—			35,796
Share-based compensation	(840		)	—			—			—			(840		)
Deferred income taxes	—			(9,134		)	(20		)	—			(9,154		)
Equity earnings of subsidiaries, net of taxes	(19,173		)	1,204			—			17,969			—
Other	—			—			2			—			2
Cash effect of changes in:
Accounts receivable, net	—			(13,757		)	569			—			(13,188		)
Inventories	—			(8,622		)	(2,701		)	—			(11,323		)
Other current assets	510			865			(1,505		)	—			(130		)
Prepaid taxes	(28,389		)	29,657			—			—			1,268
Accounts payable and accrued liabilities	8,093			11,025			3,057			—			22,175
Due Clorox	(69		)	—			—			—			(69		)
Intercompany and other	56,873			(60,853		)	1,110			2,699			(171		)
Net cash provided by operating activities	14,702			751			1,978			—			17,431
Cash flows from investing activities:
Capital expenditures	(499		)	(751		)	(269		)	—			(1,519		)
Acquisition, net	—			—			(1,797		)	—			(1,797		)
Investment in affiliate	(10,000		)	—			—			—			(10,000		)
Net cash used in investing activities	(10,499		)	(751		)	(2,066		)	—			(13,316		)
Cash flows from financing activities:
Borrowings under revolver	11,000			—			—			—			11,000
Payments on revolver	(11,000		)	—			—			—			(11,000		)
Principal payments on term loan	(11,250		)	—			—			—			(11,250		)
Payment of advance from Parent	(494		)	—			—			—			(494		)
Net cash used in financing activities	(11,744		)	—			—			—			(11,744		)
Effect of exchange rate changes on cash	—			—			(193		)	—			(193		)
Net decrease in cash	(7,541		)	—			(281		)	—			(7,822		)
Cash at beginning of period	14,843			—			6,410			—			21,253
Cash at end of period	$	7,302		$	—		$	6,129		$	—		$	13,431

20

Condensed Consolidating Statement of Cash Flows

Nine months ended September 30, 2013

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss) earnings	$	(8,067	)	$	23,406		$	(1,888	)	$	(21,518	)	$	(8,067	)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	4,556			25,553			5,604			—			35,713
Share-based compensation	216			—			—			—			216
Deferred income taxes	—			(13,225		)	229			—			(12,996		)
Equity earnings of subsidiaries, net of taxes	(23,406		)	1,888			—			21,518			—
Cash effect of changes in:
Accounts receivable, net	105			(1,390		)	3,063			—			1,778
Inventories	—			6,157			130			—			6,287
Prepaid taxes	3,329			—			—			—			3,329
Other current assets	(6,134		)	6,798			(2,566		)	—			(1,902		)
Accounts payable and accrued liabilities	3,168			3,442			(1,531		)	—			5,079
Due Clorox	—			—			(134		)	—			(134		)
Intercompany and other	45,277			(50,960		)	4,912			—			(771		)
Net cash provided by operating activities:	19,044			1,669			7,819			—			28,532
Cash flows from investing activities:
Capital expenditures	(1,000		)	(1,669		)	(225		)	—			(2,894		)
Acquisition, net	—			—			(3,755		)	—			(3,755		)
Net cash used in investing activities	(1,000		)	(1,669		)	(3,980		)	—			(6,649		)
Cash flows from financing activities:
Borrowings under revolver	23,000			—			—			—			23,000
Payments on revolver	(23,000		)	—			—			—			(23,000		)
Principal payments on term loan	(2,250		)	—			—			—			(2,250		)
Payment of advance from Parent	(50		)	—			—			—			(50		)
Net cash used in by financing activities	(2,300		)	—			—			—			(2,300		)
Effect of exchange rate changes on cash	—			—			(57		)	—			(57		)
Net increase in cash	15,744			—			3,782			—			19,526
Cash at beginning of period	1,477			—			2,729			—			4,206
Cash at end of period	$	17,221		$	—		$	6,511		$	—		$	23,732

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Note 8 — Investment in Affiliate

On March 17, 2014, the Company paid $10.0 million to acquire a non-controlling equity interest in IDQ Acquisition Corp. (“IDQ”) and also paid $1.2 million in transaction fees and closing costs.  The investment is accounted for under the cost method of accounting.  The transaction fees and closing costs included $0.3 million paid to a board member for services rendered in connection with the transaction.  The transaction fees and closing costs are reported in selling and administrative expenses on the Condensed Consolidated Statements of Comprehensive (Loss) Income.  On the same date, Parent acquired a controlling equity interest in IDQ.  In connection with the investment, the Company entered into a Shared Services and Supply Agreement (the “Shared Services Agreement”) with IDQ and Parent pursuant to which certain products and services will be provided by one party to another, as agreed by the Company and IDQ, with the purpose of utilizing the assets and operations of each company to increase sales and lower the combined costs for the mutual benefit of both IDQ and us.  On March 11, 2014, the Company entered into an amendment of its Credit Facility revising a defined term, Consolidated EBITDA.  Consolidated EBITDA is used in the calculation of certain financial condition covenants under the Credit Facility.  The revision to the definition of Consolidated EBITDA excludes from Consolidated EBITDA  fees and expenses incurred for the Company’s investment in IDQ Acquisition Corp., the Company’s implementation of a management services agreement with IDQ Acquisition Corp. and the Company’s pursuit of cost savings, expense reductions and other operating improvements and synergies related to IDQ.

Note 9— Stock Option Modification

Employees of the Company participate in the Stock Option Plan of AAG Parent (the “Plan”). On June 23, 2014, AAG Parent modified the stock option grant agreements for certain employees participating in the Plan.  In addition, AAG Parent granted additional options covering 2,385,000 shares to employees during the three months ended June 30, 2014 at $1.00 per share. One half of the modified and newly granted options shall vest ratably over a five year period from the date of grant/modification based upon the passage of time (the “Time Award”), while the remaining 50% of the options will vest upon the achievement of specified performance conditions  as set forth in the grant agreements.   The performance condition can be met each fiscal year if certain EBITDA targets are achieved, subject to certain carry back and carry forward provisions, or if a change of control occurs and the applicable return of capital target is met.

In the three month period ended September 30, 2014, the Company determined that stock compensation expense was not required based on the vesting provisions of the 2010 Equity Incentive Plan.  From November 2010 to June 2014 the Company had recorded stock compensation expense of $1.0 million.  As a result of the Company’s determination, selling and administrative expenses for the three and nine month periods ended September 30, 2014 are reduced by $1.0 million and $0.8 million, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with our financial statements and related notes. This discussion and analysis contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of various factors, including the factors we describe under “Cautionary note regarding forward-looking statements,” elsewhere in this Quarterly Report.

Overview

We are a consumer products company consisting primarily of Armor All and STP, two of the most recognizable brands in the automotive aftermarket appearance products and performance chemical products categories, respectively. The current Armor All product line of protectants, wipes, tire and wheel care products, glass cleaners, leather care products, air fresheners and washes are designed to clean, shine, refresh and protect interior and exterior automobile surfaces. The offering of STP oil and fuel additives, functional fluids and automotive appearance products has a broad customer base ranging from professional racers to car enthusiasts and “Do-it-Yourselfers.” Our brands offer over 200 individual automotive appearance and performance chemical products that can be found in most of the major developed countries around the world. We have a diversified geographic footprint with direct operations in the United States, Canada, Mexico, Australia, the United Kingdom and China and distributor relationships in approximately 50 countries.

Armor All is the most recognized automotive aftermarket appearance product brand in the United States with a comprehensive and competitively priced product line. The Armor All advertising campaigns, such as the “Go ahead. Stare,” “Care for your car”, “Armor All Way” and “A car is a privilege. Respect it.” build on what we believe to be the strong Armor All brand equity established over the business’s 50 year history to maintain a high level of consumer awareness. We further believe that Armor All has distinguished itself as the leader in the automotive aftermarket appearance products category based upon its household name, high quality product formulations, convenient application methods and tradition of innovation.

The STP brand has been characterized by a commitment to technology, performance and motor sports partnerships for over 50 years. Regular use of STP additives as part of basic maintenance helps engines run better by boosting the cleaning performance of gas and saving gas by keeping fuel intake systems clean. We believe the STP brand fuel and oil additives, functional fluids and Armor All automotive appearance products benefit from a rich heritage in the car enthusiast and racing scenes.

Industry trends

The general economic environment in our primary markets began to stabilize in 2012 allowing for moderate growth in the appearance and performance chemical products categories.  We believe the current economic environment and category growth trends are indicative of sustaining trends.  We also believe the trend toward an aging car fleet in our primary markets has reached its height and will likely decrease somewhat as sales of new cars has increased as the economy stabilizes.

We believe innovation is an important contributor to category growth because new product introductions stimulate consumer interest in the category by fulfilling unmet consumer needs and bringing attention to the appearance and performance chemical products categories. Truly innovative products have a history of driving category growth in appearance and performance chemical products. We continue to introduce new products and invest in advertising and promotion to elevate engagement of our customers and consumers with our brands.

Competition remains intense in the categories we serve. Recently, smaller brands in both the appearance and performance chemical products categories continue to have success gaining market share.  The Company continues to invest significant resources in advertising campaigns and with trade partners on promotional activities for its brands. While we believe our brands and customer relationships are strong, there is no assurance we will be able to maintain or improve our current competitive position.

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Key performance indicators

Management reviews and analyzes several key performance indicators in order to manage our business and assess the quality of, and potential variability of, our earnings and cash flows. These key performance indicators include:

·Net sales—which is an indicator of our overall business growth;

·Gross profit—is a key factor in the relative strength of our brands as gross profits enable us to generate cash to maintain marketing support, and therefore improve brand health; and

·Operating expenses—outright and as a percentage of net sales which is an indicator of the efficiency of our business and our ability to manage our business to budget.

·Adjusted EBITDA— is a measure to calculate certain incentive-based compensation and certain financial covenants related to our Credit Facility and as a factor in our tangible and intangible asset impairment test.

Results of Operations

Three and nine month periods ended September 30, 2014 compared to the corresponding periods in 2013

Financial data for the three and nine month periods ended September 30, 2014 and 2013 are as follows (in thousands, except percentages):

	Three months ended September 30,											Nine months ended September 30,
	2014			2013			Change			%		2014			2013			Change			%
Net sales	$	70,459		$	71,007		$	(548	)	(1	)	$	232,914		$	225,495		$	7,419		3
Cost of products sold	38,756			38,483			273			1		125,020			121,307			3,713			3
Gross profit	31,703			32,524			(821		)	(3	)	107,894			104,188			3,706			4
Operating expenses:
Selling and administrative expenses	9,492			9,854			(362		)	(4	)	32,075			29,202			2,873			10
Advertising costs	7,028			6,767			261			4		21,128			24,487			(3,359		)	(14	)
Research and development costs	653			626			27			4		1,887			1,839			48			3
Amortization of acquired intangible assets	9,133			9,175			(42		)	—		27,377			27,526			(149		)	(1	)
Total operating expenses	26,306			26,422			(116		)	—		82,467			83,054			(587		)	(1	)
Operating profit	5,397			6,102			(705		)	(12	)	25,427			21,134			4,293			20
Non-operating expenses:
Interest expense	11,892			12,049			(157		)	(1	)	35,722			35,976			(254		)	(1	)
Other expense (income), net	174			(68		)	242			(356	)	(181		)	447			(628		)	(140	)
Loss before benefit for income taxes	(6,669		)	(5,879		)	(790		)	13		(10,114		)	(15,289		)	5,175			(34	)
Benefit for income taxes	(2,548		)	(3,604		)	1,056			(29	)	(3,179		)	(7,222		)	4,043			(56	)
Net loss	$	(4,121	)	$	(2,275	)	$	(1,846	)	81		$	(6,935	)	$	(8,067	)	$	1,132		(14	)

Net sales

Our sales are typically higher in the first half of the calendar year as our customers purchase stock for the spring and summer seasons when weather is warmer in the northern hemisphere than in the fall and winter months. This pattern is largely reflective of our customers’ seasonal purchasing patterns, as well as the timing of our promotional activities. Weather can also influence consumer behavior, especially for appearance products. Our appearance products sell best during warm, dry weather, and sell less strongly if weather is cold and wet.

Net sales for our North America segment include products marketed and sold to customers in the United States and Canada.  Our International segment represents net sales to all other regions outside of the United States and Canada, primarily being Europe, Australia, Latin America and Asia.  The following table summarizes our net sales for the three and nine month periods ended September 30, 2014 and 2013 (in thousands, except percentages):

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	Three months ended September 30,				Change					% of Net Sales
	2014		2013		$			%		2014	2013
Net sales
North America:
Armor All products	$	36,908	$	34,684	$	2,224		6		53	49
STP products	11,982		14,350		(2,368		)	(17	)	17	20
Other brands	1,613		1,852		(239		)	(13	)	2	3
Total North America	50,503		50,886		(383		)	(1	)	72	72
International	19,956		20,121		(165		)	(1	)	28	28
Consolidated net sales	$	70,459	$	71,007	$	(548	)	(1	)	100	100

	Nine months ended September 30,				Change					% of Net Sales
	2014		2013		$			%		2014	2013
Net sales
North America:
Armor All products	$	131,689	$	121,529	$	10,160		8		57	54
STP products	38,213		42,163		(3,950		)	(9	)	16	19
Other brands	5,270		5,813		(543		)	(9	)	2	3
Total North America	175,172		169,505		5,667			3		75	75
International	57,742		55,990		1,752			3		25	25
Consolidated net sales	$	232,914	$	225,495	$	7,419		3		100	100

In North America, net sales declined during the three month period ended September 30, 2014 as compared to the same period in 2013 driven by the STP brand.  Over the last several months, the performance category has experienced a decline in unit sales and high inventory levels at some retailers has resulted in a general slowdown in sales.  Additionally, a third quarter STP promotional program featured a product with a lower sales price per unit versus a similar program a year ago, impacting net sales dollars year over year.  For the nine month period, STP products decreased due to strong promotional events by our competitors in the first half of 2014.  On the appearance side, Armor All continues to show strong growth in both the three month and nine month periods driven by strong product placement and promotions, especially in wipes and specially packaged products. Additionally, Armor All was positively impacted by improved weather conditions compared to 2013.

International net sales for the three month period ended September 30, 2014 showed a slight decline in sales driven by lower sales in Latin America and Asia export of $1.2 million partially offset by the impact of an acquisition made in the United Kingdom in the third quarter of 2013 resulting in increased net sales of $1.0 million.  For the nine month period, sales continue to show strong growth versus prior year driven by higher sales in the United Kingdom business of $4.3 million which is primarily the result of an acquisition made in the third quarter of 2013. Partially offsetting this increase were lower sales in Asia export of $2.1 million due to the decline in volume resulting from a stronger dollar.

Gross profit

Our gross profit for the three and nine month periods ended September 30, 2014 and 2013 are as follows (in thousands, except percentages):

	Three months ended September 30,											Nine months ended September 30,
	2014			2013			Change			%		2014			2013			Change		%
Gross profit	$	31,703		$	32,524		$	(821	)	(3	)	$	107,894		$	104,188		$	3,706	4
Stated as a percentage of net sales	45.0		%	45.8		%						46.3		%	46.2		%

The lower sales volume discussed above partially contributed to our lower gross profit dollars in the three month period ended September 30, 2014 as compared to the corresponding period in 2013. Our gross profit dollars and percentage

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of net sales continue to be negatively impacted by the mix of products sold with higher sales of promotional specially packaged products which are generally at a lower gross margin.

For the nine month period ended September 30, 2014 as compared to the corresponding period in 2013, increased sales volume resulted in higher gross profit dollars.  The impact of unfavorable product mix discussed above is offset by product cost savings that have helped to maintain gross profit as a percentage of net sales in line with the 2013 rate.

Selling and administrative expense, advertising costs, and research and development costs

Our selling and administrative expenses, advertising costs, and research and development costs for the three and nine month periods ended September 30, 2014 and 2013 are as follows (in thousands, except percentages):

	Three months ended September 30,											Nine months ended September 30,
	2014			2013			Change			%		2014			2013			Change			%
Selling and administrative expenses	$	9,492		$	9,854		$	(362	)	(4	)	$	32,075		$	29,202		$	2,873		10
Advertising costs	7,028			6,767			261			4		21,128			24,487			(3,359		)	(14	)
Research and development costs	653			626			27			4		1,887			1,839			48			3
	$	17,173		$	17,247		$	(74	)	—		$	55,090		$	55,528		$	(438	)	(1	)
Stated as a percentage of net sales	24.4		%	24.3		%						23.7		%	24.6		%

The decrease in our selling and administrative expenses in the three month period ended September 30, 2014 as compared to the corresponding period in 2013 is primarily due to the reversal of cumulative stock compensation expense of $1.0 million and a reduction in the compensation expense of $1.0 million, partially offset by IDQ business integration costs which totaled $1.3 million.  The increase in our selling and administrative expenses in the nine month period ended September 30, 2014 is primarily due to IDQ business integration costs which totaled $2.9 million and higher salaries related to compensation expense and profit sharing accrual of $1.4 million, partially offset by the reversal of the cumulative stock compensation expense of $1.0 million.

The increase in our advertising costs in the three month period ended September 30, 2014 as compared to the corresponding period in 2013 was primarily due to timing of consumer marketing and research spend from second quarter to third quarter.  The decrease in spend in the nine month period ended September 30, 2014 as compared to 2013 was a reduction in our North America STP media spending from TV to radio content of approximately $2.0 million and a reduction in discretionary spend of certain consumer and customer marketing programs.

Income taxes

Our effective tax benefit rate for the three and nine month periods ended September 30, 2014 and 2013 are as follows:

	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Effective tax benefit rate	38.2	%	61.3	%	31.4	%	47.2	%

Our effective tax benefit rate for the three and nine month periods ended September 30, 2014 differ from the statutory tax rate primarily due to U.S. federal manufacturing benefits recognized and state taxes, which both increase the benefit rate. Further, the Company’s effective tax benefit rate has decreased for the three and nine month periods ended September 30, 2014 as compared to the corresponding periods in 2013 primarily as a result of a discrete tax benefit of $0.2 million for the the three month period ended September 30, 2014 and a discrete tax charge of $0.6 million recorded during the nine month period ending September 30, 2014.  The discrete tax charge is primarily the result of a change in the uncertain tax positions recorded by Clorox, for which the Company has recorded a corresponding benefit in income from operations due to the indemnification agreement between the entities, a change in the Company’s blended state tax rate, and true-ups related to the filing of the Company’s 2013 income tax returns.

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Adjusted EBITDA

EBITDA is defined as net earnings before interest expense (net), income taxes, depreciation and amortization including goodwill impairment, and is used by management to measure operating performance of the business. ‘‘Adjusted EBITDA’’ is calculated by adding to or subtracting from EBITDA items of expense and income as described below. We also use EBITDA and Adjusted EBITDA as a measure to calculate certain incentive-based compensation and certain financial covenants related to our Credit Facility and as a factor in our tangible and intangible asset impairment test. EBITDA and Adjusted EBITDA are supplemental measures of our performance and our ability to service indebtedness that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net earnings or other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as measures of our liquidity. In addition, our measurements of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA for the three and nine month periods ended September 30, 2014 and 2013 is calculated as follows:

	Three months ended September 30,											Nine months ended September 30,
	2014			2013			Change			%		2014			2013			Change			%
Net income(loss), as reported	$	(4,121	)	$	(2,275	)	$	(1,846	)	81		$	(6,935	)	$	(8,067	)	$	1,132		(14	)
Interest expense	11,892			12,049			(157		)	(1	)	35,722			35,976			(254		)	(1	)
Income taxes	(2,548		)	(3,604		)	1,056			(29	)	(3,179		)	(7,222		)	4,043			(56	)
Depreciation	1,677			1,762			(85		)	(5	)	5,079			5,225			(146		)	(3	)
Amortization	9,133			9,175			(42		)	0		27,377			27,526			(149		)	(1	)
EBITDA	16,033			17,107			(1,074		)	(6	)	58,064			53,438			4,626			9
Shared based compensation(1)	(1,017		)	74			(1,091		)	(1,480	)	(840		)	216			(1,056		)	(489	)
Loss (Income) on unrestricted(2) subsidiary	144			187			(43		)	(23	)	430			501			(71		)	(14	)
Proforma acquisition adjustment(3)	—			93			(93		)	(100	)	—			673			(673		)	(100	)
State franchise taxes	175			538			(363		)	(67	)	509			664			(155		)	(23	)
Acquisition related charges(4)	1,066			898			168			19		2,099			1,908			191			10
Workforce retention and other transitional charges(5)	135			101			34			34		337			299			38			13
Sponsor monitoring fees(6)	250			250			—			0		750			781			(31		)	(4	)
Non-cash write-off of assets(7)	59			118			(59		)	(50	)	(366		)	348			(714		)	(205	)
Enterprise Resource Planning implementation(8)	260			—			260			—		582			—			582			—
ADJUSTED EBITDA	$	17,105		$	19,366		$	(2,261	)	(12	)	$	61,565		$	58,828		$	2,737		5

(1)Non-cash compensation transactions include share-based compensation expense related to options granted under the Company’s 2010 Stock Option Plan.

(2)Net loss of early stage China subsidiary formed in 2012, earnings of which are excluded from EBITDA as defined in our Credit Facility.

(3)Proforma adjustment for pre-acquisition earnings related to an acquisition in the United Kingdom.

(4)Reflects an adjustment for acquisition-related charges, the incremental cost of transitioning to a stand-alone basis and proforma cost savings.

(5)Reflects one-time retention charges and other one-time compensation costs.

(6)Amounts related to a monitoring agreement with Avista Capital Holdings, L.P.

(7)Reflects amounts for non-cash benefit of indemnity from Clorox.

(8)Reflects one-time non-capitalizable costs related to the implementation of our new Enterprise Resource Planning software.

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Liquidity and capital resources

Our principal sources of liquidity are our cash of $13.4 million as of September 30, 2014, and our $50.0 million revolving credit loan, the entirety of which is undrawn and fully available to us as of September 30, 2014. Our principal source of operating cash inflows is from sales of product to customers. Our principal cash outflows relate to the purchase and production of inventory and related costs, advertising, selling and administrative expenses, and capital expenditures. At September 30, 2014, $6.1 million of our cash is held by foreign subsidiaries to fund their working capital needs. To date, net cash generated in operations and borrowed funds under our Revolving Credit Facility have been sufficient to service our debts and other obligations and fund seasonal and other cash flow requirements. We believe that, as of September 30, 2014, cash on hand, cash expected to be generated from future operating activities and cash available under the Revolving Credit Facility will be sufficient to fund our operations, including contractual obligations and capital expenditures for the next 12 months. However, in the event that funds are not available from our operating activities or from the Revolving Credit Facility, we may have to delay certain business initiatives and adjust our strategy accordingly.  As of September 30, 2014, the Company was in compliance with all covenants related to the Credit Facility.

On March 11, 2014, the Company entered into an amendment of its Credit Facility revising a defined term, Consolidated EBITDA, which is equivalent to Adjusted EBITDA in table above.  Consolidated EBITDA is used in the calculation of certain financial condition covenants under the Credit Facility.  The revision to the definition of Consolidated EBITDA excludes from Consolidated EBITDA  fees and expenses incurred for the Company’s investment in IDQ Acquisition Corp., the Company’s implementation of a management services agreement with IDQ Acquisition Corp. and the Company’s pursuit of cost savings, expense reductions and other operating improvements and synergies related to IDQ.

Cash flows

The following table summarizes our cash flows (in thousands):

	Nine Months Ended September 30,
	2014			2013
Net cash provided by operating activities	$	17,431		$	28,532
Net cash used in investing activities	(13,316		)	(6,649		)
Net cash used in financing activities	(11,744		)	(2,300		)

Operating activities

Significant elements of our of $17.4 million net cash provided by operating activities for the nine months ended September 30, 2014 is our net loss of $6.9 million which includes non-cash charges of $25.8 million for depreciation and amortization of our long lived, tangible and intangible assets, deferred financing costs, debt discount amortization, share-based compensation and deferred income taxes.  Elements of the $28.5 million net cash provided by operating activities for the nine months ended September 30, 2013 included our net loss of $8.1 million and a decrease in net operating assets of $13.7 million, offset by non-cash charges of $22.9 million for depreciation and amortization of our long lived, tangible and intangible assets, deferred financing costs, debt discount amortization, share-based compensation and deferred income taxes.

Investing activities

Our cash used in investing activities for the nine month period ended September 30, 2014 was comprised of $1.5 million of capital expenditures, a small acquisition in our international region of $1.8 million, as well as a $10.0 million investment in an affiliate in the first quarter of 2014. Cash used in investing activities of $6.6 million for the nine month period ended September 30, 2013 consisted of capital expenditures of $2.9 million and an acquisition in the United Kingdom of $3.8 million.  Capital spending declined to 0.7% from 1.3% of net sales in the nine month period ended September 30, 2014 as compared to the corresponding period in 2013.

Financing activities

Net cash used in financing activities for the nine months ended September 30, 2014 included $2.3 million of principal payments on our term loan as well as an additional mandatory prepayment of principal in the amount of $9.0 million due to excess cash generated in the year ended December 31, 2013 pursuant to the Term Loan agreement.  Net cash used in financing activities for the nine months ended September 30, 2013 included $2.3 million of principal payments on our term loan.

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Indebtedness

We have a significant amount of indebtedness stemming from the November 5, 2010 Acquisition, including a revolving credit loan and a term loan under the Credit Facility and Senior Notes. As of September 30, 2014 we have aggregate gross amount of indebtedness of approximately $554.8 million, exclusive of issuance discounts, including a remaining $279.8 million owed on our Term Loan having quarterly principal payments of $0.8 million and the remaining principal maturing in November 2016, and $275.0 million in aggregate principal amount of 9.25% Senior Notes due 2018.  Our significant indebtedness could affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from making debt service payments. Further, the terms of our credit agreement governing the Credit Facilities and the indenture that governs the Senior Notes contain a number of restrictive covenants that impose significant operating and financial restrictions on our current and future operations, particularly our ability to respond to changes or to take certain actions. Although such encumbrances have not proven unexpectedly burdensome to date, these restrictions may limit our ability to engage in certain financial and operational business activities that may be in our long-term best interest. As of September 30, 2014, the Company was in compliance with all covenants related to the Credit Facility.  For additional details related to our debts, see Note 9 of the Notes to the Consolidated Financial Statements, “Debt”, contained in the Company’s Annual Report on Form 10-K filed with the SEC (file number 333-180736) incorporated herein by reference.

Commitments and contingencies

For details related to our contractual obligations and other commitments and contingencies, see (i) Note 4 of the Notes to Condensed Consolidated Financial Statements, “Commitments and Contingencies” included in this Quarterly Report, and (ii) Note 11 of the Notes to the Consolidated Financial Statements for the fiscal year ended December 31, 2013, “Commitments and Contingencies”,  and Management’s Discussion and Analysis of Financial Condition and Results of Operations “Certain Information Concerning Contractual Obligations” included in the Company’s Annual Report on Form 10-K filed with the SEC (file number 333-180736) incorporated herein by reference.

Off-Balance Sheet Arrangements

We currently have no material off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For details about our market risk, see Item 7A., “Quantitative and Qualitative Disclosures About Market Risk”, included in the Company’s Annual Report on Form 10-K filed with the SEC (file number 333-180736) incorporated herein by reference.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management team, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2014, including controls and procedures to timely alert management to material information relating to the Company and its subsidiaries required to be included in the reports the Company files or submits under the Exchange Act. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our first fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are involved from time to time in various legal proceedings, regulatory investigations and claims incident to the normal conduct of business, which may include proceedings that are specific to us and others generally applicable to business practices within the industries in which we operate. A substantial legal liability or a significant regulatory action against us could have an adverse effect on our business, financial condition and on the results of operations in a particular quarter or year.  As of September 30, 2014, we had no material ongoing litigation, regulatory or other proceedings and had no knowledge of any investigations by governmental or regulatory authorities in which we are a target that could have a material adverse effect on our current business.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed under “Risk Factors” included within Company’s Annual Report on Form 10-K filed with the SEC (file number 333-180736) incorporated herein by reference. The risks described in the Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. There has been no material changes in our risk factors from those disclosed in the Annual Report referred to above.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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ITEM 6. EXHIBITS

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q.

EXHIBIT NO.	DESCRIPTION
31.1†	Certificate by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2†	Certificate by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1†	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2†	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from Armored AutoGroup’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, filed with the Securities and Exchange Commission on November 6, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations and Comprehensive Income; (iii) the Consolidated Statements of Cash Flows; (iv) the Consolidated Statements of Stockholders’ Equity and (iv) the Notes to Consolidated Financial Statements.

†Filed herewith.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated:  November 6, 2014

ARMORED AUTOGROUP INC.

/s/ MICHAEL KLEIN

Michael Klein

Chief Executive Officer

/s/ J. ANDREW BOLT

J. Andrew Bolt

Executive Vice President, Chief Financial Officer, and Principal Accounting Officer

32

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Klein, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 (the “Report”);

2.Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this Report;

3.Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b)[Paragraph omitted in accordance with SEC transition instructions];

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periods covered by this Report based on such evaluation; and

(d)Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ MICHAEL KLEIN

Michael Klein

Chief Executive Officer

November 6, 2014

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Andrew Bolt, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 (the “Report”);

2.Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this Report;

3.Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b)[Paragraph omitted in accordance with SEC transition instructions];

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periods covered by this Report based on such evaluation; and

(d)Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ J. ANDREW BOLT

J. Andrew Bolt

Executive Vice President, Chief Financial Officer and Principal Accounting Officer

November 6, 2014

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Klein, certify that:

1.the accompanying Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Armored AutoGroup Inc. at the dates and for the periods indicated.

A signed original of this written statement required by Section 906 has been provided to Armored AutoGroup Inc. and will be retained by Armored AutoGroup Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

/s/ MICHAEL KLEIN

Michael Klein

Chief Executive Officer

November 6, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Andrew Bolt, certify that:

1.the accompanying Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Armored AutoGroup Inc. at the dates and for the periods indicated.

A signed original of this written statement required by Section 906 has been provided to Armored AutoGroup Inc. and will be retained by Armored AutoGroup Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

/s/ J. Andrew Bolt

J. Andrew Bolt

Executive Vice President, Chief Financial Officer and Principal Accounting Officer

November 6, 2014

XML

Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Taxes
Discrete tax benefit	$ 0.2		$ 0.6
Reconciliation of the statutory federal income tax rate to effective tax rate on loss
Effective Income Tax Rate Reconciliation, Percent	38.20%	61.30%	31.40%	47.20%

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies

Commitments and Contingencies

Note 4 — Commitments and Contingencies

Litigation and Other Legal Matters

In connection with the Acquisition, Clorox retained liability associated with a potential contract claim and the Company agreed to indemnify and reimburse Clorox for 50% of the first $5,000,000 in settlement costs related to the contract claim. As of September 30, 2014 and December 31, 2013, the Company has accrued $2.5 million in long-term liabilities related to this contingency.

The Company is subject to various lawsuits and claims relating to issues such as contract disputes, product liability, patents and trademarks, advertising, employee and other matters. Although the results of claims and litigation cannot be predicted with certainty, it is the opinion of management that the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, individually or in the aggregate, on the Company’s financial statements taken as a whole.

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Financial Information for the Company and Its Subsidiaries (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net (loss) earnings	$ (4,121)	$ (2,275)	$ (6,935)	$ (8,067)
Adjustments to reconcile net loss to net cash provided by operating activities, net of effects of acquisition:
Depreciation and amortization			35,796	35,713
Share based compensation			(840)	216
Deferred income taxes			(9,154)	(12,996)
Other			2
Cash effect of changes, net of acquisition effects, in:
Accounts receivable, net			(13,188)	1,778
Inventories			(11,323)	6,287
Prepaid taxes			(1,268)	(3,329)
Other current assets			(130)	(1,902)
Accounts payable and accrued liabilities			22,175	5,079
Due to Clorox			(69)	(134)
Intercompany and other			(171)	(771)
Net cash provided by operating activities			17,431	28,532
Cash flows from investing activities:
Capital expenditures			(1,519)	(2,894)
Acquisition, net			(1,797)	(3,755)
Payments to Acquire Businesses and Interest in Affiliates			(10,000)
Net cash used in investing activities			(13,316)	(6,649)
Cash flows from financing activities:
Borrowings under revolver			11,000	23,000
Payments on revolver			(11,000)	(23,000)
Principal payments on term loan			(11,250)	(2,250)
Payment on advance from Parent			(494)	(50)
Net cash used in by financing activities			(11,744)	(2,300)
Effect of exchange rate changes on cash			(193)	(57)
Net increase in cash			(7,822)	19,526
Cash at beginning of period			21,253	4,206
Cash at end of period	13,431	23,732	13,431	23,732
Reportable Legal Entities | Issuer
Cash flows from operating activities:
Net (loss) earnings	(4,121)	(2,275)	(6,935)	(8,067)
Adjustments to reconcile net loss to net cash provided by operating activities, net of effects of acquisition:
Depreciation and amortization			4,632	4,556
Share based compensation			(840)	216
Equity earnings of subsidiaries, net of taxes	(5,441)	(8,944)	(24,616)	(23,406)
Cash effect of changes, net of acquisition effects, in:
Accounts receivable, net				105
Prepaid taxes			28,389	(3,329)
Other current assets			510	(6,134)
Accounts payable and accrued liabilities			8,093	3,168
Due to Clorox			(69)
Intercompany and other			56,873	45,277
Net cash provided by operating activities			14,702	19,044
Cash flows from investing activities:
Capital expenditures			(499)	(1,000)
Payments to Acquire Businesses and Interest in Affiliates			(10,000)
Net cash used in investing activities			(10,499)	(1,000)
Cash flows from financing activities:
Borrowings under revolver			11,000	23,000
Payments on revolver			(11,000)	(23,000)
Principal payments on term loan			(11,250)	(2,250)
Payment on advance from Parent			(494)	(50)
Net cash used in by financing activities			(11,744)	(2,300)
Net increase in cash			(7,541)	15,744
Cash at beginning of period			14,843	1,477
Cash at end of period	7,302	17,221	7,302	17,221
Reportable Legal Entities | Combined Guarantor Subsidiaries
Cash flows from operating activities:
Net (loss) earnings	5,441	8,944	24,616	23,406
Adjustments to reconcile net loss to net cash provided by operating activities, net of effects of acquisition:
Depreciation and amortization			25,750	25,553
Deferred income taxes			(9,134)	(13,225)
Equity earnings of subsidiaries, net of taxes	2,746	2,423	3,948	1,888
Cash effect of changes, net of acquisition effects, in:
Accounts receivable, net			(13,757)	(1,390)
Inventories			(8,622)	6,157
Prepaid taxes			(29,657)
Other current assets			865	6,798
Accounts payable and accrued liabilities			11,025	3,442
Intercompany and other			(60,853)	(50,960)
Net cash provided by operating activities			751	1,669
Cash flows from investing activities:
Capital expenditures			(751)	(1,669)
Net cash used in investing activities			(751)	(1,669)
Reportable Legal Entities | Combined Non- Guarantor Subsidiaries
Cash flows from operating activities:
Net (loss) earnings	(2,746)	(2,423)	(3,948)	(1,888)
Adjustments to reconcile net loss to net cash provided by operating activities, net of effects of acquisition:
Depreciation and amortization			5,414	5,604
Deferred income taxes			(20)	229
Other			2
Cash effect of changes, net of acquisition effects, in:
Accounts receivable, net			569	3,063
Inventories			(2,701)	130
Other current assets			(1,505)	(2,566)
Accounts payable and accrued liabilities			3,057	(1,531)
Due to Clorox				(134)
Intercompany and other			1,110	4,912
Net cash provided by operating activities			1,978	7,819
Cash flows from investing activities:
Capital expenditures			(269)	(225)
Acquisition, net			(1,797)	(3,755)
Net cash used in investing activities			(2,066)	(3,980)
Cash flows from financing activities:
Effect of exchange rate changes on cash			(193)	(57)
Net increase in cash			(281)	3,782
Cash at beginning of period			6,410	2,729
Cash at end of period	6,129	6,511	6,129	6,511
Eliminations
Cash flows from operating activities:
Net (loss) earnings	(2,695)	(6,521)	(20,668)	(21,518)
Adjustments to reconcile net loss to net cash provided by operating activities, net of effects of acquisition:
Equity earnings of subsidiaries, net of taxes	2,695	6,521	20,668	21,518
Cash effect of changes, net of acquisition effects, in:
Intercompany and other			$ 2,699

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Financial Information for the Company and Its Subsidiaries (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Condensed Consolidating Statement of Comprehensive (Loss) Income
Net sales	$ 70,459	$ 71,007	$ 232,914	$ 225,495
Cost of products sold	38,756	38,483	125,020	121,307
Gross profit	31,703	32,524	107,894	104,188
Operating expenses:
Selling and administrative expenses	9,492	9,854	32,075	29,202
Advertising costs	7,028	6,767	21,128	24,487
Research and development costs	653	626	1,887	1,839
Amortization of acquired intangible assets	9,133	9,175	27,377	27,526
Total operating expenses	26,306	26,422	82,467	83,054
Operating (loss) profit	5,397	6,102	25,427	21,134
Non-operating expenses (income)
Interest expense	11,892	12,049	35,722	35,976
Other expense (income), net	174	(68)	(181)	447
(Loss) earnings before (benefit) provision for income taxes	(6,669)	(5,879)	(10,114)	(15,289)
(Benefit) provision for income taxes	(2,548)	(3,604)	(3,179)	(7,222)
Net (loss) earnings	(4,121)	(2,275)	(6,935)	(8,067)
Other comprehensive (loss) income:
Foreign currency translation	(5,542)	2,336	(4,383)	(5,994)
Comprehensive income (loss)	(9,663)	61	(11,318)	(14,061)
Reportable Legal Entities | Issuer
Operating expenses:
Selling and administrative expenses	3,624	4,532	14,840	13,020
Total operating expenses	3,624	4,532	14,840	13,020
Operating (loss) profit	(3,624)	(4,532)	(14,840)	(13,020)
Non-operating expenses (income)
Interest expense	11,888	12,044	35,713	35,968
Other expense (income), net	66	3	(402)	119
(Loss) earnings before (benefit) provision for income taxes	(15,578)	(16,579)	(50,151)	(49,107)
(Benefit) provision for income taxes	(6,016)	(5,360)	(18,600)	(17,634)
Equity earnings of subsidiaries, net of taxes	5,441	8,944	24,616	23,406
Net (loss) earnings	(4,121)	(2,275)	(6,935)	(8,067)
Other comprehensive (loss) income:
Foreign currency translation	(5,542)	2,336	(4,383)	(5,994)
Comprehensive income (loss)	(9,663)	61	(11,318)	(14,061)
Reportable Legal Entities | Combined Guarantor Subsidiaries
Condensed Consolidating Statement of Comprehensive (Loss) Income
Net sales	58,123	57,639	193,967	185,441
Cost of products sold	30,636	28,534	102,126	97,799
Gross profit	27,487	29,105	91,841	87,642
Operating expenses:
Selling and administrative expenses	2,683	2,916	8,141	8,662
Advertising costs	5,127	5,396	15,804	19,310
Research and development costs	653	625	1,887	1,828
Amortization of acquired intangible assets	7,546	7,545	22,636	22,636
Total operating expenses	16,009	16,482	48,468	52,436
Operating (loss) profit	11,478	12,623	43,373	35,206
Non-operating expenses (income)
Other expense (income), net		1		7
(Loss) earnings before (benefit) provision for income taxes	11,478	12,622	43,373	35,199
(Benefit) provision for income taxes	3,291	1,255	14,809	9,905
Equity earnings of subsidiaries, net of taxes	(2,746)	(2,423)	(3,948)	(1,888)
Net (loss) earnings	5,441	8,944	24,616	23,406
Other comprehensive (loss) income:
Foreign currency translation	(5,542)	2,336	(4,383)	(5,994)
Comprehensive income (loss)	(101)	11,280	20,233	17,412
Reportable Legal Entities | Combined Non- Guarantor Subsidiaries
Condensed Consolidating Statement of Comprehensive (Loss) Income
Net sales	19,924	19,164	61,123	57,342
Cost of products sold	15,708	15,745	45,070	40,796
Gross profit	4,216	3,419	16,053	16,546
Operating expenses:
Selling and administrative expenses	3,185	2,406	9,094	7,520
Advertising costs	1,901	1,371	5,324	5,177
Research and development costs		1		11
Amortization of acquired intangible assets	1,587	1,630	4,741	4,890
Total operating expenses	6,673	5,408	19,159	17,598
Operating (loss) profit	(2,457)	(1,989)	(3,106)	(1,052)
Non-operating expenses (income)
Interest expense	4	5	9	8
Other expense (income), net	108	(72)	221	321
(Loss) earnings before (benefit) provision for income taxes	(2,569)	(1,922)	(3,336)	(1,381)
(Benefit) provision for income taxes	177	501	612	507
Net (loss) earnings	(2,746)	(2,423)	(3,948)	(1,888)
Other comprehensive (loss) income:
Foreign currency translation	(5,542)	2,336	(4,383)	(5,994)
Comprehensive income (loss)	(8,288)	(87)	(8,331)	(7,882)
Eliminations
Condensed Consolidating Statement of Comprehensive (Loss) Income
Net sales	(7,588)	(5,796)	(22,176)	(17,288)
Cost of products sold	(7,588)	(5,796)	(22,176)	(17,288)
Non-operating expenses (income)
Equity earnings of subsidiaries, net of taxes	(2,695)	(6,521)	(20,668)	(21,518)
Net (loss) earnings	(2,695)	(6,521)	(20,668)	(21,518)
Other comprehensive (loss) income:
Foreign currency translation	11,084	(4,672)	8,766	11,988
Comprehensive income (loss)	$ 8,389	$ (11,193)	$ (11,902)	$ (9,530)

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Investment in Affiliate (Details) (IDQ Acquisition Corp (IDQ), USD $) In Millions, unless otherwise specified	0 Months Ended
	Mar. 17, 2014
IDQ Acquisition Corp (IDQ)
Investment in Affiliate
Amount paid to acquire non-controlling equity interest	$ 10.0
Transaction Fees and Closing Costs	1.2
Amount paid to board member included in transaction fees and closing costs	$ 0.3

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Stock Option Modification (Details) (Employee Stock Option, USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		2,385,000
Granted (in dollars per share)		$ 1.00
Share based compensation charges to be written off over the vesting period	$ 1.0		$ 0.8
Time Based Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Percentage		0.50%
Vesting period		5 years
Performance Based Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting Percentage		50.00%
Share base compensation charges		$ 1.0

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Fair Value Measurement of Assets and Liabilities

9 Months Ended

Sep. 30, 2014

Fair Value Measurement of Assets and Liabilities

Fair Value Measurement of Assets and Liabilities

Note 3 - Fair Value Measurement of Assets and Liabilities

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value which is intended to increase consistency and comparability and related disclosures. An asset or liability’s classification is based on the lowest level of input that is significant to the fair value measurement and is disclosed in one of the following three categories:

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3—Unobservable inputs reflecting the reporting entity’s own assumptions.

The Company’s financial instruments consist of cash, trade accounts receivable, trade accounts payable and long-term debt.  Due to their short-term maturity, the carrying amounts of cash, trade accounts receivable and trade accounts payable approximate their fair market values.  The carrying and fair values of the Company’s long-term debt were as follows (in thousands):

	September 30, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
Term loan	$	275,946	$	279,051	$	285,982	$	291,000
Senior notes	268,533		280,500		267,600		267,438

The fair value of the Term Loan and the Senior Notes was determined using broker quotes, which use discounted cash flows, an income approach, and the then applicable forward LIBOR rates and, therefore, meets the definition of Level 2 fair value, as defined above.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash	$ 13,431	$ 21,253
Accounts receivable, net	73,977	60,324
Inventories	45,883	34,043
Other current assets	10,565	11,676
Total current assets	143,856	127,296
Property, plant and equipment, net	25,351	28,936
Goodwill	358,647	358,826
Intangible assets, net	284,380	313,470
Investment in affiliate	10,000
Deferred financing costs and other assets, net	2,363	3,719
Total assets	824,597	832,247
Current liabilities:
Accounts payable	19,365	6,989
Accrued expenses and other current liabilities	35,554	24,594
Payable to parent	251
Current portion of long-term debt, less discount	1,318	71
Total current liabilities	56,510	32,490
Long-term debt, less discount and current portion	543,161	553,511
Other liability	2,500	2,500
Deferred income taxes	80,446	89,610
Total liabilities	682,617	678,111
Commitments and contingencies (Note 4)
Shareholder's Equity:
Common stock ($0.01 par value, one thousand shares authorized, one thousand shares issued and outstanding at September 30, 2014 and December 31, 2013)
Additional paid-in capital	260,200	261,040
Accumulated deficit	(105,888)	(98,955)
Accumulated other comprehensive (loss)	(12,332)	(7,949)
Total shareholder's equity	141,980	154,136
Total liabilities and shareholder's equity	824,597	832,247
Armored Auto Group
Current liabilities:
Payable to parent	251	745
Clorox
Current liabilities:
Payable to parent	$ 22	$ 91

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The Company and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

The Company and Summary of Significant Accounting Policies

The Company and Summary of Significant Accounting Policies

Note 1 — The Company and Summary of Significant Accounting Policies

The Company

Armored AutoGroup Inc. is a consumer products company consisting primarily of Armor All® and STP®, two of the most recognizable brands in the automotive aftermarket appearance products and performance chemicals categories, respectively. Armored AutoGroup Inc. delivers its products to distributors, resellers and end customers (collectively, “the customers”) through its direct operations in the United States, Canada, Mexico, Australia, China and the United Kingdom and distributor relationships in approximately 50 countries. The Armor All and STP brands offer multiple automotive appearance and performance chemical products that can be found in most of the major developed countries around the world.

In September 2010, Viking Acquisition Inc., an entity owned by affiliates of Avista Capital Holdings, L.P. (“Avista”), entered into an agreement to acquire the AutoCare Products Business, Armor All, STP and certain other brands from The Clorox Company (“Clorox”) pursuant to the terms of a Purchase and Sale Agreement dated September 21, 2010 (the “Acquisition”).  The Acquisition closed on November 5, 2010 and included employees in the United States and other countries dedicated to the Company, related product patent and developed technology and certain other assets, including the manufacturing facilities located in Painesville, Ohio and Wales, United Kingdom.  Viking Acquisition Inc. was subsequently renamed Armored AutoGroup Inc. (“AAG”).  Armored AutoGroup Parent Inc. (“AAG Parent” or “Parent”) indirectly owns all of AAG’s issued and outstanding capital stock through its direct subsidiary and AAG’s direct parent, Armored AutoGroup Intermediate Inc. (“Intermediate”).

Basis of Presentation

The interim condensed consolidated financial statements for the three and nine month periods ended September 30, 2014 and 2013 are unaudited but, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of the Company for the periods presented. The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ materially from the estimates and assumptions made. During the quarter ended September 30, 2014, management revised its estimated compensation expense resulting in a reduction of $1.0 million in selling and administrative expense for the quarter. Further, the results for the interim periods ended September 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2014, or for any future period.

The Company’s business is moderately seasonal and can be impacted by weather. Sales are typically higher in the first half of the calendar year as the Company’s customers in the northern hemisphere purchase inventory for the spring and summer seasons when weather is warmer than in the fall and winter months.  This pattern is largely reflective of our customers’ seasonal purchasing patterns, as well as the timing of our promotional activities. Weather can also influence consumer behavior, especially for appearance products. Our appearance products sell best during warm, dry weather, and less if weather is cold and wet.  For these reasons, among others, the Company’s results for any quarter are not necessarily indicative of future quarterly results and, accordingly, period-to-period comparisons should not be relied upon as an indication of future performance.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2013, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies. The consolidated balance sheet at December 31, 2013 has been derived from the Company’s audited financial statements at that date, but does not include all of the financial information or disclosures required by U.S. GAAP for complete financial statements.

Revenue Recognition

Sales are recognized when title to the product, ownership and risk of loss transfer to the customer, which can be on the date of shipment or the date of receipt by the customer and when all of the following have occurred: a firm sales arrangement exists, pricing is fixed and determinable, and collection is reasonably assured. Revenue includes shipping and handling costs, when these costs are included in the list price to the customer. Taxes collected from customers and remitted to governmental authorities are not included in sales. A provision for payment discounts and product return allowances is recorded as a reduction of sales in the same period that the revenue is recognized.

The Company routinely commits to trade promotion programs with customers, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons offered through various programs to customers and consumers. Accruals for expected payouts under these programs are included as accrued marketing and promotion in the accrued expenses and other current liabilities line item in the Condensed Consolidated Balance Sheets and are recorded as a reduction of sales in the Condensed Statements of Comprehensive Income (Loss).

Amounts received by the Company from the licensing of certain trademarks are recognized as revenue on a straight-line basis over the term of the licensing agreement when the underlying royalties are earned.

Cost of Products Sold

Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacturing of product, as well as manufacturing labor, depreciation expense, direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product, contract manufacturing costs, and provisions for inventory losses (including losses relating to excess and obsolete inventory). Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, internal transfer costs, warehousing costs and other shipping and handling activity as well as costs associated with developing and designing new packaging.

Income Taxes

The Company uses the asset and liability method to account for income taxes. For purposes of the unaudited interim condensed consolidated financial statements, the Company calculates tax with reference to the anticipated effective tax rate for the annual financial period. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to the differences between the financial statement amounts and their respective tax bases. Management reviews the Company’s deferred tax assets to determine whether their value can be realized based upon available evidence. A valuation allowance is established when management believes that it is more likely than not that some portion or all of its deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the Company’s tax provision in the period of change. In addition to valuation allowances, the Company provides for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards prescribed by accounting guidance on the accounting for uncertainty in income taxes. Amounts for uncertain tax positions are adjusted when new information becomes available or when positions are effectively settled.

None of the Company’s goodwill is expected to be deductible for tax purposes.

The Company files consolidated federal and certain state income tax returns with its Parent.  Income taxes have been prepared on a separate return basis.  The Company pays its tax liability on behalf of its Parent.

Foreign Currency Translation

Local currencies are the functional currencies for substantially all of the Company’s foreign operations. When the transactional currency is different than the functional currency, transaction gains and losses are included as a component of other expense (income), net.  Assets and liabilities of foreign operations are translated into U.S. dollars using the exchange rates in effect at the respective balance sheet reporting date. Income and expenses are translated at the average exchange rate during the period. Gains and losses on foreign currency translation are reported as a component of accumulated other comprehensive (loss). Deferred taxes are not provided on cumulative translation adjustments where the Company expects earnings of a foreign subsidiary to be indefinitely reinvested.

Goodwill and Intangible Assets

The Company tests its goodwill and trademark and brand intangible assets with indefinite lives annually as of October 1st unless there are indications during an interim period that these assets may have become impaired.  Goodwill impairment occurs when the carrying amount of one of the Company’s reporting unit’s goodwill exceeds its implied fair value. The Company would then record an impairment charge being the difference between the carrying amount and the implied fair value of the reporting unit’s goodwill. For trademarks and brand intangible assets with indefinite lives, impairment occurs when the carrying amount of an asset is greater than its estimated fair value and an impairment charge is recorded for the difference between the carrying amount and the fair value. The Company’s estimates of fair value are based primarily on a discounted cash flow approach as supplemented by a market based approach. Significant judgment is necessary in the preparation of assumptions and estimates inherent in such valuation approaches, particularly with respect to the determination of future volumes, revenue and expense growth rates, changes in working capital use, foreign-exchange rates, inflation, the selection of an appropriate discount rate and the calculation of an average earnings before interest, tax, depreciation and amortization (“EBITDA”) multiple of a selected public-company peer group. In particular, the discount rates the Company utilizes in these analyses, as well as expectations for future cash flows, may be influenced by such factors as changes in interest rates, rates of inflation and changes in regional risk.  During the nine months ended September 30, 2014, goodwill decreased by $0.2 million due to currency translation of $2.1 million and partially offset by the preliminary purchase accounting related to a small acquisition in our international region of $1.9 million.

Property, Plant & Equipment and Finite-Lived Intangible Assets

Property, plant and equipment and finite-lived intangible assets are stated at cost less accumulated depreciation and amortization. The Company calculates depreciation and amortization expense by the straight-line method using estimated useful lives of the related assets. The Company reviews property, plant and equipment and finite-lived intangible assets for impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset or asset group may not be recoverable. The Company’s impairment review is based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist and impairment occurs when the book value of the asset group exceeds the estimated future undiscounted cash flows generated by the asset group. When impairment is indicated, a charge is recorded for the difference between the book value of the asset group and its fair value. Depending on the asset or asset group, estimated fair value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in a similar condition.

Reclassification

Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss or comprehensive (loss) income.

Recent Accounting Pronouncements

In August 2014 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15—Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  The ASU requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued and, if so, to disclose that fact.  The ASU requires management to make this evaluation for both the annual and interim reporting periods, if applicable.  Management is also required to evaluate and disclose whether its plans alleviate that doubt.  The ASU is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016.  The Company is assessing the impact of the adoption of the ASU on its disclosure requirements.

In June 2014 the FASB issued ASU No. 2014-12—Compensation-Stock Compensation.  The ASU is intended to resolve diverse accounting treatment for accounting for share-based payments when the terms of an award provide that the performance target could be achieved after the requisite service period.  The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.  The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.  Earlier adoption is permitted.  The Company is assessing the impact on the adoption of the ASU on its financial statements.

In May 2014 the FASB issued ASU No. 2014-09—Revenue from Contracts with Customers.  The ASU clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”) that removes inconsistencies and weaknesses in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, provides more useful information to users of the financial statements through improved disclosure requirements and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.  The amendments in this update are effective for the annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  Full or modified retrospective adoption is required and early application is not permitted.  The Company is assessing the impact of the adoption of the ASU on its financial statements, disclosure requirements and methods of adoption.

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Inventories
Finished goods	$ 38,764	$ 28,400
Raw materials and packaging	9,476	7,896
Allowances for obsolescence	(2,357)	(2,253)
Inventory, net	$ 45,883	$ 34,043

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Commitments and Contingencies (Details) (Potential Contract Claim, Clorox, USD $)	Sep. 30, 2014	Dec. 31, 2013
Potential Contract Claim | Clorox
Litigation and Other Legal Matters
Percentage of first $5,000,000 in settlement costs agreed to be indemnified and reimbursed	50.00%
Settlement costs as basis for determining settlement costs related to the contract claim to be indemnified and reimbursed	$ 5,000,000
Accrued long-term liabilities related to loss contingency	$ 2,500,000	$ 2,500,000

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Inventories

9 Months Ended

Sep. 30, 2014

Inventories

Inventories

Note 2 — Inventories

Inventories consisted of the following (in thousands):

	September 30, 2014			December 31, 2013
Finished goods	$	38,764		$	28,400
Raw materials and packaging	9,476			7,896
Allowances for obsolescence	(2,357		)	(2,253		)
	$	45,883		$	34,043

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	1,000	1,000
Common stock, shares issued	1,000	1,000
Common stock, shares outstanding	1,000	1,000

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Fair Value Measurement of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Measurement of Assets and Liabilities

Schedule of carrying and fair values of the Company's long-term debt

The carrying and fair values of the Company’s long-term debt were as follows (in thousands):

	September 30, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
Term loan	$	275,946	$	279,051	$	285,982	$	291,000
Senior notes	268,533		280,500		267,600		267,438

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 01, 2014
Document and Entity Information
Entity Registrant Name	Armored AutoGroup Inc.
Entity Central Index Key	0001537660
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		1,000
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2014

Income Taxes

Schedule of Company's effective tax benefit rate

	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Effective tax benefit rate	38.2	%	61.3	%	31.4	%	47.2	%

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net sales	$ 70,459	$ 71,007	$ 232,914	$ 225,495
Cost of products sold	38,756	38,483	125,020	121,307
Gross profit	31,703	32,524	107,894	104,188
Operating expenses:
Selling and administrative expenses	9,492	9,854	32,075	29,202
Advertising costs	7,028	6,767	21,128	24,487
Research and development costs	653	626	1,887	1,839
Amortization of acquired intangible assets	9,133	9,175	27,377	27,526
Total operating expenses	26,306	26,422	82,467	83,054
Operating profit (loss)	5,397	6,102	25,427	21,134
Non-operating expenses
Interest expense	11,892	12,049	35,722	35,976
Other expense (income), net	174	(68)	(181)	447
(Loss) earnings before (benefit) provision for income taxes	(6,669)	(5,879)	(10,114)	(15,289)
Benefit for income taxes	(2,548)	(3,604)	(3,179)	(7,222)
Net (loss) earnings	(4,121)	(2,275)	(6,935)	(8,067)
Other comprehensive (loss) income:
Foreign currency translation gain (loss)	(5,542)	2,336	(4,383)	(5,994)
Comprehensive income (loss)	$ (9,663)	$ 61	$ (11,318)	$ (14,061)

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Financial Information for the Company and Its Subsidiaries

9 Months Ended

Sep. 30, 2014

Financial Information for the Company and Its Subsidiaries

Financial Information for the Company and Its Subsidiaries

Note 7 — Financial Information for the Company and Its Subsidiaries

The Company’s payment obligations under the Senior Notes are guaranteed, jointly and severally, by all of the Company’s wholly owned domestic subsidiaries that guarantee the obligations of the Company under the Credit Facility. These guarantees are full and unconditional, subject, in the case of the subsidiary guarantors, to customary release provisions. The Company conducts substantially all of its business through its subsidiaries. In servicing payments to be made on the Senior Notes and other indebtedness, and to satisfy other liquidity requirements, the Company will rely, in large part, on cash flows from these subsidiaries, mainly in the form of dividends, royalties and advances or payments on account of intercompany loan arrangements. The ability of these subsidiaries to make dividend payments to the Company will be affected by, among other factors, the obligations of these entities to their creditors, requirements of corporate and other law, and restrictions contained in agreements entered into by or relating to these entities.

The following supplemental consolidating financial information sets forth, on a combining basis, balance sheets, statements of comprehensive (loss) income and statements of cash flows for the Company, the guarantor subsidiaries, the non-guarantor subsidiaries and elimination entries necessary to consolidate the Company and its subsidiaries. This information is presented in lieu of separate financial statements and other related disclosures pursuant to Regulation S-X Rule 3-10 of the Securities Exchange Act of 1934, as amended, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.”

The operating and investing activities of the separate legal entities are fully interdependent and integrated. Accordingly, the results of the separate legal entities are not representative of what the operating results would be on a standalone basis.

Condensed Consolidating Balance Sheet

September 30, 2014

	Issuer		Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash	$	7,302	$	—		$	6,129		$	—		$	13,431
Accounts receivable, net	—		57,541			16,436			—			73,977
Inventories	—		33,175			12,708			—			45,883
Other current assets	81,798		(74,559		)	3,326			—			10,565
Total current assets	89,100		16,157			38,599			—			143,856
Property, plant and equipment, net	7,264		15,675			2,412			—			25,351
Goodwill	—		310,576			48,071			—			358,647
Intangible assets, net	—		253,820			32,211			(1,651		)	284,380
Investment in subsidiaries	595,664		109,047			—			(704,711		)	—
Investment in affiliate	10,000		—			—			—			10,000
Deferred financing costs and other assets, net	2,276		87			—			—			2,363
Total assets	$	704,304	$	705,362		$	121,293		$	(706,362	)	$	824,597
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	933	$	14,418		$	4,014		$	—		$	19,365
Accrued expenses and other current liabilities	17,389		9,976			8,189			—			35,554
Payable to parent	251		—			—			—			251
Due to Clorox	—		23			(1		)	—			22
Current portion of long-term debt, less discount	1,318		—			—			—			1,318
Total current liabilities	19,891		24,417			12,202			—			56,510
Long-term debt, less discount and current portion	543,161		—			—			—			543,161
Other liability	2,500		—			—			—			2,500
Deferred income taxes	5,121		75,281			44			—			80,446
Total liabilities	570,673		99,698			12,246			—			682,617
Shareholder’s equity	133,631		605,664			109,047			(706,362		)	141,980
Total liabilities and shareholder’s equity	$	704,304	$	705,362		$	121,293		$	(706,362	)	$	824,597

Condensed Consolidating Balance Sheet

Year Ended December 31, 2013

	Issuer		Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
Current assets:
Cash	$	14,843	$	—		$	6,410		$	—		$	21,253
Accounts receivable	—		43,784			16,540			—			60,324
Inventory	—		24,553			9,490			—			34,043
Other current assets	53,931		(43,971		)	1,716			—			11,676
Total current assets	68,774		24,366			34,156			—			127,296
Property, plant and equipment	8,061		18,037			2,838			—			28,936
Goodwill	—		310,576			48,250			—			358,826
Intangible assets	—		276,461			38,198			(1,189		)	313,470
Investment in subsidiaries	647,107		115,394			—			(762,501		)	—
Other assets	3,632		87			—			—			3,719
Total assets	$	727,574	$	744,921		$	123,442		$	(763,690	)	$	832,247
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	169	$	4,413		$	2,407		$	—		$	6,989
Accrued expenses and other current liabilities	10,063		8,953			5,578			—			24,594
Due to Clorox	69		23			(1		)	—			91
Due to Parent	745		—			—			—			745
Notes payable, current portion	71		—			—			—			71
Total current liabilities	11,117		13,389			7,984						32,490
Notes payable, less current portion and discount	553,511		—			—			—			553,511
Other liabilities	2,500		—			—			—			2,500
Deferred income taxes	5,121		84,425			64			—			89,610
Total liabilities	572,249		97,814			8,048			—			678,111
Shareholder’s equity	155,325		647,107			115,394			(763,690		)	154,136
Total liabilities and shareholder’s equity	$	727,574	$	744,921		$	123,442		$	(763,690	)	$	832,247

Condensed Consolidating Statement of Comprehensive (Loss) Income

Three Months Ended September 30, 2014

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	58,123		$	19,924		$	(7,588	)	$	70,459
Cost of products sold	—			30,636			15,708			(7,588		)	38,756
Gross profit	—			27,487			4,216			—			31,703
Operating expenses:
Selling and administrative expenses	3,624			2,683			3,185			—			9,492
Advertising costs	—			5,127			1,901			—			7,028
Research and development costs	—			653			—			—			653
Amortization of acquired intangible assets	—			7,546			1,587			—			9,133
Total operating expenses	3,624			16,009			6,673			—			26,306
Operating (loss) profit	(3,624		)	11,478			(2,457		)	—			5,397
Non-operating expenses:
Interest expense	11,888			—			4			—			11,892
Other expense, net	66			—			108			—			174
(Loss) earnings before (benefit) provision for income taxes	(15,578		)	11,478			(2,569		)	—			(6,669		)
(Benefit) provision for income taxes	(6,016		)	3,291			177			—			(2,548		)
Equity earnings of subsidiaries, net of taxes	5,441			(2,746		)	—			(2,695		)	—
Net (loss) earnings	$	(4,121	)	$	5,441		$	(2,746	)	$	(2,695	)	$	(4,121	)
Other comprehensive loss:
Foreign currency translation	(5,542		)	(5,542		)	(5,542		)	11,084			(5,542		)
Comprehensive (loss) income	$	(9,663	)	$	(101	)	$	(8,288	)	$	8,389		$	(9,663	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

Three months ended September 30, 2013

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	57,639		$	19,164		$	(5,796	)	$	71,007
Cost of products sold	—			28,534			15,745			(5,796		)	38,483
Gross profit	—			29,105			3,419			—			32,524
Operating expenses:
Selling and administrative expenses	4,532			2,916			2,406			—			9,854
Advertising costs	—			5,396			1,371			—			6,767
Research and development costs	—			625			1			—			626
Amortization of acquired intangible assets	—			7,545			1,630			—			9,175
Total operating expenses	4,532			16,482			5,408			—			26,422
Operating (loss) profit	(4,532		)	12,623			(1,989		)	—			6,102
Non-operating expenses:
Interest expense	12,044			—			5			—			12,049
Other expense, net	3			1			(72		)	—			(68		)
(Loss) earnings before (benefit) provision for income taxes	(16,579		)	12,622			(1,922		)	—			(5,879		)
(Benefit) provision for income taxes	(5,360		)	1,255			501			—			(3,604		)
Equity earnings (loss) of subsidiaries, net of taxes	8,944			(2,423		)	—			(6,521		)	—
Net (loss) earnings	$	(2,275	)	$	8,944		$	(2,423	)	$	(6,521	)	$	(2,275	)
Other comprehensive loss:
Foreign currency translation	2,336			2,336			2,336			(4,672		)	2,336
Comprehensive income (loss)	$	61		$	11,280		$	(87	)	$	(11,193	)	$	61

Condensed Consolidating Statement of Comprehensive (Loss) Income

Nine months ended September 30, 2014

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	193,967		$	61,123		$	(22,176	)	$	232,914
Cost of products sold	—			102,126			45,070			(22,176		)	125,020
Gross profit	—			91,841			16,053			—			107,894
Operating expenses:
Selling and administrative expenses	14,840			8,141			9,094			—			32,075
Advertising costs	—			15,804			5,324			—			21,128
Research and development costs	—			1,887			—			—			1,887
Amortization of acquired intangible assets	—			22,636			4,741			—			27,377
Total operating expenses	14,840			48,468			19,159			—			82,467
Operating (loss) profit	(14,840		)	43,373			(3,106		)	—			25,427
Non-operating expenses (income):
Interest expense	35,713			—			9			—			35,722
Other expense, net	(402		)	—			221			—			(181		)
(Loss) earnings before (benefit) provision for income taxes	(50,151		)	43,373			(3,336		)	—			(10,114		)
(Benefit) provision for income taxes	(18,600		)	14,809			612			—			(3,179		)
Equity earnings of subsidiaries, net of taxes	24,616			(3,948		)	—			(20,668		)	—
Net (loss) earnings	$	(6,935	)	$	24,616		$	(3,948	)	$	(20,668	)	$	(6,935	)
Other comprehensive (loss) income:
Foreign currency translation	(4,383		)	(4,383		)	(4,383		)	8,766			(4,383		)
Comprehensive (loss) income	$	(11,318	)	$	20,233		$	(8,331	)	$	(11,902	)	$	(11,318	)

Condensed Consolidating Statement of Comprehensive (Loss) Income

Nine months ended September 30, 2013

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	185,441		$	57,342		$	(17,288	)	$	225,495
Cost of products sold	—			97,799			40,796			(17,288		)	121,307
Gross profit	—			87,642			16,546			—			104,188
Operating expenses:
Selling and administrative expenses	13,020			8,662			7,520			—			29,202
Advertising costs	—			19,310			5,177			—			24,487
Research and development costs	—			1,828			11			—			1,839
Amortization of acquired intangible assets	—			22,636			4,890			—			27,526
Total operating expenses	13,020			52,436			17,598			—			83,054
Operating (loss) profit	(13,020		)	35,206			(1,052		)	—			21,134
Non-operating expenses (income):
Interest expense	35,968			—			8			—			35,976
Other expense, net	119			7			321			—			447
(Loss) earnings before (benefit) provision for income taxes	(49,107		)	35,199			(1,381		)	—			(15,289		)
(Benefit) provision for income taxes	(17,634		)	9,905			507			—			(7,222		)
Equity earnings (loss) of subsidiaries, net of taxes	23,406			(1,888		)	—			(21,518		)	—
Net (loss) earnings	$	(8,067	)	$	23,406		$	(1,888	)	$	(21,518	)	$	(8,067	)
Other comprehensive (loss) income:
Foreign currency translation	(5,994		)	(5,994		)	(5,994		)	11,988			(5,994		)
Comprehensive (loss) income	$	(14,061	)	$	17,412		$	(7,882	)	$	(9,530	)	$	(14,061	)

Condensed Consolidating Statement of Cash Flows

Nine months ended September 30, 2014

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss) earnings	$	(6,935	)	$	24,616		$	(3,948	)	$	(20,668	)	$	(6,935	)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	4,632			25,750			5,414			—			35,796
Share-based compensation	(840		)	—			—			—			(840		)
Deferred income taxes	—			(9,134		)	(20		)	—			(9,154		)
Equity earnings of subsidiaries, net of taxes	(19,173		)	1,204			—			17,969			—
Other	—			—			2			—			2
Cash effect of changes in:
Accounts receivable, net	—			(13,757		)	569			—			(13,188		)
Inventories	—			(8,622		)	(2,701		)	—			(11,323		)
Other current assets	510			865			(1,505		)	—			(130		)
Prepaid taxes	(28,389		)	29,657			—			—			1,268
Accounts payable and accrued liabilities	8,093			11,025			3,057			—			22,175
Due Clorox	(69		)	—			—			—			(69		)
Intercompany and other	56,873			(60,853		)	1,110			2,699			(171		)
Net cash provided by operating activities	14,702			751			1,978			—			17,431
Cash flows from investing activities:
Capital expenditures	(499		)	(751		)	(269		)	—			(1,519		)
Acquisition, net	—			—			(1,797		)	—			(1,797		)
Investment in affiliate	(10,000		)	—			—			—			(10,000		)
Net cash used in investing activities	(10,499		)	(751		)	(2,066		)	—			(13,316		)
Cash flows from financing activities:
Borrowings under revolver	11,000			—			—			—			11,000
Payments on revolver	(11,000		)	—			—			—			(11,000		)
Principal payments on term loan	(11,250		)	—			—			—			(11,250		)
Payment of advance from Parent	(494		)	—			—			—			(494		)
Net cash used in financing activities	(11,744		)	—			—			—			(11,744		)
Effect of exchange rate changes on cash	—			—			(193		)	—			(193		)
Net decrease in cash	(7,541		)	—			(281		)	—			(7,822		)
Cash at beginning of period	14,843			—			6,410			—			21,253
Cash at end of period	$	7,302		$	—		$	6,129		$	—		$	13,431

Condensed Consolidating Statement of Cash Flows

Nine months ended September 30, 2013

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss) earnings	$	(8,067	)	$	23,406		$	(1,888	)	$	(21,518	)	$	(8,067	)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	4,556			25,553			5,604			—			35,713
Share-based compensation	216			—			—			—			216
Deferred income taxes	—			(13,225		)	229			—			(12,996		)
Equity earnings of subsidiaries, net of taxes	(23,406		)	1,888			—			21,518			—
Cash effect of changes in:
Accounts receivable, net	105			(1,390		)	3,063			—			1,778
Inventories	—			6,157			130			—			6,287
Prepaid taxes	3,329			—			—			—			3,329
Other current assets	(6,134		)	6,798			(2,566		)	—			(1,902		)
Accounts payable and accrued liabilities	3,168			3,442			(1,531		)	—			5,079
Due Clorox	—			—			(134		)	—			(134		)
Intercompany and other	45,277			(50,960		)	4,912			—			(771		)
Net cash provided by operating activities:	19,044			1,669			7,819			—			28,532
Cash flows from investing activities:
Capital expenditures	(1,000		)	(1,669		)	(225		)	—			(2,894		)
Acquisition, net	—			—			(3,755		)	—			(3,755		)
Net cash used in investing activities	(1,000		)	(1,669		)	(3,980		)	—			(6,649		)
Cash flows from financing activities:
Borrowings under revolver	23,000			—			—			—			23,000
Payments on revolver	(23,000		)	—			—			—			(23,000		)
Principal payments on term loan	(2,250		)	—			—			—			(2,250		)
Payment of advance from Parent	(50		)	—			—			—			(50		)
Net cash used in by financing activities	(2,300		)	—			—			—			(2,300		)
Effect of exchange rate changes on cash	—			—			(57		)	—			(57		)
Net increase in cash	15,744			—			3,782			—			19,526
Cash at beginning of period	1,477			—			2,729			—			4,206
Cash at end of period	$	17,221		$	—		$	6,511		$	—		$	23,732

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Segment Data

9 Months Ended

Sep. 30, 2014

Segment Data

Segment Data

Note 6 — Segment Data

The Company manages its business through two geographic segments: North America and International.

· North America—consists of auto-care products marketed and sold in the United States and Canada. Products within this segment include auto-care products primarily under the Armor All and STP brands.

· International—consists of products sold outside North America, including Australia, Europe and other international locations. Products within this segment include auto-care products primarily under the Armor All and STP brands.

The Company does not allocate its amortization of intangible assets or interest expense between its North America and International segments but includes them in the tables below under Corporate in order to reconcile the North America and International segments’ performance to the Company’s Statements of Comprehensive (Loss) Income. All intersegment sales are eliminated and are not included in the Company’s reportable segments’ net sales.

The following summarizes the financial performance of the Company’s operating segments (in thousands):

	Three months ended September 30, 2014
	North America		International		Corporate			Consolidated
Net sales	$	50,503	$	19,956	$	—		$	70,459
Earnings (loss) before income taxes	14,092		262		(21,023		)	(6,669		)
Capital expenditures	669		138		—			807
Depreciation of property, plant and equipment and amortization of intangible assets	1,558		122		9,133			10,813

	Three months ended September 30, 2013
	North America		International		Corporate			Consolidated
Net sales	$	50,886	$	20,121	$	—		$	71,007
Earnings (loss) before income taxes	11,421		3,924		(21,224		)	(5,879		)
Capital expenditures	1,049		95		—			1,144
Depreciation of property plant and equipment and amortization of intangible assets	1,556		127		9,175			10,858

	Nine months ended September 30, 2014
	North America		International		Corporate			Consolidated
Net sales	$	175,172	$	57,742	$	—		$	232,914
Earnings (loss) before income taxes	49,330		3,653		(63,097		)	(10,114		)
Capital expenditures	1,250		269		—			1,519
Depreciation of property, plant and equipment and amortization of intangible assets	4,720		365		27,377			32,462

	Nine months ended September 30, 2013
	North America		International		Corporate			Consolidated
Net sales	$	169,505	$	55,990	$	—		$	225,495
Earnings (loss) before income taxes	41,724		6,489		(63,502		)	(15,289		)
Capital expenditures	2,652		242		—			2,894
Depreciation of property plant and equipment and amortization of intangible assets	4,577		404		27,525			32,506

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Fair Value Measurement of Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Carrying Value
Fair Value Measurement of Assets and Liabilities
Term loan	$ 275,946	$ 285,982
Senior notes	268,533	267,600
Fair Value
Fair Value Measurement of Assets and Liabilities
Term loan	279,051	291,000
Senior notes	$ 280,500	$ 267,438

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Segment Data (Tables)

9 Months Ended

Sep. 30, 2014

Segment Data

Summary of the financial performance of the Company's operating segments

The following summarizes the financial performance of the Company’s operating segments (in thousands):

	Three months ended September 30, 2014
	North America		International		Corporate			Consolidated
Net sales	$	50,503	$	19,956	$	—		$	70,459
Earnings (loss) before income taxes	14,092		262		(21,023		)	(6,669		)
Capital expenditures	669		138		—			807
Depreciation of property, plant and equipment and amortization of intangible assets	1,558		122		9,133			10,813

	Three months ended September 30, 2013
	North America		International		Corporate			Consolidated
Net sales	$	50,886	$	20,121	$	—		$	71,007
Earnings (loss) before income taxes	11,421		3,924		(21,224		)	(5,879		)
Capital expenditures	1,049		95		—			1,144
Depreciation of property plant and equipment and amortization of intangible assets	1,556		127		9,175			10,858

	Nine months ended September 30, 2014
	North America		International		Corporate			Consolidated
Net sales	$	175,172	$	57,742	$	—		$	232,914
Earnings (loss) before income taxes	49,330		3,653		(63,097		)	(10,114		)
Capital expenditures	1,250		269		—			1,519
Depreciation of property, plant and equipment and amortization of intangible assets	4,720		365		27,377			32,462

	Nine months ended September 30, 2013
	North America		International		Corporate			Consolidated
Net sales	$	169,505	$	55,990	$	—		$	225,495
Earnings (loss) before income taxes	41,724		6,489		(63,502		)	(15,289		)
Capital expenditures	2,652		242		—			2,894
Depreciation of property plant and equipment and amortization of intangible assets	4,577		404		27,525			32,506

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The Company and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

The Company and Summary of Significant Accounting Policies

Basis of Presentation

Basis of Presentation

The interim condensed consolidated financial statements for the three and nine month periods ended September 30, 2014 and 2013 are unaudited but, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated results of operations, financial position and cash flows of the Company for the periods presented. The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ materially from the estimates and assumptions made. During the quarter ended September 30, 2014, management revised its estimated compensation expense resulting in a reduction of $1.0 million in selling and administrative expense for the quarter. Further, the results for the interim periods ended September 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2014, or for any future period.

The Company’s business is moderately seasonal and can be impacted by weather. Sales are typically higher in the first half of the calendar year as the Company’s customers in the northern hemisphere purchase inventory for the spring and summer seasons when weather is warmer than in the fall and winter months.  This pattern is largely reflective of our customers’ seasonal purchasing patterns, as well as the timing of our promotional activities. Weather can also influence consumer behavior, especially for appearance products. Our appearance products sell best during warm, dry weather, and less if weather is cold and wet.  For these reasons, among others, the Company’s results for any quarter are not necessarily indicative of future quarterly results and, accordingly, period-to-period comparisons should not be relied upon as an indication of future performance.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information in this report should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2013, which includes a complete set of footnote disclosures, including the Company’s significant accounting policies. The consolidated balance sheet at December 31, 2013 has been derived from the Company’s audited financial statements at that date, but does not include all of the financial information or disclosures required by U.S. GAAP for complete financial statements.

Revenue Recognition

Revenue Recognition

Sales are recognized when title to the product, ownership and risk of loss transfer to the customer, which can be on the date of shipment or the date of receipt by the customer and when all of the following have occurred: a firm sales arrangement exists, pricing is fixed and determinable, and collection is reasonably assured. Revenue includes shipping and handling costs, when these costs are included in the list price to the customer. Taxes collected from customers and remitted to governmental authorities are not included in sales. A provision for payment discounts and product return allowances is recorded as a reduction of sales in the same period that the revenue is recognized.

The Company routinely commits to trade promotion programs with customers, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons offered through various programs to customers and consumers. Accruals for expected payouts under these programs are included as accrued marketing and promotion in the accrued expenses and other current liabilities line item in the Condensed Consolidated Balance Sheets and are recorded as a reduction of sales in the Condensed Statements of Comprehensive Income (Loss).

Amounts received by the Company from the licensing of certain trademarks are recognized as revenue on a straight-line basis over the term of the licensing agreement when the underlying royalties are earned.

Cost of Products Sold

Cost of Products Sold

Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacturing of product, as well as manufacturing labor, depreciation expense, direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product, contract manufacturing costs, and provisions for inventory losses (including losses relating to excess and obsolete inventory). Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, internal transfer costs, warehousing costs and other shipping and handling activity as well as costs associated with developing and designing new packaging.

Income Taxes

Income Taxes

The Company uses the asset and liability method to account for income taxes. For purposes of the unaudited interim condensed consolidated financial statements, the Company calculates tax with reference to the anticipated effective tax rate for the annual financial period. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to the differences between the financial statement amounts and their respective tax bases. Management reviews the Company’s deferred tax assets to determine whether their value can be realized based upon available evidence. A valuation allowance is established when management believes that it is more likely than not that some portion or all of its deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the Company’s tax provision in the period of change. In addition to valuation allowances, the Company provides for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards prescribed by accounting guidance on the accounting for uncertainty in income taxes. Amounts for uncertain tax positions are adjusted when new information becomes available or when positions are effectively settled.

None of the Company’s goodwill is expected to be deductible for tax purposes.

The Company files consolidated federal and certain state income tax returns with its Parent.  Income taxes have been prepared on a separate return basis.  The Company pays its tax liability on behalf of its Parent.

Foreign Currency Translation

Foreign Currency Translation

Local currencies are the functional currencies for substantially all of the Company’s foreign operations. When the transactional currency is different than the functional currency, transaction gains and losses are included as a component of other expense (income), net.  Assets and liabilities of foreign operations are translated into U.S. dollars using the exchange rates in effect at the respective balance sheet reporting date. Income and expenses are translated at the average exchange rate during the period. Gains and losses on foreign currency translation are reported as a component of accumulated other comprehensive (loss). Deferred taxes are not provided on cumulative translation adjustments where the Company expects earnings of a foreign subsidiary to be indefinitely reinvested.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The Company tests its goodwill and trademark and brand intangible assets with indefinite lives annually as of October 1st unless there are indications during an interim period that these assets may have become impaired.  Goodwill impairment occurs when the carrying amount of one of the Company’s reporting unit’s goodwill exceeds its implied fair value. The Company would then record an impairment charge being the difference between the carrying amount and the implied fair value of the reporting unit’s goodwill. For trademarks and brand intangible assets with indefinite lives, impairment occurs when the carrying amount of an asset is greater than its estimated fair value and an impairment charge is recorded for the difference between the carrying amount and the fair value. The Company’s estimates of fair value are based primarily on a discounted cash flow approach as supplemented by a market based approach. Significant judgment is necessary in the preparation of assumptions and estimates inherent in such valuation approaches, particularly with respect to the determination of future volumes, revenue and expense growth rates, changes in working capital use, foreign-exchange rates, inflation, the selection of an appropriate discount rate and the calculation of an average earnings before interest, tax, depreciation and amortization (“EBITDA”) multiple of a selected public-company peer group. In particular, the discount rates the Company utilizes in these analyses, as well as expectations for future cash flows, may be influenced by such factors as changes in interest rates, rates of inflation and changes in regional risk.  During the nine months ended September 30, 2014, goodwill decreased by $0.2 million due to currency translation of $2.1 million and partially offset by the preliminary purchase accounting related to a small acquisition in our international region of $1.9 million.

Property, Plant & Equipment and Finite-Lived Intangible Assets

Property, Plant & Equipment and Finite-Lived Intangible Assets

Property, plant and equipment and finite-lived intangible assets are stated at cost less accumulated depreciation and amortization. The Company calculates depreciation and amortization expense by the straight-line method using estimated useful lives of the related assets. The Company reviews property, plant and equipment and finite-lived intangible assets for impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset or asset group may not be recoverable. The Company’s impairment review is based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist and impairment occurs when the book value of the asset group exceeds the estimated future undiscounted cash flows generated by the asset group. When impairment is indicated, a charge is recorded for the difference between the book value of the asset group and its fair value. Depending on the asset or asset group, estimated fair value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in a similar condition.

Reclassification

Reclassification

Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no effect on reported net loss or comprehensive (loss) income.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2014 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15—Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  The ASU requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued and, if so, to disclose that fact.  The ASU requires management to make this evaluation for both the annual and interim reporting periods, if applicable.  Management is also required to evaluate and disclose whether its plans alleviate that doubt.  The ASU is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016.  The Company is assessing the impact of the adoption of the ASU on its disclosure requirements.

In June 2014 the FASB issued ASU No. 2014-12—Compensation-Stock Compensation.  The ASU is intended to resolve diverse accounting treatment for accounting for share-based payments when the terms of an award provide that the performance target could be achieved after the requisite service period.  The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.  The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.  Earlier adoption is permitted.  The Company is assessing the impact on the adoption of the ASU on its financial statements.

In May 2014 the FASB issued ASU No. 2014-09—Revenue from Contracts with Customers.  The ASU clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”) that removes inconsistencies and weaknesses in revenue requirements, provides a more robust framework for addressing revenue issues, improves comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets, provides more useful information to users of the financial statements through improved disclosure requirements and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.  The amendments in this update are effective for the annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  Full or modified retrospective adoption is required and early application is not permitted.  The Company is assessing the impact of the adoption of the ASU on its financial statements, disclosure requirements and methods of adoption.

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Investment in Affiliate

9 Months Ended

Sep. 30, 2014

Investment in Affiliate

Investment in Affiliate

Note 8 — Investment in Affiliate

On March 17, 2014, the Company paid $10.0 million to acquire a non-controlling equity interest in IDQ Acquisition Corp. (“IDQ”) and also paid $1.2 million in transaction fees and closing costs.  The investment is accounted for under the cost method of accounting.  The transaction fees and closing costs included $0.3 million paid to a board member for services rendered in connection with the transaction.  The transaction fees and closing costs are reported in selling and administrative expenses on the Condensed Consolidated Statements of Comprehensive (Loss) Income.  On the same date, Parent acquired a controlling equity interest in IDQ.  In connection with the investment, the Company entered into a Shared Services and Supply Agreement (the “Shared Services Agreement”) with IDQ and Parent pursuant to which certain products and services will be provided by one party to another, as agreed by the Company and IDQ, with the purpose of utilizing the assets and operations of each company to increase sales and lower the combined costs for the mutual benefit of both IDQ and us.  On March 11, 2014, the Company entered into an amendment of its Credit Facility revising a defined term, Consolidated EBITDA.  Consolidated EBITDA is used in the calculation of certain financial condition covenants under the Credit Facility.  The revision to the definition of Consolidated EBITDA excludes from Consolidated EBITDA  fees and expenses incurred for the Company’s investment in IDQ Acquisition Corp., the Company’s implementation of a management services agreement with IDQ Acquisition Corp. and the Company’s pursuit of cost savings, expense reductions and other operating improvements and synergies related to IDQ.

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Stock Option Modification

9 Months Ended

Sep. 30, 2014

Stock Option Modification

Stock Option Modification

Note 9— Stock Option Modification

Employees of the Company participate in the Stock Option Plan of AAG Parent (the “Plan”). On June 23, 2014, AAG Parent modified the stock option grant agreements for certain employees participating in the Plan.  In addition, AAG Parent granted additional options covering 2,385,000 shares to employees during the three months ended June 30, 2014 at $1.00 per share. One half of the modified and newly granted options shall vest ratably over a five year period from the date of grant/modification based upon the passage of time (the “Time Award”), while the remaining 50% of the options will vest upon the achievement of specified performance conditions  as set forth in the grant agreements.   The performance condition can be met each fiscal year if certain EBITDA targets are achieved, subject to certain carry back and carry forward provisions, or if a change of control occurs and the applicable return of capital target is met.

In the three month period ended September 30, 2014, the Company determined that stock compensation expense was not required based on the vesting provisions of the 2010 Equity Incentive Plan.  From November 2010 to June 2014 the Company had recorded stock compensation expense of $1.0 million.  As a result of the Company’s determination, selling and administrative expenses for the three and nine month periods ended September 30, 2014 are reduced by $1.0 million and $0.8 million, respectively.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2014

Inventories

Schedule of inventories

Inventories consisted of the following (in thousands):

	September 30, 2014			December 31, 2013
Finished goods	$	38,764		$	28,400
Raw materials and packaging	9,476			7,896
Allowances for obsolescence	(2,357		)	(2,253		)
	$	45,883		$	34,043

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The Company and Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014 item
Goodwill and Intangible Assets
Increase in goodwill		$ 200,000
Increase in goodwill due to currency translation		2,100,000
Increase in goodwill due to a small acquisition in our international region		1,900,000
Income Taxes
Goodwill expected to be deductible for tax purposes	0	0
Number of most recognizable brands held		2
Number of countries in which the entity has distributor relationships		50
Selling, general and administrative expense reduction	$ 1,000,000

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Segment Data (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 item	Sep. 30, 2013
Segment Data
Number of geographic segments			2
Net sales	$ 70,459	$ 71,007	$ 232,914	$ 225,495
Earnings (loss) before income taxes	(6,669)	(5,879)	(10,114)	(15,289)
Capital expenditures	807	1,144	1,519	2,894
Depreciation of property, plant and equipment and amortization of intangible assets	10,813	10,858	32,462	32,506
Share based compensation			(840)	216
Operating Segments | North America Segment
Segment Data
Net sales	50,503	50,886	175,172	169,505
Earnings (loss) before income taxes	14,092	11,421	49,330	41,724
Capital expenditures	669	1,049	1,250	2,652
Depreciation of property, plant and equipment and amortization of intangible assets	1,558	1,556	4,720	4,577
Operating Segments | International Segment
Segment Data
Net sales	19,956	20,121	57,742	55,990
Earnings (loss) before income taxes	262	3,924	3,653	6,489
Capital expenditures	138	95	269	242
Depreciation of property, plant and equipment and amortization of intangible assets	122	127	365	404
Corporate
Segment Data
Earnings (loss) before income taxes	(21,023)	(21,224)	(63,097)	(63,502)
Depreciation of property, plant and equipment and amortization of intangible assets	$ 9,133	$ 9,175	$ 27,377	$ 27,525

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net loss	$ (6,935)	$ (8,067)
Adjustments to reconcile net loss to net cash provided by operating activities, net of effects of acquisition:
Depreciation and amortization	35,796	35,713
Share based compensation	(840)	216
Other	2
Deferred income taxes	(9,154)	(12,996)
Cash effect of changes in:
Accounts receivable, net	(13,188)	1,778
Inventories	(11,323)	6,287
Prepaid taxes	1,268	3,329
Other current assets	(130)	(1,902)
Accounts payable and accrued liabilities	22,175	5,079
Due to Clorox	(69)	(134)
Other	(171)	(771)
Net cash provided by operating activities	17,431	28,532
Cash flows from investing activities:
Capital expenditures	(1,519)	(2,894)
Acquisition, net	(1,797)	(3,755)
Payments to Acquire Businesses and Interest in Affiliates	(10,000)
Net cash used in investing activities	(13,316)	(6,649)
Cash flows from financing activities:
Borrowings under revolver	11,000	23,000
Payments on revolver	(11,000)	(23,000)
Principal payments on term loan	(11,250)	(2,250)
Payment on advance from Parent	(494)	(50)
Net cash used in by financing activities	(11,744)	(2,300)
Effect of exchange rate changes on cash	(193)	(57)
Net (decrease) increase in cash	(7,822)	19,526
Cash at beginning of period	21,253	4,206
Cash at end of period	13,431	23,732
Supplemental cash flow disclosures:
Cash paid for interest	26,126	26,567
Cash paid for income taxes	$ 4,743	$ 3,226

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Taxes

Income Taxes

Note 5 — Income taxes

The Company’s effective tax benefit rate was as follows:

	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Effective tax benefit rate	38.2	%	61.3	%	31.4	%	47.2	%

The Company’s effective tax benefit rate for the three month period ended September 30, 2014 differs from the statutory tax rate primarily due to U.S. federal manufacturing benefits recognized and state taxes, which both increase the benefit rate. Further, the Company’s effective tax benefit rate has decreased for the three month period ended September 30, 2014 as compared to the corresponding period in 2013, as a result of a discrete tax benefit of $0.2 million recorded during the three month period ending September 30, 2014.  The discrete tax benefit is primarily the result of a change in the uncertain tax positions recorded by Clorox, for which the Company has recorded a corresponding benefit in income from operations due to the indemnification agreement between the entities, a change in the Company’s blended state tax rate, and true-ups related to the filing of the Company’s 2013 income tax returns.

The Company’s effective tax benefit rate for the nine month period ended September 30, 2014 differs from the statutory tax rate primarily due to U.S. federal manufacturing benefits recognized and state taxes. Further, the Company’s effective tax benefit rate has decreased for the nine month period ended September 30, 2014 as compared to the corresponding period in 2013 primarily as a result of a discrete tax charge of $0.6 million recorded during the nine month period ending September 30, 2014.  The discrete tax charge is primarily the result of a change in the uncertain tax positions recorded by Clorox, for which the Company has recorded a corresponding benefit in income from operations due to the indemnification agreement between the entities, a change in the Company’s blended state tax rate, and true-ups related to the filing of the Company’s 2013 income tax returns.

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Financial Information for the Company and Its Subsidiaries (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash	$ 13,431	$ 21,253	$ 23,732	$ 4,206
Accounts receivable, net	73,977	60,324
Inventories	45,883	34,043
Other current assets	10,565	11,676
Total current assets	143,856	127,296
Property, plant and equipment	25,351	28,936
Goodwill	358,647	358,826
Intangible assets, net	284,380	313,470
Investment in affiliate	10,000
Deferred financing costs and other assets, net	2,363	3,719
Total assets	824,597	832,247
Current liabilities:
Accounts payable	19,365	6,989
Accrued expenses and other current liabilities	35,554	24,594
Payable to parent	251
Current portion of long-term debt, less discount	1,318	71
Total current liabilities	56,510	32,490
Long-term debt, less discount and current portion	543,161	553,511
Other liabilities	2,500	2,500
Deferred income taxes	80,446	89,610
Total liabilities	682,617	678,111
Shareholder's equity	141,980	154,136
Total liabilities and shareholder's equity	824,597	832,247
Clorox
Current liabilities:
Payable to parent	22	91
Armored Auto Group
Current liabilities:
Payable to parent	251	745
Reportable Legal Entities | Issuer
Current assets:
Cash	7,302	14,843	17,221	1,477
Other current assets	81,798	53,931
Total current assets	89,100	68,774
Property, plant and equipment	7,264	8,061
Investment in subsidiaries	595,664	647,107
Investment in affiliate	10,000
Deferred financing costs and other assets, net	2,276	3,632
Total assets	704,304	727,574
Current liabilities:
Accounts payable	933	169
Accrued expenses and other current liabilities	17,389	10,063
Payable to parent	251
Current portion of long-term debt, less discount	1,318	71
Total current liabilities	19,891	11,117
Long-term debt, less discount and current portion	543,161	553,511
Other liabilities	2,500	2,500
Deferred income taxes	5,121	5,121
Total liabilities	570,673	572,249
Shareholder's equity	133,631	155,325
Total liabilities and shareholder's equity	704,304	727,574
Reportable Legal Entities | Issuer | Clorox
Current liabilities:
Payable to parent		69
Reportable Legal Entities | Issuer | Armored Auto Group
Current liabilities:
Payable to parent		745
Reportable Legal Entities | Combined Guarantor Subsidiaries
Current assets:
Accounts receivable, net	57,541	43,784
Inventories	33,175	24,553
Other current assets	(74,559)	(43,971)
Total current assets	16,157	24,366
Property, plant and equipment	15,675	18,037
Goodwill	310,576	310,576
Intangible assets, net	253,820	276,461
Investment in subsidiaries	109,047	115,394
Deferred financing costs and other assets, net	87	87
Total assets	705,362	744,921
Current liabilities:
Accounts payable	14,418	4,413
Accrued expenses and other current liabilities	9,976	8,953
Total current liabilities	24,417	13,389
Deferred income taxes	75,281	84,425
Total liabilities	99,698	97,814
Shareholder's equity	605,664	647,107
Total liabilities and shareholder's equity	705,362	744,921
Reportable Legal Entities | Combined Guarantor Subsidiaries | Clorox
Current liabilities:
Payable to parent	23	23
Reportable Legal Entities | Combined Non- Guarantor Subsidiaries
Current assets:
Cash	6,129	6,410	6,511	2,729
Accounts receivable, net	16,436	16,540
Inventories	12,708	9,490
Other current assets	3,326	1,716
Total current assets	38,599	34,156
Property, plant and equipment	2,412	2,838
Goodwill	48,071	48,250
Intangible assets, net	32,211	38,198
Total assets	121,293	123,442
Current liabilities:
Accounts payable	4,014	2,407
Accrued expenses and other current liabilities	8,189	5,578
Total current liabilities	12,202	7,984
Deferred income taxes	44	64
Total liabilities	12,246	8,048
Shareholder's equity	109,047	115,394
Total liabilities and shareholder's equity	121,293	123,442
Reportable Legal Entities | Combined Non- Guarantor Subsidiaries | Clorox
Current liabilities:
Payable to parent	(1)	(1)
Eliminations
Current assets:
Intangible assets, net	(1,651)	(1,189)
Investment in subsidiaries	(704,711)	(762,501)
Total assets	(706,362)	(763,690)
Current liabilities:
Shareholder's equity	(706,362)	(763,690)
Total liabilities and shareholder's equity	$ (706,362)	$ (763,690)

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Financial Information for the Company and Its Subsidiaries (Tables)

9 Months Ended

Sep. 30, 2014

Financial Information for the Company and Its Subsidiaries

Schedule of Condensed Consolidating Balance Sheet

September 30, 2014

	Issuer		Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash	$	7,302	$	—		$	6,129		$	—		$	13,431
Accounts receivable, net	—		57,541			16,436			—			73,977
Inventories	—		33,175			12,708			—			45,883
Other current assets	81,798		(74,559		)	3,326			—			10,565
Total current assets	89,100		16,157			38,599			—			143,856
Property, plant and equipment, net	7,264		15,675			2,412			—			25,351
Goodwill	—		310,576			48,071			—			358,647
Intangible assets, net	—		253,820			32,211			(1,651		)	284,380
Investment in subsidiaries	595,664		109,047			—			(704,711		)	—
Investment in affiliate	10,000		—			—			—			10,000
Deferred financing costs and other assets, net	2,276		87			—			—			2,363
Total assets	$	704,304	$	705,362		$	121,293		$	(706,362	)	$	824,597
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	933	$	14,418		$	4,014		$	—		$	19,365
Accrued expenses and other current liabilities	17,389		9,976			8,189			—			35,554
Payable to parent	251		—			—			—			251
Due to Clorox	—		23			(1		)	—			22
Current portion of long-term debt, less discount	1,318		—			—			—			1,318
Total current liabilities	19,891		24,417			12,202			—			56,510
Long-term debt, less discount and current portion	543,161		—			—			—			543,161
Other liability	2,500		—			—			—			2,500
Deferred income taxes	5,121		75,281			44			—			80,446
Total liabilities	570,673		99,698			12,246			—			682,617
Shareholder’s equity	133,631		605,664			109,047			(706,362		)	141,980
Total liabilities and shareholder’s equity	$	704,304	$	705,362		$	121,293		$	(706,362	)	$	824,597

Year Ended December 31, 2013

	Issuer		Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
Current assets:
Cash	$	14,843	$	—		$	6,410		$	—		$	21,253
Accounts receivable	—		43,784			16,540			—			60,324
Inventory	—		24,553			9,490			—			34,043
Other current assets	53,931		(43,971		)	1,716			—			11,676
Total current assets	68,774		24,366			34,156			—			127,296
Property, plant and equipment	8,061		18,037			2,838			—			28,936
Goodwill	—		310,576			48,250			—			358,826
Intangible assets	—		276,461			38,198			(1,189		)	313,470
Investment in subsidiaries	647,107		115,394			—			(762,501		)	—
Other assets	3,632		87			—			—			3,719
Total assets	$	727,574	$	744,921		$	123,442		$	(763,690	)	$	832,247
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	169	$	4,413		$	2,407		$	—		$	6,989
Accrued expenses and other current liabilities	10,063		8,953			5,578			—			24,594
Due to Clorox	69		23			(1		)	—			91
Due to Parent	745		—			—			—			745
Notes payable, current portion	71		—			—			—			71
Total current liabilities	11,117		13,389			7,984						32,490
Notes payable, less current portion and discount	553,511		—			—			—			553,511
Other liabilities	2,500		—			—			—			2,500
Deferred income taxes	5,121		84,425			64			—			89,610
Total liabilities	572,249		97,814			8,048			—			678,111
Shareholder’s equity	155,325		647,107			115,394			(763,690		)	154,136
Total liabilities and shareholder’s equity	$	727,574	$	744,921		$	123,442		$	(763,690	)	$	832,247

Schedule of Condensed Consolidating Statement of Comprehensive (Loss) Income

Three Months Ended September 30, 2014

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	58,123		$	19,924		$	(7,588	)	$	70,459
Cost of products sold	—			30,636			15,708			(7,588		)	38,756
Gross profit	—			27,487			4,216			—			31,703
Operating expenses:
Selling and administrative expenses	3,624			2,683			3,185			—			9,492
Advertising costs	—			5,127			1,901			—			7,028
Research and development costs	—			653			—			—			653
Amortization of acquired intangible assets	—			7,546			1,587			—			9,133
Total operating expenses	3,624			16,009			6,673			—			26,306
Operating (loss) profit	(3,624		)	11,478			(2,457		)	—			5,397
Non-operating expenses:
Interest expense	11,888			—			4			—			11,892
Other expense, net	66			—			108			—			174
(Loss) earnings before (benefit) provision for income taxes	(15,578		)	11,478			(2,569		)	—			(6,669		)
(Benefit) provision for income taxes	(6,016		)	3,291			177			—			(2,548		)
Equity earnings of subsidiaries, net of taxes	5,441			(2,746		)	—			(2,695		)	—
Net (loss) earnings	$	(4,121	)	$	5,441		$	(2,746	)	$	(2,695	)	$	(4,121	)
Other comprehensive loss:
Foreign currency translation	(5,542		)	(5,542		)	(5,542		)	11,084			(5,542		)
Comprehensive (loss) income	$	(9,663	)	$	(101	)	$	(8,288	)	$	8,389		$	(9,663	)

Three months ended September 30, 2013

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	57,639		$	19,164		$	(5,796	)	$	71,007
Cost of products sold	—			28,534			15,745			(5,796		)	38,483
Gross profit	—			29,105			3,419			—			32,524
Operating expenses:
Selling and administrative expenses	4,532			2,916			2,406			—			9,854
Advertising costs	—			5,396			1,371			—			6,767
Research and development costs	—			625			1			—			626
Amortization of acquired intangible assets	—			7,545			1,630			—			9,175
Total operating expenses	4,532			16,482			5,408			—			26,422
Operating (loss) profit	(4,532		)	12,623			(1,989		)	—			6,102
Non-operating expenses:
Interest expense	12,044			—			5			—			12,049
Other expense, net	3			1			(72		)	—			(68		)
(Loss) earnings before (benefit) provision for income taxes	(16,579		)	12,622			(1,922		)	—			(5,879		)
(Benefit) provision for income taxes	(5,360		)	1,255			501			—			(3,604		)
Equity earnings (loss) of subsidiaries, net of taxes	8,944			(2,423		)	—			(6,521		)	—
Net (loss) earnings	$	(2,275	)	$	8,944		$	(2,423	)	$	(6,521	)	$	(2,275	)
Other comprehensive loss:
Foreign currency translation	2,336			2,336			2,336			(4,672		)	2,336
Comprehensive income (loss)	$	61		$	11,280		$	(87	)	$	(11,193	)	$	61

Nine months ended September 30, 2014

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	193,967		$	61,123		$	(22,176	)	$	232,914
Cost of products sold	—			102,126			45,070			(22,176		)	125,020
Gross profit	—			91,841			16,053			—			107,894
Operating expenses:
Selling and administrative expenses	14,840			8,141			9,094			—			32,075
Advertising costs	—			15,804			5,324			—			21,128
Research and development costs	—			1,887			—			—			1,887
Amortization of acquired intangible assets	—			22,636			4,741			—			27,377
Total operating expenses	14,840			48,468			19,159			—			82,467
Operating (loss) profit	(14,840		)	43,373			(3,106		)	—			25,427
Non-operating expenses (income):
Interest expense	35,713			—			9			—			35,722
Other expense, net	(402		)	—			221			—			(181		)
(Loss) earnings before (benefit) provision for income taxes	(50,151		)	43,373			(3,336		)	—			(10,114		)
(Benefit) provision for income taxes	(18,600		)	14,809			612			—			(3,179		)
Equity earnings of subsidiaries, net of taxes	24,616			(3,948		)	—			(20,668		)	—
Net (loss) earnings	$	(6,935	)	$	24,616		$	(3,948	)	$	(20,668	)	$	(6,935	)
Other comprehensive (loss) income:
Foreign currency translation	(4,383		)	(4,383		)	(4,383		)	8,766			(4,383		)
Comprehensive (loss) income	$	(11,318	)	$	20,233		$	(8,331	)	$	(11,902	)	$	(11,318	)

Nine months ended September 30, 2013

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	185,441		$	57,342		$	(17,288	)	$	225,495
Cost of products sold	—			97,799			40,796			(17,288		)	121,307
Gross profit	—			87,642			16,546			—			104,188
Operating expenses:
Selling and administrative expenses	13,020			8,662			7,520			—			29,202
Advertising costs	—			19,310			5,177			—			24,487
Research and development costs	—			1,828			11			—			1,839
Amortization of acquired intangible assets	—			22,636			4,890			—			27,526
Total operating expenses	13,020			52,436			17,598			—			83,054
Operating (loss) profit	(13,020		)	35,206			(1,052		)	—			21,134
Non-operating expenses (income):
Interest expense	35,968			—			8			—			35,976
Other expense, net	119			7			321			—			447
(Loss) earnings before (benefit) provision for income taxes	(49,107		)	35,199			(1,381		)	—			(15,289		)
(Benefit) provision for income taxes	(17,634		)	9,905			507			—			(7,222		)
Equity earnings (loss) of subsidiaries, net of taxes	23,406			(1,888		)	—			(21,518		)	—
Net (loss) earnings	$	(8,067	)	$	23,406		$	(1,888	)	$	(21,518	)	$	(8,067	)
Other comprehensive (loss) income:
Foreign currency translation	(5,994		)	(5,994		)	(5,994		)	11,988			(5,994		)
Comprehensive (loss) income	$	(14,061	)	$	17,412		$	(7,882	)	$	(9,530	)	$	(14,061	)

Schedule of Condensed Consolidating Statement of Cash Flows

Nine months ended September 30, 2014

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss) earnings	$	(6,935	)	$	24,616		$	(3,948	)	$	(20,668	)	$	(6,935	)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	4,632			25,750			5,414			—			35,796
Share-based compensation	(840		)	—			—			—			(840		)
Deferred income taxes	—			(9,134		)	(20		)	—			(9,154		)
Equity earnings of subsidiaries, net of taxes	(19,173		)	1,204			—			17,969			—
Other	—			—			2			—			2
Cash effect of changes in:
Accounts receivable, net	—			(13,757		)	569			—			(13,188		)
Inventories	—			(8,622		)	(2,701		)	—			(11,323		)
Other current assets	510			865			(1,505		)	—			(130		)
Prepaid taxes	(28,389		)	29,657			—			—			1,268
Accounts payable and accrued liabilities	8,093			11,025			3,057			—			22,175
Due Clorox	(69		)	—			—			—			(69		)
Intercompany and other	56,873			(60,853		)	1,110			2,699			(171		)
Net cash provided by operating activities	14,702			751			1,978			—			17,431
Cash flows from investing activities:
Capital expenditures	(499		)	(751		)	(269		)	—			(1,519		)
Acquisition, net	—			—			(1,797		)	—			(1,797		)
Investment in affiliate	(10,000		)	—			—			—			(10,000		)
Net cash used in investing activities	(10,499		)	(751		)	(2,066		)	—			(13,316		)
Cash flows from financing activities:
Borrowings under revolver	11,000			—			—			—			11,000
Payments on revolver	(11,000		)	—			—			—			(11,000		)
Principal payments on term loan	(11,250		)	—			—			—			(11,250		)
Payment of advance from Parent	(494		)	—			—			—			(494		)
Net cash used in financing activities	(11,744		)	—			—			—			(11,744		)
Effect of exchange rate changes on cash	—			—			(193		)	—			(193		)
Net decrease in cash	(7,541		)	—			(281		)	—			(7,822		)
Cash at beginning of period	14,843			—			6,410			—			21,253
Cash at end of period	$	7,302		$	—		$	6,129		$	—		$	13,431

Nine months ended September 30, 2013

	Issuer			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss) earnings	$	(8,067	)	$	23,406		$	(1,888	)	$	(21,518	)	$	(8,067	)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	4,556			25,553			5,604			—			35,713
Share-based compensation	216			—			—			—			216
Deferred income taxes	—			(13,225		)	229			—			(12,996		)
Equity earnings of subsidiaries, net of taxes	(23,406		)	1,888			—			21,518			—
Cash effect of changes in:
Accounts receivable, net	105			(1,390		)	3,063			—			1,778
Inventories	—			6,157			130			—			6,287
Prepaid taxes	3,329			—			—			—			3,329
Other current assets	(6,134		)	6,798			(2,566		)	—			(1,902		)
Accounts payable and accrued liabilities	3,168			3,442			(1,531		)	—			5,079
Due Clorox	—			—			(134		)	—			(134		)
Intercompany and other	45,277			(50,960		)	4,912			—			(771		)
Net cash provided by operating activities:	19,044			1,669			7,819			—			28,532
Cash flows from investing activities:
Capital expenditures	(1,000		)	(1,669		)	(225		)	—			(2,894		)
Acquisition, net	—			—			(3,755		)	—			(3,755		)
Net cash used in investing activities	(1,000		)	(1,669		)	(3,980		)	—			(6,649		)
Cash flows from financing activities:
Borrowings under revolver	23,000			—			—			—			23,000
Payments on revolver	(23,000		)	—			—			—			(23,000		)
Principal payments on term loan	(2,250		)	—			—			—			(2,250		)
Payment of advance from Parent	(50		)	—			—			—			(50		)
Net cash used in by financing activities	(2,300		)	—			—			—			(2,300		)
Effect of exchange rate changes on cash	—			—			(57		)	—			(57		)
Net increase in cash	15,744			—			3,782			—			19,526
Cash at beginning of period	1,477			—			2,729			—			4,206
Cash at end of period	$	17,221		$	—		$	6,511		$	—		$	23,732