Note 15. Condensed Consolidating Financial Statements

The 10.5% Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior basis by certain of the Company’s 100% owned domestic subsidiaries (“Guarantor Subsidiaries”) and secured by a first priority lien on 51% of the capital stock of certain of our foreign restricted subsidiaries (“Non-Guarantor Subsidiaries”). The Company’s Guarantor Subsidiaries and Non-Guarantor Subsidiaries are not consistent with the Company’s business groups or geographic operations; accordingly this basis of presentation is not intended to present the Company’s financial condition, results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting. The Company is required to present condensed consolidating financial information in order for the subsidiary guarantors of the Company’s public debt to be exempt from reporting under the Securities Exchange Act of 1934, as amended.

In fiscal year 2012, the Company incorrectly reflected transactions between the Parent and the Guarantor Subsidiaries in the Condensed Consolidating Financial Statements which did not impact the consolidated results. As of March 31, 2012, this resulted in an understatement of the Guarantor Subsidiaries’ retained earnings, intercompany receivables and net income by $27.8 million. Management concluded that the correction of prior periods is immaterial; accordingly, previous filings have not been revised. However, during the current period, the Company has corrected its disclosure of the Condensed Consolidating Balance Sheet as of March 31, 2012. Future filings will be corrected as applicable.

Condensed consolidating financial statements for the Company’s Guarantor Subsidiaries and Non-Guarantor Subsidiaries are presented in the following tables (amounts in thousands):

Condensed Consolidating Balance Sheet

December 31, 2012

(Unaudited)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Reclassifications and Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	8,418	$	94,644	$	34,497	$	—		$	137,559
Accounts receivable, net	—		38,529		58,119		—			96,648
Intercompany receivable	287,152		185,113		173,135		(645,400		)	—
Inventories, net	—		134,225		87,135		—			221,360
Prepaid expenses and other	3,223		12,085		24,148		(2,947		)	36,509
Deferred income taxes	—		883		4,500		—			5,383
Total current assets	298,793		465,479		381,534		(648,347		)	497,459
Property and equipment, net	202		113,883		198,826		—			312,911
Investments in subsidiaries	437,615		467,565		10,683		(915,863		)	—
Goodwill	—		35,584		—		—			35,584
Intangible assets, net	—		30,546		9,204		—			39,750
Restricted cash	—		26,177		—		—			26,177
Other assets	7,073		4,102		3,284		—			14,459
Long-term intercompany receivable	78,225		61,481		2,876		(142,582		)	—
Total assets	$	821,908	$	1,204,817	$	606,407	$	(1,706,792	)	$	926,340

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	6,630	$	25	$	1,253	$	—		$	7,908
Accounts payable, trade	35		23,717		37,841		—			61,593
Intercompany payable	81,288		452,953		111,159		(645,400		)	—
Accrued expenses	26,907		17,904		40,266		—			85,077
Income taxes payable	—		3,062		989		(2,947		)	1,104
Total current liabilities	114,860		497,661		191,508		(648,347		)	155,682
Long-term debt, less current portion	375,020		—		567		—			375,587
Other non-current obligations	28,217		4,669		53,569		—			86,455
Deferred income taxes	—		1,045		3,760		—			4,805
Long-term intercompany payable	—		78,225		64,357		(142,582		)	—
Stockholders’ equity	303,811		623,217		292,646		(915,863		)	303,811

Total liabilities and stockholders’ equity	$	821,908	$	1,204,817	$	606,407	$	(1,706,792	)	$	926,340

Condensed Consolidating Balance Sheet

March 31, 2012

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	7,933	$	178,205	$	24,383		$	—		$	210,521
Accounts receivable, net	—		42,706		62,244			—			104,950
Intercompany receivable	251,970		55,863		171,921			(479,754		)	—
Inventories, net	—		121,611		90,623			—			212,234
Prepaid expenses and other	3,084		13,537		18,416			(2,778		)	32,259
Deferred income taxes	—		192		6,178			—			6,370
Total current assets	262,987		412,114		373,765			(482,532		)	566,334
Property and equipment, net	20		114,615		201,213			—			315,848
Investments in subsidiaries	454,517		435,970		(4,622		)	(885,865		)	—
Goodwill	—		36,676		—			—			36,676
Intangible assets, net	—		31,630		9,897			—			41,527
Restricted cash	—		2,204		—			—			2,204
Other assets	7,796		3,956		1,211			—			12,963
Long-term intercompany receivable	79,185		62,235		1,065			(142,485		)	—
Total assets	$	804,505	$	1,099,400	$	582,529		$	(1,510,882	)	$	975,552

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	25	$	1,926		$	—		$	1,951
Accounts payable, trade	460		35,206		39,490			(752		)	74,404
Intercompany payable	34,830		315,906		122,799			(473,535		)	—
Accrued expenses	30,747		23,007		35,325			—			89,079
Income taxes payable	—		3,031		2,003			(2,778		)	2,256
Total current liabilities	66,037		377,175		201,543			(477,065		)	167,690
Long-term debt, less current portion	343,539		—		1,841			—			345,380
Other non-current obligations	35,933		5,400		59,896			—			101,229
Deferred income taxes	—		272		1,985			—			2,257
Long-term intercompany payable	—		79,185		63,300			(142,485		)	—
Stockholders’ equity	358,996		637,368		253,964			(891,332		)	358,996

Total liabilities and stockholders’ equity	$	804,505	$	1,099,400	$	582,529		$	(1,510,882	)	$	975,552

Condensed Consolidating Statement of Operations

For the Quarter Ended December 31, 2012

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	—		$	216,004	$	199,936		$	(215,643	)	$	200,297

Operating costs and expenses:
Cost of sales	460			184,993		185,470			(204,806		)	166,117
Selling, general and administrative expenses	7,916			14,072		14,260			(10,837		)	25,411
Research and development	55			4,549		2,094			—			6,698
Restructuring charges	—			2,476		1,410			—			3,886
Goodwill impairment	—			—		—			—			—
Write down of long-lived assets	—			—		3,084			—			3,084
Settlement gain on benefit plan	—			—		587			—			587
Net (gain) loss on sales and disposals of assets	4			9		(209		)	—			(196		)
Total operating costs and expenses	8,435			206,099		206,696			(215,643		)	205,587
Operating income (loss)	(8,435		)	9,905		(6,760		)	—			(5,290		)

Other (income) expense, net	3,181			5,972		(601		)	—			8,552
Equity in (earnings) losses of subsidiaries	2,641			—		—			(2,641		)	—
Income (loss) before income taxes	(14,257		)	3,933		(6,159		)	2,641			(13,842		)

Income tax expense	—			123		292			—			415

Net income (loss)	$	(14,257	)	$	3,810	$	(6,451	)	$	2,641		$	(14,257	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Quarter Ended December 31, 2012

Comprehensive income (loss)

(12,691

)

3,420

(3,965

)

2,641

(10,595

)

Condensed Consolidating Statement of Operations

For the Quarter Ended December 31, 2011

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	—		$	218,614		$	200,560		$	(200,379	)	$	218,795
Operating costs and expenses:
Cost of sales	265			184,345			193,591			(199,896		)	178,305
Selling, general and administrative expenses	6,269			8,038			10,913			(483		)	24,737
Research and development	—			4,809			2,363			—			7,172
Restructuring charges	—			(19		)	10,767			—			10,748
Write down of long-lived assets	—			—			15,786			—			15,786
Net (gain) loss on sales and disposals of assets	—			78			(69		)	—			9
Total operating costs and expenses	6,534			197,251			233,351			(200,379		)	236,757
Operating income (loss)	(6,534		)	21,363			(32,791		)	—			(17,962		)

Other (income) expense, net	692			7,837			(541		)	(298		)	7,690
Equity in (earnings) losses of subsidiaries	20,545			—			—			(20,545		)	—
Income (loss) before income taxes	(27,771		)	13,526			(32,250		)	20,843			(25,652		)

Income tax expense	—			49			2,070			—			2,119

Net income (loss)	$	(27,771	)	$	13,477		$	(34,320	)	$	20,843		$	(27,771	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Quarter Ended December 31, 2011

Comprehensive income (loss)

(31,115

)

12,678

(35,995

)

20,843

(33,589

)

Condensed Consolidating Statement of Operations

For the Nine Months Ended December 31, 2012

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	—		$	690,815		$	655,006		$	(705,901	)	$	639,920

Operating costs and expenses:
Cost of sales	1,553			617,857			594,773			(673,692		)	540,491
Selling, general and administrative expenses	22,957			45,792			44,109			(32,209		)	80,649
Research and development	155			14,578			6,531			—			21,264
Restructuring charges	—			4,436			9,236			—			13,672
Goodwill impairment	—			1,092			—			—			1,092
Write down of long-lived assets	—			—			7,318			—			7,318
Settlement gain on benefit plan	—			—			(1,088		)	—		.	(1,088		)
Net (gain) loss on sales and disposals of assets	4			42			(169		)	—			(123		)
Total operating costs and expenses	24,669			683,797			660,710			(705,901		)	663,275

Operating income (loss)	(24,669		)	7,018			(5,704		)	—			(23,355		)

Other (income) expense, net	10,144			20,624			(1,165		)	—			29,603
Equity in (earnings) losses of subsidiaries	22,118			—			—			(22,118		)	—
Income before income taxes	(56,931		)	(13,606		)	(4,539		)	22,118			(52,958		)

Income tax expense	—			230			3,743			—			3,973

Net income	$	(56,931	)	$	(13,836	)	$	(8,282	)	$	22,118		$	(56,931	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Nine Months Ended December 31, 2012

Comprehensive loss

(57,891

)

(13,847

)

(9,011

)

22,118

(58,631

)

Condensed Consolidating Statement of Operations

For the Nine Months Ended December 31, 2011

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Reclassifications and Eliminations			Consolidated
Net sales	$	—		$	738,052	$	725,897		$	(689,784	)	$	774,165

Operating costs and expenses:
Cost of sales	551			610,850		653,281			(672,554		)	592,128
Selling, general and administrative expenses	23,335			41,249		36,628			(17,844		)	83,368
Research and development	—			15,112		6,508			—			21,620
Restructuring charges	—			1,819		11,559			—			13,378
Write down of long-lived assets	—			—		15,786						15,786
Net (gain) loss on sales and disposals of assets	3			107		(18		)	—			92
Total operating costs and expenses	23,889			669,137		723,744			(690,398		)	726,372

Operating income (loss)	(23,889		)	68,915		2,153			614			47,793

Other (income) expense, net	(6,974		)	31,788		(1,085		)	(229		)	23,500
Equity in earnings of subsidiaries	(34,119		)	—		—			34,119			—
Income before income taxes	17,204			37,127		3,238			(33,276		)	24,293

Income tax expense (benefit)	(1,192		)	146		6,943			—			5,897

Net income	$	18,396		$	36,981	$	(3,705	)	$	(33,276	)	$	18,396

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Nine Months Ended December 31, 2011

Comprehensive income (loss)

10,877

35,122

(8,577

)

(33,276

)

4,146

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended December 31, 2012

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations		Consolidated
Sources (uses) of cash and cash equivalents
Net cash provided by (used in) operating activities	$	(33,506	)	$	(45,166	)	$	37,050		$	—	$	(41,622	)

Investing activities:
Capital expenditures	—			(13,395		)	(24,954		)	—		(38,349		)
Change in restricted cash	—			(24,000		)	—			—		(24,000		)
Net cash used in investing activities	—			(37,395		)	(24,954		)	—		(62,349		)

Financing activities:
Proceeds from issuance of debt	39,825			—			—			—		39,825
Deferred acquisition payments	(5,617		)	(1,000		)	—			—		(6,617		)
Payments of long-term debt	—			—			(1,901		)	—		(1,901		)
Proceeds from exercise of stock options	58			—			—			—		58
Debt issuance costs	(275		)	—			—			—		(275		)
Net cash provided by (used in) financing activities	33,991			(1,000		)	(1,901		)	—		31,090
Net increase (decrease) in cash and cash equivalents	485			(83,561		)	10,195			—		(72,881		)
Effect of foreign currency fluctuations on cash	—			—			(81		)	—		(81		)
Cash and cash equivalents at beginning of fiscal period	7,933			178,205			24,383			—		210,521
Cash and cash equivalents at end of fiscal period	$	8,418		$	94,644		$	34,497		$	—	$	137,559

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended December 31, 2011

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Reclassifications and Eliminations		Consolidated
Sources (uses) of cash and cash equivalents
Net cash provided by operating activities	$	40,743		$	9,764		$	21,396		$	—	$	71,903

Investing activities:
Capital expenditures	(1		)	(17,903		)	(13,889		)	—		(31,793		)
Acquisition, net of cash received	—			(11,584		)	—			—		(11,584		)
Net cash used in investing activities	(1		)	(29,487		)	(13,889		)	—		(43,377		)

Financing activities:
Payments of long-term debt	(40,581		)	—			—			—		(40,581		)
Net payments under other credit facilities	—			—			(3,153		)	—		(3,153		)
Proceeds from exercise of stock options	225			—			—			—		225
Debt issuance costs	—			(36		)	—			—		(36		)
Net cash used in financing activities	(40,356		)	(36		)	(3,153		)	—		(43,545		)
Net increase (decrease) in cash and cash equivalents	386			(19,759		)	4,354			—		(15,019		)
Effect of foreign currency fluctuations on cash	—			—			(983		)	—		(983		)
Cash and cash equivalents at beginning of fiscal period	6,417			119,326			26,308			—		152,051
Cash and cash equivalents at end of fiscal period	$	6,803		$	99,567		$	29,679		$	—	$	136,049