Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 1-May-14 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Armored AutoGroup Inc. | ' |
Entity Central Index Key | '0001537660 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
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 | 'Q1 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash | $13,182 | $21,253 |
Accounts receivable, net | 80,940 | 62,210 |
Inventories | 36,629 | 34,043 |
Other current assets | 7,400 | 9,790 |
Total current assets | 138,151 | 127,296 |
Property, plant and equipment, net | 27,559 | 28,936 |
Goodwill | 357,507 | 358,826 |
Intangible assets, net | 303,654 | 313,470 |
Investment in affiliate | 10,000 | ' |
Deferred financing costs and other assets, net | 3,352 | 3,719 |
Total assets | 840,223 | 832,247 |
Current liabilities: | ' | ' |
Accounts payable | 21,233 | 8,128 |
Accrued expenses and other current liabilities | 32,285 | 23,455 |
Current portion of long-term debt, less discount | 79 | 71 |
Total current liabilities | 54,383 | 32,490 |
Long-term debt, less discount and current portion | 544,464 | 553,511 |
Other liability | 2,500 | 2,500 |
Deferred income taxes | 86,530 | 89,610 |
Total liabilities | 687,877 | 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 March 31, 2014 and December 31, 2013, respectively) | ' | ' |
Additional paid-in capital | 261,067 | 261,040 |
Accumulated deficit | -98,880 | -98,955 |
Accumulated other comprehensive loss | -9,841 | -7,949 |
Total shareholder's equity | 152,346 | 154,136 |
Total liabilities and shareholder's equity | 840,223 | 832,247 |
Parent | ' | ' |
Current liabilities: | ' | ' |
Amount due to related party | 695 | 745 |
Clorox | ' | ' |
Current liabilities: | ' | ' |
Amount due to related party | $91 | $91 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Per Share data, unless otherwise specified | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 1 | 1 |
Common stock, shares issued | 1 | 1 |
Common stock, shares outstanding | 1 | 1 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ' | ' |
Net sales | $80,559 | $74,413 |
Cost of products sold | 41,654 | 40,485 |
Gross profit | 38,905 | 33,928 |
Operating expenses: | ' | ' |
Selling and administrative expenses | 11,552 | 9,603 |
Advertising costs | 5,405 | 3,573 |
Research and development costs | 608 | 638 |
Amortization of acquired intangible assets | 9,111 | 9,175 |
Total operating expenses | 26,676 | 22,989 |
Operating profit | 12,229 | 10,939 |
Non-operating expenses: | ' | ' |
Interest expense | 11,949 | 11,906 |
Other (income) expense, net | -421 | 112 |
Income (loss) before benefit for income taxes | 701 | -1,079 |
Expense (benefit) for income taxes | -627 | -573 |
Net income (loss) | 74 | -506 |
Other comprehensive loss: | ' | ' |
Foreign currency translation | -1,892 | -1,760 |
Comprehensive loss | ($1,818) | ($2,266) |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows from operating activities: | ' | ' |
Net income (loss) | $74 | ($506) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 11,919 | 11,883 |
Share-based compensation | 27 | 65 |
Deferred income taxes | -3,098 | -3,332 |
Other | 2 | ' |
Cash effect of changes in: | ' | ' |
Accounts receivable, net | -18,730 | -5,863 |
Inventories | -2,586 | -2,933 |
Prepaid Taxes | 2,830 | 2,022 |
Other current assets | -451 | -1,846 |
Accounts payable and accrued liabilities | 21,936 | 8,787 |
Due to Clorox | ' | -31 |
Other | 102 | -49 |
Net cash provided by operating activities | 12,025 | 8,197 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -328 | -944 |
Investment in affiliate | -10,000 | ' |
Net cash used in investing activities | -10,328 | -944 |
Cash flows from financing activities: | ' | ' |
Principal payments on term loan | -9,750 | -750 |
Payment on advance from Parent | -50 | ' |
Net cash used in financing activities | -9,800 | -750 |
Effect of exchange rate changes on cash | 32 | 1 |
Net (decrease) increase in cash | -8,071 | 6,504 |
Cash at beginning of period | 21,253 | 4,206 |
Cash at end of period | 13,182 | 10,710 |
Supplemental cash flow disclosures: | ' | ' |
Cash paid for interest | 4,695 | 4,679 |
Cash paid for income taxes | $555 | $737 |
The_Company_and_Summary_of_Sig
The Company and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 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 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, U.K. 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 month periods ended March 31, 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. Further, the results for the interim period ended March 31, 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, which generally 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 Loss. | |
Amounts received by the Company from the licensing of certain trademarks are recorded as deferred revenue in the Condensed Consolidated Balance Sheets and 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 a 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 (income) expense, 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) income. 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 three months ended March 31, 2014, goodwill decreased by $1.3 million due to currency translation. | |
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 expenses 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. | |
Recent Accounting Pronouncements | |
The Company adopted the following pronouncements effective January 1, 2014: | |
In February 2013 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2013-04—Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (ASU 2013-04). The ASU requires reporting and disclosure about obligations resulting from joint and several liability arrangements within its scope for which the total amount of the obligation is fixed at the reporting date. For the Company, ASU 2013-04 is effective January 1, 2014 for fiscal year 2014 and interim periods therein. The guidance in ASU 2013-04 is to be applied retrospectively for those obligations resulting from joint and several liability arrangements within its scope that exist at January 1, 2014. Adoption of ASU 2013-04 did not have a material impact on the Company. |
Inventories
Inventories | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Inventories | ' | |||||||
Inventories | ' | |||||||
Note 2 — Inventories | ||||||||
Inventories consisted of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Finished goods | $ | 29,285 | $ | 28,400 | ||||
Raw materials and packaging | 9,724 | 7,896 | ||||||
Allowances for obsolescence | (2,380 | ) | (2,253 | ) | ||||
$ | 36,629 | $ | 34,043 |
Fair_Value_Measurement_of_Asse
Fair Value Measurement of Assets and Liabilities | 3 Months Ended | |||||||||||||
Mar. 31, 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): | ||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||
Value | Value | Value | Value | |||||||||||
Term loan | $ | 276,637 | $ | 281,953 | $ | 285,982 | $ | 291,000 | ||||||
Senior notes | 267,906 | 288,750 | 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. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 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 March 31, 2014 and December 31, 2013, the Company has accrued $2,500,000 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. |
Income_taxes
Income taxes | 3 Months Ended | |||||
Mar. 31, 2014 | ||||||
Income taxes | ' | |||||
Income taxes | ' | |||||
Note 5 — Income taxes | ||||||
The Company’s effective tax rate was as follows: | ||||||
Three months ended March 31, | ||||||
2014 | 2013 | |||||
Effective tax rate | 89.4 | % | 53.1 | % | ||
The Company’s effective tax rate for the three month period ended March 31, 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 rate has increased for the three month period ended March 31, 2014 as compared to the corresponding period in 2013 primarily as a result of a discrete tax charge of $0.4 million recorded during the three month period ending March 31, 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. |
Segment_Data
Segment Data | 3 Months Ended | |||||||||||||
Mar. 31, 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 Condensed Consolidated Statements of Comprehensive Loss. 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 March 31, 2014 | ||||||||||||||
North | International | Corporate | Consolidated | |||||||||||
America | ||||||||||||||
Net sales | $ | 61,567 | $ | 18,992 | $ | — | $ | 80,559 | ||||||
Earnings (loss) before income taxes | 18,758 | 3,003 | (21,060 | ) | 701 | |||||||||
Capital expenditures | 276 | 52 | — | 328 | ||||||||||
Depreciation of property, plant and equipment and amortization of intangible assets | 1,577 | 122 | 9,111 | 10,810 | ||||||||||
Share based compensation | 24 | 3 | — | 27 | ||||||||||
Three Months Ended March 31, 2013 | ||||||||||||||
North | International | Corporate | Consolidated | |||||||||||
America | ||||||||||||||
Net sales | $ | 56,614 | $ | 17,799 | $ | — | $ | 74,413 | ||||||
Earnings (loss) before income taxes | 18,276 | 1,726 | (21,081 | ) | (1,079 | ) | ||||||||
Capital expenditures | 793 | 151 | — | 944 | ||||||||||
Depreciation of property plant and equipment and amortization of intangible assets | 1,511 | 146 | 9,175 | 10,832 | ||||||||||
Share based compensation | 62 | 3 | — | 65 | ||||||||||
Financial_Information_for_the_
Financial Information for the Company and Its Subsidiaries | 3 Months Ended | ||||||||||||||||
Mar. 31, 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 condensed consolidating financial information sets forth 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 | |||||||||||||||||
March 31, 2014 | |||||||||||||||||
Issuer | Combined | Combined | Eliminations | Consolidated | |||||||||||||
Guarantor | Non- | ||||||||||||||||
Subsidiaries | Guarantor | ||||||||||||||||
Subsidiaries | |||||||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash | $ | 4,789 | $ | — | $ | 8,393 | $ | — | $ | 13,182 | |||||||
Accounts receivable, net | 6 | 63,100 | 17,834 | — | 80,940 | ||||||||||||
Inventories | — | 26,716 | 9,913 | — | 36,629 | ||||||||||||
Other current assets | 60,487 | (54,367 | ) | 1,280 | — | 7,400 | |||||||||||
Total current assets | 65,282 | 35,449 | 37,420 | — | 138,151 | ||||||||||||
Property, plant and equipment, net | 7,823 | 17,078 | 2,658 | — | 27,559 | ||||||||||||
Goodwill | — | 310,576 | 46,931 | — | 357,507 | ||||||||||||
Intangible assets, net | — | 268,916 | 35,982 | (1,244 | ) | 303,654 | |||||||||||
Investment in subsidiaries | 627,915 | 113,737 | — | (741,652 | ) | — | |||||||||||
Investment in affiliate | 10,000 | — | — | — | 10,000 | ||||||||||||
Deferred financing costs and other assets, net | 3,265 | 87 | — | — | 3,352 | ||||||||||||
Total assets | $ | 714,285 | $ | 745,843 | $ | 122,991 | $ | (742,896 | ) | $ | 840,223 | ||||||
LIABILITIES AND SHAREHOLDER’S EQUITY | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Accounts payable | $ | 786 | $ | 16,255 | $ | 4,192 | $ | — | $ | 21,233 | |||||||
Accrued expenses and other current liabilities | 16,981 | 10,283 | 5,021 | — | 32,285 | ||||||||||||
Due to Clorox | 69 | 23 | (1 | ) | — | 91 | |||||||||||
Due to Parent | 695 | — | — | — | 695 | ||||||||||||
Current portion of long-term debt, less discount | 79 | — | — | — | 79 | ||||||||||||
Total current liabilities | 18,610 | 26,561 | 9,212 | — | 54,383 | ||||||||||||
Long-term debt, less discount and current portion | 544,464 | — | — | — | 544,464 | ||||||||||||
Other liability | 2,500 | — | — | — | 2,500 | ||||||||||||
Deferred income taxes | 5,121 | 81,367 | 42 | — | 86,530 | ||||||||||||
Total liabilities | 570,695 | 107,928 | 9,254 | — | 687,877 | ||||||||||||
Shareholder’s equity | 143,590 | 637,915 | 113,737 | (742,896 | ) | 152,346 | |||||||||||
Total liabilities and shareholder’s equity | $ | 714,285 | $ | 745,843 | $ | 122,991 | $ | (742,896 | ) | $ | 840,223 | ||||||
Condensed Consolidating Balance Sheet | |||||||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||
Issuer | Combined | Combined | Eliminations | Consolidated | |||||||||||||
Guarantor | Non- | Total | |||||||||||||||
Subsidiaries | Guarantor | ||||||||||||||||
Subsidiaries | |||||||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash | $ | 14,843 | $ | — | $ | 6,410 | $ | — | $ | 21,253 | |||||||
Accounts receivable | 78 | 44,885 | 17,247 | — | 62,210 | ||||||||||||
Inventory | — | 24,553 | 9,490 | — | 34,043 | ||||||||||||
Other current assets | 53,853 | (45,072 | ) | 1,009 | — | 9,790 | |||||||||||
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 | $ | 5,103 | $ | 2,856 | $ | — | $ | 8,128 | |||||||
Accrued expenses and other current liabilities | 10,063 | 8,263 | 5,129 | — | 23,455 | ||||||||||||
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 Income (Loss) | |||||||||||||||||
Three months ended March 31, 2014 | |||||||||||||||||
Issuer | Combined | Combined | Eliminations | Consolidated | |||||||||||||
Guarantor | Non- | ||||||||||||||||
Subsidiaries | Guarantor | ||||||||||||||||
Subsidiaries | |||||||||||||||||
Net sales | $ | — | $ | 66,428 | $ | 20,359 | $ | (6,228 | ) | $ | 80,559 | ||||||
Cost of products sold | — | 33,765 | 14,117 | (6,228 | ) | 41,654 | |||||||||||
Gross profit | — | 32,663 | 6,242 | — | 38,905 | ||||||||||||
Operating expenses: | |||||||||||||||||
Selling and administrative expenses | 5,729 | 2,941 | 2,882 | — | 11,552 | ||||||||||||
Advertising costs | — | 3,924 | 1,481 | — | 5,405 | ||||||||||||
Research and development costs | — | 608 | — | — | 608 | ||||||||||||
Amortization of acquired intangible assets | — | 7,545 | 1,566 | — | 9,111 | ||||||||||||
Total operating expenses | 5,729 | 15,018 | 5,929 | — | 26,676 | ||||||||||||
Operating (loss) profit | (5,729 | ) | 17,645 | 313 | — | 12,229 | |||||||||||
Non-operating expenses: | |||||||||||||||||
Interest expense | 11,949 | — | — | — | 11,949 | ||||||||||||
Other expense, net | (425 | ) | — | 4 | — | (421 | ) | ||||||||||
(Loss) earnings before (benefit) provision for income taxes | (17,253 | ) | 17,645 | 309 | — | 701 | |||||||||||
(Benefit) provision for income taxes | (6,406 | ) | 6,775 | 258 | — | 627 | |||||||||||
Equity earnings (loss) of subsidiaries, net of taxes | 10,921 | 51 | — | (10,972 | ) | — | |||||||||||
Net (loss) earnings | $ | 74 | $ | 10,921 | $ | 51 | $ | (10,972 | ) | $ | 74 | ||||||
Other comprehensive loss: | |||||||||||||||||
Foreign currency translation | (1,892 | ) | (1,892 | ) | (1,892 | ) | 3,784 | (1,892 | ) | ||||||||
Comprehensive loss | $ | (1,818 | ) | $ | 9,029 | $ | (1,841 | ) | $ | (7,188 | ) | $ | (1,818 | ) | |||
Condensed Consolidating Statement of Comprehensive (Loss) Income | |||||||||||||||||
Three months ended March 31, 2013 | |||||||||||||||||
Combined | |||||||||||||||||
Combined | Non- | ||||||||||||||||
Guarantor | Guarantor | ||||||||||||||||
Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Net sales | $ | — | $ | 61,797 | $ | 18,606 | $ | (5,990 | ) | $ | 74,413 | ||||||
Cost of products sold | — | 34,238 | 12,237 | (5,990 | ) | 40,485 | |||||||||||
Gross profit | — | 27,559 | 6,369 | — | 33,928 | ||||||||||||
Operating expenses: | |||||||||||||||||
Selling and administrative expenses | 4,300 | 2,742 | 2,561 | — | 9,603 | ||||||||||||
Advertising costs | — | 2,099 | 1,474 | — | 3,573 | ||||||||||||
Research and development costs | — | 638 | — | — | 638 | ||||||||||||
Amortization of acquired intangible assets | — | 7,545 | 1,630 | — | 9,175 | ||||||||||||
Total operating expenses | 4,300 | 13,024 | 5,665 | — | 22,989 | ||||||||||||
Operating (loss) profit | (4,300 | ) | 14,535 | 704 | — | 10,939 | |||||||||||
Non-operating expenses: | |||||||||||||||||
Interest expense | 11,906 | — | — | — | 11,906 | ||||||||||||
Other expense, net | — | 4 | 108 | — | 112 | ||||||||||||
(Loss) earnings before income taxes | (16,206 | ) | 14,531 | 596 | — | (1,079 | ) | ||||||||||
(Benefit) provision for income taxes | (6,103 | ) | 5,373 | 157 | — | (573 | ) | ||||||||||
Equity earnings of subsidiaries, net of taxes | 9,597 | 439 | — | (10,036 | ) | — | |||||||||||
Net (loss) earnings | $ | (506 | ) | $ | 9,597 | $ | 439 | $ | (10,036 | ) | $ | (506 | ) | ||||
Other comprehensive (loss) income: | |||||||||||||||||
Foreign currency translation | (1,760 | ) | (1,760 | ) | (1,760 | ) | 3,520 | (1,760 | ) | ||||||||
Comprehensive (loss) income | $ | (2,266 | ) | $ | 7,837 | $ | (1,321 | ) | $ | (6,516 | ) | $ | (2,266 | ) | |||
Condensed Consolidating Statement of Cash Flows | |||||||||||||||||
Three months ended March 31, 2014 | |||||||||||||||||
Issuer | Combined | Combined | Eliminations | Consolidated | |||||||||||||
Guarantor | Non- | ||||||||||||||||
Subsidiaries | Guarantor | ||||||||||||||||
Subsidiaries | |||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net (loss) earnings | $ | 74 | $ | 10,921 | $ | 51 | $ | (10,972 | ) | $ | 74 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||||||||
Depreciation and amortization | 1,550 | 8,577 | 1,792 | — | 11,919 | ||||||||||||
Share-based compensation | 27 | — | — | — | 27 | ||||||||||||
Deferred income taxes | (16 | ) | (3,060 | ) | (22 | ) | — | (3,098 | ) | ||||||||
Equity earnings of subsidiaries, net of taxes | (10,921 | ) | (51 | ) | — | 10,972 | — | ||||||||||
Other | — | — | 2 | — | 2 | ||||||||||||
Cash effect of changes in: | |||||||||||||||||
Accounts receivable, net | 72 | (18,215 | ) | (587 | ) | — | (18,730 | ) | |||||||||
Inventories | — | (2,163 | ) | (423 | ) | — | (2,586 | ) | |||||||||
Prepaid taxes | (6,432 | ) | 9,262 | — | 2,830 | ||||||||||||
Other current assets | (216 | ) | 34 | (269 | ) | — | (451 | ) | |||||||||
Accounts payable and accrued liabilities | 7,537 | 13,171 | 1,228 | — | 21,936 | ||||||||||||
Intercompany and other | 18,277 | (18,406 | ) | 231 | — | 102 | |||||||||||
Net cash provided by operating activities: | 9,952 | 70 | 2,003 | — | 12,025 | ||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Capital expenditures | (206 | ) | (70 | ) | (52 | ) | — | (328 | ) | ||||||||
Acquisition, net | (10,000 | ) | — | — | — | (10,000 | ) | ||||||||||
Net cash used in investing activities | (10,206 | ) | (70 | ) | (52 | ) | — | (10,328 | ) | ||||||||
Cash flows from financing activities: | |||||||||||||||||
Principal payments on term loan | (9,750 | ) | — | — | — | (9,750 | ) | ||||||||||
Payment of advance from Parent | (50 | ) | — | — | — | (50 | ) | ||||||||||
Net cash used in by financing activities | (9,800 | ) | — | — | — | (9,800 | ) | ||||||||||
Effect of exchange rate changes on cash | — | — | 32 | — | 32 | ||||||||||||
Net increase in cash | (10,054 | ) | — | 1,983 | — | (8,071 | ) | ||||||||||
Cash at beginning of period | 14,843 | — | 6,410 | — | 21,253 | ||||||||||||
Cash at end of period | $ | 4,789 | $ | — | $ | 8,393 | $ | — | $ | 13,182 | |||||||
Condensed Consolidating Statement of Cash Flows | |||||||||||||||||
Three months ended March 31, 2013 | |||||||||||||||||
Combined | |||||||||||||||||
Combined | Non- | ||||||||||||||||
Guarantor | Guarantor | ||||||||||||||||
Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net (loss) earnings | $ | (506 | ) | $ | 9,597 | $ | 439 | $ | (10,036 | ) | $ | (506 | ) | ||||
Adjustments: | |||||||||||||||||
Depreciation and amortization | 1,493 | 8,593 | 1,797 | — | 11,883 | ||||||||||||
Share-based compensation | 65 | — | — | — | 65 | ||||||||||||
Deferred income taxes | — | (3,648 | ) | 316 | — | (3,332 | ) | ||||||||||
Equity earnings of subsidiaries, net of taxes | (9,597 | ) | (439 | ) | — | 10,036 | — | ||||||||||
Cash effect of changes in: | |||||||||||||||||
Accounts receivable | 34 | (8,225 | ) | 2,328 | — | (5,863 | ) | ||||||||||
Inventories | — | (2,200 | ) | (733 | ) | — | (2,933 | ) | |||||||||
Prepaid taxes | 1,940 | — | 82 | — | 2,022 | ||||||||||||
Other current assets | 485 | (2,391 | ) | 60 | — | (1,846 | ) | ||||||||||
Accounts payable and accrued liabilities | 3,964 | 7,682 | (2,859 | ) | — | 8,787 | |||||||||||
Due from Clorox | — | — | (31 | ) | — | (31 | ) | ||||||||||
Intercompany and other | 3,637 | (8,176 | ) | 4,490 | — | (49 | ) | ||||||||||
Net cash (used in) provided by operating activities | 1,515 | 793 | 5,889 | — | 8,197 | ||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Capital expenditures | — | (793 | ) | (151 | ) | — | (944 | ) | |||||||||
Net cash used in investing activities | — | (793 | ) | (151 | ) | — | (944 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||||
Principal payments on term loan | (750 | ) | — | — | — | (750 | ) | ||||||||||
Net cash provided by financing activities | (750 | ) | — | — | — | (750 | ) | ||||||||||
Effect of exchange rate on cash | 1 | 1 | |||||||||||||||
Net increase (decrease) in cash | 765 | — | 5,739 | — | 6,504 | ||||||||||||
Cash at beginning of period | 1,477 | — | 2,729 | — | 4,206 | ||||||||||||
Cash at end of period | $ | 2,242 | $ | — | $ | 8,468 | $ | — | $ | 10,710 |
Investment_in_Affiliate
Investment in Affiliate | 3 Months Ended |
Mar. 31, 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 Company did not evaluate the investment for impairment due the limited holding time period. 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. 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 on an arm’s-length basis 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. |
The_Company_and_Summary_of_Sig1
The Company and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
The Company and Summary of Significant Accounting Policies | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The interim condensed consolidated financial statements for the three month periods ended March 31, 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. Further, the results for the interim period ended March 31, 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, which generally 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 Loss. | |
Amounts received by the Company from the licensing of certain trademarks are recorded as deferred revenue in the Condensed Consolidated Balance Sheets and 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 a 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 (income) expense, 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) income. 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 three months ended March 31, 2014, goodwill decreased by $1.3 million due to currency translation. | |
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 expenses 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. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
The Company adopted the following pronouncements effective January 1, 2014: | |
In February 2013 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2013-04—Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (ASU 2013-04). The ASU requires reporting and disclosure about obligations resulting from joint and several liability arrangements within its scope for which the total amount of the obligation is fixed at the reporting date. For the Company, ASU 2013-04 is effective January 1, 2014 for fiscal year 2014 and interim periods therein. The guidance in ASU 2013-04 is to be applied retrospectively for those obligations resulting from joint and several liability arrangements within its scope that exist at January 1, 2014. Adoption of ASU 2013-04 did not have a material impact on the Company. |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Inventories | ' | |||||||
Schedule of inventories | ' | |||||||
Inventories consisted of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Finished goods | $ | 29,285 | $ | 28,400 | ||||
Raw materials and packaging | 9,724 | 7,896 | ||||||
Allowances for obsolescence | (2,380 | ) | (2,253 | ) | ||||
$ | 36,629 | $ | 34,043 |
Fair_Value_Measurement_of_Asse1
Fair Value Measurement of Assets and Liabilities (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 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): | ||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||
Value | Value | Value | Value | |||||||||||
Term loan | $ | 276,637 | $ | 281,953 | $ | 285,982 | $ | 291,000 | ||||||
Senior notes | 267,906 | 288,750 | 267,600 | 267,438 | ||||||||||
Income_taxes_Tables
Income taxes (Tables) | 3 Months Ended | |||||
Mar. 31, 2014 | ||||||
Income taxes | ' | |||||
Schedule of Company's effective tax rate | ' | |||||
Three months ended March 31, | ||||||
2014 | 2013 | |||||
Effective tax rate | 89.4 | % | 53.1 | % |
Segment_Data_Tables
Segment Data (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 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 March 31, 2014 | ||||||||||||||
North | International | Corporate | Consolidated | |||||||||||
America | ||||||||||||||
Net sales | $ | 61,567 | $ | 18,992 | $ | — | $ | 80,559 | ||||||
Earnings (loss) before income taxes | 18,758 | 3,003 | (21,060 | ) | 701 | |||||||||
Capital expenditures | 276 | 52 | — | 328 | ||||||||||
Depreciation of property, plant and equipment and amortization of intangible assets | 1,577 | 122 | 9,111 | 10,810 | ||||||||||
Share based compensation | 24 | 3 | — | 27 | ||||||||||
Three Months Ended March 31, 2013 | ||||||||||||||
North | International | Corporate | Consolidated | |||||||||||
America | ||||||||||||||
Net sales | $ | 56,614 | $ | 17,799 | $ | — | $ | 74,413 | ||||||
Earnings (loss) before income taxes | 18,276 | 1,726 | (21,081 | ) | (1,079 | ) | ||||||||
Capital expenditures | 793 | 151 | — | 944 | ||||||||||
Depreciation of property plant and equipment and amortization of intangible assets | 1,511 | 146 | 9,175 | 10,832 | ||||||||||
Share based compensation | 62 | 3 | — | 65 | ||||||||||
Financial_Information_for_the_1
Financial Information for the Company and Its Subsidiaries (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Financial Information for the Company and Its Subsidiaries | ' | ||||||||||||||||
Schedule of Condensed Consolidating Balance Sheet | ' | ||||||||||||||||
March 31, 2014 | |||||||||||||||||
Issuer | Combined | Combined | Eliminations | Consolidated | |||||||||||||
Guarantor | Non- | ||||||||||||||||
Subsidiaries | Guarantor | ||||||||||||||||
Subsidiaries | |||||||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash | $ | 4,789 | $ | — | $ | 8,393 | $ | — | $ | 13,182 | |||||||
Accounts receivable, net | 6 | 63,100 | 17,834 | — | 80,940 | ||||||||||||
Inventories | — | 26,716 | 9,913 | — | 36,629 | ||||||||||||
Other current assets | 60,487 | (54,367 | ) | 1,280 | — | 7,400 | |||||||||||
Total current assets | 65,282 | 35,449 | 37,420 | — | 138,151 | ||||||||||||
Property, plant and equipment, net | 7,823 | 17,078 | 2,658 | — | 27,559 | ||||||||||||
Goodwill | — | 310,576 | 46,931 | — | 357,507 | ||||||||||||
Intangible assets, net | — | 268,916 | 35,982 | (1,244 | ) | 303,654 | |||||||||||
Investment in subsidiaries | 627,915 | 113,737 | — | (741,652 | ) | — | |||||||||||
Investment in affiliate | 10,000 | — | — | — | 10,000 | ||||||||||||
Deferred financing costs and other assets, net | 3,265 | 87 | — | — | 3,352 | ||||||||||||
Total assets | $ | 714,285 | $ | 745,843 | $ | 122,991 | $ | (742,896 | ) | $ | 840,223 | ||||||
LIABILITIES AND SHAREHOLDER’S EQUITY | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Accounts payable | $ | 786 | $ | 16,255 | $ | 4,192 | $ | — | $ | 21,233 | |||||||
Accrued expenses and other current liabilities | 16,981 | 10,283 | 5,021 | — | 32,285 | ||||||||||||
Due to Clorox | 69 | 23 | (1 | ) | — | 91 | |||||||||||
Due to Parent | 695 | — | — | — | 695 | ||||||||||||
Current portion of long-term debt, less discount | 79 | — | — | — | 79 | ||||||||||||
Total current liabilities | 18,610 | 26,561 | 9,212 | — | 54,383 | ||||||||||||
Long-term debt, less discount and current portion | 544,464 | — | — | — | 544,464 | ||||||||||||
Other liability | 2,500 | — | — | — | 2,500 | ||||||||||||
Deferred income taxes | 5,121 | 81,367 | 42 | — | 86,530 | ||||||||||||
Total liabilities | 570,695 | 107,928 | 9,254 | — | 687,877 | ||||||||||||
Shareholder’s equity | 143,590 | 637,915 | 113,737 | (742,896 | ) | 152,346 | |||||||||||
Total liabilities and shareholder’s equity | $ | 714,285 | $ | 745,843 | $ | 122,991 | $ | (742,896 | ) | $ | 840,223 | ||||||
Year Ended December 31, 2013 | |||||||||||||||||
Issuer | Combined | Combined | Eliminations | Consolidated | |||||||||||||
Guarantor | Non- | Total | |||||||||||||||
Subsidiaries | Guarantor | ||||||||||||||||
Subsidiaries | |||||||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash | $ | 14,843 | $ | — | $ | 6,410 | $ | — | $ | 21,253 | |||||||
Accounts receivable | 78 | 44,885 | 17,247 | — | 62,210 | ||||||||||||
Inventory | — | 24,553 | 9,490 | — | 34,043 | ||||||||||||
Other current assets | 53,853 | (45,072 | ) | 1,009 | — | 9,790 | |||||||||||
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 | $ | 5,103 | $ | 2,856 | $ | — | $ | 8,128 | |||||||
Accrued expenses and other current liabilities | 10,063 | 8,263 | 5,129 | — | 23,455 | ||||||||||||
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 March 31, 2014 | |||||||||||||||||
Issuer | Combined | Combined | Eliminations | Consolidated | |||||||||||||
Guarantor | Non- | ||||||||||||||||
Subsidiaries | Guarantor | ||||||||||||||||
Subsidiaries | |||||||||||||||||
Net sales | $ | — | $ | 66,428 | $ | 20,359 | $ | (6,228 | ) | $ | 80,559 | ||||||
Cost of products sold | — | 33,765 | 14,117 | (6,228 | ) | 41,654 | |||||||||||
Gross profit | — | 32,663 | 6,242 | — | 38,905 | ||||||||||||
Operating expenses: | |||||||||||||||||
Selling and administrative expenses | 5,729 | 2,941 | 2,882 | — | 11,552 | ||||||||||||
Advertising costs | — | 3,924 | 1,481 | — | 5,405 | ||||||||||||
Research and development costs | — | 608 | — | — | 608 | ||||||||||||
Amortization of acquired intangible assets | — | 7,545 | 1,566 | — | 9,111 | ||||||||||||
Total operating expenses | 5,729 | 15,018 | 5,929 | — | 26,676 | ||||||||||||
Operating (loss) profit | (5,729 | ) | 17,645 | 313 | — | 12,229 | |||||||||||
Non-operating expenses: | |||||||||||||||||
Interest expense | 11,949 | — | — | — | 11,949 | ||||||||||||
Other expense, net | (425 | ) | — | 4 | — | (421 | ) | ||||||||||
(Loss) earnings before (benefit) provision for income taxes | (17,253 | ) | 17,645 | 309 | — | 701 | |||||||||||
(Benefit) provision for income taxes | (6,406 | ) | 6,775 | 258 | — | 627 | |||||||||||
Equity earnings (loss) of subsidiaries, net of taxes | 10,921 | 51 | — | (10,972 | ) | — | |||||||||||
Net (loss) earnings | $ | 74 | $ | 10,921 | $ | 51 | $ | (10,972 | ) | $ | 74 | ||||||
Other comprehensive loss: | |||||||||||||||||
Foreign currency translation | (1,892 | ) | (1,892 | ) | (1,892 | ) | 3,784 | (1,892 | ) | ||||||||
Comprehensive loss | $ | (1,818 | ) | $ | 9,029 | $ | (1,841 | ) | $ | (7,188 | ) | $ | (1,818 | ) | |||
Three months ended March 31, 2013 | |||||||||||||||||
Combined | |||||||||||||||||
Combined | Non- | ||||||||||||||||
Guarantor | Guarantor | ||||||||||||||||
Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Net sales | $ | — | $ | 61,797 | $ | 18,606 | $ | (5,990 | ) | $ | 74,413 | ||||||
Cost of products sold | — | 34,238 | 12,237 | (5,990 | ) | 40,485 | |||||||||||
Gross profit | — | 27,559 | 6,369 | — | 33,928 | ||||||||||||
Operating expenses: | |||||||||||||||||
Selling and administrative expenses | 4,300 | 2,742 | 2,561 | — | 9,603 | ||||||||||||
Advertising costs | — | 2,099 | 1,474 | — | 3,573 | ||||||||||||
Research and development costs | — | 638 | — | — | 638 | ||||||||||||
Amortization of acquired intangible assets | — | 7,545 | 1,630 | — | 9,175 | ||||||||||||
Total operating expenses | 4,300 | 13,024 | 5,665 | — | 22,989 | ||||||||||||
Operating (loss) profit | (4,300 | ) | 14,535 | 704 | — | 10,939 | |||||||||||
Non-operating expenses: | |||||||||||||||||
Interest expense | 11,906 | — | — | — | 11,906 | ||||||||||||
Other expense, net | — | 4 | 108 | — | 112 | ||||||||||||
(Loss) earnings before income taxes | (16,206 | ) | 14,531 | 596 | — | (1,079 | ) | ||||||||||
(Benefit) provision for income taxes | (6,103 | ) | 5,373 | 157 | — | (573 | ) | ||||||||||
Equity earnings of subsidiaries, net of taxes | 9,597 | 439 | — | (10,036 | ) | — | |||||||||||
Net (loss) earnings | $ | (506 | ) | $ | 9,597 | $ | 439 | $ | (10,036 | ) | $ | (506 | ) | ||||
Other comprehensive (loss) income: | |||||||||||||||||
Foreign currency translation | (1,760 | ) | (1,760 | ) | (1,760 | ) | 3,520 | (1,760 | ) | ||||||||
Comprehensive (loss) income | $ | (2,266 | ) | $ | 7,837 | $ | (1,321 | ) | $ | (6,516 | ) | $ | (2,266 | ) | |||
Schedule of Condensed Consolidating Statement of Cash Flows | ' | ||||||||||||||||
Three months ended March 31, 2014 | |||||||||||||||||
Issuer | Combined | Combined | Eliminations | Consolidated | |||||||||||||
Guarantor | Non- | ||||||||||||||||
Subsidiaries | Guarantor | ||||||||||||||||
Subsidiaries | |||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net (loss) earnings | $ | 74 | $ | 10,921 | $ | 51 | $ | (10,972 | ) | $ | 74 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||||||||
Depreciation and amortization | 1,550 | 8,577 | 1,792 | — | 11,919 | ||||||||||||
Share-based compensation | 27 | — | — | — | 27 | ||||||||||||
Deferred income taxes | (16 | ) | (3,060 | ) | (22 | ) | — | (3,098 | ) | ||||||||
Equity earnings of subsidiaries, net of taxes | (10,921 | ) | (51 | ) | — | 10,972 | — | ||||||||||
Other | — | — | 2 | — | 2 | ||||||||||||
Cash effect of changes in: | |||||||||||||||||
Accounts receivable, net | 72 | (18,215 | ) | (587 | ) | — | (18,730 | ) | |||||||||
Inventories | — | (2,163 | ) | (423 | ) | — | (2,586 | ) | |||||||||
Prepaid taxes | (6,432 | ) | 9,262 | — | 2,830 | ||||||||||||
Other current assets | (216 | ) | 34 | (269 | ) | — | (451 | ) | |||||||||
Accounts payable and accrued liabilities | 7,537 | 13,171 | 1,228 | — | 21,936 | ||||||||||||
Intercompany and other | 18,277 | (18,406 | ) | 231 | — | 102 | |||||||||||
Net cash provided by operating activities: | 9,952 | 70 | 2,003 | — | 12,025 | ||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Capital expenditures | (206 | ) | (70 | ) | (52 | ) | — | (328 | ) | ||||||||
Acquisition, net | (10,000 | ) | — | — | — | (10,000 | ) | ||||||||||
Net cash used in investing activities | (10,206 | ) | (70 | ) | (52 | ) | — | (10,328 | ) | ||||||||
Cash flows from financing activities: | |||||||||||||||||
Principal payments on term loan | (9,750 | ) | — | — | — | (9,750 | ) | ||||||||||
Payment of advance from Parent | (50 | ) | — | — | — | (50 | ) | ||||||||||
Net cash used in by financing activities | (9,800 | ) | — | — | — | (9,800 | ) | ||||||||||
Effect of exchange rate changes on cash | — | — | 32 | — | 32 | ||||||||||||
Net increase in cash | (10,054 | ) | — | 1,983 | — | (8,071 | ) | ||||||||||
Cash at beginning of period | 14,843 | — | 6,410 | — | 21,253 | ||||||||||||
Cash at end of period | $ | 4,789 | $ | — | $ | 8,393 | $ | — | $ | 13,182 | |||||||
Three months ended March 31, 2013 | |||||||||||||||||
Combined | |||||||||||||||||
Combined | Non- | ||||||||||||||||
Guarantor | Guarantor | ||||||||||||||||
Issuer | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net (loss) earnings | $ | (506 | ) | $ | 9,597 | $ | 439 | $ | (10,036 | ) | $ | (506 | ) | ||||
Adjustments: | |||||||||||||||||
Depreciation and amortization | 1,493 | 8,593 | 1,797 | — | 11,883 | ||||||||||||
Share-based compensation | 65 | — | — | — | 65 | ||||||||||||
Deferred income taxes | — | (3,648 | ) | 316 | — | (3,332 | ) | ||||||||||
Equity earnings of subsidiaries, net of taxes | (9,597 | ) | (439 | ) | — | 10,036 | — | ||||||||||
Cash effect of changes in: | |||||||||||||||||
Accounts receivable | 34 | (8,225 | ) | 2,328 | — | (5,863 | ) | ||||||||||
Inventories | — | (2,200 | ) | (733 | ) | — | (2,933 | ) | |||||||||
Prepaid taxes | 1,940 | — | 82 | — | 2,022 | ||||||||||||
Other current assets | 485 | (2,391 | ) | 60 | — | (1,846 | ) | ||||||||||
Accounts payable and accrued liabilities | 3,964 | 7,682 | (2,859 | ) | — | 8,787 | |||||||||||
Due from Clorox | — | — | (31 | ) | — | (31 | ) | ||||||||||
Intercompany and other | 3,637 | (8,176 | ) | 4,490 | — | (49 | ) | ||||||||||
Net cash (used in) provided by operating activities | 1,515 | 793 | 5,889 | — | 8,197 | ||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Capital expenditures | — | (793 | ) | (151 | ) | — | (944 | ) | |||||||||
Net cash used in investing activities | — | (793 | ) | (151 | ) | — | (944 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||||
Principal payments on term loan | (750 | ) | — | — | — | (750 | ) | ||||||||||
Net cash provided by financing activities | (750 | ) | — | — | — | (750 | ) | ||||||||||
Effect of exchange rate on cash | 1 | 1 | |||||||||||||||
Net increase (decrease) in cash | 765 | — | 5,739 | — | 6,504 | ||||||||||||
Cash at beginning of period | 1,477 | — | 2,729 | — | 4,206 | ||||||||||||
Cash at end of period | $ | 2,242 | $ | — | $ | 8,468 | $ | — | $ | 10,710 |
The_Company_and_Summary_of_Sig2
The Company and Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
item | |
The Company and Summary of Significant Accounting Policies | ' |
Number of most recognizable brands held | 2 |
Number of countries in which the entity has distributor relationships | 50 |
Goodwill and Intangible Assets | ' |
Decrease in goodwill related to preliminary allocation of purchase price for an acquisition | $1,300,000 |
Income Taxes | ' |
Goodwill expected to be deductible for tax purposes | $0 |
Inventories_Details
Inventories (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventories | ' | ' |
Finished goods | $29,285 | $28,400 |
Raw materials and packaging | 9,724 | 7,896 |
Allowances for obsolescence | -2,380 | -2,253 |
Inventory, net | $36,629 | $34,043 |
Fair_Value_Measurement_of_Asse2
Fair Value Measurement of Assets and Liabilities (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Carrying Value | ' | ' |
Fair Value Measurement of Assets and Liabilities | ' | ' |
Term loan | $276,637 | $285,982 |
Senior notes | 267,906 | 267,600 |
Fair Value | ' | ' |
Fair Value Measurement of Assets and Liabilities | ' | ' |
Term loan | 281,953 | 291,000 |
Senior notes | $288,750 | $267,438 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (Potential contract claim, Clorox, USD $) | Mar. 31, 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 |
Income_taxes_Details
Income taxes (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Income taxes | ' | ' |
Effective tax rate (as a percent) | 89.40% | 53.10% |
Discrete tax charge | $0.40 | ' |
Segment_Data_Details
Segment Data (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
item | ||
Segment Data | ' | ' |
Number of geographic segments | 2 | ' |
Segment Data | ' | ' |
Net sales | $80,559 | $74,413 |
Earnings (loss) before income taxes | 701 | -1,079 |
Capital expenditures | 328 | 944 |
Depreciation and amortization | 10,810 | 10,832 |
Share based compensation | 27 | 65 |
Operating segment | North America | ' | ' |
Segment Data | ' | ' |
Net sales | 61,567 | 56,614 |
Earnings (loss) before income taxes | 18,758 | 18,276 |
Capital expenditures | 276 | 793 |
Depreciation and amortization | 1,577 | 1,511 |
Share based compensation | 24 | 62 |
Operating segment | International | ' | ' |
Segment Data | ' | ' |
Net sales | 18,992 | 17,799 |
Earnings (loss) before income taxes | 3,003 | 1,726 |
Capital expenditures | 52 | 151 |
Depreciation and amortization | 122 | 146 |
Share based compensation | 3 | 3 |
Corporate | ' | ' |
Segment Data | ' | ' |
Earnings (loss) before income taxes | -21,060 | -21,081 |
Depreciation and amortization | $9,111 | $9,175 |
Financial_Information_for_the_2
Financial Information for the Company and Its Subsidiaries (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||||
Current assets: | ' | ' | ' | ' |
Cash | $13,182 | $21,253 | $10,710 | $4,206 |
Accounts receivable, net | 80,940 | 62,210 | ' | ' |
Inventories | 36,629 | 34,043 | ' | ' |
Other current assets | 7,400 | 9,790 | ' | ' |
Total current assets | 138,151 | 127,296 | ' | ' |
Property, plant and equipment | 27,559 | 28,936 | ' | ' |
Goodwill | 357,507 | 358,826 | ' | ' |
Intangible assets, net | 303,654 | 313,470 | ' | ' |
Investment in affiliate | 10,000 | ' | ' | ' |
Deferred financing costs and other assets, net | 3,352 | 3,719 | ' | ' |
Total assets | 840,223 | 832,247 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 21,233 | 8,128 | ' | ' |
Accrued expenses and other current liabilities | 32,285 | 23,455 | ' | ' |
Current portion of long-term debt, less discount | 79 | 71 | ' | ' |
Total current liabilities | 54,383 | 32,490 | ' | ' |
Long-term debt, less discount and current portion | 544,464 | 553,511 | ' | ' |
Other liability | 2,500 | 2,500 | ' | ' |
Deferred income taxes | 86,530 | 89,610 | ' | ' |
Total liabilities | 687,877 | 678,111 | ' | ' |
Shareholder's equity | 152,346 | 154,136 | ' | ' |
Total liabilities and shareholder's equity | 840,223 | 832,247 | ' | ' |
Clorox | ' | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Due to Parent | 91 | 91 | ' | ' |
Parent | ' | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Due to Parent | 695 | 745 | ' | ' |
Reportable legal entities | Issuer | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash | 4,789 | 14,843 | 2,242 | 1,477 |
Accounts receivable, net | 6 | 78 | ' | ' |
Other current assets | 60,487 | 53,853 | ' | ' |
Total current assets | 65,282 | 68,774 | ' | ' |
Property, plant and equipment | 7,823 | 8,061 | ' | ' |
Investment in subsidiaries | 627,915 | 647,107 | ' | ' |
Investment in affiliate | 10,000 | ' | ' | ' |
Deferred financing costs and other assets, net | 3,265 | 3,632 | ' | ' |
Total assets | 714,285 | 727,574 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 786 | 169 | ' | ' |
Accrued expenses and other current liabilities | 16,981 | 10,063 | ' | ' |
Current portion of long-term debt, less discount | 79 | 71 | ' | ' |
Total current liabilities | 18,610 | 11,117 | ' | ' |
Long-term debt, less discount and current portion | 544,464 | 553,511 | ' | ' |
Other liability | 2,500 | 2,500 | ' | ' |
Deferred income taxes | 5,121 | 5,121 | ' | ' |
Total liabilities | 570,695 | 572,249 | ' | ' |
Shareholder's equity | 143,590 | 155,325 | ' | ' |
Total liabilities and shareholder's equity | 714,285 | 727,574 | ' | ' |
Reportable legal entities | Issuer | Clorox | ' | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Due to Parent | 69 | 69 | ' | ' |
Reportable legal entities | Issuer | Parent | ' | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Due to Parent | 695 | 745 | ' | ' |
Reportable legal entities | Combined Guarantor Subsidiaries | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Accounts receivable, net | 63,100 | 44,885 | ' | ' |
Inventories | 26,716 | 24,553 | ' | ' |
Other current assets | -54,367 | -45,072 | ' | ' |
Total current assets | 35,449 | 24,366 | ' | ' |
Property, plant and equipment | 17,078 | 18,037 | ' | ' |
Goodwill | 310,576 | 310,576 | ' | ' |
Intangible assets, net | 268,916 | 276,461 | ' | ' |
Investment in subsidiaries | 113,737 | 115,394 | ' | ' |
Deferred financing costs and other assets, net | 87 | 87 | ' | ' |
Total assets | 745,843 | 744,921 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 16,255 | 5,103 | ' | ' |
Accrued expenses and other current liabilities | 10,283 | 8,263 | ' | ' |
Total current liabilities | 26,561 | 13,389 | ' | ' |
Deferred income taxes | 81,367 | 84,425 | ' | ' |
Total liabilities | 107,928 | 97,814 | ' | ' |
Shareholder's equity | 637,915 | 647,107 | ' | ' |
Total liabilities and shareholder's equity | 745,843 | 744,921 | ' | ' |
Reportable legal entities | Combined Guarantor Subsidiaries | Clorox | ' | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Due to Parent | 23 | 23 | ' | ' |
Reportable legal entities | Combined Non-Guarantor Subsidiaries | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash | 8,393 | 6,410 | 8,468 | 2,729 |
Accounts receivable, net | 17,834 | 17,247 | ' | ' |
Inventories | 9,913 | 9,490 | ' | ' |
Other current assets | 1,280 | 1,009 | ' | ' |
Total current assets | 37,420 | 34,156 | ' | ' |
Property, plant and equipment | 2,658 | 2,838 | ' | ' |
Goodwill | 46,931 | 48,250 | ' | ' |
Intangible assets, net | 35,982 | 38,198 | ' | ' |
Total assets | 122,991 | 123,442 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 4,192 | 2,856 | ' | ' |
Accrued expenses and other current liabilities | 5,021 | 5,129 | ' | ' |
Total current liabilities | 9,212 | 7,984 | ' | ' |
Deferred income taxes | 42 | 64 | ' | ' |
Total liabilities | 9,254 | 8,048 | ' | ' |
Shareholder's equity | 113,737 | 115,394 | ' | ' |
Total liabilities and shareholder's equity | 122,991 | 123,442 | ' | ' |
Reportable legal entities | Combined Non-Guarantor Subsidiaries | Clorox | ' | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Due to Parent | -1 | -1 | ' | ' |
Eliminations | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Intangible assets, net | -1,244 | -1,189 | ' | ' |
Investment in subsidiaries | -741,652 | -762,501 | ' | ' |
Total assets | -742,896 | -763,690 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Shareholder's equity | -742,896 | -763,690 | ' | ' |
Total liabilities and shareholder's equity | ($742,896) | ($763,690) | ' | ' |
Financial_Information_for_the_3
Financial Information for the Company and Its Subsidiaries (Details 2) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Condensed Consolidating Statement of Comprehensive Income (Loss) | ' | ' |
Net sales | $80,559 | $74,413 |
Cost of products sold | 41,654 | 40,485 |
Gross profit | 38,905 | 33,928 |
Operating expenses: | ' | ' |
Selling and administrative expenses | 11,552 | 9,603 |
Advertising costs | 5,405 | 3,573 |
Research and development costs | 608 | 638 |
Amortization of acquired intangible assets | 9,111 | 9,175 |
Total operating expenses | 26,676 | 22,989 |
Operating (loss) profit | 12,229 | 10,939 |
Non-operating expenses (income) | ' | ' |
Interest expense | 11,949 | 11,906 |
Other expense, net | -421 | 112 |
Income (loss) before benefit for income taxes | 701 | -1,079 |
(Benefit) provision for income taxes | 627 | 573 |
Net income (loss) | 74 | -506 |
Other comprehensive (loss) income: | ' | ' |
Foreign currency translation | -1,892 | -1,760 |
Comprehensive loss | -1,818 | -2,266 |
Reportable legal entities | Issuer | ' | ' |
Operating expenses: | ' | ' |
Selling and administrative expenses | 5,729 | 4,300 |
Total operating expenses | 5,729 | 4,300 |
Operating (loss) profit | -5,729 | -4,300 |
Non-operating expenses (income) | ' | ' |
Interest expense | 11,949 | 11,906 |
Other expense, net | -425 | ' |
Income (loss) before benefit for income taxes | -17,253 | -16,206 |
(Benefit) provision for income taxes | -6,406 | -6,103 |
Equity earnings (loss) of subsidiaries, net of taxes | 10,921 | 9,597 |
Net income (loss) | 74 | -506 |
Other comprehensive (loss) income: | ' | ' |
Foreign currency translation | -1,892 | -1,760 |
Comprehensive loss | -1,818 | -2,266 |
Reportable legal entities | Combined Guarantor Subsidiaries | ' | ' |
Condensed Consolidating Statement of Comprehensive Income (Loss) | ' | ' |
Net sales | 66,428 | 61,797 |
Cost of products sold | 33,765 | 34,238 |
Gross profit | 32,663 | 27,559 |
Operating expenses: | ' | ' |
Selling and administrative expenses | 2,941 | 2,742 |
Advertising costs | 3,924 | 2,099 |
Research and development costs | 608 | 638 |
Amortization of acquired intangible assets | 7,545 | 7,545 |
Total operating expenses | 15,018 | 13,024 |
Operating (loss) profit | 17,645 | 14,535 |
Non-operating expenses (income) | ' | ' |
Other expense, net | ' | 4 |
Income (loss) before benefit for income taxes | 17,645 | 14,531 |
(Benefit) provision for income taxes | 6,775 | 5,373 |
Equity earnings (loss) of subsidiaries, net of taxes | 51 | 439 |
Net income (loss) | 10,921 | 9,597 |
Other comprehensive (loss) income: | ' | ' |
Foreign currency translation | -1,892 | -1,760 |
Comprehensive loss | 9,029 | 7,837 |
Reportable legal entities | Combined Non-Guarantor Subsidiaries | ' | ' |
Condensed Consolidating Statement of Comprehensive Income (Loss) | ' | ' |
Net sales | 20,359 | 18,606 |
Cost of products sold | 14,117 | 12,237 |
Gross profit | 6,242 | 6,369 |
Operating expenses: | ' | ' |
Selling and administrative expenses | 2,882 | 2,561 |
Advertising costs | 1,481 | 1,474 |
Amortization of acquired intangible assets | 1,566 | 1,630 |
Total operating expenses | 5,929 | 5,665 |
Operating (loss) profit | 313 | 704 |
Non-operating expenses (income) | ' | ' |
Other expense, net | 4 | 108 |
Income (loss) before benefit for income taxes | 309 | 596 |
(Benefit) provision for income taxes | 258 | 157 |
Net income (loss) | 51 | 439 |
Other comprehensive (loss) income: | ' | ' |
Foreign currency translation | -1,892 | -1,760 |
Comprehensive loss | -1,841 | 1,321 |
Eliminations | ' | ' |
Condensed Consolidating Statement of Comprehensive Income (Loss) | ' | ' |
Net sales | -6,228 | -5,990 |
Cost of products sold | -6,228 | -5,990 |
Non-operating expenses (income) | ' | ' |
Equity earnings (loss) of subsidiaries, net of taxes | -10,972 | -10,036 |
Net income (loss) | -10,972 | -10,036 |
Other comprehensive (loss) income: | ' | ' |
Foreign currency translation | 3,784 | 3,520 |
Comprehensive loss | ($7,188) | ($6,516) |
Financial_Information_for_the_4
Financial Information for the Company and Its Subsidiaries (Details 3) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows from operating activities: | ' | ' |
Net (loss) earnings | $74 | ($506) |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 11,919 | 11,883 |
Share-based compensation | 27 | 65 |
Deferred income taxes | -3,098 | -3,332 |
Other | 2 | ' |
Cash effect of changes in: | ' | ' |
Accounts receivable, net | -18,730 | -5,863 |
Inventories | -2,586 | -2,933 |
Prepaid taxes | 2,830 | 2,022 |
Other current assets | -451 | -1,846 |
Accounts payable and accrued liabilities | 21,936 | 8,787 |
Due from Clorox | ' | -31 |
Intercompany and other | 102 | -49 |
Net cash provided by operating activities | 12,025 | 8,197 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -328 | -944 |
Acquisition, net | -10,000 | ' |
Net cash used in investing activities | -10,328 | -944 |
Cash flows from financing activities: | ' | ' |
Principal payments on term loan | -9,750 | -750 |
Payment of advance from Parent | -50 | ' |
Net cash used in financing activities | -9,800 | -750 |
Effect of exchange rate changes on cash | 32 | 1 |
Net increase (decrease) in cash | -8,071 | 6,504 |
Cash at beginning of period | 21,253 | 4,206 |
Cash at end of period | 13,182 | 10,710 |
Reportable legal entities | Issuer | ' | ' |
Cash flows from operating activities: | ' | ' |
Net (loss) earnings | 74 | -506 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 1,550 | 1,493 |
Share-based compensation | 27 | 65 |
Deferred income taxes | -16 | ' |
Equity earnings of subsidiaries, net of taxes | -10,921 | -9,597 |
Cash effect of changes in: | ' | ' |
Accounts receivable, net | 72 | 34 |
Prepaid taxes | -6,432 | 1,940 |
Other current assets | -216 | 485 |
Accounts payable and accrued liabilities | 7,537 | 3,964 |
Intercompany and other | 18,277 | 3,637 |
Net cash provided by operating activities | 9,952 | 1,515 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -206 | ' |
Acquisition, net | -10,000 | ' |
Net cash used in investing activities | -10,206 | ' |
Cash flows from financing activities: | ' | ' |
Principal payments on term loan | -9,750 | -750 |
Payment of advance from Parent | -50 | ' |
Net cash used in financing activities | -9,800 | -750 |
Net increase (decrease) in cash | -10,054 | 765 |
Cash at beginning of period | 14,843 | 1,477 |
Cash at end of period | 4,789 | 2,242 |
Reportable legal entities | Combined Guarantor Subsidiaries | ' | ' |
Cash flows from operating activities: | ' | ' |
Net (loss) earnings | 10,921 | 9,597 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 8,577 | 8,593 |
Deferred income taxes | -3,060 | -3,648 |
Equity earnings of subsidiaries, net of taxes | -51 | -439 |
Cash effect of changes in: | ' | ' |
Accounts receivable, net | -18,215 | -8,225 |
Inventories | -2,163 | -2,200 |
Prepaid taxes | 9,262 | ' |
Other current assets | 34 | -2,391 |
Accounts payable and accrued liabilities | 13,171 | 7,682 |
Intercompany and other | -18,406 | -8,176 |
Net cash provided by operating activities | 70 | 793 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -70 | -793 |
Net cash used in investing activities | -70 | -793 |
Reportable legal entities | Combined Non-Guarantor Subsidiaries | ' | ' |
Cash flows from operating activities: | ' | ' |
Net (loss) earnings | 51 | 439 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 1,792 | 1,797 |
Deferred income taxes | -22 | 316 |
Other | 2 | ' |
Cash effect of changes in: | ' | ' |
Accounts receivable, net | -587 | 2,328 |
Inventories | -423 | -733 |
Prepaid taxes | ' | 82 |
Other current assets | -269 | 60 |
Accounts payable and accrued liabilities | 1,228 | -2,859 |
Due from Clorox | ' | -31 |
Intercompany and other | 231 | 4,490 |
Net cash provided by operating activities | 2,003 | 5,889 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -52 | -151 |
Net cash used in investing activities | -52 | -151 |
Cash flows from financing activities: | ' | ' |
Effect of exchange rate changes on cash | 32 | 1 |
Net increase (decrease) in cash | 1,983 | 5,739 |
Cash at beginning of period | 6,410 | 2,729 |
Cash at end of period | 8,393 | 8,468 |
Eliminations | ' | ' |
Cash flows from operating activities: | ' | ' |
Net (loss) earnings | -10,972 | -10,036 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ' | ' |
Equity earnings of subsidiaries, net of taxes | $10,972 | $10,036 |
Investment_in_Affiliate_Detail
Investment in Affiliate (Details) (IDQ, USD $) | 0 Months Ended |
In Millions, unless otherwise specified | Mar. 17, 2014 |
Investment in Affiliate | ' |
Amount of non-controlling equity interest acquired | $10 |
Transaction costs | 1.2 |
Board member | ' |
Investment in Affiliate | ' |
Transaction costs | $0.30 |