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Prestige Consumer Healthcare Inc. - Quarter Report: 2019 September (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
                                            
FORM 10-Q
(Mark One)                                     
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to _____

Commission File Number: 001-32433
pch03.jpg

PRESTIGE CONSUMER HEALTHCARE INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
 
20-1297589
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
660 White Plains Road
Tarrytown, New York 10591
(Address of Principal Executive Offices) (Zip Code)
(914) 524-6800
(Registrant's Telephone Number, Including Area Code)
 
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
PBH
New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒      No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.  
Large Accelerated Filer
☒
 
 
Accelerated Filer
☐
Non-Accelerated Filer
☐
 
 
Smaller Reporting Company
☐
 
 
 
 
Emerging Growth Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of October 25, 2019, there were 50,232,558 shares of common stock outstanding.



Prestige Consumer Healthcare Inc.
Form 10-Q
Index

PART I.
FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements
 
 
Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended September 30, 2019 and 2018 (unaudited)
 
Condensed Consolidated Balance Sheets as of September 30, 2019 (unaudited) and March 31, 2019
 
Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended September 30, 2019 and 2018 (unaudited)
 
Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2019 and 2018 (unaudited)
 
Notes to Condensed Consolidated Financial Statements (unaudited)
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
 
 
Item 4.
Controls and Procedures
 
 
 
PART II.
OTHER INFORMATION
 
 
 
 
Item 1A.
Risk Factors
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
 
 
Item 6.
Exhibits
 
 
 
 
Signatures
 
 
 

Trademarks and Trade Names
Trademarks and trade names used in this Quarterly Report on Form 10-Q are the property of Prestige Consumer Healthcare Inc. or its subsidiaries, as the case may be.  We have italicized our trademarks or trade names when they appear in this Quarterly Report on Form 10-Q.

- 1-


PART I.
FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS

Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
 
Three Months Ended September 30,
 
Six Months Ended September 30,
(In thousands, except per share data)
2019
 
2018
 
2019
 
2018
Revenues
 
 
 
 
 
 
 
Net sales
$
238,051

 
$
239,354

 
$
470,184

 
$
493,308

Other revenues
18

 
3

 
39

 
29

Total revenues
238,069

 
239,357

 
470,223

 
493,337

 





 
 
 
 
Cost of Sales
 

 
 

 
 

 
 

Cost of sales excluding depreciation
100,318

 
100,647

 
197,418

 
212,716

Cost of sales depreciation
1,000


1,238

 
1,987


2,526

Cost of sales
101,318


101,885

 
199,405


215,242

Gross profit
136,751


137,472

 
270,818


278,095

 





 
 
 
 
Operating Expenses
 


 

 
 

 
 

Advertising and promotion
38,667

 
37,042

 
73,468

 
74,153

General and administrative
22,514

 
24,034

 
44,220

 
47,975

Depreciation and amortization
6,222

 
6,756

 
12,296

 
13,840

Gain on divestiture
—


(1,284
)
 
—


(1,284
)
Total operating expenses
67,403

 
66,548

 
129,984

 
134,684

Operating income
69,348

 
70,924

 
140,834

 
143,411

 
 
 
 
 
 
 
 
Other (income) expense
 
 
 
 
 

 
 

Interest income
(32
)
 
(33
)
 
(75
)

(133
)
Interest expense
24,509

 
27,103

 
49,572

 
53,143

Other expense, net
859

 
335

 
1,275


422

Total other expense
25,336

 
27,405

 
50,772

 
53,432

Income before income taxes
44,012


43,519

 
90,062


89,979

Provision for income taxes
10,760

 
12,678

 
22,885

 
24,672

Net income
$
33,252


$
30,841

 
$
67,177


$
65,307

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 

 
 

Basic
$
0.66

 
$
0.59

 
$
1.32

 
$
1.25

Diluted
$
0.65

 
$
0.59

 
$
1.31

 
$
1.24

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 

 
 

Basic
50,455

 
51,841

 
51,073

 
52,238

Diluted
50,811

 
52,153

 
51,426

 
52,545

 
 
 
 
 
 
 
 
Comprehensive income, net of tax:
 
 
 
 
 
 
 
Currency translation adjustments
(3,584
)

(2,145
)
 
(3,808
)

(5,119
)
Total other comprehensive loss
(3,584
)

(2,145
)
 
(3,808
)

(5,119
)
Comprehensive income
$
29,668


$
28,696

 
$
63,369


$
60,188

See accompanying notes.

- 2-


Prestige Consumer Healthcare Inc.
Condensed Consolidated Balance Sheets
(Unaudited)


(In thousands)
September 30, 2019
 
March 31, 2019
 
 
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
27,905

 
$
27,530

Accounts receivable, net of allowance of $18,095 and $12,965, respectively
142,602

 
148,787

Inventories
126,362

 
119,880

Prepaid expenses and other current assets
8,017

 
4,741

Total current assets
304,886

 
300,938

 
 
 
 
Property, plant and equipment, net
52,500

 
51,176

Operating lease right-of-use asset
33,145

 
—

Goodwill
577,544

 
578,583

Intangible assets, net
2,493,469

 
2,507,210

Other long-term assets
3,216

 
3,129

Total Assets
$
3,464,760

 
$
3,441,036

 
 
 
 
Liabilities and Stockholders' Equity
 

 
 

Current liabilities
 

 
 

Accounts payable
$
64,941

 
$
56,560

Accrued interest payable
9,458

 
9,756

Operating lease liabilities, current portion
7,016

 
—

Other accrued liabilities
65,479

 
60,663

Total current liabilities
146,894

 
126,979

 
 
 
 
Long-term debt, net
1,754,171

 
1,798,598

Deferred income tax liabilities
404,632

 
399,575

Long-term operating lease liability, net of current portion
27,457

 
—

Other long-term liabilities
18,816

 
20,053

Total Liabilities
2,351,970

 
2,345,205

 
 
 
 
Commitments and Contingencies — Note 16


 


 
 
 
 
Stockholders' Equity
 

 
 

Preferred stock - $0.01 par value
 

 
 

Authorized - 5,000 shares
 

 
 

Issued and outstanding - None
—

 
—

Common stock - $0.01 par value
 

 
 

Authorized - 250,000 shares
 

 
 

Issued - 53,755 shares at September 30, 2019 and 53,670 shares at March 31, 2019
537

 
536

Additional paid-in capital
483,595

 
479,150

Treasury stock, at cost - 3,523 shares at September 30, 2019 and 1,871 shares at March 31, 2019
(110,784
)
 
(59,928
)
Accumulated other comprehensive loss, net of tax
(29,555
)
 
(25,747
)
Retained earnings
768,997

 
701,820

Total Stockholders' Equity
1,112,790

 
1,095,831

Total Liabilities and Stockholders' Equity
$
3,464,760

 
$
3,441,036

 See accompanying notes.

- 3-


Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)


Three Months Ended September 30, 2019

Common Stock

Additional Paid-in Capital

Treasury Stock

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Totals
(In thousands)
Shares

Par
Value


Shares

Amount



Balances at June 30, 2019
53,741


$
537


$
480,805


2,848


$
(89,493
)

$
(25,971
)

$
735,745


$
1,101,623

Stock-based compensation
—


—


2,521


—


—


—


—


2,521

Exercise of stock options
9


—


269


—


—


—


—


269

Issuance of shares related to restricted stock
5


—


—


—


—


—


—


—

Treasury share repurchases
—


—


—


675


(21,291
)

—


—


(21,291
)
Net income
—


—


—


—


—


—


33,252


33,252

Comprehensive loss
—


—


—


—


—


(3,584
)

—


(3,584
)
Balances at September 30, 2019
53,755


$
537


$
483,595


3,523


$
(110,784
)

$
(29,555
)

$
768,997


$
1,112,790




Three Months Ended September 30, 2018

Common Stock

Additional Paid-in Capital

Treasury Stock

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Totals
(In thousands)
Shares

Par
Value


Shares

Amount



Balances at June 30, 2018
53,603


$
536


$
471,318


1,871


$
(59,928
)

$
(22,289
)

$
772,086


$
1,161,723

Stock-based compensation
—


—


2,671


—


—


—


—


2,671

Exercise of stock options
4


—


148


—


—


—


—


148

Issuance of shares related to restricted stock
2


—


—


—


—


—


—


—

Net income
—


—


—


—


—


—


30,841


30,841

Comprehensive loss
—


—


—


—


—


(2,145
)

—


(2,145
)
Balances at September 30, 2018
53,609


$
536


$
474,137


1,871


$
(59,928
)

$
(24,434
)

$
802,927


$
1,193,238
















- 4-



Six Months Ended September 30, 2019

Common Stock

Additional Paid-in Capital

Treasury Stock

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Totals
(In thousands)
Shares

Par
Value


Shares

Amount



Balances at March 31, 2019
53,670


$
536


$
479,150


1,871


$
(59,928
)

$
(25,747
)

$
701,820


$
1,095,831

Stock-based compensation
—


—


3,902


—


—


—


—


3,902

Exercise of stock options
18


—


544


—


—


—


—


544

Issuance of shares related to restricted stock
67


1


(1
)

—


—


—


—


—

Treasury share repurchases
—


—


—


1,652


(50,856
)

—


—


(50,856
)
Net income
—


—


—


—


—


—


67,177


67,177

Comprehensive loss
—


—


—


—


—


(3,808
)

—


(3,808
)
Balances at September 30, 2019
53,755


$
537


$
483,595


3,523


$
(110,784
)

$
(29,555
)

$
768,997


$
1,112,790




Six Months Ended September 30, 2018

Common Stock

Additional Paid-in Capital

Treasury Stock

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Totals
(In thousands)
Shares

Par
Value


Shares

Amount



Balances at March 31, 2018
53,396


$
534


$
468,783


353


$
(7,669
)

$
(19,315
)

$
736,277


$
1,178,610

Adoption of new accounting pronouncement
—


—


—


—


—


—


1,343


1,343

Stock-based compensation
—


—


4,328


—


—


—


—


4,328

Exercise of stock options
37


—


1,028


—


—


—


—


1,028

Issuance of shares related to restricted stock
176


2


(2
)

—


—


—


—


—

Treasury share repurchases
—


—


—


1,518


(52,259
)

—


—


(52,259
)
Net income
—


—


—


—


—


—


65,307


65,307

Comprehensive loss
—


—


—


—


—


(5,119
)

—


(5,119
)
Balances at September 30, 2018
53,609


$
536


$
474,137


1,871


$
(59,928
)

$
(24,434
)

$
802,927


$
1,193,238

See accompanying notes.


- 5-



Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Six Months Ended September 30,
(In thousands)
2019
 
2018
Operating Activities
 
 
 
Net income
$
67,177

 
$
65,307

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 
Depreciation and amortization
14,283

 
16,366

Gain on divestiture
—

 
(1,284
)
Loss on disposal of property and equipment
19

 
37

Deferred income taxes
5,827

 
339

Amortization of debt origination costs
1,711

 
3,021

Stock-based compensation costs
3,902

 
4,328

Non-cash operating lease cost
3,154

 
—

Other
—

 
247

Changes in operating assets and liabilities:
 

 
 
Accounts receivable
5,982

 
(7,718
)
Inventories
(6,400
)
 
(4,145
)
Prepaid expenses and other current assets
(3,128
)
 
1,302

Accounts payable
8,465

 
4,187

Accrued liabilities
6,616

 
14,339

Operating lease liabilities
(3,398
)
 
—

Other
(1,210
)
 
(1,219
)
Net cash provided by operating activities
103,000

 
95,107

 
 
 
 
Investing Activities
 

 
 

Purchases of property, plant and equipment
(5,822
)
 
(5,074
)
Proceeds from divestiture
—

 
65,912

Net cash (used in) provided by investing activities
(5,822
)
 
60,838

 
 
 
 
Financing Activities
 

 
 

Term loan repayments
—

 
(100,000
)
Borrowings under revolving credit agreement
30,000

 
30,000

Repayments under revolving credit agreement
(76,000
)
 
(30,000
)
Proceeds from exercise of stock options
544

 
1,028

Fair value of shares surrendered as payment of tax withholding
(880
)
 
(2,281
)
Repurchase of common stock
(49,976
)
 
(49,978
)
Net cash used in financing activities
(96,312
)
 
(151,231
)
 
 
 
 
Effects of exchange rate changes on cash and cash equivalents
(491
)
 
(352
)
Increase in cash and cash equivalents
375

 
4,362

Cash and cash equivalents - beginning of period
27,530

 
32,548

Cash and cash equivalents - end of period
$
27,905

 
$
36,910

 
 
 
 
Interest paid
$
48,033

 
$
49,147

Income taxes paid
$
14,655

 
$
7,778

See accompanying notes.

- 6-


Prestige Consumer Healthcare Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

1.    Business and Basis of Presentation

Nature of Business
Prestige Consumer Healthcare Inc. (referred to herein as the “Company” or “we,” which reference shall, unless the context requires otherwise, be deemed to refer to Prestige Consumer Healthcare Inc. and all of its direct and indirect 100% owned subsidiaries on a consolidated basis) is engaged in the development, manufacturing, marketing, sales and distribution of over-the-counter (“OTC”) healthcare and household cleaning products (prior to the sale of our Household Cleaning segment, as discussed in Note 2) to mass merchandisers and drug, food, dollar, convenience and club stores and e-commerce channels in North America (the United States and Canada), and in Australia and certain other international markets.  Prestige Consumer Healthcare Inc. is a holding company with no operations and is also the parent guarantor of the senior credit facility and the senior notes described in Note 8.

Basis of Presentation
The unaudited Condensed Consolidated Financial Statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  All significant intercompany transactions and balances have been eliminated in consolidation.  In the opinion of management, these Condensed Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, that are considered necessary for a fair statement of our consolidated financial position, results of operations and cash flows for the interim periods presented.  Our fiscal year ends on March 31st of each year. References in these Condensed Consolidated Financial Statements or related notes to a year (e.g., 2020) mean our fiscal year ending or ended on March 31st of that year. Operating results for the six months ended September 30, 2019 are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2020.  These unaudited Condensed Consolidated Financial Statements and related notes should be read in conjunction with our audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period.  Although these estimates are based on our knowledge of current events and actions that we may undertake in the future, actual results could differ from those estimates. Our most significant estimates include those made in connection with the valuation of intangible assets, stock-based compensation, fair value of debt, sales returns and allowances, trade promotional allowances, inventory obsolescence, and accounting for income taxes and related uncertain tax positions.  

Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842). This update amended a number of aspects of lease accounting, including requiring lessees to recognize all leases with a term greater than one year as a right-of-use ("ROU") asset and corresponding lease liability, measured at the present value of the lease payments. On April 1, 2019, we adopted Topic 842 using the modified retrospective approach. Results for the three and six months ended September 30, 2019 are presented under Topic 842. No prior period amounts were adjusted and the prior period continues to be reported in accordance with previous lease guidance, Accounting Standards Codification ("ASC") Topic 840, Leases.

The new standard provided a number of optional practical expedients in transition. We elected the package of transition provisions available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.

The effects of this recently adopted accounting pronouncement to our Consolidated Balance Sheet as of April 1, 2019 are as follows:

- 7-


(In thousands)
March 31, 2019

New Lease Standard Adjustment

April 1, 2019
Assets:





     Operating lease ROU assets
$
—


$
17,435


$
17,435







Liabilities:





     Operating lease liabilities, current portion
$
—


$
(5,697
)

$
(5,697
)
     Long-term operating lease liabilities, net of current portion
$
—


$
(13,296
)

$
(13,296
)
Other accrued liabilities (1)
$
(60,663
)

$
1,558


$
(59,105
)
(1) Relates to deferred rent and exit costs associated with existing leases.

Adoption of this accounting pronouncement had no impact on our other financial statements.

See Note 6 for our lease accounting policy.

Recently Issued Accounting Pronouncements
In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by eliminating certain required disclosures and incorporating others. The amendments are effective for public companies for fiscal years ending after December 15, 2020. We do not expect the adoption of this standard to have a material impact on our Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements in Topic 820, with a particular focus on Level 3 investments, by eliminating certain required disclosures and incorporating others. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We do not expect the adoption of this standard to have a material impact on our Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. The amendments in this update provide financial statement users with more useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. These amendments clarify and improve areas of guidance related to recently issued standards on the topics of credit losses, hedging and recognition and measurements. In May 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provides entities that have certain instruments an option to irrevocably elect the fair value option in Subtopic 825-10. The amendments in these updates are effective for us for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

2.    Divestitures

On July 2, 2018, we sold the Comet®, Spic and Span®, Chore Boy®, Chlorinol® and Cinch® brands, as well as associated inventory. These brands represented our Household Cleaning segment.

As a result of this transaction, we received proceeds of approximately $65.9 million and recorded a pre-tax gain on sale of $1.3 million. The net proceeds were used to repay debt. 


- 8-


3.     Inventories

Inventories consist of the following:
(In thousands)
September 30, 2019
 
March 31, 2019
Components of Inventories
 
 
 
Packaging and raw materials
$
11,341

 
$
17,082

Work in process
322

 
161

Finished goods
114,699

 
102,637

Inventories
$
126,362

 
$
119,880



Inventories are carried and depicted above at the lower of cost or net realizable value, which includes a reduction in inventory values of $6.7 million and $5.5 million at September 30, 2019 and March 31, 2019, respectively, related to obsolete and slow-moving inventory.

4.    Goodwill

A reconciliation of the activity affecting goodwill by operating segment is as follows:
(In thousands)
North American OTC
Healthcare

International OTC
Healthcare

Consolidated
Balance - March 31, 2019







Goodwill
$
711,104


$
31,190


$
742,294


Accumulated impairment loss
(163,711
)

—


(163,711
)
Balance - March 31, 2019
547,393


31,190


578,583


2020 Reductions:








Effects of foreign currency exchange rates
—


(1,039
)

(1,039
)
Balance - September 30, 2019






Goodwill
711,104


30,151


741,255


Accumulated impairment loss
(163,711
)

—


(163,711
)
Balance - September 30, 2019
$
547,393


$
30,151


$
577,544

 
 
 
 
 
 
 


Under accounting guidelines, goodwill is not amortized, but must be tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below the carrying amount.

On an annual basis during the fourth quarter of each fiscal year, or more frequently if conditions indicate that the carrying value of the asset may not be recoverable, management performs a review of the values assigned to goodwill and tests for impairment. The date of our annual impairment review was February 28, 2019, and we recorded impairment charges in our March 31, 2019 financial statements. We utilize the discounted cash flow method to estimate the fair value of our reporting units as part of the goodwill impairment test. We also considered our market capitalization at February 28, 2019, which was the date of our annual review, as compared to the aggregate fair values of our reporting units, to assess the reasonableness of our estimates pursuant to the discounted cash flow methodology. The estimates and assumptions made in assessing the fair value of our reporting units and the valuation of the underlying assets and liabilities are inherently subject to significant uncertainties. Consequently, changing rates of interest and inflation, declining sales or margins, increasing competition, changing consumer preferences, technical advances, or reductions in advertising and promotion may require an additional impairment charge to be recorded in the future. As of September 30, 2019, no events have occurred that would indicate potential impairment of goodwill.


- 9-


5.    Intangible Assets, net

A reconciliation of the activity affecting intangible assets, net is as follows:
(In thousands)
Indefinite-
Lived
Trademarks
 
Finite-Lived
Trademarks and Customer Relationships
 
Totals
Gross Carrying Amounts
 
 
 
 
 
Balance — March 31, 2019
$
2,273,191

 
$
390,283

 
$
2,663,474

Effects of foreign currency exchange rates
(3,770
)
 
(211
)
 
(3,981
)
Balance — September 30, 2019
2,269,421

 
390,072

 
2,659,493

 
 

 
 

 
 

Accumulated Amortization
 

 
 

 
 

Balance — March 31, 2019
—

 
156,264

 
156,264

Additions
—

 
9,816

 
9,816

Effects of foreign currency exchange rates
—

 
(56
)
 
(56
)
Balance — September 30, 2019
—

 
166,024

 
166,024

 
 
 
 
 
 
Intangible assets, net - September 30, 2019
$
2,269,421

 
$
224,048

 
$
2,493,469



Amortization expense was $4.9 million and $9.8 million for the three and six months ended September 30, 2019, respectively, and $5.4 million and $11.2 million for the three and six months ended September 30, 2018, respectively.  Based on our amortizable intangible assets as of September 30, 2019, amortization expense is expected to be approximately $9.8 million for the remainder of fiscal 2020, $19.6 million in each of fiscal 2021, 2022, 2023 and 2024 and $135.8 million thereafter.

Under accounting guidelines, indefinite-lived assets are not amortized, but must be tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below the carrying amount. The date of our annual impairment review was February 28, 2019, and we recorded impairment charges in our March 31, 2019 financial statements. Additionally, at each reporting period, an evaluation must be made to determine whether events and circumstances continue to support an indefinite useful life.  Intangible assets with finite lives are amortized over their respective estimated useful lives and are also tested for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable and exceeds its fair value.

We utilize the excess earnings method to estimate the fair value of our individual indefinite-lived intangible assets.  The discount rate utilized in the analyses, as well as future cash flows, may be influenced by such factors as changes in interest rates and rates of inflation.  Additionally, should the related fair values of intangible assets be adversely affected as a result of declining sales or margins caused by competition, changing consumer preferences, technological advances or reductions in advertising and promotional expenses, we may be required to record impairment charges in the future.

As of September 30, 2019, no events have occurred that would indicate potential impairment of intangible assets.

6.    Leases

We lease real estate and equipment for use in our operations. These leases have lease terms of 1 to 10 years, some of which include options to terminate or extend leases for up to 1 to 6 years or on a month-to-month basis. The exercise of lease renewal options is at our sole discretion and our lease ROU assets and liabilities reflect only the options we are reasonably certain that we will exercise.

We determine if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether we have the right to control the identified asset. ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives and initial direct costs incurred, as applicable.


- 10-


Variable lease payments, which do not vary based on an index or rate, are excluded from the ROU asset and lease liability determination. Variable lease payments are typically usage-based and are recorded in the period in which the obligation for those payments is incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As the implicit rate in our leases is unknown, we used our incremental borrowing rate based on the information available at the date of adoption for existing leases and at the lease commencement date for new leases in determining the present value of future lease payments. We give consideration to our credit risk, term of the lease, total lease payments and adjust for the impacts of collateral, as necessary, when calculating our incremental borrowing rates. Rent expense for our operating leases is recognized on a straight-line basis over the lease term.

For the measurement and classification of our lease agreements, we group lease and non-lease components into a single lease component for all underlying asset classes. We have also elected to exclude any leases within our existing classes of assets with a term of twelve months or less.

The components of lease expense for the three and six months ended September 30, 2019 was as follows:
(In thousands)
 
Three Months Ended September 30, 2019
 
Six Months Ended September 30, 2019
Operating lease cost
 
$
2,242

 
$
3,458

Short term lease cost
 
27

 
50

Variable lease cost
 
15,696

 
32,295

Sublease income
 
(860
)
 
(1,774
)
Total net lease cost
 
$
17,105

 
$
34,029



As of September 30, 2019, the maturities of operating lease liabilities were as follows:
(In thousands)
 

Year Ending March 31,
 
 
2020 (Remaining six months ending March 31, 2020)
 
$
4,775

2021
 
7,053

2022
 
6,529

2023
 
6,304

2024
 
6,294

Thereafter
 
9,095

Total undiscounted lease payments
 
40,050

Less imputed interest
 
(5,577
)
Total present value of lease payments
 
$
34,473



As of September 30, 2019, the weighted average remaining lease term was 5.61 years and the weighted average discount rate used to determine the operating lease liability was 5.27%.

The following table summarizes future minimum lease payments for our operating leases as of March 31, 2019, before adoption of Topic 842:
(In thousands)
Facilities
 
Equipment
 
Total
Year Ending March 31,
 
 
 
 
 
2020
$
2,828

 
$
314

 
$
3,142

2021
2,633

 
248

 
2,881

2022
2,265

 
213

 
2,478

2023
1,684

 
105

 
1,789

2024
1,705

 
—

 
1,705

Thereafter
6,780

 
—

 
6,780

 
$
17,895

 
$
880

 
$
18,775



- 11-



On May 13, 2019, we entered into a Master Logistics Services Agreement with GEODIS Logistics LLC (“GEODIS”), pursuant to which GEODIS serves as a new third party logistics provider. The agreement has an initial term of five years with an option to renew for an additional five year term. Under the Master Logistics Services Agreement, we have authorized GEODIS to lease a facility under a five year term.  The lease commenced in July 2019 and the lease and non-lease components are recorded in our second quarter fiscal year 2020 financial statements.  The ROU asset and operating lease liability at lease commencement was $18.9 million.

7.    Other Accrued Liabilities

Other accrued liabilities consist of the following:

(In thousands)
September 30, 2019
 
March 31, 2019
Accrued marketing costs
$
33,895

 
$
31,228

Accrued compensation costs
7,117

 
10,958

Accrued broker commissions
388

 
1,361

Income taxes payable
2,924

 
88

Accrued professional fees
4,280

 
2,441

Accrued production costs
8,805

 
6,788

Other accrued liabilities
8,070

 
7,799

 
$
65,479

 
$
60,663



8.    Long-Term Debt

At September 30, 2019, we had $29.0 million outstanding on the asset-based revolving credit facility entered into January 31, 2012, as amended (the "2012 ABL Revolver") and an additional borrowing capacity of $125.0 million.

Long-term debt consists of the following, as of the dates indicated:
(In thousands, except percentages)
 
September 30, 2019
 
March 31, 2019
2016 Senior Notes bearing interest at 6.375%, with interest payable on March 1 and September 1 of each year. The 2016 Senior Notes mature on March 1, 2024.
 
$
600,000

 
$
600,000

2013 Senior Notes bearing interest at 5.375%, with interest payable on June 15 and December 15 of each year. The 2013 Senior Notes mature on December 15, 2021.
 
400,000

 
400,000

2012 Term B-5 Loans bearing interest at the Borrower's option at either LIBOR plus a margin of 2.00%, with a LIBOR floor of 0.00%, or an alternate base rate plus a margin of 1.00%, with a floor of 1.00%, due on January 26, 2024.
 
738,000

 
738,000

2012 ABL Revolver bearing interest at the Borrower's option at either a base rate plus applicable margin or LIBOR plus applicable margin. Any unpaid balance is due on January 26, 2022.
 
29,000

 
75,000

Long-term debt
 
1,767,000

 
1,813,000

Less: unamortized debt costs
 
(12,829
)
 
(14,402
)
Long-term debt, net
 
$
1,754,171

 
$
1,798,598



- 12-



As of September 30, 2019, aggregate future principal payments required in accordance with the terms of the 2012 Term B-5 Loans, 2012 ABL Revolver and the indentures governing the 6.375% senior unsecured notes due 2024 (the "2016 Senior Notes") and the 5.375% senior unsecured notes due 2021 (the "2013 Senior Notes") are as follows:
(In thousands)
 
Year Ending March 31,
Amount
2020 (remaining six months ending March 31, 2020)
$
—

2021
 
—

2022
 
429,000

2023
 
—

2024
 
1,338,000

Thereafter
—

 
$
1,767,000



9.    Fair Value Measurements
 
For certain of our financial instruments, including cash, accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their respective fair values due to the relatively short maturity of these amounts.

FASB ASC 820, Fair Value Measurements, requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market assuming an orderly transaction between market participants. ASC 820 established market (observable inputs) as the preferred source of fair value, to be followed by our assumptions of fair value based on hypothetical transactions (unobservable inputs) in the absence of observable market inputs. Based upon the above, the following fair value hierarchy was created:

Level 1 - Quoted market prices for identical instruments in active markets;

Level 2 - Quoted prices for similar instruments in active markets, as well as quoted prices for identical or similar instruments in markets that are not considered active; and

Level 3 - Unobservable inputs developed by us using estimates and assumptions reflective of those that would be utilized by a market participant.

The market values have been determined based on market values for similar instruments adjusted for certain factors. As such, the 2016 Senior Notes, the 2013 Senior Notes, the 2012 Term B-5 Loans, and the 2012 ABL Revolver are measured in Level 2 of the above hierarchy. See summary below detailing the carrying amounts and estimated fair values of these borrowings at September 30, 2019 and March 31, 2019.
 
 
September 30, 2019
 
March 31, 2019
(In thousands)
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
2016 Senior Notes
 
$
600,000

 
$
624,000

 
$
600,000

 
$
606,000

2013 Senior Notes
 
400,000

 
402,000

 
400,000

 
401,500

2012 Term B-5 Loans
 
738,000

 
739,845

 
738,000

 
728,775

2012 ABL Revolver
 
29,000

 
29,000

 
75,000

 
75,000



At September 30, 2019 and March 31, 2019, we did not have any assets or liabilities measured in Level 1 or 3.

10.    Stockholders' Equity

We are authorized to issue 250.0 million shares of common stock, $0.01 par value per share, and 5.0 million shares of preferred stock, $0.01 par value per share.  The Board of Directors may direct the issuance of the undesignated preferred stock in one or more series and determine preferences, privileges and restrictions thereof.

Each share of common stock has the right to one vote on all matters submitted to a vote of stockholders.  The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors,

- 13-


subject to prior rights of holders of all classes of outstanding stock having priority rights as to dividends.  No dividends have been declared or paid on our common stock through September 30, 2019.

During the three and six months ended September 30, 2019, we repurchased 2,273 shares and 28,537 shares, respectively, of common stock from our employees pursuant to the provisions of various employee restricted stock awards. The repurchases for the three and six months ended September 30, 2019 were at an average price of $35.32 and $30.83 per share, respectively. During the three months ended September 30, 2018, we made no repurchases of common stock. During the six months ended September 30, 2018, we repurchased 68,939 shares of common stock from our employees pursuant to the provisions of various employee restricted stock awards at an average price of $33.09 per share. All of the repurchased shares have been recorded as treasury stock.

During the three and six months ended September 30, 2019, we also repurchased 672,719 shares and 1,622,544 shares, respectively, of our common stock in conjunction with our share repurchase program. The repurchases for the three and six months ended September 30, 2019 were at an average price of $31.53 and $30.80 per share, respectively, and totaled $21.2 million and $50.0 million, respectively. During the six months ended September 30, 2018, we repurchased 1,449,750 shares of our common stock in conjunction with our share repurchase program at an average price of $34.47 per share and a total of $50.0 million. All of the repurchased shares have been recorded as treasury stock.

11.    Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consisted of the following at September 30, 2019 and March 31, 2019:
(In thousands)
September 30, 2019
 
March 31, 2019
Components of Accumulated Other Comprehensive Loss
 
 
 
Cumulative translation adjustment
$
(30,686
)
 
$
(26,878
)
Unrecognized net gain on pension plans, net of tax of $0.3 million and $0.3 million, respectively
1,131

 
1,131

Accumulated other comprehensive loss, net of tax
$
(29,555
)
 
$
(25,747
)


As of September 30, 2019 and March 31, 2019, no amounts were reclassified from accumulated other comprehensive loss into earnings.


- 14-


12.    Earnings Per Share

Basic earnings per share is computed based on income available to common stockholders and the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on income available to common stockholders and the weighted average number of shares of common stock outstanding plus the effect of potentially dilutive common shares outstanding during the period using the treasury stock method, which includes stock options and restricted stock units ("RSUs"). Potential common shares, composed of the incremental common shares issuable upon the exercise of outstanding stock options and nonvested RSUs, are included in the diluted earnings per share calculation to the extent that they are dilutive. In loss periods, the assumed exercise of in-the-money stock options and RSUs has an anti-dilutive effect, and therefore these instruments are excluded from the computation of diluted earnings per share.
 
The following table sets forth the computation of basic and diluted earnings per share:
 
 
Three Months Ended September 30,
 
Six Months Ended September 30,
(In thousands, except per share data)
 
2019

2018
 
2019

2018
Numerator
 
 
 
 
 
 
 
 
Net income
 
$
33,252

 
$
30,841

 
$
67,177

 
$
65,307

 
 
 

 
 

 
 
 
 
Denominator
 
 

 
 

 
 
 
 
Denominator for basic earnings per share — weighted average shares outstanding
 
50,455

 
51,841

 
51,073

 
52,238

Dilutive effect of nonvested restricted stock units and options issued to employees and directors
 
356

 
312

 
353

 
307

Denominator for diluted earnings per share
 
50,811

 
52,153

 
51,426

 
52,545

 
 
 

 
 

 
 
 
 
Earnings per Common Share:
 
 

 
 

 
 
 
 
Basic earnings per share
 
$
0.66

 
$
0.59

 
$
1.32

 
$
1.25

 
 
 

 
 

 
 
 
 
Diluted earnings per share
 
$
0.65

 
$
0.59

 
$
1.31

 
$
1.24



For the three months ended September 30, 2019 and 2018, there were 0.7 million shares attributable to outstanding stock-based awards that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For the six months ended September 30, 2019 and 2018, there were 0.9 million and 0.5 million shares, respectively, attributable to outstanding stock-based awards that were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.
   
13.    Share-Based Compensation

In connection with our initial public offering, the Board of Directors adopted the 2005 Long-Term Equity Incentive Plan (the “Plan”), which provides for grants of up to a maximum of 5.0 million shares of restricted stock, stock options, RSUs and other equity-based awards. In June 2014, the Board of Directors approved, and in July 2014, our stockholders ratified, an increase of an additional 1.8 million shares of our common stock for issuance under the Plan, an increase of the maximum number of shares subject to stock options that may be awarded to any one participant under the Plan during any fiscal 12-month period from 1.0 million to 2.5 million shares, and an extension of the term of the Plan by ten years, to February 2025.  Directors, officers and other employees of the Company and its subsidiaries, as well as others performing services for the Company, are eligible for grants under the Plan.

During the three and six months ended September 30, 2019, pre-tax share-based compensation costs charged against income were $2.5 million and $3.9 million, respectively, and the related income tax benefit recognized was $0.4 million and $0.6 million, respectively. During the three and six months ended September 30, 2018, pre-tax share-based compensation costs charged against income were $2.7 million and $4.3 million, respectively, and the related income tax benefit recognized was $0.5 million and $0.8 million, respectively.

At September 30, 2019, there were $9.2 million of unrecognized compensation costs related to nonvested share-based compensation arrangements under the Plan, based on management's estimate of the shares that will ultimately vest.  We expect to recognize such

- 15-


costs over a weighted average period of 1.0 year.  The total fair value of options and RSUs vested during the six months ended September 30, 2019 and 2018 was $7.4 million and $11.9 million, respectively.  For the six months ended September 30, 2019 and 2018, we received cash from the exercise of stock options of $0.5 million and $1.0 million, respectively. For the six months ended September 30, 2019 and 2018, we realized $0.4 million and $1.2 million, respectively, in tax benefits from the tax deductions resulting from RSU issuances and stock option exercises. At September 30, 2019, there were 1.4 million shares available for issuance under the Plan.

On May 6, 2019, the Compensation and Talent Management Committee of our Board of Directors granted 98,644 performance stock units, 89,286 RSUs and stock options to acquire 281,487 shares of our common stock to certain executive officers and employees under the Plan. The stock options were granted at an exercise price of $30.56 per share, which was equal to the closing price for our common stock on the date of the grant.
On May 13, 2019, the Compensation and Talent Management Committee of our Board of Directors granted 7,287 RSUs and stock options to acquire 21,194 shares of our common stock to a recently hired executive officer under the Plan. The stock options were granted at an exercise price of $30.19 per share, which was equal to the closing price for our common stock on the date of the grant.
Each of the independent members of the Board of Directors received a grant under the Plan of 4,183 RSUs on July 30, 2019.
Restricted Stock Units

RSUs granted to employees under the Plan generally vest in three years, primarily upon the attainment of certain time vesting thresholds, and, in the case of performance share units, may also be contingent on the attainment of certain performance goals of the Company, including revenue and earnings before income taxes, depreciation and amortization targets.  The RSUs provide for accelerated vesting if there is a change of control, as defined in the Plan.  The RSUs granted to employees generally vest either ratably over three years or in their entirety on the three-year anniversary of the date of the grant. Upon vesting, the units will be settled in shares of our common stock. Termination of employment prior to vesting will result in forfeiture of the RSUs, unless otherwise accelerated by the Compensation and Talent Management Committee or, in the case of RSUs granted in May 2017, 2018 and 2019, subject to pro-rata vesting in the event of death, disability or retirement. The RSUs granted to directors prior to fiscal 2020 vest immediately upon grant, and will be settled by delivery to the director of one share of our common stock for each vested RSU promptly following the earliest of the (i) director's death, (ii) director's disability or (iii) six-month anniversary of the date on which the director's Board membership ceases for reasons other than death or disability. The RSUs granted to directors in July 2019 vest immediately upon grant, and will be settled by delivery to the director of one share of our common stock for each vested RSU promptly following the earliest of the (i) director's death, (ii) the director's separation from service or (iii) a change in control of the Company.

The fair value of the RSUs is determined using the closing price of our common stock on the date of the grant.

- 16-



A summary of the RSUs granted under the Plan is presented below:
 
 
 
RSUs
 
 
Shares
(in thousands)
 
Weighted
Average
Grant-Date
Fair Value
Six Months Ended September 30, 2018
 
 
 
 
Vested and nonvested at March 31, 2018
 
393.5

 
$
44.13

Granted
 
226.4

 
30.09

Vested and issued
 
(175.8
)
 
43.05

Forfeited
 
(31.1
)
 
48.32

Vested and nonvested at September 30, 2018
 
413.0

 
36.58

Vested at September 30, 2018
 
113.2

 
31.05

 
 
 

 
 

Six Months Ended September 30, 2019
 
 
 
 
Vested and nonvested at March 31, 2019
 
413.0

 
$
36.58

Granted
 
220.3

 
31.02

Vested and issued
 
(66.8
)
 
47.99

Forfeited
 
(27.8
)
 
36.71

Vested and nonvested at September 30, 2019
 
538.7

 
32.88

Vested at September 30, 2019
 
138.3

 
31.71



Options

The Plan provides that the exercise price of options granted shall be no less than the fair market value of our common stock on the date the options are granted.  Options granted have a term of no greater than ten years from the date of grant and vest in accordance with a schedule determined at the time the option is granted, generally three to five years.  The option awards provide for accelerated vesting in the event of a change in control, as defined in the Plan. Except in the case of death, disability or retirement, termination of employment prior to vesting will result in forfeiture of the nonvested stock options. Vested stock options will remain exercisable by the employee after termination of employment, subject to the terms in the Plan.

The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model that uses the assumptions noted in the table below.  Expected volatilities are based on the historical volatility of our common stock and other factors, including the historical volatilities of comparable companies.  We use appropriate historical data, as well as current data, to estimate option exercise and employee termination behaviors.  Employees that are expected to exhibit similar exercise or termination behaviors are grouped together for the purposes of valuation.  The expected terms of the options granted are derived from our historical experience, management's estimates, and consideration of information derived from the public filings of companies similar to us, and represent the period of time that options granted are expected to be outstanding.  The risk-free rate represents the yield on U.S. Treasury bonds with a maturity equal to the expected term of the granted options.  

The weighted average grant-date fair values of the options granted during the six months ended September 30, 2019 and 2018 were $10.83 and $10.22, respectively.
 
 
Six Months Ended September 30,
 
 
2019
 
2018
Expected volatility
 
30.9% - 31.3%

 
29.6
%
Expected dividends
 
$
—

 
$
—

Expected term in years
 
6.0 to 7.0

 
6.0

Risk-free rate
 
2.3% to 2.4%

 
2.9
%


- 17-


A summary of option activity under the Plan is as follows:
 
 
 
 
Options
 
 
 
Shares
(in thousands)
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term (years)
 
Aggregate
Intrinsic
Value
(in thousands)
Six Months Ended September 30, 2018
 
 
 
 
 
 
 
 
Outstanding at March 31, 2018
 
873.2

 
$
41.79

 
 
 
 
Granted
 
294.5

 
29.46

 
 
 
 
Exercised
 
(37.2
)
 
27.60

 
 
 
 
Forfeited or expired
 
(125.4
)
 
47.16

 
 
 
 
Outstanding at September 30, 2018
 
1,005.1

 
38.03

 
7.3
 
$
6,271

Vested at September 30, 2018
 
555.2

 
37.08

 
6.4
 
$
3,890

 
 
 
 
 
 
 
 
 
Six Months Ended September 30, 2019
 
 

 
 

 
 
 
 

Outstanding at March 31, 2019
 
944.6

 
$
38.45

 
 
 
 
Granted
 
302.7

 
30.53

 
 
 
 
Exercised
 
(18.4
)
 
29.57

 
 
 
 
Forfeited or expired
 
(124.7
)
 
43.08

 
 
 
 
Outstanding at September 30, 2019
 
1,104.2

 
35.90

 
7.2
 
$
3,959

Vested at September 30, 2019
 
610.2

 
38.56

 
5.7
 
$
2,772



The aggregate intrinsic value of options exercised during the six months ended September 30, 2019 was less than $0.1 million.

14.    Income Taxes

Income taxes are recorded in our quarterly financial statements based on our estimated annual effective income tax rate, subject to adjustments for discrete events, should they occur. The effective rates used in the calculation of income taxes were 24.5% and 29.1% for the three months ended September 30, 2019 and 2018, respectively.  The effective rates used in the calculation of income taxes were 25.4% and 27.4% for the six months ended September 30, 2019 and 2018, respectively. The decrease in the effective tax rate for the three and six months ended September 30, 2019 versus the prior year periods was primarily related to a discrete item arising from the sale of our Household Cleaning segment in July 2018.

We have revised the Condensed Consolidated Statements of Cash Flows to correct an error in the disclosed amount of income taxes paid in the six months ended September 30, 2018. The correction increased income taxes paid from the previously reported amount of $2.4 million to $7.8 million. We have evaluated the impact of this error and determined it is not material to the previously issued financial statements.

15.     Employee Retirement Plans

The primary components of Net Periodic Benefits consist of the following:
 
 
Three Months Ended September 30,
 
Six Months Ended September 30,
 (In thousands)
 
2019

2018
 
2019

2018
Interest cost
 
$
577

 
$
610

 
$
1,154

 
$
1,220

Expected return on assets
 
(721
)
 
(768
)
 
(1,442
)
 
(1,536
)
Net periodic benefit income
 
$
(144
)
 
$
(158
)
 
$
(288
)
 
$
(316
)


During the six months ended September 30, 2019, we contributed $0.2 million to our non-qualified defined benefit plan and $1.0 million to the qualified defined benefit plan. During the remainder of fiscal 2020, we expect to contribute an additional $0.2 million to our non-qualified plan and make no further contributions to the qualified plan.


- 18-


16.    Commitments and Contingencies

We are involved from time to time in legal matters and other claims incidental to our business.  We review outstanding claims and proceedings internally and with external counsel as necessary to assess the probability and amount of a potential loss.  These assessments are re-evaluated at each reporting period and as new information becomes available to determine whether a reserve should be established or if any existing reserve should be adjusted.  The actual cost of resolving a claim or proceeding ultimately may be substantially different than the amount of the recorded reserve.  In addition, because it is not permissible under GAAP to establish a litigation reserve until the loss is both probable and estimable, in some cases there may be insufficient time to establish a reserve prior to the actual incurrence of the loss (upon verdict and judgment at trial, for example, or in the case of a quickly negotiated settlement).  We believe the resolution of routine legal matters and other claims incidental to our business, taking our reserves into account, will not have a material adverse effect on our business, financial condition, or results of operations.

17.    Concentrations of Risk

Our revenues are concentrated in the area of OTC Healthcare. We sell our products to mass merchandisers and drug, food, dollar, convenience and club stores and e-commerce channels.  During the three and six months ended September 30, 2019, approximately 42.6% and 43.3%, respectively, of our gross revenues were derived from our five top selling brands. During the three and six months ended September 30, 2018, approximately 44.7% and 43.5%, respectively, of our gross revenues were derived from our five top selling brands. One customer, Walmart accounted for more than 10% of our gross revenues for each of the periods presented. Walmart accounted for approximately 22.9% and 23.5%, respectively, of our gross revenues for the three and six months ended September 30, 2019. Walmart accounted for approximately 23.6% and 24.1%, respectively, of our gross revenues for the three and six months ended September 30, 2018. The gross revenues for Walmart are included in our North American OTC Healthcare segment and Household Cleaning segment (prior to the sale of our Household Cleaning segment on July 2, 2018).

Our product distribution in the United States is managed by a third party through one primary distribution center near St. Louis, Missouri. On May 13, 2019, we entered into an agreement with a second third party logistics provider for a warehouse, and we are in the process of transitioning to this facility, which is managed by a new logistics provider. In addition, we operate one manufacturing facility for certain of our products located in Lynchburg, Virginia. A serious disruption, caused by performance or contractual issues with a third party distribution manager or by natural disaster, such as earthquake, flood, or fire, could damage our inventory and/or materially impair our ability to distribute our products to customers in a timely manner or at a reasonable cost. Any disruption as a result of business integration, transition of our distribution center to the new third party manager or new location, or third party performance at our distribution centers could result in increased costs, expense and/or shipping times, and could cause us to incur customer fees and penalties. In addition, any serious disruption to our Lynchburg manufacturing facility could materially impair our ability to manufacture many of the products associated with our acquisition of C.B. Fleet Company, Inc. ("Fleet"), which would also limit our ability to provide those products to customers in a timely manner or at a reasonable cost.  We could also incur significantly higher costs and experience longer lead times if we need to replace our distribution centers, the third party distribution managers or the manufacturing facility.  As a result, any serious disruption could have a material adverse effect on our business, financial condition and results of operations.

At September 30, 2019, we had relationships with 113 third party manufacturers.  Of those, we had long-term contracts with 30 manufacturers that produced items that accounted for approximately 66.4% of gross sales for the six months ended September 30, 2019. At September 30, 2018, we had relationships with 110 third party manufacturers.  Of those, we had long-term contracts with 34 manufacturers that produced items that accounted for approximately 60.0% of gross sales for the six months ended September 30, 2018. The fact that we do not have long-term contracts with certain manufacturers means that they could cease manufacturing our products at any time and for any reason or initiate arbitrary and costly price increases, which could have a material adverse effect on our business and results of operations. Although we are continually in the process of negotiating long-term contracts with certain key manufacturers, we may not be able to reach a timely agreement, which could have a material adverse effect on our business and results of operations.

- 19-



18.    Business Segments

Segment information has been prepared in accordance with the Segment Reporting topic of the FASB ASC 280. Our current reportable segments consist of (i) North American OTC Healthcare and (ii) International OTC Healthcare. We sold our Household Cleaning segment on July 2, 2018; see Note 2 for further information. We evaluate the performance of our operating segments and allocate resources to these segments based primarily on contribution margin, which we define as gross profit less advertising and promotional expenses.

The tables below summarize information about our reportable segments.
 
Three Months Ended September 30, 2019
(In thousands)
North American OTC
Healthcare

International OTC
Healthcare

Household
Cleaning

Consolidated
Total segment revenues*
$
213,878


$
24,191


$
—


$
238,069

Cost of sales
92,931


8,387


—


101,318

Gross profit
120,947


15,804


—


136,751

Advertising and promotion
34,595


4,072


—


38,667

Contribution margin
$
86,352


$
11,732


$
—


98,084

Other operating expenses
 




 


28,736

Operating income
 




 


69,348

Other expense
 




 


25,336

Income before income taxes








44,012

Provision for income taxes
 




 


10,760

Net income








$
33,252

* Intersegment revenues of $0.8 million were eliminated from the North American OTC Healthcare segment.

 
Six Months Ended September 30, 2019
(In thousands)
North American OTC
Healthcare
 
International OTC
Healthcare
 
Household
Cleaning
 
Consolidated
Total segment revenues*
$
424,662


$
45,561


$
—


$
470,223

Cost of sales
181,742


17,663


—


199,405

Gross profit
242,920


27,898


—


270,818

Advertising and promotion
65,609


7,859


—


73,468

Contribution margin
$
177,311


$
20,039


$
—


197,350

Other operating expenses
 





 


56,516

Operating income
 





 


140,834

Other expense
 





 


50,772

Income before income taxes









90,062

Provision for income taxes
 





 


22,885

Net income









$
67,177

* Intersegment revenues of $1.6 million were eliminated from the North American OTC Healthcare segment.

- 20-



 
Three Months Ended September 30, 2018
(In thousands)
North American OTC
Healthcare

International OTC
Healthcare

Household
Cleaning

Consolidated
Total segment revenues*
$
215,950


$
23,407


$
—


$
239,357

Cost of sales
92,007


9,878


—


101,885

Gross profit
123,943


13,529


—


137,472

Advertising and promotion
33,325


3,717


—


37,042

Contribution margin
$
90,618


$
9,812


$
—


100,430

Other operating expenses
 




 


29,506

Operating income
 




 


70,924

Other expense
 




 


27,405

Income before income taxes








43,519

Provision for income taxes
 




 


12,678

Net income








$
30,841


* Intersegment revenues of $1.6 million were eliminated from the North American OTC Healthcare segment.

 
Six Months Ended September 30, 2018
(In thousands)
North American OTC
Healthcare
 
International OTC
Healthcare
 
Household
Cleaning
 
Consolidated
Total segment revenues*
$
430,725


$
42,801


$
19,811


$
493,337

Cost of sales
181,160


17,494


16,588


215,242

Gross profit
249,565


25,307


3,223


278,095

Advertising and promotion
66,583


7,140


430


74,153

Contribution margin
$
182,982


$
18,167


$
2,793


203,942

Other operating expenses
 




 


60,531

Operating income
 




 


143,411

Other expense
 




 


53,432

Income before income taxes








89,979

Provision for income taxes
 




 


24,672

Net income








$
65,307

* Intersegment revenues of $4.3 million were eliminated from the North American OTC Healthcare segment.

- 21-


The tables below summarize information about our segment revenues from similar product groups.
 
Three Months Ended September 30, 2019
(In thousands)
North American OTC
Healthcare
 
International OTC
Healthcare
 
Household
Cleaning
 
Consolidated
Analgesics
$
28,831

 
$
243

 
$
—

 
$
29,074

Cough & Cold
20,506

 
5,814

 
—

 
26,320

Women's Health
59,678

 
2,905

 
—

 
62,583

Gastrointestinal
32,214

 
9,028

 
—

 
41,242

Eye & Ear Care
22,286

 
3,185

 
—

 
25,471

Dermatologicals
28,039

 
576

 
—

 
28,615

Oral Care
21,063

 
2,439

 
—

 
23,502

Other OTC
1,261

 
1

 
—

 
1,262

Household Cleaning
—

 
—

 
—

 
—

Total segment revenues
$
213,878

 
$
24,191

 
$
—

 
$
238,069



 
Six Months Ended September 30, 2019
(In thousands)
North American OTC
Healthcare
 
International OTC
Healthcare
 
Household
Cleaning
 
Consolidated
Analgesics
$
57,366

 
$
473

 
$
—

 
$
57,839

Cough & Cold
37,846

 
11,196

 
—

 
49,042

Women's Health
119,256

 
5,324

 
—

 
124,580

Gastrointestinal
63,786

 
16,013

 
—

 
79,799

Eye & Ear Care
49,039

 
6,196

 
—

 
55,235

Dermatologicals
53,777

 
1,266

 
—

 
55,043

Oral Care
41,042

 
5,091

 
—

 
46,133

Other OTC
2,550

 
2

 
—

 
2,552

Household Cleaning
—

 
—

 
—

 
—

Total segment revenues
$
424,662

 
$
45,561

 
$
—

 
$
470,223


 
Three Months Ended September 30, 2018
(In thousands)
North American OTC
Healthcare
 
International OTC
Healthcare
 
Household
Cleaning
 
Consolidated
Analgesics
$
28,638

 
$
125

 
$
—

 
$
28,763

Cough & Cold
20,492

 
5,734

 
—

 
26,226

Women's Health
61,614

 
3,270

 
—

 
64,884

Gastrointestinal
30,529

 
7,950

 
—

 
38,479

Eye & Ear Care
24,845

 
2,995

 
—

 
27,840

Dermatologicals
25,338

 
605

 
—

 
25,943

Oral Care
23,142

 
2,727

 
—

 
25,869

Other OTC
1,352

 
1

 
—

 
1,353

Household Cleaning
—

 
—

 
—

 
—

Total segment revenues
$
215,950

 
$
23,407

 
$
—

 
$
239,357


- 22-


 
Six Months Ended September 30, 2018
(In thousands)
North American OTC
Healthcare
 
International OTC
Healthcare
 
Household
Cleaning
 
Consolidated
Analgesics
$
56,896

 
$
282

 
$
—

 
$
57,178

Cough & Cold
36,706

 
10,905

 
—

 
47,611

Women's Health
125,091

 
5,527

 
—

 
130,618

Gastrointestinal
63,328

 
13,940

 
—

 
77,268

Eye & Ear Care
50,317

 
5,614

 
—

 
55,931

Dermatologicals
50,460

 
1,137

 
—

 
51,597

Oral Care
45,339

 
5,394

 
—

 
50,733

Other OTC
2,588

 
2

 
—

 
2,590

Household Cleaning
—

 
—

 
19,811

 
19,811

Total segment revenues
$
430,725

 
$
42,801

 
$
19,811

 
$
493,337


Our total segment revenues by geographic area are as follows:
 
Three Months Ended September 30,
 
Six Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
United States
$
199,714


$
203,763

 
$
400,343


$
427,240

Rest of world
38,355


35,594

 
69,880


66,097

Total
$
238,069


$
239,357

 
$
470,223


$
493,337



Our consolidated goodwill and intangible assets have been allocated to the reportable segments as follows:
September 30, 2019
North American OTC
Healthcare
 
International OTC
Healthcare
 
Consolidated
(In thousands)
 
 
 
 
 
Goodwill
$
547,393

 
$
30,151

 
$
577,544

 
 
 
 
 
 
Intangible assets
 
 
 
 
 

Indefinite-lived
2,195,616

 
73,805

 
2,269,421

Finite-lived, net
219,176

 
4,872

 
224,048

Intangible assets, net
2,414,792

 
78,677

 
2,493,469

Total
$
2,962,185

 
$
108,828

 
$
3,071,013



March 31, 2019
North American OTC
Healthcare
 
International OTC
Healthcare
 
Consolidated
(In thousands)
 
 
 
 
 
Goodwill
$
547,393


$
31,190


$
578,583

 







Intangible assets





 

Indefinite-lived
2,195,617

 
77,574

 
2,273,191

Finite-lived, net
228,743

 
5,276

 
234,019

Intangible assets, net
2,424,360

 
82,850

 
2,507,210

Total
$
2,971,753

 
$
114,040

 
$
3,085,793




- 23-


ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read together with the Condensed Consolidated Financial Statements and the related notes included in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.  This discussion and analysis may contain forward-looking statements that involve certain risks, assumptions and uncertainties.  Future results could differ materially from the discussion that follows for many reasons, including the factors described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019 and in future reports filed with the U.S. Securities and Exchange Commission ("SEC").
See also “Cautionary Statement Regarding Forward-Looking Statements” on page 34 of this Quarterly Report on Form 10-Q.
Unless otherwise indicated by the context, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” the “Company” or “Prestige” refer to Prestige Consumer Healthcare Inc. and our subsidiaries. Similarly, reference to a year (e.g., 2020) refers to our fiscal year ended March 31 of that year.

General
We are engaged in the development, manufacturing, marketing, sales and distribution of well-recognized, brand name over-the-counter ("OTC") healthcare and household cleaning products (prior to the sale of our Household Cleaning segment on July 2, 2018) to mass merchandisers and drug, food, dollar, convenience, and club stores and e-commerce channels in North America (the United States and Canada) and in Australia and certain other international markets.  We use the strength of our brands, our established retail distribution network, a low-cost operating model and our experienced management team to our competitive advantage.

We have grown our brand portfolio both organically and through acquisitions. We develop our existing brands by investing in new product lines, brand extensions and strong advertising support. Acquisitions of OTC brands have also been an important part of our growth strategy. We have acquired strong and well-recognized brands from consumer products and pharmaceutical companies, as well as private equity firms. While many of these brands have long histories of brand development and investment, we believe that, at the time we acquired them, most were considered “non-core” by their previous owners. As a result, these acquired brands did not benefit from adequate management focus and marketing support during the period prior to their acquisition, which created opportunities for us to reinvigorate these brands and improve their performance post-acquisition. After adding a core brand to our portfolio, we seek to increase its sales, market share and distribution in both existing and new channels through our established retail distribution network.  We pursue this growth through increased spending on advertising and promotional support, new sales and marketing strategies, improved packaging and formulations, and innovative development of brand extensions.

Divestiture
On July 2, 2018, we entered into an Asset Purchase Agreement with KIK International LLC, pursuant to which we sold certain assets, including certain intellectual property rights, that represented our Household Cleaning segment. We received proceeds from the sale of $65.9 million and recorded a pre-tax gain on sale of $1.3 million. The net proceeds were used to repay long-term debt in July 2018.


- 24-


Results of Operations

Three Months Ended September 30, 2019 compared to the Three Months Ended September 30, 2018

Total Segment Revenues

The following table represents total revenue by segment, including product groups, for the three months ended September 30, 2019 and 2018.
 
Three Months Ended September 30,
 
 
 
 
 
 
 
 
 
Increase (Decrease)
(In thousands)
2019
 
%
 
2018
 
%
 
Amount
 
%
North American OTC Healthcare
 
 
 
 
 
 
 
 
 
 
Analgesics
$
28,831

 
12.1
 
$
28,638

 
12.0
 
$
193

 
0.7

Cough & Cold
20,506

 
8.6
 
20,492

 
8.5
 
14

 
0.1

Women's Health
59,678

 
25.3
 
61,614

 
25.7
 
(1,936
)
 
(3.1
)
Gastrointestinal
32,214

 
13.5
 
30,529

 
12.7
 
1,685

 
5.5

Eye & Ear Care
22,286

 
9.4
 
24,845

 
10.4
 
(2,559
)
 
(10.3
)
Dermatologicals
28,039

 
11.8
 
25,338

 
10.6
 
2,701

 
10.7

Oral Care
21,063

 
8.8
 
23,142

 
9.7
 
(2,079
)
 
(9.0
)
Other OTC
1,261

 
0.5
 
1,352

 
0.6
 
(91
)
 
(6.7
)
Total North American OTC Healthcare
213,878

 
90.0
 
215,950

 
90.2
 
(2,072
)
 
(1.0
)
 
 
 
 
 
 
 
 
 
 
 
 
International OTC Healthcare
 
 
 
 
 
 
 
 
 
 
Analgesics
243

 
0.1
 
125

 
0.1
 
118

 
94.4

Cough & Cold
5,814

 
2.4
 
5,734

 
2.4
 
80

 
1.4

Women's Health
2,905

 
1.2
 
3,270

 
1.4
 
(365
)
 
(11.2
)
Gastrointestinal
9,028

 
3.8
 
7,950

 
3.2
 
1,078

 
13.6

Eye & Ear Care
3,185

 
1.3
 
2,995

 
1.3
 
190

 
6.3

Dermatologicals
576

 
0.2
 
605

 
0.3
 
(29
)
 
(4.8
)
Oral Care
2,439

 
1.0
 
2,727

 
1.1
 
(288
)
 
(10.6
)
Other OTC
1

 
—
 
1

 
—
 
—

 
—

Total International OTC Healthcare
24,191

 
10.0
 
23,407

 
9.8
 
784

 
3.3

 
 
 
 
 
 
 
 
 
 
 
 
Total Consolidated
$
238,069

 
100.0
 
$
239,357

 
100.0
 
$
(1,288
)
 
(0.5
)

Total segment revenues for the three months ended September 30, 2019 were $238.1 million, a decrease of $1.3 million, or 0.5%, versus the three months ended September 30, 2018. The $1.3 million decrease was primarily attributable to the effects of foreign currency exchange rates and inventory reductions at certain retailers, partially offset by increased consumption and geographic expansion.

North American OTC Healthcare Segment
Revenues for the North American OTC Healthcare segment decreased $2.1 million, or 1.0%, during the three months ended September 30, 2019 versus the three months ended September 30, 2018.  The decrease was primarily attributable to inventory reductions at certain key retailers.

International OTC Healthcare Segment
Revenues for the International OTC Healthcare segment increased $0.8 million, or 3.3%, during the three months ended September 30, 2019 versus the three months ended September 30, 2018. The $0.8 million increase was primarily attributable to increased consumption and geographic expansion, partially offset by the impact of unfavorable foreign currency exchange rates.


- 25-


Gross Profit
The following table presents our gross profit and gross profit as a percentage of total segment revenues, by segment for each of the periods presented.
 
Three Months Ended September 30,
(In thousands)
 
 
 
 
 
 
 
 
Increase (Decrease)
Gross Profit
2019
 
%
 
2018
 
%
 
Amount
 
%
North American OTC Healthcare
$
120,947

 
56.5
 
$
123,943

 
57.4
 
$
(2,996
)
 
(2.4
)
International OTC Healthcare
15,804

 
65.3
 
13,529

 
57.8
 
2,275

 
16.8

 
$
136,751

 
57.4
 
$
137,472

 
57.4
 
$
(721
)
 
(0.5
)

Gross profit for the three months ended September 30, 2019 decreased $0.7 million, or 0.5%, when compared with the three months ended September 30, 2018.  The decrease in gross profit was primarily due to lower sales as discussed above and certain costs associated with a change in warehouse locations. As a percentage of total revenues, gross profit remained consistent at 57.4% during the three months ended September 30, 2019, compared to the three months ended September 30, 2018.
 
North American OTC Healthcare Segment
Gross profit for the North American OTC Healthcare segment decreased $3.0 million, or 2.4%, during the three months ended September 30, 2019 versus the three months ended September 30, 2018. As a percentage of North American OTC Healthcare revenues, gross profit decreased to 56.5% during the three months ended September 30, 2019 from 57.4% during the three months ended September 30, 2018, primarily due to certain costs associated with a change in warehouse locations.

International OTC Healthcare Segment
Gross profit for the International OTC Healthcare segment increased $2.3 million, or 16.8%, during the three months ended September 30, 2019 versus the three months ended September 30, 2018. As a percentage of International OTC Healthcare revenues, gross profit increased to 65.3% during the three months ended September 30, 2019 from 57.8% during the three months ended September 30, 2018, primarily due to product mix.

Contribution Margin
Contribution margin is our segment measure of profitability. It is defined as gross profit less advertising and promotional expenses.

The following table presents our contribution margin and contribution margin as a percentage of total segment revenues, by segment for each of the periods presented.
 
Three Months Ended September 30,
(In thousands)
 
 
 
 
 
 
 
 
Increase (Decrease)
Contribution Margin
2019
 
%
 
2018
 
%
 
Amount
 
%
North American OTC Healthcare
$
86,352

 
40.4
 
$
90,618

 
42.0
 
$
(4,266
)
 
(4.7
)
International OTC Healthcare
11,732

 
48.5
 
9,812

 
41.9
 
1,920

 
19.6

 
$
98,084

 
41.2
 
$
100,430

 
42.0
 
$
(2,346
)
 
(2.3
)

North American OTC Healthcare Segment
Contribution margin for the North American OTC Healthcare segment decreased $4.3 million, or 4.7%, during the three months ended September 30, 2019 versus the three months ended September 30, 2018. As a percentage of North American OTC Healthcare revenues, contribution margin decreased to 40.4% during the three months ended September 30, 2019 from 42.0% during the three months ended September 30, 2018. The contribution margin decrease as a percentage of revenues was primarily due to the gross profit decrease as a percentage of revenues in the North America OTC Healthcare segment discussed above, and an increase in advertising and promotional spend.

International OTC Healthcare Segment
Contribution margin for the International OTC Healthcare segment increased $1.9 million, or 19.6%, during the three months ended September 30, 2019 versus the three months ended September 30, 2018. As a percentage of International OTC Healthcare revenues, contribution margin increased to 48.5% during the three months ended September 30, 2019 from 41.9% during the three months ended September 30, 2018. The contribution margin increase as a percentage of revenues was primarily due to the gross profit increase as a percentage of revenues in the International OTC Healthcare segment discussed above.


- 26-


General and Administrative
General and administrative expenses were $22.5 million for the three months ended September 30, 2019 versus $24.0 million for the three months ended September 30, 2018. The decrease in general and administrative expenses was primarily due to divestiture costs in the prior period associated with the sale of the Household Cleaning segment, partly offset by higher professional fees in the current period.

Depreciation and Amortization
Depreciation and amortization expenses were $6.2 million for the three months ended September 30, 2019 and $6.8 million for the three months ended September 30, 2018. The decrease in depreciation and amortization expenses was primarily due to lower amortization expense resulting from prior year intangible asset impairments, which were recorded in the fourth quarter of fiscal 2019.

Interest Expense
Interest expense was $24.5 million during the three months ended September 30, 2019, versus $27.1 million during the three months ended September 30, 2018. The average indebtedness decreased to $1.8 billion during the three months ended September 30, 2019 from $2.0 billion during the three months ended September 30, 2018. The average cost of borrowing decreased to 5.4% for the three months ended September 30, 2019 compared to 5.5% for the three months ended September 30, 2018.

Income Taxes
The provision for income taxes during the three months ended September 30, 2019 was $10.8 million versus $12.7 million during the three months ended September 30, 2018.  The effective tax rate during the three months ended September 30, 2019 was 24.5% versus 29.1% during the three months ended September 30, 2018. The decrease in the effective tax rate for the three months ended September 30, 2019 was primarily due to a discrete item arising from the sale of our Household Cleaning segment in July 2018.

- 27-



Results of Operations

Six Months Ended September 30, 2019 compared to the Six Months Ended September 30, 2018

Total Segment Revenues

The following table represents total revenue by segment, including product groups, for the six months ended September 30, 2019 and 2018.
 
Six Months Ended September 30,
 
 
 
 
 
 
 
 
 
Increase (Decrease)
(In thousands)
2019
 
%
 
2018
 
%
 
Amount
 
%
North American OTC Healthcare
 
 
 
 
 
 
 
 
 
 
Analgesics
$
57,366

 
12.2
 
$
56,896

 
11.5
 
$
470

 
0.8

Cough & Cold
37,846

 
8.0
 
36,706

 
7.4
 
1,140

 
3.1

Women's Health
119,256

 
25.5
 
125,091

 
25.4
 
(5,835
)
 
(4.7
)
Gastrointestinal
63,786

 
13.6
 
63,328

 
12.8
 
458

 
0.7

Eye & Ear Care
49,039

 
10.4
 
50,317

 
10.2
 
(1,278
)
 
(2.5
)
Dermatologicals
53,777

 
11.4
 
50,460

 
10.2
 
3,317

 
6.6

Oral Care
41,042

 
8.7
 
45,339

 
9.3
 
(4,297
)
 
(9.5
)
Other OTC
2,550

 
0.5
 
2,588

 
0.5
 
(38
)
 
(1.5
)
Total North American OTC Healthcare
424,662

 
90.3
 
430,725

 
87.3
 
(6,063
)
 
(1.4
)
 
 
 
 
 
 
 
 
 
 
 
 
International OTC Healthcare
 
 
 
 
 
 
 
 
 
 
Analgesics
473

 
0.1
 
282

 
0.1
 
191

 
67.7

Cough & Cold
11,196

 
2.4
 
10,905

 
2.2
 
291

 
2.7

Women's Health
5,324

 
1.1
 
5,527

 
1.1
 
(203
)
 
(3.7
)
Gastrointestinal
16,013

 
3.4
 
13,940

 
2.8
 
2,073

 
14.9

Eye & Ear Care
6,196

 
1.3
 
5,614

 
1.1
 
582

 
10.4

Dermatologicals
1,266

 
0.3
 
1,137

 
0.3
 
129

 
11.3

Oral Care
5,091

 
1.1
 
5,394

 
1.1
 
(303
)
 
(5.6
)
Other OTC
2

 
—
 
2

 
—
 
—

 
—

Total International OTC Healthcare
45,561

 
9.7
 
42,801

 
8.7
 
2,760

 
6.4

 
 
 
 
 
 
 
 
 
 
 
 
Total OTC Healthcare
470,223

 
100.0
 
473,526

 
96.0
 
(3,303
)
 
(0.7
)
Household Cleaning
—

 
—
 
19,811

 
4.0
 
(19,811
)
 
(100.0
)
Total Consolidated
$
470,223

 
100.0
 
$
493,337

 
100.0
 
$
(23,114
)
 
(4.7
)

Total segment revenues for the six months ended September 30, 2019 were $470.2 million, a decrease of $23.1 million, or 4.7%, versus the six months ended September 30, 2018. The $23.1 million decrease was primarily related to the sale of our Household Cleaning segment on July 2, 2018.

North American OTC Healthcare Segment
Revenues for the North American OTC Healthcare segment decreased $6.1 million, or 1.4%, during the six months ended September 30, 2019 versus the six months ended September 30, 2018.  The decrease was primarily attributable to inventory reductions at certain key retailers and the impact of unfavorable foreign currency exchange rates.

International OTC Healthcare Segment
Revenues for the International OTC Healthcare segment increased $2.8 million, or 6.4%, during the six months ended September 30, 2019 versus the six months ended September 30, 2018. The $2.8 million increase was primarily attributable to increased consumption and geographic expansion, partially offset by the impact of unfavorable foreign currency exchange rates.

- 28-



Household Cleaning Segment
Due to the sale of our Household Cleaning segment on July 2, 2018, there were no related revenues in the six months ended September 30, 2019.

Gross Profit
The following table presents our gross profit and gross profit as a percentage of total segment revenues, by segment for each of the periods presented.
 
Six Months Ended September 30,
(In thousands)
 
 
 
 
 
 
 
 
Increase (Decrease)
Gross Profit
2019
 
%
 
2018
 
%
 
Amount
 
%
North American OTC Healthcare
$
242,920

 
57.2
 
$
249,565

 
57.9
 
$
(6,645
)
 
(2.7
)
International OTC Healthcare
27,898

 
61.2
 
25,307

 
59.1
 
2,591

 
10.2

Household Cleaning
—

 
—
 
3,223

 
16.3
 
(3,223
)
 
(100.0
)
 
$
270,818

 
57.6
 
$
278,095

 
56.4
 
$
(7,277
)
 
(2.6
)

Gross profit for the six months ended September 30, 2019 decreased $7.3 million, or 2.6%, when compared with the six months ended September 30, 2018.  The decrease in gross profit was primarily due to decreases in gross profit within the North American OTC Healthcare segment and the sale of our Household Cleaning segment. As a percentage of total revenues, gross profit increased to 57.6% during the six months ended September 30, 2019, from 56.4% during the six months ended September 30, 2018. The increase in gross profit as a percentage of revenues was primarily a result of the divestiture of our Household Cleaning segment, which had lower gross margins, partially offset by certain costs associated with a change in warehouse locations.
 
North American OTC Healthcare Segment
Gross profit for the North American OTC Healthcare segment decreased $6.6 million, or 2.7%, during the six months ended September 30, 2019 versus the six months ended September 30, 2018. As a percentage of North American OTC Healthcare revenues, gross profit decreased to 57.2% during the six months ended September 30, 2019 from 57.9% during the six months ended September 30, 2018, primarily due to certain costs associated with a change in warehouse locations.

International OTC Healthcare Segment
Gross profit for the International OTC Healthcare segment increased $2.6 million, or 10.2%, during the six months ended September 30, 2019 versus the six months ended September 30, 2018. As a percentage of International OTC Healthcare revenues, gross profit increased to 61.2% during the six months ended September 30, 2019 from 59.1% during the six months ended September 30, 2018, primarily due to product mix.

Household Cleaning Segment
Due to the sale of our Household Cleaning segment on July 2, 2018, there was no related gross profit in the six months ended September 30, 2019.

Contribution Margin
Contribution margin is our segment measure of profitability. It is defined as gross profit less advertising and promotional expenses.

The following table presents our contribution margin and contribution margin as a percentage of total segment revenues, by segment for each of the periods presented.
 
Six Months Ended September 30,
(In thousands)
 
 
 
 
 
 
 
 
Increase (Decrease)
Contribution Margin
2019
 
%
 
2018
 
%
 
Amount
 
%
North American OTC Healthcare
$
177,311

 
41.8
 
$
182,982

 
42.5
 
$
(5,671
)
 
(3.1
)
International OTC Healthcare
20,039

 
44.0
 
18,167

 
42.4
 
1,872

 
10.3

Household Cleaning
—

 
—
 
2,793

 
14.1
 
(2,793
)
 
(100.0
)
 
$
197,350

 
42.0
 
$
203,942

 
41.3
 
$
(6,592
)
 
(3.2
)
    

- 29-


North American OTC Healthcare Segment
Contribution margin for the North American OTC Healthcare segment decreased $5.7 million, or 3.1%, during the six months ended September 30, 2019 versus the six months ended September 30, 2018. As a percentage of North American OTC Healthcare revenues, contribution margin decreased to 41.8% during the six months ended September 30, 2019 from 42.5% during the six months ended September 30, 2018. The contribution margin decrease as a percentage of revenues was primarily due to the decrease in gross profit noted above and an increase in advertising and promotional spend.

International OTC Healthcare Segment
Contribution margin for the International OTC Healthcare segment increased $1.9 million, or 10.3%, during the six months ended September 30, 2019 versus the six months ended September 30, 2018. As a percentage of International OTC Healthcare revenues, contribution margin increased to 44.0% during the six months ended September 30, 2019 from 42.4% during the six months ended September 30, 2018. The contribution margin increase as a percentage of revenues was primarily due to the gross profit increase as a percentage of revenues in the International OTC Healthcare segment discussed above.
 
Household Cleaning Segment
Due to the sale of our Household Cleaning segment on July 2, 2018, there was no related contribution margin in the six months ended September 30, 2019.

General and Administrative
General and administrative expenses were $44.2 million for the six months ended September 30, 2019 versus $48.0 million for the six months ended September 30, 2018. The decrease in general and administrative expenses was primarily due to divestiture costs in the prior period associated with the sale of the Household Cleaning segment, partly offset by higher professional fees in the current period.

Depreciation and Amortization
Depreciation and amortization expenses were $12.3 million for the six months ended September 30, 2019 and $13.8 million for the six months ended September 30, 2018. The decrease in depreciation and amortization expenses was primarily due to the sale of our Household Cleaning segment on July 2, 2018, as well as lower amortization expense resulting from prior year intangible asset impairments which were recorded in the fourth quarter of fiscal 2019.

Interest Expense
Interest expense was $49.6 million during the six months ended September 30, 2019, versus $53.1 million during the six months ended September 30, 2018. The average indebtedness decreased to $1.8 billion during the six months ended September 30, 2019 from $2.0 billion during the six months ended September 30, 2018. The average cost of borrowing increased to 5.5% for the six months ended September 30, 2019 compared to 5.3% for the six months ended September 30, 2018.

Income Taxes
The provision for income taxes during the six months ended September 30, 2019 was $22.9 million versus $24.7 million during the six months ended September 30, 2018.  The effective tax rate during the six months ended September 30, 2019 was 25.4% versus 27.4% during the six months ended September 30, 2018. The decrease in the effective tax rate for the six months ended September 30, 2019 was primarily due to a discrete item arising from the sale of our Household Cleaning segment in July 2018.
Liquidity and Capital Resources

Liquidity
Our primary source of cash comes from our cash flow from operations. In the past, we have supplemented this source of cash with various debt facilities, primarily in connection with acquisitions. We have financed our operations, and expect to continue to finance our operations over the next twelve months, with a combination of funds generated from operations and borrowings.  Our principal uses of cash are for operating expenses, debt service, share repurchases and acquisitions. Based on our current levels of operations and anticipated growth, excluding acquisitions, we believe that our cash generated from operations and our existing credit facilities will be adequate to finance our working capital and capital expenditures through the next twelve months.

As of September 30, 2019, we had cash and cash equivalents of $27.9 million, an increase of $0.4 million from March 31, 2019. The following table summarizes the change:


- 30-


 
Six Months Ended September 30,
(In thousands)
2019
 
2018
 
$ Change
Cash provided by (used in):
 
 
 
 
 
Operating Activities
$
103,000

 
$
95,107

 
$
7,893

Investing Activities
(5,822
)
 
60,838

 
(66,660
)
Financing Activities
(96,312
)
 
(151,231
)
 
54,919

Effects of exchange rate changes on cash and cash equivalents
(491
)
 
(352
)
 
(139
)
Net change in cash and cash equivalents
$
375

 
$
4,362

 
$
(3,987
)

Operating Activities
Net cash provided by operating activities was $103.0 million for the six months ended September 30, 2019 compared to $95.1 million for the six months ended September 30, 2018. The $7.9 million increase was primarily due to an increase in net income after non-cash items.

Investing Activities
Net cash used in investing activities was $5.8 million for the six months ended September 30, 2019 compared to net cash provided by investing activities of $60.8 million for the six months ended September 30, 2018. The change was primarily due to proceeds of $65.9 million from the divestiture of our Household Cleaning segment in the prior period.

Financing Activities
Net cash used in financing activities was $96.3 million for the six months ended September 30, 2019 compared to $151.2 million for the six months ended September 30, 2018.  The decrease was primarily due to a repayment of our Term Loan of $100.0 million in the prior period, partly offset by an increase of $46.0 million in repayments under our revolving credit agreement in the current period.

Capital Resources

As of September 30, 2019, we had an aggregate of $1.8 billion of outstanding indebtedness, which consisted of the following:

•
$400.0 million of 5.375% 2013 Senior Notes, which mature on December 15, 2021;
•
$600.0 million of 6.375% 2016 Senior Notes, which mature on March 1, 2024;
•
$738.0 million of borrowings under the 2012 Term B-5 Loans due January 26, 2024; and
•
$29.0 million of borrowings under the 2012 ABL Revolver due January 26, 2022.

As of September 30, 2019, we had $125.0 million of an additional borrowing capacity under the 2012 ABL Revolver.

During the years ended March 31, 2019 and 2018, we made voluntary principal payments against outstanding indebtedness of $200.0 million and $444.0 million, respectively, under the 2012 Term Loan. During the six months ended September 30, 2019, we did not make any voluntary principal payments under the 2012 Term Loan. Under the Term Loan Amendment No. 5, we are required to make quarterly payments each equal to 0.25% of the aggregate principal amount, which, as of September 30, 2019, was $738.0 million. Since we have made optional payments in prior years that exceed a significant portion of our required quarterly payments, we will not be required to make another payment on the 2012 Term Loan until the fiscal year ending March 31, 2024.


Maturities:
(In thousands)
 
Year Ending March 31,
Amount
2020 (remaining nine months ending March 31, 2020)
$
—

2021
 
—

2022
 
429,000

2023
 
—

2024
 
1,338,000

Thereafter
—

 
$
1,767,000



- 31-


Covenants:
Our debt facilities contain various financial covenants, including provisions that require us to maintain certain leverage, interest coverage and fixed charge ratios.  The credit agreement governing the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2013 Senior Notes and 2016 Senior Notes contain provisions that accelerate our indebtedness on certain changes in control and restrict us from undertaking specified corporate actions, including asset dispositions, acquisitions, payment of dividends and other specified payments, repurchasing our equity securities in the public markets, incurrence of indebtedness, creation of liens, making loans and investments and transactions with affiliates. Specifically, we must:

•
Have a leverage ratio of less than 6.50 to 1.0 for the quarter ended September 30, 2019 and thereafter (defined as, with certain adjustments, the ratio of our consolidated total net debt as of the last day of the fiscal quarter to our trailing twelve month consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items (“EBITDA”));

•
Have an interest coverage ratio of greater than 2.25 to 1.0 for the quarter ended September 30, 2019 and thereafter (defined as, with certain adjustments, the ratio of our consolidated EBITDA to our trailing twelve month consolidated cash interest expense); and

•
Have a fixed charge ratio of greater than 1.0 to 1.0 for the quarter ended September 30, 2019 (defined as, with certain adjustments, the ratio of our consolidated EBITDA minus capital expenditures to our trailing twelve month consolidated interest paid, taxes paid and other specified payments). Our fixed charge requirement remains level throughout the term of the debt facilities.

At September 30, 2019, we were in compliance with the applicable financial and restrictive covenants under the 2012 Term Loan and the 2012 ABL Revolver and the indentures governing the 2013 Senior Notes and the 2016 Senior Notes. Additionally, management anticipates that in the normal course of operations, we will be in compliance with the financial and restrictive covenants during the remainder of 2020.

As we deem appropriate, we may from time to time utilize derivative financial instruments to mitigate the impact of changing interest rates associated with our long-term debt obligations or other derivative financial instruments.  While we have utilized derivative financial instruments in the past, we did not have any significant derivative financial instruments outstanding at either September 30, 2019 or March 31, 2019 or during any of the periods presented. We have not entered into derivative financial instruments for trading purposes; all of our derivatives have been over-the-counter instruments with liquid markets. 

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements or financing activities with special-purpose entities.



- 32-


Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period.  Although these estimates are based on our knowledge of current events and actions that we may undertake in the future, actual results could differ from those estimates.  A summary of our critical accounting policies is presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.  There were no material changes to our critical accounting policies during the six months ended September 30, 2019, except as described in Note 6 of this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements
A description of recently issued and recently adopted accounting pronouncements is included in the notes to the unaudited Condensed Consolidated Financial Statements in Part I, Item I, Note 1 of this Quarterly Report on Form 10-Q.


- 33-


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), including, without limitation, information within Management's Discussion and Analysis of Financial Condition and Results of Operations.  The following cautionary statements are being made pursuant to the provisions of the PSLRA and with the intention of obtaining the benefits of the “safe harbor” provisions of the PSLRA.  

Forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q.  Except as required under federal securities laws and the rules and regulations of the SEC, we do not intend to update any forward-looking statements to reflect events or circumstances arising after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise.  As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on forward-looking statements included in this Quarterly Report on Form 10-Q or that may be made elsewhere from time to time by, or on behalf of, us.  All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

These forward-looking statements generally can be identified by the use of words or phrases such as “believe,” “anticipate,” “expect,” “estimate,” “project,” "intend," "strategy," "goal," "future," "seek," "may," "should," "would," "will," or other similar words and phrases.  Forward-looking statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including, without limitation:

•
The high level of competition in our industry and markets;
•
Our inability to increase organic growth via new product introductions, line extensions, increased spending on advertising and promotional support, and other new sales and marketing strategies;
•
Our dependence on a limited number of customers for a large portion of our sales;
•
Our inability to successfully identify, negotiate, complete and integrate suitable acquisition candidates and to obtain necessary financing;
•
Our inability to invest successfully in research and development to develop new products;
•
Changes in inventory management practices by retailers;
•
Our inability to grow our international sales;
•
General economic conditions and incidence levels affecting sales of our products and their respective markets;
•
Economic factors, such as increases in interest rates and currency exchange rate fluctuations;
•
Business, regulatory and other conditions affecting retailers;
•
Changing consumer trends, additional store brand or branded competition or other pricing pressures which may cause us to lower our prices;
•
Our dependence on third party manufacturers to produce many of the products we sell;
•
Our dependence on third party logistics providers to distribute our products to customers;
•
Price increases for raw materials, labor, energy and transportation costs, and for other input costs;
•
Disruptions in our distribution center or manufacturing facility;
•
Acquisitions, dispositions or other strategic transactions diverting managerial resources, the incurrence of additional liabilities, or problems associated with integration of those businesses and facilities;
•
Actions of government agencies in connection with our products, advertising or regulatory matters governing our industry;
•
Product liability claims, product recalls and related negative publicity;
•
Our inability to protect our intellectual property rights;
•
Our dependence on third parties for intellectual property relating to some of the products we sell;
•
Our inability to protect our internal information technology systems;
•
Our dependence on third party information technology service providers and their ability to protect against security threats and disruptions;
•
Our assets being comprised virtually entirely of goodwill and intangibles and possible changes in their value based on adverse operating results and/or changes in the discount rate used to value our brands;
•
Our dependence on key personnel;
•
Shortages of supply of sourced goods or interruptions in the distribution or manufacturing of our products;
•
The costs associated with any claims in litigation or arbitration and any adverse judgments rendered in such litigation or arbitration;
•
Our level of indebtedness and possible inability to service our debt;
•
Our inability to obtain additional financing;
•
The restrictions imposed by our financing agreements on our operations; and
•
Changes in federal and state tax laws, including the Tax Cuts and Jobs Act.

For more information, see Part I, Item 1A., "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

- 34-


ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to changes in interest rates because our 2012 Term Loan and 2012 ABL Revolver are variable rate debt instruments.  Interest rate changes generally do not significantly affect the market value of the 2012 Term Loan and the 2012 ABL Revolver but do affect the amount of our interest payments and, therefore, our future earnings and cash flows, assuming other factors are held constant.  At September 30, 2019, we had variable rate debt of approximately $767.0 million.

Holding other variables constant, including levels of indebtedness, a 1.0% increase in interest rates on our variable rate debt would have an adverse impact on pre-tax earnings and cash flows for the three and six months ended September 30, 2019 of approximately $2.0 million and $4.0 million, respectively.

Foreign Currency Exchange Rate Risk

During the three and six months ended September 30, 2019, approximately 11.5% and 11.0%, respectively, of our revenues were denominated in currencies other than the U.S. Dollar. During the three and six months ended September 30, 2018, approximately 12.1% and 10.5%, respectively, of our revenues were denominated in currencies other than the U.S. Dollar. As such, we are exposed to transactions that are sensitive to foreign currency exchange rates. These transactions are primarily with respect to the Canadian and Australian Dollars.

We performed a sensitivity analysis with respect to exchange rates for the three and six months ended September 30, 2019 and 2018. Holding all other variables constant, and assuming a hypothetical 10.0% adverse change in foreign currency exchange rates, this analysis resulted in a less than 5.0% impact on pre-tax income of approximately $1.6 million for the three months ended September 30, 2019 and approximately $2.5 million for the six months ended September 30, 2019. It represented a less than 5% impact on pre-tax income of approximately $0.9 million for the three months ended September 30, 2018 and approximately $1.9 million for the six months ended September 30, 2018.

ITEM 4.
CONTROLS AND PROCEDURES
              
Disclosure Controls and Procedures

The Company's management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures, as defined in Rule 13a–15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), as of September 30, 2019.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2019, the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

We have enhanced certain internal controls related to the adoption of the new lease standard as of April 1, 2019.  In connection with the evaluation described above, there were no other changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



- 35-


PART II.
OTHER INFORMATION

ITEM 1A. RISK FACTORS

You should carefully consider the risk factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended March 31, 2019, which could materially affect our business, financial condition or future results of operations. The risk factors described in our Annual Report on Form 10-K have not materially changed in the period covered by this Quarterly Report on Form 10-Q, but such risks are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and results of operations.

Our quarterly operating results and revenues may fluctuate as a result of any of these or other factors. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year, and revenues for any particular future period may decrease.  In the future, operating results may fall below the expectations of securities analysts and investors.  In that event, the market price of our outstanding securities could be adversely impacted.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES (a)
Period
 
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
July 1 to July 31, 2019
 
672,719

 
$
31.53

 
672,719

 
$
—

August 1 to August 31, 2019
 
2,273

 
$
35.32

 
—

 
$
—

September 1 to September 30, 2019
 
—

 
$
—

 
—

 
$
—

Total
 
674,992

 
 
 
672,719

 
 
(a) The majority of these purchases (672,719 shares) were made pursuant to our share repurchase program, which was announced in May 2019 and permits the repurchase of up to $50.0 million of our common stock through May 2020. The remaining purchases (2,273 shares) were made pursuant to our 2005 Long-Term Equity Incentive Plan, which allows for the indirect purchase of shares through a net-settlement feature upon the vesting of shares in order to satisfy minimum statutory tax-withholding requirements.


- 36-


ITEM 6.     EXHIBITS

 
 
 
3.1
 
 
 
 
3.1.1
 
 
 
 
3.2
 
 
 
 
31.1
 
 
 
 
31.2
 
 
 
 
32.1
 
 
 
 
32.2
 
 
 
 
*
 
Incorporated herein by reference.
 
 
 
101.INS
 
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
 
XBRL Taxonomy Extension Schema Document
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document


- 37-


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
PRESTIGE CONSUMER HEALTHCARE INC.
 
 
 
 
 
 
 
 
 
 
 
Date:
October 31, 2019
By:
/s/ Christine Sacco
 
 
 
 
Christine Sacco
 
 
 
 
Chief Financial Officer
 
 
 
 
(Principal Financial Officer and Duly Authorized Officer)
 
 
 
 
 
 



- 38-