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 June 30, 2020

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

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 July 31, 2020, there were 50,188,863 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 months ended June 30, 2020 and 2019 (unaudited)	2
	Condensed Consolidated Balance Sheets as of June 30, 2020 and March 31, 2020 (unaudited)	3
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months ended June 30, 2020 and 2019 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2020 and 2019 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
Item 1A.	Risk Factors	31
Item 2.	Issuer Purchases of Equity Securities	31
Item 5.	Other Information	31
Item 6.	Exhibits	33
	Signatures	34

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 June 30,
(In thousands, except per share data)	2020		2019
Revenues
Net sales	$	229,384	$	232,133
Other revenues	10		21
Total revenues	229,394		232,154
Cost of Sales
Cost of sales excluding depreciation	94,124		97,100
Cost of sales depreciation	1,402		987
Cost of sales	95,526		98,087
Gross profit	133,868		134,067
Operating Expenses
Advertising and marketing	27,750		34,801
General and administrative	19,934		21,706
Depreciation and amortization	6,065		6,074
Total operating expenses	53,749		62,581
Operating income	80,119		71,486
Other (income) expense
Interest income	(24)		(43)
Interest expense	21,965		25,063
Other expense, net	10		416
Total other expense	21,951		25,436
Income before income taxes	58,168		46,050
Provision for income taxes	14,462		12,125
Net income	$	43,706	$	33,925
Earnings per share:
Basic	$	0.87	$	0.66
Diluted	$	0.86	$	0.65
Weighted average shares outstanding:
Basic	50,264		51,697
Diluted	50,808		52,047
Comprehensive income, net of tax:
Currency translation adjustments	10,590		(224)
Unrealized gain on interest rate swaps	309		—
Total other comprehensive income (loss)	10,899		(224)
Comprehensive income	$	54,605	$	33,701

See accompanying notes.

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Prestige Consumer Healthcare Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)	June 30, 2020		March 31, 2020
Assets
Current assets
Cash and cash equivalents	$	57,941	$	94,760
Accounts receivable, net of allowance of $20,106 and $20,194, respectively	112,324		150,517
Inventories	116,811		116,026
Prepaid expenses and other current assets	8,488		4,351
Total current assets	295,564		365,654
Property, plant and equipment, net	58,325		55,988
Operating lease right-of-use assets	27,659		28,888
Finance lease right-of-use assets, net	5,517		5,842
Goodwill	577,128		575,179
Intangible assets, net	2,483,051		2,479,391
Other long-term assets	2,903		2,963
Total Assets	$	3,450,147	$	3,513,905
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	32,352	$	62,375
Accrued interest payable	24,738		9,911
Operating lease liabilities, current portion	5,450		5,612
Finance lease liabilities, current portion	1,230		1,220
Other accrued liabilities	68,159		70,763
Total current liabilities	131,929		149,881
Long-term debt, net	1,620,641		1,730,300
Deferred income tax liabilities	417,230		407,812
Long-term operating lease liabilities, net of current portion	23,762		24,877
Long-term finance lease liabilities, net of current portion	4,314		4,626
Other long-term liabilities	25,257		25,438
Total Liabilities	2,223,133		2,342,934
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 - 53,939 shares at June 30, 2020 and 53,805 shares at March 31, 2020	539		538
Additional paid-in capital	490,795		488,116
Treasury stock, at cost - 3,750 shares at June 30, 2020 and 3,719 shares at March 31, 2020	(118,865)		(117,623)
Accumulated other comprehensive loss, net of tax	(33,262)		(44,161)
Retained earnings	887,807		844,101
Total Stockholders' Equity	1,227,014		1,170,971
Total Liabilities and Stockholders' Equity	$	3,450,147	$	3,513,905

 See accompanying notes.

-3-

Prestige Consumer Healthcare Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

	Three Months Ended June 30, 2020
	Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Totals
(In thousands)	Shares	Par Value				Shares	Amount
Balances at March 31, 2020	53,805	$	538	$	488,116	3,719	$	(117,623)	$	(44,161)	$	844,101	$	1,170,971
Stock-based compensation	—	—		1,464		—	—		—		—		1,464
Exercise of stock options	60	—		1,216		—	—		—		—		1,216
Issuance of shares related to restricted stock	74	1		(1)		—	—		—		—		—
Treasury share repurchases	—	—		—		31	(1,242)		—		—		(1,242)
Net income	—	—		—		—	—		—		43,706		43,706
Comprehensive income	—	—		—		—	—		10,899		—		10,899
Balances at June 30, 2020	53,939	$	539	$	490,795	3,750	$	(118,865)	$	(33,262)	$	887,807	$	1,227,014

	Three Months Ended June 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	—	—		1,381		—	—		—		—		1,381
Exercise of stock options	9	—		275		—	—		—		—		275
Issuance of shares related to restricted stock	62	1		(1)		—	—		—		—		—
Treasury share repurchases	—	—		—		977	(29,565)		—		—		(29,565)
Net income	—	—		—		—	—		—		33,925		33,925
Comprehensive loss	—	—		—		—	—		(224)		—		(224)
Balances at June 30, 2019	53,741	$	537	$	480,805	2,848	$	(89,493)	$	(25,971)	$	735,745	$	1,101,623

See accompanying notes.

-4-

Prestige Consumer Healthcare Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended June 30,
(In thousands)	2020		2019
Operating Activities
Net income	$	43,706	$	33,925
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,467		7,061
Loss on disposal of property and equipment	42		20
Deferred income taxes	6,147		4,206
Amortization of debt origination costs	1,400		851
Stock-based compensation costs	1,464		1,381
Non-cash operating lease cost	1,831		1,338
Interest expense relating to finance lease liability	50		—
Changes in operating assets and liabilities:
Accounts receivable	39,734		5,808
Inventories	51		(8,939)
Prepaid expenses and other current assets	(4,019)		(4,335)
Accounts payable	(32,386)		5,306
Accrued liabilities	11,588		7,616
Operating lease liabilities	(1,812)		(1,368)
Other	(109)		(93)
Net cash provided by operating activities	75,154		52,777
Investing Activities
Purchases of property, plant and equipment	(2,553)		(1,956)
Net cash used in investing activities	(2,553)		(1,956)
Financing Activities
Term loan repayments	(56,000)		—
Borrowings under revolving credit agreement	—		15,000
Repayments under revolving credit agreement	(55,000)		(35,000)
Payments of finance leases	(336)		—
Proceeds from exercise of stock options	1,216		275
Fair value of shares surrendered as payment of tax withholding	(1,242)		(799)
Repurchase of common stock	—		(28,766)
Net cash used in financing activities	(111,362)		(49,290)
Effects of exchange rate changes on cash and cash equivalents	1,942		(19)
(Decrease) increase in cash and cash equivalents	(36,819)		1,512
Cash and cash equivalents - beginning of period	94,760		27,530
Cash and cash equivalents - end of period	$	57,941	$	29,042
Interest paid	$	5,571	$	19,966
Income taxes paid	$	2,182	$	1,807

See accompanying notes.

-5-

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 products to mass merchandisers, 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 7 to these Consolidated Financial Statements.

Coronavirus Outbreak

In January 2020, the World Health Organization ("WHO") announced a global health crisis due to a new strain of coronavirus ("COVID-19"). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic. This pandemic is affecting the United States and global economies, including causing significant volatility in the global economy and resulting in materially reduced economic activity. If the outbreak continues to spread or if we continue a period of recession or enter a depression, it may materially affect our operations and those of third parties on which we rely, including causing disruptions in the supply and distribution of our products. We may need to limit operations and may experience material limitations in employee resources. We did see an increase in sales at the end of March 2020 related to the United States shelter-in-place restrictions, followed by a significant decrease in consumer consumption in the weeks that followed. The decrease in consumption varied over the quarter with some categories positively impacted and some categories negatively impacted. Early in our first quarter of fiscal 2021, it had been reported to us that there had been an increase in absenteeism at our distribution center and some of our suppliers, however, we have not experienced a material disruption to our overall supply chain to date. These circumstances could change in this dynamic, unprecedented environment. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, and the actions to contain COVID-19 or treat its impact, among others. We do not yet know the full extent of impacts on our business or the global economy. However, these effects could have a material, adverse impact on our liquidity, capital resources, operations and business and those of the third parties on which we rely.

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 31^st of each year. References in these Condensed Consolidated Financial Statements or related notes to a year (e.g., 2021) mean our fiscal year ending or ended on March 31^st of that year. Operating results for the three months ended June 30, 2020 are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2021.  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, 2020.

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

-6-

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 adopted this standard effective April 1, 2020, and the adoption did not 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 (with subsequent targeted amendments). 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. The guidance requires entities to utilize an expected credit loss model for certain financial instruments, including most trade receivables, which replaces the incurred credit loss model previously used. Under this new model, we are required to recognize estimated credit losses expected to occur over time using a broad range of information including historical information, current conditions and reasonable and supportable forecasts. The amendments in these updates were effective for us in the first quarter of our fiscal year 2021. We adopted this standard effective April 1, 2020, and the adoption did not have a material impact on our Consolidated Financial Statements.

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 December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update eliminate the need for an organization to analyze whether certain exceptions apply for tax purposes. It also simplifies GAAP for certain taxes. The amendments in these updates are effective for us for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We do not expect the adoption of this standard to have a material impact on our Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The amendments in this update provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. An entity may elect to apply the amendments prospectively through December 31, 2022. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

2.  Inventories

Inventories consist of the following:

(In thousands)	June 30, 2020		March 31, 2020
Components of Inventories
Packaging and raw materials	$	9,279	$	9,803
Work in process	223		355
Finished goods	107,309		105,868
Inventories	$	116,811	$	116,026

Inventories are carried and depicted above at the lower of cost or net realizable value, which includes a reduction in inventory values of $4.2 million and $6.5 million at June 30, 2020 and March 31, 2020, respectively, related to obsolete and slow-moving inventory.

-7-

3. 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, 2020
	Goodwill	$	710,354	$	28,536	$	738,890
	Accumulated impairment loss	(163,711)		—		(163,711)
Balance - March 31, 2020		546,643		28,536		575,179
	Effects of foreign currency exchange rates	—		1,949		1,949
Balance - June 30, 2020
	Goodwill	710,354		30,485		740,839
	Accumulated impairment loss	(163,711)		—		(163,711)
Balance - June 30, 2020		$	546,643	$	30,485	$	577,128

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. On February 29, 2020, the date of our annual impairment review, there were no indicators of impairment as a result of the analysis and, accordingly, no impairment charge was taken on our March 31, 2020 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 29, 2020 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 marketing may require an impairment charge to be recorded in the future. As of June 30, 2020, no events have occurred that would indicate potential impairment of goodwill.

4. 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, 2020	$	2,265,331	$	389,801	$	2,655,132
Effects of foreign currency exchange rates	8,360		329		8,689
Balance — June 30, 2020	2,273,691		390,130		2,663,821
Accumulated Amortization
Balance — March 31, 2020	—		175,741		175,741
Additions	—		4,905		4,905
Effects of foreign currency exchange rates	—		124		124
Balance — June 30, 2020	—		180,770		180,770
Intangible assets, net - June 30, 2020	$	2,273,691	$	209,360	$	2,483,051

Amortization expense was $4.9 million for the three months ended June 30, 2020, and $4.9 million for the three months ended June 30, 2019.  

-8-

Finite-lived intangible assets are expected to be amortized over their estimated useful life, which ranges from a period of 10 to 30 years, and the estimated amortization expense for each of the five succeeding years and the periods thereafter is as follows (in thousands):

(In thousands)
Year Ending March 31,	Amount
2021 (remaining nine months ended March 31, 2021)	14,725
2022	19,633
2023	19,633
2024	19,604
2025	17,560
Thereafter	118,205
	$	209,360

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. On February 29, 2020, the date of our annual impairment review, there were no indicators of impairment as a result of the analysis and, accordingly, no impairment charge was taken on our March 31, 2020 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 marketing expenses, we may be required to record impairment charges in the future.

As of June 30, 2020, no events have occurred that would indicate potential impairment of intangible assets.

5. Leases

We lease real estate and equipment for use in our operations.

The components of lease expense for the three months ended June 30, 2020 and 2019 were as follows:

	Three Months Ended June 30,
(In thousands)	2020		2019
Finance lease cost:
Amortization of right-of-use assets	$	325	$	—
Interest on lease liabilities	50		—
Operating lease cost	1,697		1,216
Short term lease cost	23		23
Variable lease cost	11,707		16,599
Sublease income	(54)		(914)
Total net lease cost	$	13,748	$	16,924

As of June 30, 2020, the maturities of lease liabilities were as follows:

-9-

(In thousands)
Year Ending March 31,	Operating Leases		Financing Lease		Total
2021 (Remaining nine months ending March 31, 2021)	$	5,250	$	1,052	$	6,302
2022	6,585		1,404		7,989
2023	6,317		1,404		7,721
2024	6,304		1,404		7,708
2025	4,132		700		4,832
Thereafter	4,974		—		4,974
Total undiscounted lease payments	33,562		5,964		39,526
Less amount of lease payments representing interest	(4,350)		(420)		(4,770)
Total present value of lease payments	$	29,212	$	5,544	$	34,756

The weighted average remaining lease term and weighted average discount rate were as follows:

		June 30, 2020
Weighted average remaining lease term (years)
	Operating leases	5.28
	Financing leases	4.25
Weighted average discount rate
	Operating leases	5.27	%
	Financing leases	3.55 %

Under our Master Services Agreement with GEODIS Logistics LLC ("GEODIS"), GEODIS has agreed to purchase certain assets for our use in the future. Under this agreement there is approximately $5.0 million of finance lease liabilities that are expected to commence in the second quarter of fiscal 2021.

6. Other Accrued Liabilities

Other accrued liabilities consist of the following:

(In thousands)	June 30, 2020		March 31, 2020
Accrued marketing costs	$	34,832	$	34,450
Accrued compensation costs	6,254		13,393
Accrued broker commissions	1,009		1,491
Income taxes payable	9,622		3,210
Accrued professional fees	3,502		4,183