Guarantor and Non-Guarantor Financial Information

3 Months Ended

Mar. 31, 2012

Guarantor and Non-Guarantor Financial Information

Guarantor and Non-Guarantor Financial Information

Note 14                  Guarantor and Non-Guarantor Financial Information

RDA Holding Co., and our domestic subsidiaries guarantee the Senior Secured Notes issued by RDA (collectively, the “Guarantor Subsidiaries”) jointly and severally, irrevocably and unconditionally.  The Guarantor Subsidiaries do not include foreign subsidiaries, domestic subsidiaries whose assets substantially consist of voting stock of one or more foreign subsidiaries or non-wholly-owned subsidiaries (subject to certain limited exceptions such as in the event that such non-wholly-owned subsidiary guarantees debt issued in a capital markets transaction).  Our subsidiaries that are not Guarantor Subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) are not guarantors of the Senior Secured Notes.

The following tables present  RDA Holding Co. (the parent) and RDA (the issuer), both of which are presented on a stand-alone basis, Guarantor Subsidiaries on a combined basis and Non-Guarantor Subsidiaries on a combined basis.

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2012 (Successor Company):

	Guarantor Parent HoldCo			Issuer Parent-RDA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	16.1		$	63.2		$	164.1		$	(1.6	)	$	241.8
Product, distribution and editorial expenses	—			11.0			32.5			75.7			(1.6		)	117.6
Promotion, marketing and administrative expenses	—			28.4			37.3			114.5			—			180.2
Other operating items, net	—			1.0			1.5			(1.7		)	—			0.8
Operating loss	—			(24.3		)	(8.1		)	(24.4		)	—			(56.8		)
Interest expense	—			17.4			—			—			—			17.4
Loss (income) from investment in subsidiaries	7.8			(92.2		)	6.9			—			77.5			—
Other expense (income), net	—			101.1			(95.7		)	(7.8		)	—			(2.4		)
(Loss) income before income taxes	(7.8		)	(50.6		)	80.7			(16.6		)	(77.5		)	(71.8		)
Income tax (benefit) expense	—			(42.8		)	30.0			(3.4		)	—			(16.2		)
(Loss) income from continuing operations before discontinued operations	(7.8		)	(7.8		)	50.7			(13.2		)	(77.5		)	(55.6		)
Income (loss) from discontinued operations, net of taxes	—			—			48.1			(0.3		)	—			47.8
Net (loss) profit	$	(7.8	)	$	(7.8	)	$	98.8		$	(13.5	)	$	(77.5	)	$	(7.8	)
Comprehensive income (loss)	$	(7.8	)	$	8.6		$	98.7		$	(13.9	)	$	(77.7	)	$	7.9

Consolidated Condensed Balance Sheet as of March 31, 2012 (Successor Company):

	Guarantor Parent HoldCo		Issuer Parent-RDA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets	$	—	$	167.1	$	122.4	$	329.4	$	(14.3	)	$	604.6
Property and equipment, net	—		32.7		7.7		11.7		—			52.1
Restricted cash	—		1.6		—		5.6		—			7.2
Goodwill	—		—		243.5		153.0		—			396.5
Other intangible assets, net	—		—		134.6		167.3		—			301.9
Prepaid pension assets	—		117.3		—		22.3		—			139.6
Investments in subsidiaries	151.8		506.1		343.0		—		(1,000.9		)	—
Intercompany noncurrent receivables	—		79.0		—		8.9		(87.9		)	—
Other noncurrent assets	—		21.1		20.9		2.6		—			44.6
Total assets	$	151.8	$	924.9	$	872.1	$	700.8	$	(1,103.1	)	$	1,546.5
Liabilities and stockholders’ equity
Current liabilities	$	—	$	90.3	$	242.3	$	233.4	$	(14.3	)	$	551.7
Long-term debt	—		570.2		—		—		—			570.2
Unearned revenue	—		—		94.4		1.4		—			95.8
Accrued pension	—		—		—		4.7		—			4.7
Postretirement and postemployment benefits other than pensions	—		7.4		—		1.3		—			8.7
Intercompany noncurrent payables	—		8.9		8.0		71.0		(87.9		)	—
Other noncurrent liabilities	—		96.3		10.8		56.5		—			163.6
Total liabilities	—		773.1		355.5		368.3		(102.2		)	1,394.7
Stockholders’ equity	151.8		151.8		516.6		332.5		(1,000.9		)	151.8
Total liabilities and stockholders’ equity	$	151.8	$	924.9	$	872.1	$	700.8	$	(1,103.1	)	$	1,546.5

Consolidated Condensed Statement of Cash Flows for the three months ended March 31, 2012 (Successor Company):

	Guarantor Parent HoldCo		Issuer Parent-RDA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net change in cash due to continuing operating activities	$	—	$	(14.7	)	$	(4.5	)	$	(6.4	)	$	(1.1	)	$	(26.7	)
Net change in cash due to discontinued operating activities	—		—			(1.9		)	—			—			(1.9		)
Net change in cash due to operating activities	—		(14.7		)	(6.4		)	(6.4		)	(1.1		)	(28.6		)
Net change in cash due to continuing investing activities	—		116.1			(0.1		)	(1.5		)	—			114.5
Net change in cash due to discontinued investing activities	—		—			2.1			—			—			2.1
Net change in cash due to investing activities	—		116.1			2.0			(1.5		)	—			116.6
Net change in cash due to continuing financing activities	—		(48.2		)	—			—			—			(48.2		)
Net change in cash due to discontinued financing activities	—		—			(0.2		)	—			—			(0.2		)
Net change in cash due to financing activities	—		(48.2		)	(0.2		)	—			—			(48.4		)
Effect of exchange rate changes on cash and cash equivalents	—		(1.0		)	—			1.9			1.1			2.0
Net change in cash and cash equivalents	—		52.2			(4.6		)	(6.0		)	—			41.6
Cash and cash equivalents at beginning of the period	—		21.4			7.4			83.5			—			112.3
Cash and cash equivalents at end of the period	$	—	$	73.6		$	2.8		$	77.5		$	—		$	153.9

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2011 (Successor Company):

	Guarantor Parent HoldCo			Issuer Parent-RDA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	16.8		$	73.5		$	195.3		$	(1.8	)	$	283.8
Product, distribution and editorial expenses	—			11.0			41.3			87.1			(1.8		)	137.6
Promotion, marketing and administrative expenses	—			26.4			41.9			127.4			—			195.7
Other operating items, net	—			4.2			(1.5		)	1.9			—			4.6
Operating loss	—			(24.8		)	(8.2		)	(21.1		)	—			(54.1		)
Interest expense	—			13.8			—			—			—			13.8
Other (income) expense, net	—			(6.2		)	1.4			6.3			—			1.5
Loss (income) from equity investment	81.7			47.6			(0.3		)	—			(129.0		)	—
Loss before income taxes and discontinued operations	(81.7		)	(80.0		)	(9.3		)	(27.4		)	129.0			(69.4		)
Income tax expense (benefit)	—			1.7			(14.0		)	(1.6		)	—			(13.9		)
(Loss) income from continuing operations before discontinued operations	(81.7		)	(81.7		)	4.7			(25.8		)	129.0			(55.5		)
Loss from discontinued operations, net of taxes	—			—			(23.1		)	(3.1		)	—			(26.2		)
Net loss	$	(81.7	)	$	(81.7	)	$	(18.4	)	$	(28.9	)	$	129.0		$	(81.7	)
Comprehensive loss	$	(81.7	)	$	(49.6	)	$	(18.3	)	$	(28.5	)	$	129.3		$	(48.8	)

Consolidated Condensed Balance Sheet as of December 31, 2011 (Successor Company):

	Guarantor Parent HoldCo		Issuer Parent-RDA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets	$	—	$	38.9	$	241.2	$	364.5	$	(14.7	)	$	629.9
Property and equipment, net	—		33.2		8.0		10.8		—			52.0
Restricted cash	—		1.7		—		5.0		—			6.7
Goodwill	—		—		243.5		147.2		—			390.7
Other intangible assets, net	—		—		139.4		168.0		—			307.4
Prepaid pension assets	—		114.0		—		21.5		—			135.5
Investments in subsidiaries	142.6		617.1		202.4		—		(962.1		)	—
Intercompany noncurrent receivables	—		84.1		—		8.1		(92.2		)	—
Other noncurrent assets	—		21.2		16.8		3.9		—			41.9
Total assets	$	142.6	$	910.2	$	851.3	$	729.0	$	(1,069.0	)	$	1,564.1
Liabilities and stockholders’ equity
Current liabilities	$	—	$	72.8	$	254.9	$	247.4	$	(14.7	)	$	560.4
Long-term debt	—		603.8		—		—		—			603.8
Unearned revenue	—		—		88.0		1.6		—			89.6
Accrued pension	—		—		—		4.4		—			4.4
Postretirement and postemployment benefits other than pensions	—		8.0		—		1.2		—			9.2
Intercompany noncurrent payables	—		8.1		8.0		76.1		(92.2		)	—
Other noncurrent liabilities	—		74.9		23.1		56.1		—			154.1
Total liabilities	—		767.6		374.0		386.8		(106.9		)	1,421.5
Stockholders’ equity	142.6		142.6		477.3		342.2		(962.1		)	142.6
Total liabilities and stockholders’ equity	$	142.6	$	910.2	$	851.3	$	729.0	$	(1,069.0	)	$	1,564.1

Consolidated Condensed Statement of Cash Flows for the three months ended March 31, 2011 (Successor Company):

	Guarantor Parent HoldCo		Issuer Parent-RDA			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net change in cash due to continuing operating activities	$	—	$	—		$	3.8		$	(32.8	)	$	(3.3	)	$	(32.3	)
Net change in cash due to discontinued operating activities	—		—			(2.6		)	—			—			(2.6		)
Net change in cash due to operating activities	—		—			1.2			(32.8		)	(3.3		)	(34.9		)
Net change in cash due to continuing investing activities	—		(4.0		)	(0.5		)	8.0			—			3.5
Net change in cash due to discontinued investing activities	—		—			(0.3		)	—			—			(0.3		)
Net change in cash due to investing activities	—		(4.0		)	(0.8		)	8.0			—			3.2
Net change in cash due to financing activities	—		(43.5		)	—			—			—			(43.5		)
Effect of exchange rate changes on cash and cash equivalents	—		(1.5		)	—			2.6			3.3			4.4
Net change in cash and cash equivalents	—		(49.0		)	0.4			(22.2		)	—			(70.8		)
Cash and cash equivalents at beginning of the period	—		64.8			3.8			100.8			—			169.4
Cash and cash equivalents at end of the period	$	—	$	15.8		$	4.2		$	78.6		$	—		$	98.6