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    Prestige Brands Holdings, Inc. Reports Third Quarter & Nine Months Results

    IRVINGTON, N.Y.--(BUSINESS WIRE)--Feb. 8, 2008--Prestige Brands Holdings, Inc. (NYSE: PBH), a consumer products company with a diversified portfolio of well-known brands in over-the-counter healthcare products, household products and personal care products, today announced results for the third fiscal quarter and nine months ended December 31, 2007.

    Third Quarter Results

    Revenues for the third quarter ended December 31, 2007 were $80.2 million, slightly ahead of last year's comparable period revenues of $80.1 million, despite the negative effects of a weak cough/cold season and the industry-wide voluntary pediatric cough /cold product withdrawal in October which affected two Little Remedies(R) products.

    Operating income of $22.9 million for the third fiscal quarter was $1.6 million or 7% below last year's third quarter operating income of $24.5 million. The decline in operating income was due to a gross profit decrease primarily due to unfavorable sales mix and an increase in advertising and promotional spending, partially offset by a decline in general and administrative expenses. A&P expenses were 7% higher than those of the prior year comparable period primarily because of the Company continuing support behind the new product launches of Murine(TM) Earigate(TM) and Comet(R) SprayGel Mildew Stain Remover. General and administrative expenses declined in the quarter due to reductions to incentive compensation accruals partly offset by increased legal expenses.

    Net income for the third quarter ended December 31, 2007 was $8.4 million or $0.17 per diluted share. This was 6% below the comparable prior period's adjusted net income of $8.9 million or $0.18 per diluted share, which reflects reported net income of $10.6 million less an adjustment of $1.7 million ($0.03 per diluted share) resulting from a favorable non-cash income tax benefit.

    Commenting on the results, Mark Pettie, Chairman and CEO said, "Our third quarter revenue results were mixed in aggregate. We are quite pleased with the solid organic growth we enjoyed across many of our largest OTC and Household brands and the continued strong success of our Murine(TM) Earigate(TM) and Comet(R) SprayGel Mildew Stain Remover new product launches. However, the effect of two well publicized events, namely a weak cough/cold season and the industry-wide voluntary pediatric cough/cold product withdrawal, negated much of the growth."

        Results by Segment
    
        Over-The-Counter Healthcare Products
    

    Revenues for the OTC segment in the third fiscal quarter were $45.1 million, or 1% below the prior year comparable quarter. The slight decline was due to a weak cough/cold season affecting sales of Chloraseptic(R), the industry-wide voluntary withdrawal of pediatric cough/cold products affecting two Little Remedies(R) products, and continuing competitive pressures on The Doctor's(R) NightGuard(TM) dental protector. Partially offsetting the above declines were continuing strong sales of the Murine(TM) brand, led by new Murine(TM) Earigate(TM), and strong sales of Clear Eyes(R).

    Household Products

    Revenues for the household products segment in the third fiscal quarter were $30.1 million, 5% higher than the prior year comparable quarter, primarily due to strong sales of Comet(R) SprayGel Mildew Stain Remover, this segment's newest product.

    Personal Care Products

    The smallest segment of the Company's business registered revenues of $5.1 million, 13% below last year's third quarter results.

    Free Cash Flow and Debt Repayment

    Free cash flow is a "non-GAAP financial measure" as that term is defined by the Securities and Exchange Commission in Regulation G. We view "free cash flow" as an important measure because it is an indicator of cash available for debt repayment and other corporate purposes. We define "free cash flow" as operating cash flow less capital expenditures.

    The Company's free cash flow for the three months ended December 31, 2007 was $13.6 million, composed of operating cash flows of $13.8 million less capital expenditures of $0.2 million. The $13.6 million of free cash flow was an improvement over the $12.4 million of free cash flow, composed of operating cash flows of $12.5 million less capital expenditures of $0.1 million, generated in the prior year's comparable quarter.

    During the third fiscal quarter, the Company used free cash flow to reduce its term loan debt by $10.9 million. Year to date, the Company has reduced its debt by $37.1 million to $426.2 million at December 31, 2007.

    Year-To-Date Results

    For the nine month period ended December 31, 2007, revenues were $246.2 million, 2% higher than the prior period comparable results of $240.6 million. Operating income of $66.6 million was 8% below the prior year comparable period, largely as a result of increased advertising and promotion expenses and increased general and administrative expenses. Net income for the nine month period ended December 31, 2007 was $23.6 million, 9% below the comparable period's adjusted net income of $26.0 million, which reflects an adjustment of $1.7 million ($0.03 per diluted share) resulting from the favorable non-cash income tax benefit mentioned above.

    Conference Call

    The Company will host a conference call to review its third quarter fiscal 2008 results on Friday, February 8, 2008 at 8:30 am (EST). The toll free dial in number is 866-271-0675. International callers may dial 617-213-8892. The conference password is "prestige". We will have a live internet webcast of the call, as well as an archived replay, which can be accessed from the Investor Relations page of www.prestigebrandsinc.com. The archived replay will be available for two weeks following completion of the call. The dial in numbers are 888-286-8010 (domestic) and 617-801-6888 (international). The pass code for the replay is 51390487.

    About Prestige Brands Holdings, Inc.

    Located in Irvington, New York, Prestige Brands Holdings, Inc. is a marketer and distributor of brand name over-the-counter healthcare, personal care and household products sold throughout the U.S, Canada, and certain international markets. Key brands include Compound W(R) wart remover, Chloraseptic(R) sore throat treatment, New-Skin(R) liquid bandage, Clear Eyes(R) and Murine(TM) eye care products, Little Remedies(R) pediatric over-the-counter healthcare products, The Doctor's(R) NightGuard(TM) dental protector, Cutex(R) nail polish remover, Comet(R) and Spic and Span(R) household products, and other well-known brands.

    Forward-Looking Statements

    Note: This news release contains, and our upcoming conference call may include, "forward-looking statements" within the meaning of the federal securities laws and is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "assumptions," "target," "guidance," "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe, "potential," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, statements regarding the outlook for Prestige Brands Holdings' market and the demand for its products, earnings per share, future cash flows from operations, future revenues and margin requirement and expansion, the success of new product introductions, growth in costs and expenses, and the impact of acquisitions, divestitures, restructurings and other unusual items, including Prestige Brands Holdings' ability to integrate and obtain the anticipated results and synergies from its acquisitions. These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in the Company's Annual Report on Form 10-K and other periodic and other reports filed with the Securities and Exchange Commission.

                        Prestige Brands Holdings, Inc.
                    Consolidated Statements of Operations
                                 (Unaudited)
    
                                       Three Months        Nine Months
                                    Ended December 31   Ended December 31
                                    ------------------ -------------------
    (In thousands, except per share
     data)                            2007     2006      2007      2006
                                    -------- --------- --------- ---------
    Revenues
     Net sales                      $79,644  $ 79,564  $244,525  $239,164
     Other revenues                     578       560     1,645     1,434
                                    -------- --------- --------- ---------
        Total revenues               80,222    80,124   246,170   240,598
                                    -------- --------- --------- ---------
    
    Cost of Sales
     Costs of sales                  38,783    36,766   118,875   114,350
                                    -------- --------- --------- ---------
        Gross profit                 41,439    43,358   127,295   126,248
                                    -------- --------- --------- ---------
    
    Operating Expenses
     Advertising and promotion        9,572     8,952    28,375    25,809
     General and administrative       6,209     7,068    24,039    20,761
     Depreciation                       126       177       379       616
     Amortization of intangible
      assets                          2,627     2,627     7,881     7,013
                                    -------- --------- --------- ---------
        Total operating expenses     18,534    18,824    60,674    54,199
                                    -------- --------- --------- ---------
    
        Operating income             22,905    24,534    66,621    72,049
                                    -------- --------- --------- ---------
    
    Other income (expense)
     Interest income                    164       199       524       787
     Interest expense                (9,490)  (10,355)  (29,132)  (30,478)
                                    -------- --------- --------- ---------
        Total other income (expense) (9,326)  (10,156)  (28,608)  (29,691)
                                    -------- --------- --------- ---------
    
        Income before provision for
        income taxes                 13,579    14,378    38,013    42,358
    
    Provision for income taxes        5,160     3,735    14,445    14,675
                                    -------- --------- --------- ---------
        Net income                  $ 8,419  $ 10,643  $ 23,568  $ 27,683
                                    ======== ========= ========= =========
    
    
    Basic earnings per share        $  0.17  $   0.21  $   0.47  $   0.56
                                    ======== ========= ========= =========
    
    Diluted earnings per share      $  0.17  $   0.21  $   0.47  $   0.55
                                    ======== ========= ========= =========
    
    Weighted average shares
     outstanding:
      Basic                          49,799    49,535    49,744    49,425
                                    ======== ========= ========= =========
      Diluted                        50,035    50,024    50,040    50,016
                                    ======== ========= ========= =========
    
                        Prestige Brands Holdings, Inc.
                         Consolidated Balance Sheets
                                 (Unaudited)
    
    (In thousands)
    Assets                               December 31, 2007 March 31, 2007
                                         ----------------- ---------------
    Current assets
      Cash and cash equivalents             $   11,554        $    13,758
      Accounts receivable                       38,977             35,167
      Inventories                               30,659             30,173
      Deferred income tax assets                 3,094              2,735
      Prepaid expenses and other current
       assets                                    2,002              1,935
                                         ----------------- ---------------
    Total current assets                        86,286             83,768
    
    Property and equipment                       1,437              1,449
    Goodwill                                   308,915            310,947
    Intangible assets                          649,277            657,157
    Other long-term assets                       7,528             10,095
                                         ----------------- ---------------
    
    Total Assets                            $1,053,443        $ 1,063,416
                                         ================= ===============
    
    Liabilities and Stockholders' Equity
    Current liabilities
      Accounts payable                      $   18,703        $    19,303
      Accrued interest payable                   4,574              7,552
      Other accrued liabilities                 11,711             10,505
      Current portion of long-term debt          3,550              3,550
                                         ----------------- ---------------
    Total current liabilities                   38,538             40,910
    
    Long-term debt                             422,675            459,800
    Other long-term liabilities                  2,801              2,801
    Deferred income tax liabilities            120,066            114,571
                                         ----------------- ---------------
    
    Total Liabilities                          584,080            618,082
                                         ----------------- ---------------
    
    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 - 50,060 shares                       501                501
    Additional paid-in capital                 379,983            379,225
    Treasury stock, at cost - 57 shares
     at December 31, 2007
       and 55 shares at March 31, 2007             (45)               (40)
    Accumulated other comprehensive
     income                                         21                313
    Retained earnings                           88,903             65,335
                                         ----------------- ---------------
    Total stockholders' equity                 469,363            445,334
                                         ----------------- ---------------
    
    Total Liabilities and Stockholders'
     Equity                                 $1,053,443        $ 1,063,416
                                         ================= ===============
    
                        Prestige Brands Holdings, Inc.
                    Consolidated Statements of Cash Flows
                                 (Unaudited)
    
                                             Nine Months Ended December 31
                                             -----------------------------
    (In thousands)                                 2007           2006
                                             -------------- --------------
    Operating Activities
    Net income                                 $    23,568    $    27,683
    Adjustments to reconcile net income to
     net cash provided by operating
     activities:
       Depreciation and amortization                 8,260          7,629
       Deferred income taxes                         7,366          7,686
       Amortization of deferred financing
        costs                                        2,283          2,422
       Stock-based compensation                        758            439
       Changes in operating assets and
        liabilities
         Accounts receivable                        (3,810)         4,812
         Inventories                                  (486)         2,707
         Prepaid expenses and other current
          assets                                       (66)          (765)
         Accounts payable                             (795)         1,366
         Income taxes payable                           --         (1,584)
         Accrued liabilities                        (1,772)         2,894
                                             -------------- --------------
     Net cash provided by operating
      activities                                    35,306         55,289
                                             -------------- --------------
    
    Investing Activities
    Purchases of equipment                            (364)          (429)
    Change in other assets due to purchase
     price adjustments                                 (16)           386
    Purchase of business                                --        (31,242)
                                             -------------- --------------
     Net cash used for investing activities           (380)       (31,285)
                                             -------------- --------------
    
    Financing Activities
    Repayment of long-term debt                    (37,125)       (27,392)
    Purchase of common stock for treasury               (5)           (10)
                                             -------------- --------------
     Net cash used for financing activities        (37,130)       (27,402)
                                             -------------- --------------
    
    Decrease in cash                                (2,204)        (3,398)
    Cash - beginning of period                      13,758          8,200
                                             -------------- --------------
    
    Cash - end of period                       $    11,554    $     4,802
                                             ============== ==============
    
    Supplemental Cash Flow Information
    Fair value of assets acquired              $        --    $    35,096
    Fair value of liabilities assumed                   --         (3,854)
                                             -------------- --------------
    Cash paid to purchase business             $        --    $    31,242
                                             ============== ==============
    
    Interest paid                              $    29,828    $    30,749
                                             ============== ==============
    Income taxes paid                          $     6,911    $     8,790
                                             ============== ==============
    
                        Prestige Brands Holdings, Inc.
                        Segment Results of Operations
    
                                   Three Months Ended December 31, 2007
                                ------------------------------------------
                                Over-the-
                                 Counter   Household Personal
                                Healthcare Cleaning    Care   Consolidated
                                ---------- --------- -------- ------------
    
    Net sales                      $45,015   $29,568   $5,061      $79,644
    Other revenues                      51       527       --          578
                                ---------- --------- -------- ------------
    
    Total revenues                  45,066    30,095    5,061       80,222
    Cost of sales                   16,994    18,332    3,457       38,783
                                ---------- --------- -------- ------------
    
    Gross profit                    28,072    11,763    1,604       41,439
    Advertising and promotion        7,045     2,271      256        9,572
                                ---------- --------- -------- ------------
    
    Contribution margin            $21,027   $ 9,492   $1,348       31,867
                                ========== ========= ========
    Other operating expenses                                         8,962
                                                              ------------
    
    Operating income                                                22,905
    Other (income) expense                                           9,326
    Provision for income taxes                                       5,160
                                                              ------------
    
    Net income                                                     $ 8,419
                                                              ============
    
                                   Nine Months Ended December 31, 2007
                                ------------------------------------------
                                Over-the-
                                 Counter   Household Personal
                                Healthcare Cleaning    Care   Consolidated
                                ---------- --------- -------- ------------
    
    Net sales                     $137,444   $89,838  $17,243     $244,525
    Other revenues                      51     1,566       28        1,645
                                ---------- --------- -------- ------------
    
    Total revenues                 137,495    91,404   17,271      246,170
    Cost of sales                   52,068    56,312   10,495      118,875
                                ---------- --------- -------- ------------
    
    Gross profit                    85,427    35,092    6,776      127,295
    Advertising and promotion       21,080     6,474      821       28,375
                                ---------- --------- -------- ------------
    
    Contribution margin           $ 64,347   $28,618  $ 5,955       98,920
                                ========== ========= ========
    Other operating expenses                                        32,299
                                                              ------------
    
    Operating income                                                66,621
    Other (income) expense                                          28,608
    Provision for income taxes                                      14,445
                                                              ------------
    
    Net income                                                    $ 23,568
                                                              ============
    
                        Prestige Brands Holdings, Inc.
                        Segment Results of Operations
    
                                   Three Months Ended December 31, 2006
                                ------------------------------------------
                                Over-the-
                                 Counter   Household Personal Consolidated
                                Healthcare Cleaning    Care
                                ---------- --------- -------- ------------
    
    Net sales                      $45,574   $28,155   $5,835      $79,564
    Other revenues                      --       560       --          560
                                ---------- --------- -------- ------------
    
    Total revenues                  45,574    28,715    5,835       80,124
    Cost of sales                   15,800    17,787    3,179       36,766
                                ---------- --------- -------- ------------
    
    Gross profit                    29,774    10,928    2,656       43,358
    Advertising and promotion        7,089     1,595      268        8,952
                                ---------- --------- -------- ------------
    
    Contribution margin            $22,685   $ 9,333   $2,388       34,406
                                ========== ========= ========
    Other operating expenses                                         9,872
                                                              ------------
    
    Operating income                                                24,534
    Other (income) expense                                          10,156
    Provision for income taxes                                       3,735
                                                              ------------
    
    Net income                                                     $10,643
                                                              ============
    
                                   Nine Months Ended December 31, 2006
                                ------------------------------------------
                                Over-the-
                                 Counter   Household Personal Consolidated
                                Healthcare Cleaning    Care
                                ---------- --------- -------- ------------
    
    Net sales                     $131,427   $88,625  $19,112     $239,164
    Other revenues                      --     1,434       --        1,434
                                ---------- --------- -------- ------------
    
    Total revenues                 131,427    90,059   19,112      240,598
    Cost of sales                   48,198    54,882   11,270      114,350
                                ---------- --------- -------- ------------
    
    Gross profit                    83,229    35,177    7,842      126,248
    Advertising and promotion       19,573     5,304      932       25,809
                                ---------- --------- -------- ------------
    
    Contribution margin           $ 63,656   $29,873  $ 6,910      100,439
                                ========== ========= ========
    Other operating expenses                                        28,390
                                                              ------------
    
    Operating income                                                72,049
    Other (income) expense                                          29,691
    Provision for income taxes                                      14,675
                                                              ------------
    
    Net income                                                    $ 27,683
                                                              ============
    

    CONTACT: Prestige Brands Holdings, Inc.
    Dean Siegal, 914-524-6819

    SOURCE: Prestige Brands Holdings, Inc.

    Primary IR Contact

    Irinquiries@prestigebrands.com
    Prestige Consumer Healthcare Inc.
    660 White Plains Road – Ste 250
    Tarrytown, NY 10591
    Telephone: 914-524-6819

    Transfer Agent

    AST
    6201 15th Avenue
    Brooklyn, NY 11219
    Telephone: (800) 937-5449
    help@astfinancial.com
    https://www.astfinancial.com

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