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Prestige Brands Holdings, Inc. Reports Fourth Quarter and Fiscal '09 Results

Fourth quarter revenues were $70.9 million, 11.9% less than the prior year comparable quarter revenues of $80.4 million; fiscal year 2009 revenues were $312.7 million, 4.3% below the comparable period's revenues of $326.6 million.
Fourth quarter reported net loss includes an after-tax non-cash goodwill impairment charge of $220.1 million.
Excluding effects of the non-cash goodwill impairment charge, fourth quarter net income would have been $9.0 million, or $0.18 per diluted share.
Free cash flow for the quarter was $13.2 million, an increase of 37.5% over the same period last year; free cash flow for fiscal year 2009 increased 48.8% over prior year to $66.2 million.
Excluding the effects of the non-cash impairment charge, fiscal year 2009 net income would have been $33.3 million, or $0.67 per diluted share.

IRVINGTON, N.Y.--(BUSINESS WIRE)--May. 14, 2009-- Prestige Brands Holdings, Inc. (NYSE:PBH) today reported fourth quarter fiscal year 2009 revenues of $70.9 million, 11.9% below the same period a year ago reflecting the challenging macroeconomic environment and continuing inventory reductions by retailers. Revenues declined for all three reporting segments in the quarter.

The Company reported a net loss for fourth quarter fiscal year 2009 of$211.1 million or $4.22 per diluted share. This includes the effects of a non-cash, pre-tax impairment charge of $249.6 million to reduce the book value of the Company’s goodwill and other intangible assets to their estimated fair value. Excluding the effects of the impairment charge, net income for the quarter would have been $9.0 million, a decrease of $1.4 million or 13.5% from last year’s reported net income of $10.4 million, or $0.18 per share.

The reduction in net income, exclusive of the impairment charge, was primarily due to the sales decline, partially offset by decreases in advertising and promotion, general and administrative (G&A) and interest expenses. The reduction in advertising and promotion expenses resulted from declines in non-working media compared to the prior year quarter. The G&A reduction was primarily due to a reduction in bonus expense for the current year as the Company’s operating performance for fiscal year 2009 resulted in no annual incentive payout. Interest expense was significantly below the prior year due to a combination of the lower debt outstanding and lower interest rates compared to fourth quarter of fiscal year 2008.

Commenting on the results, Mark Pettie, Chairman and CEO, said, “We faced a challenging quarter and second half of fiscal 2009 as a result of the macroeconomic headwinds and associated pull-backs in consumer spending and retailer inventory reductions affecting each segment of our business. Despite these circumstances, during the quarter we were able to use our strong cash flow to complete the planned improvement in our liquidity position and resume our debt pay down.”

Mr. Pettie added, “Given the current external operating environment, we remain cautious in our outlook for fiscal year 2010, and we project revenue performance below our long term goal of 2-4%. However, we believe we are in a good position to weather the economic challenges faced by our industry, and plan to continue investing in our focus brands going forward.”

Results by Segment for Fourth Fiscal Quarter

Over-the-Counter Healthcare Products (OTC)

Net revenues for the OTC segment of $39.8 million were $6.4 million or 13.9% below the prior year comparable period. The sales declines resulted from shortfalls on Chloraseptic®, Compound W®, Wartner®, Murine® ear, Dermoplast® and The Doctor’s® brands. Partially offsetting these declines were increases in sales of Little Remedies® and New Skin® as well as sales of the new Chloraseptic® and Little Allergies® Allergen Block products.

Household Products

The household cleaning products segment reported net revenues of $26.7 million, $3.0 million, or 10.1% less than the prior year comparable period. Revenues for the Spic and Span® brand were even with the prior year period, while Comet® and Chore Boy® experienced sales declines.

Personal Care Products

Net revenues of $4.3 million for the Personal Care products segment were $200 thousand less than the prior year comparable period. A sales increase for Cutex® was offset by declines on the Denorex® and Prell® shampoo brands.

Fiscal Year 2009

The Company reported total revenues of $312.7 million for the fiscal year ended March 31, 2009, 4.3% less than fiscal 2008 total revenues of $326.6 million. The reported net loss for fiscal 2009 of $186.8 million (($3.74) per diluted share) compared to net income of $33.9 million ($0.68 per diluted share) for fiscal year 2008. Excluding the effects of the impairment charge, the Company’s 2009 net income would have been $33.3 million, which was $0.6 million or 1.8% below fiscal 2008 results. Excluding the effects of the impairment charge, fully diluted earnings per share would have been $0.67 for 2009 compared to $0.68 in fiscal 2008.

Free Cash Flow and Debt Repayment

Free cash flow is a “non GAAP financial measure”. Free cash flow is presented here because management believes this is a commonly used measure of liquidity, indicative of cash available for debt repayment. The Company defines “free cash flow” as operating cash flow minus capital expenditures.

The Company’s free cash flow for the fourth quarter ended March 31, 2009 was $13.2 million, $3.6 million or 37.5% greater than free cash flow of $9.6 million generated in the fourth quarter ended March 31, 2008. This is composed of operating cash flow of $13.3 million less capital expenditures of $0.1 million. The improvement in free cash flow resulted from an improvement in working capital. For fiscal year 2009, free cash flow totaled $66.2 million, composed of operating cash flow of $66.7 million minus capital expenditures of $0.5 million. This compared to free cash flow for 2008 of $44.5 million, composed of operating cash flow of $45.0 million less capital expenditures of $0.5 million.

During the fourth fiscal quarter, the Company reached its previously stated goal of enhancing its liquidity position by using its free cash flow to accumulate a reserve of approximately $30 million. After reaching this goal, the Company resumed debt repayment. At March 31, 2009, the Company had cash on hand of $35.2 million. At March 31, 2009, total indebtedness was reduced to $378.3 million, reflecting $6.0 million of repayments during the quarter.

Conference Call

The Company will host a conference call today at 8:30 a.m. EDT. To access the call, listeners calling from within North America may dial 866-362-4820 at least 15 minutes prior to the start of the call. To access the call from outside North America, callers should dial 617-597-5345. The conference passcode is “prestige”. The Company will provide a live internet webcast as well as an archived replay, which can be accessed from the Investor Relations page of http://prestigebrandsinc.com. Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 888-286-8010 with North America, and at 617-801-6888 from outside North America. The passcode is 46204340.

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 products, 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 and allergy treatment, New-Skin(R) liquid bandage, Clear eyes(R) and Murine(R) eye and ear care products, Little Remedies(R) pediatric over-the-counter products, 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 "forward-looking statements" within the meaning of the federal securities laws and that are 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 its focus brands as well as prospects for the industry. These 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 expected as a result of a variety of 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 Ended March 31
(In thousands, except per share data)		2009			2008
Revenues
Net sales	$	70,563		$	80,096
Other revenues		289			337
Total revenues		70,852			80,433

Cost of Sales
Cost of sales		35,564			39,221
Gross profit		35,288			41,212

Operating Expenses
Advertising and promotion		5,714			6,290
General and administrative		6,241			7,375
Depreciation and amortization		2,946			2,754
Impairment of goodwill and intangible assets		249,590			--
Total operating expenses		264,491			16,419

Operating income (loss)		(229,203	)		24,793

Other (income) expense
Interest income		--			(151	)
Interest expense		5,923			8,936
Miscellaneous		--			(187	)
Total other (income) expense		5,923			8,598

Income (loss) before income taxes		(235,126	)		16,195

Provision (benefit) for income taxes		(24,029	)		5,844
Net income (loss)	$	(211,097	)	$	10,351

Basic earnings (loss) per share	$	(4.22	)	$	0.21
Diluted earnings (loss) per share	$	(4.22	)	$	0.21

Weighted average shares outstanding:
Basic		49,976			49,842
Diluted		49,976			50,037


Prestige Brands Holdings, Inc. Consolidated Statements of Operations (Unaudited)

	Year Ended March 31
(In thousands, except per share data)		2009			2008			2007
Revenues
Net sales	$	310,505		$	324,621		$	316,847
Other revenues		2,210			1,982			1,787
Total revenues		312,715			326,603			318,634

Cost of Sales
Cost of sales		149,445			158,096			153,147
Gross profit		163,270			168,507			165,487

Operating Expenses
Advertising and promotion		38,099			34,665			32,005
General and administrative		31,888			31,414			28,416
Depreciation and amortization		11,219			11,014			10,384
Impairment of goodwill and intangible assets		249,590			--			--
Total operating expenses		330,796			77,093			70,805

Operating income (loss)		(167,526	)		91,414			94,682

Other (income) expense
Interest income		(143	)		(675	)		(972	)
Interest expense		28,579			38,068			40,478
Miscellaneous		--			(187	)		--
Total other (income) expense		28,436			37,206			39,506

Income (loss) before income taxes		(195,962	)		54,208			55,176

Provision (benefit) for income taxes		(9,186	)		20,289			19,098
Net income (loss)	$	(186,776	)	$	33,919		$	36,078

Basic earnings (loss) per share	$	(3.74	)	$	0.68		$	0.73
Diluted earnings (loss) per share	$	(3.74	)	$	0.68		$	0.72

Weighted average shares outstanding:
Basic		49,935			49,751			49,460
Diluted		49,935			50,039			50,020


Prestige Brands Holdings, Inc. Consolidated Balance Sheets (Unaudited)

(In thousands)	March 31
Assets		2009			2008
Current assets
Cash and cash equivalents	$	35,181		$	6,078
Accounts receivable		36,025			44,219
Inventories		26,977			29,696
Deferred income tax assets		4,022			3,066
Prepaid expenses and other current assets		1,358			2,316
Total current assets		103,563			85,375

Property and equipment		1,367			1,433
Goodwill		114,240			308,915
Intangible assets		577,593			646,683
Other long-term assets		4,618			6,750

Total Assets	$	801,381		$	1,049,156

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	18,050		$	20,539
Accrued interest payable		5,371			5,772
Other accrued liabilities		7,255			8,030
Current portion of long-term debt		3,550			3,550
Total current liabilities		34,226			37,891

Long-term debt		374,787			407,675
Other long-term liabilities		--			2,377
Deferred income tax liabilities		97,983			122,140

Total Liabilities		506,996			570,083

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 at March 31, 2009 and 2008		501			501
Additional paid-in capital		382,803			380,364
Treasury stock, at cost – 63 shares and 59 shares at
March 31, 2009 and 2008, respectively		(63	)		(47	)
Accumulated other comprehensive income (loss)		(1,334	)		(999	)
Retained earnings (deficit)		(87,522	)		99,254
Total stockholders’ equity		294,385			479,073

Total Liabilities and Stockholders’ Equity	$	801,381		$	1,049,156


Prestige Brands Holdings, Inc. Consolidated Statements of Cash Flows (Unaudited)

	Year Ended March 31
		2009			2008			2007
(In thousands)
Operating Activities
Net income (loss)	$	(186,776	)	$	33,919		$	36,078
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization		11,219			11,014			10,384
Amortization of financing costs		2,233			3,007			3,257
Impairment of goodwill and intangible assets		249,590			--			--
Deferred income taxes		(19,955	)		10,096			9,662
Stock-based compensation costs		2,439			1,139			655
Changes in operating assets and liabilities, net of effects
of purchases of businesses
Accounts receivable		8,193			(9,052	)		4,875
Inventories		2,719			477			4,292
Prepaid expenses and other assets		458			(381	)		(1,235	)
Accounts payable		(2,265	)		(975	)		(186	)
Other accrued liabilities		(1,176	)		(4,255	)		4,117
Net cash provided by operating activities		66,679			44,989			71,899

Investing Activities
Purchases of equipment		(481	)		(488	)		(540	)
Purchases of intangible assets		--			(33	)		--
Business acquisition purchase price adjustments		(4,191	)		(16	)		750
Purchases of businesses, net		--			--			(31,261	)
Net cash used for investing activities		(4,672	)		(537	)		(31,051	)

Financing Activities
Repayment of notes		(32,888	)		(52,125	)		(35,280	)
Redemption of equity interests		(16	)		(7	)		(10	)
Net cash used for financing activities		(32,904	)		(52,132	)		(35,290	)

Increase (decrease) in cash		29,103			(7,680	)		5,558
Cash - beginning of year		6,078			13,758			8,200

Cash - end of year	$	35,181		$	6,078		$	13,758


Prestige Brands Holdings, Inc. Consolidating Statement of Operations (Unaudited)

	Three Months Ended March 31, 2009
	Over-the-Counter		Household		Personal
(In Thousands)	Healthcare		Cleaning		Care		Consolidated

Net sales	$	39,788	$	26,451	$	4,324	$	70,563
Other revenues		4		264		21		289

Total revenues		39,792		26,715		4,345		70,852
Cost of sales		15,792		17,344		2,428		35,564

Gross profit		24,000		9,371		1,917		35,288
Advertising and promotion		4,545		1,030		139		5,714

Contribution margin	$	19,455	$	8,341	$	1,778		29,574
Other operating expenses								9,187
Impairment of goodwill and
intangible assets								249,590

Operating loss								(229,203	)
Other expenses								5,923
Income tax benefit								(24,029	)

Net loss							$	(211,097	)

	Three Months Ended March 31, 2008
	Over-the-Counter		Household		Personal
(In Thousands)	Healthcare		Cleaning		Care		Consolidated

Net sales	$	46,197	$	29,386	$	4,513	$	80,096
Other revenues				337		--		337

Total revenues		46,197		29,723		4,513		80,433
Cost of sales		17,276		19,147		2,798		39,221

Gross profit		28,921		10,576		1,715		41,212
Advertising and promotion		5,108		1,009		173		6,290

Contribution margin	$	23,813	$	9,567	$	1,542		34,922
Other operating expenses								10,129

Operating income								24,793
Other expenses								8,598
Provision for income taxes								5,844

Net income							$	10,351


Prestige Brands Holdings, Inc. Consolidating Statement of Operations (Unaudited)

	Year Ended March 31, 2009
	Over-the-Counter		Household		Personal
	Healthcare		Cleaning		Care		Consolidated
(In Thousands)
Net sales	$	176,878	$	113,923	$	19,704	$	310,505
Other revenues		97		2,092		21		2,210

Total revenues		176,975		116,015		19,725		312,715
Cost of sales		63,459		74,457		11,529		149,445

Gross profit		113,516		41,558		8,196		163,270
Advertising and promotion		29,695		7,625		779		38,099

Contribution margin	$	83,821	$	33,933	$	7,417		125,171
Other operating expenses								43,107
Impairment of goodwill and
intangibles								249,590

Operating loss								(167,526	)
Other expenses								28,436
Income tax benefit								(9,186	)

Net loss							$	(186,776	)

	Year Ended March 31, 2008
	Over-the-Counter		Household		Personal
(In Thousands)	Healthcare		Cleaning		Care		Consolidated

Net sales	$	183,641	$	119,224	$	21,756	$	324,621
Other revenues		51		1,903		28		1,982

Total revenues		183,692		121,127		21,784		326,603
Cost of sales		69,344		75,459		13,293		158,096

Gross profit		114,348		45,668		8,491		168,507
Advertising and promotion		26,188		7,483		994		34,665

Contribution margin	$	88,160	$	38,185	$	7,497		133,842
Other operating expenses								42,428

Operating income								91,414
Other expenses								37,206
Provision for income taxes								20,289

Net income							$	33,919


Prestige Brands Holdings, Inc. Consolidating Statement of Operations (Unaudited)

	Year Ended March 31, 2007
	Over-the-Counter		Household		Personal
(In Thousands)	Healthcare		Cleaning		Care		Consolidated

Net sales	$	174,704	$	117,249	$	24,894	$	316,847
Other revenues		--		1,787		--		1,787

Total revenues		174,704		119,036		24,894		318,634
Cost of sales		65,601		73,002		14,544		153,147

Gross profit		109,103		46,034		10,350		165,487
Advertising and promotion		24,201		6,679		1,125		32,005

Contribution margin	$	84,902	$	39,355	$	9,225		133,482
Other operating expenses								38,800

Operating income								94,682
Other expenses								39,506
Provision for income taxes								19,098

Net income							$	36,078


Prestige Brands Holdings, Inc. Reconciliation of Net Income to Net Income Before Impairment of Goodwill and Intangibles (Unaudited)

	Three Months Ended March 31					Year Ended March 31
(In Thousands)		2009		2008			2009		2008

Net income (loss)	$	(211,097	)	$	10,351	$	(186,776	)	$	33,919

Adjustments:
Impairment of goodwill and
intangibles		249,590			--		249,590			--
Income tax benefit		(29,511	)		--		(29,511	)		--
		220,079			--		220,079			--

Net income before impairment of
goodwill and intangibles	$	8,982		$	10,351	$	33,303		$	33,919

Basic earnings per share on net
income before impairment of
goodwill and intangibles	$	0.18		$	0.21	$	0.67		$	0.68

Diluted earnings per share on net
income before impairment of
goodwill and intangibles	$	0.18		$	0.21	$	0.67		$	0.68

Weighted average shares
outstanding:
Basic		49,976			49,842		49,935			49,751
Diluted		50,059			50,037		50,043			50,039

Source: Prestige Brands Holdings, Inc.

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