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    Prestige Brands Holdings, Inc. Reports Record Fourth Quarter Revenues Up 39.1%; Record Core Organic OTC Revenues Up 14.0%; EPS Exceeds Recent Guidance

    IRVINGTON, N.Y.--(BUSINESS WIRE)--May. 17, 2012-- Prestige Brands Holdings, Inc. (NYSE: PBH) today announced record results for the fourth quarter and fiscal year ended March 31, 2012, driven by strong Over-the-Counter Healthcare (“OTC”) organic growth and the completion of the acquisition of 17 brands from GlaxoSmithKline (the “GSK Brands”), the largest acquisition in the Company's history.

    Revenues for the fourth fiscal quarter were $134.0 million, $37.6 million or 39.1% above the prior year comparable quarter's results of $96.4 million. Organic revenues for the fourth fiscal quarter grew $7.2 million, or 7.5% over the prior year comparable quarter. Revenues from the Company's nine legacy core OTC brands increased $8.2 million or 14.0% over the prior year comparable quarter. These brands are Chloraseptic®, Clear Eyes®, Compound W®, Little Remedies®, The Doctor's® NightGuard®, Efferdent®, PediaCare®, Dramamine® and Luden's®. Revenues from two months of ownership of the GSK Brands accounted for $30.4 million of the increase. The GSK Brands' acquisition increases the core brand group by five. These brands are Beano®, BC® and Goody's®, and Debrox® in the U.S., and Gaviscon® in Canada.

    Gross profit for the fourth fiscal quarter was $68.5 million, $22.2 million, or 47.9% above the prior year comparable quarter of $46.3 million. Excluding charges associated with inventory valuation step-up adjustments of $1.8 million related to the GSK Brands' acquisition, gross profit would have been $70.3 million in the current quarter. Gross margin was 51.1% in the current quarter, which was impacted by 1.4 percentage points from the inventory step-up charges noted above. Excluding these charges, gross margin would have improved to 52.5%. In the prior year comparable quarter, gross margin was 48.1%, which was impacted by 3.8 percentage points from the inventory step-up adjustments of $3.7 million associated with the Blacksmith Brands and Dramamine acquisitions. Excluding these charges, gross margin would have been 51.9%. The year-over-year improvement in gross margin is primarily a result of a higher proportion of revenue generated from the OTC segment.

    The Company continued its investment in Advertising and Promotion (“A&P”) during the quarter in support of its core OTC brands and certain recently acquired OTC brands. A&P for the quarter was $18.5 million, $4.4 million, or 31.3% above the prior year comparable quarter spend of $14.1 million. A&P as a percent of revenue was 13.8% during the fourth fiscal quarter, a modest decline from 14.7% in the prior year comparable quarter. The prior year comparable period included a higher advertising spend against brands newly acquired in the Blacksmith Brands and Dramamine® acquisitions, which was affected by seasonality. Excluding this factor, the normalized A&P spending level continued to increase.

    Operating income for the fourth fiscal quarter was $22.6 million, $4.0 million or 21.1% higher than the prior year comparable quarter of $18.6 million. Operating income for fiscal 2012 was impacted by $15.2 million of costs primarily associated with the GSK Brands' acquisition (including transaction costs of $8.1 million, an inventory step-up adjustment of $1.8 million and GSK transition costs of $3.6 million) and $1.7 million of costs associated with the evaluation of the Genomma Lab unsolicited proposal. Excluding these charges, operating income would have been $37.8 million. Operating income for the prior year comparable quarter included $4.5 million of costs associated with the acquisitions of Blacksmith and Dramamine®, including an inventory step-up adjustment of $3.7 million and transaction costs of $0.8 million. Excluding these charges, the prior year operating income would have been $23.1 million. On a comparable basis, excluding the charges noted above in the current and prior year quarter, operating income in the current quarter increased 63.3%.

    In the fourth fiscal quarter, the Company's diluted earnings per share from continuing operations was $0.00, which included the GSK acquisition and the impact of the above noted costs. This compares to $0.13 in the prior year comparable quarter, which also included the impact of the above noted costs. Excluding the impact of the charges noted above in each quarter, diluted earnings per share from continuing operations in the fourth fiscal quarter would have been $0.26 compared to $0.18 in the prior year comparable quarter, an increase of 44.4%.

    Commentary

    “We are pleased with the excellent revenue and adjusted EPS growth in the Company's fourth fiscal quarter. We recorded our seventh consecutive quarter of organic core OTC growth achieving the highest growth rate in almost two years. With this organic growth performance, Prestige ranks near the top of many CPG industry participants” commented Matthew M. Mannelly, President and CEO. “In less than three years, our clear and consistent value creation strategy has taken hold. We have transformed Prestige into the largest independent OTC products company in the U.S. with a proven ability to generate consistent organic growth in our core OTC business coupled with a leading free cash flow profile,” he said.

    “This quarter's revenue increase reflects the success of our core OTC brand-building strategy, and includes two months of revenues from this quarter's GSK Brands' acquisition. Consumption was driven by increased A&P support resulting in our brands' growth significantly exceeding category growth. Our nine legacy core OTC brands increased almost 15% despite the soft cough/cold season.”

    “For the fiscal year, we achieved record revenues and earnings growth, which exceeded our expectations. Our consistently strong free cash flow continued in fiscal 2012, and helped fund the most transformative event in our history-the acquisition of 17 brands from GSK,” Mr. Mannelly said. “This is a meaningful step toward continued shareholder value creation. Our M&A strategy in action has transformed Prestige into a company with approximately 90% of profits derived from higher growth, higher margin OTC brands,” he said.

    “The integration of the GSK Brands, our third acquisition in the past year and a half, is proceeding on schedule. We are excited by the potential created by this opportunity, which significantly enhances our portfolio by adding five new core OTC brands. This acquisition closely aligns with our operating model and we believe it is highly cash generative,” he said.

    “We've made a steadfast commitment to creating value by driving core OTC growth, acquiring with an exclusive OTC focus, and strategically managing our portfolio. We have much to do in fiscal 2013. Our new product pipeline is robust. We will continue to develop the potential of our two prior acquisitions, Blacksmith Brands and Dramamine®. Furthermore, we will endeavor to participate in M&A within the OTC space to continue the strategic transformation process. Our confidence in our future is reflected in the guidance we previously provided for fiscal year 2013, anticipating diluted adjusted earnings per share to be in the range of $1.22 to $1.32, which represents an increase of approximately 23% to 33% from our current adjusted EPS,” Mr. Mannelly said. “Based on our strong fourth quarter performance, I am bullish regarding our ability to deliver strong results in fiscal 2013.”

    Results by Segment for the Fourth Fiscal Quarter

    Revenues for the OTC segment in the fourth fiscal quarter were $109.7 million, an increase of 53.3% over the prior year comparable period revenues of $71.6 million. This was due to revenue increases in six of the Company's nine core OTC brands, as well as the addition of two months of revenues from the newly acquired GSK Brands.

    Revenues for the Household Cleaning segment for the fourth fiscal quarter were $24.3 million, a 2.2% reduction over the prior year comparable quarter revenues of $24.8 million. The rate of reduction in this segment has improved over the prior year comparable quarter, primarily as a result of increased distribution of Spic and Span®, as well as the fourth quarter introduction of the Comet® line of stainless steel cleaners.

    Fiscal Year 2012

    Revenues for fiscal 2012 were $441.1 million, an increase of 31.1%, or $104.6 million, over the prior year's revenues of $336.5 million. Organic revenues for the Company grew $10.7 million or 3.2% during fiscal 2012 over the prior year comparable period. Revenues from the GSK acquisition accounted for $30.4 million of the increase. Blacksmith Brands and Dramamine® contributed $63.5 million of the increase for the period prior to the anniversary of their respective purchases.

    Income from continuing operations for fiscal 2012 of $37.2 million was 27.5% higher than fiscal 2011 income from continuing operations of $29.2 million. Income from continuing operations for fiscal 2012 was impacted by $12.9 million of costs primarily associated with the GSK acquisition (including transaction costs of $8.4 million, an inventory step-up adjustment of $1.1 million and GSK transition costs of $2.2 million), costs associated with the evaluation of the Genomma Lab unsolicited proposal of $1.1 million, and $0.1 million of costs as a result of the net amount of the combined loss on extinguishment of debt and settlement gain, net of related tax effects.

    Income from continuing operations for fiscal 2011 was impacted by costs of $10.5 million associated with the Blacksmith and Dramamine acquisitions and $0.2 million of a loss associated with the extinguishment of debt, net of related tax effects. Excluding these impacts, income from continuing operations would have been $50.1 million for the current fiscal year compared to $39.9 million for the prior fiscal year, an increase of 25.8%.

    Diluted earnings per share from continuing operations for fiscal 2012 was $0.73, which includes the impact of the above noted costs, compared to $0.58 in the prior fiscal year, which included the costs associated with the Blacksmith and Dramamine acquisitions and the extinguishment of debt. Excluding the impact of these charges in the fiscal year, diluted earnings per share from continuing operations in fiscal 2012 would have been $0.99 compared to $0.79 in the prior fiscal year.

    Outlook

    For fiscal year 2013, which began on April 1, 2012, the Company had previously announced that it expects to report diluted adjusted earnings per share in the range of $1.22 to $1.32. This estimate excludes costs related to the GSK acquisition, and related Transition Services Agreement and integration costs, and costs related to the unsolicited Genomma Lab offer.

    Free Cash Flow and Debt

    Free cash flow (“FCF”) is a “non-GAAP financial measure” and is presented here because management believes it is a commonly used measure of liquidity, indicative of cash available for debt repayment and acquisitions. The Company defines “free cash flow” as net cash provided by operating activities minus capital expenditures.

    The Company's FCF for the fourth quarter ended March 31, 2012 was $19.2 million, a decrease of 22.4% over the prior year comparable period's FCF of $24.8 million. FCF for the fourth quarter was impacted by $8.4 million of working capital investments associated with the GSK acquisition, and $10.5 million of other costs, net of related tax effects. Excluding the impact of these charges, FCF for the fourth quarter ended March 31, 2012 would have been $38.1 million.

    For fiscal 2012, FCF totaled $66.8 million, a decrease of 22.3% over the prior year comparable period's FCF of $86.0 million. FCF for fiscal 2012 was impacted by $8.4 million of working capital investments associated with the GSK acquisition and $6.7 million of adjustments, net of related tax effects. Excluding the impact of these charges, FCF for fiscal 2012 would have been $81.9 million.

    Conference Call and Accompanying Slide Presentation

    The Company will host a conference call to review its fourth quarter and year end results on May 17, 2012 at 8:30 am EST. The toll-free dial-in numbers are 800-884-5695 within North America and 617-786-2960 outside of North America. The conference pass code is "prestige". The Company will provide a live internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Company's Investor Relations page of http://prestigebrands.com. The slide presentation can be accessed just before the call from the Investor Relations page of the website by clicking on Webcasts and Presentations. Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 888-286-8010 within North America and at 617-801-6888 from outside North America. The pass code is 20647616.

    About Prestige Brands Holdings, Inc.

    The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S., Canada, and certain international markets. Core brands now include Chloraseptic® sore throat treatments, Clear Eyes® eye care products, Compound W® wart treatments, The Doctor's® NightGuard® dental protector, the Little Remedies® and PediaCare® lines of pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, Dramamine® motion sickness treatment, BC® and Goody's® analgesics, Gaviscon® antacid, Beano® gas treatment, and Debrox® earwax remover.

    Note Regarding Forward-Looking Statements

    This news release contains "forward-looking statements" within the meaning of the federal securities laws 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. Forward-looking statements in this news release include, without limitation, statements regarding the impact of our M&A strategy, our ability to integrate and develop the brands that we acquire, our new product pipeline, and our outlook for adjusted earnings per share and our plans for growth. These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, although they 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 reports filed with the Securities and Exchange Commission.

           

    Prestige Brands Holdings, Inc.

    Consolidated Statements of Operations

    (Unaudited)

     
    Three Months Ended
    March 31, Year Ended March 31,
    (In thousands, except per share data) 2012     2011 2012     2011
    Revenues
    Net sales $ 133,160 $ 95,629 $ 437,838 $ 333,715
    Other revenues 836   734   3,247   2,795  
    Total revenues 133,996 96,363 441,085 336,510
     
    Cost of Sales
    Cost of sales (exclusive of depreciation shown below) 65,508   50,058   213,701   165,632  
    Gross profit 68,488   46,305   227,384   170,878  
     
    Operating Expenses
    Advertising and promotion 18,547 14,122 57,127 42,897
    General and administrative 24,334 11,019 56,700 41,960
    Depreciation and amortization 3,051   2,540   10,734   9,876  
    Total operating expenses 45,932   27,681   124,561   94,733  
     
    Operating income 22,556   18,624   102,823   76,145  
     
    Other (income) expense
    Interest income (14 ) (1 ) (18 ) (1 )
    Interest expense 16,361 8,810 41,338 27,318
    Gain on settlement (5,063 )
    Loss on extinguishment of debt 5,409     5,409   300  
    Total other expense 21,756   8,809   41,666   27,617  
     
    Income from continuing operations before income taxes 800 9,815 61,157 48,528
    Provision for income taxes 815   3,401   23,945   19,349  
    Income (loss) from continuing operations (15 ) 6,414 37,212 29,179
     
    Discontinued Operations
    Income from discontinued operations, net of income tax 591
    Loss on sale of discontinued operations, net of income tax       (550 )
    Net income (loss) $ (15 ) $ 6,414   $ 37,212   $ 29,220  
     
    Basic earnings per share:
    Income from continuing operations $ $ 0.13 $ 0.74 $ 0.58
    Income from discontinued operations and loss on sale of discontinued operations        
    Net income $   $ 0.13   $ 0.74   $ 0.58  
     
    Diluted earnings per share:
    Income from continuing operations $ $ 0.13 $ 0.73 $ 0.58
    Income from discontinued operations and loss on sale of discontinued operations        
    Net income $   $ 0.13   $ 0.73   $ 0.58  
     
    Weighted average shares outstanding:
    Basic 50,314   50,129   50,270   50,081  
    Diluted 50,992   50,555   50,748   50,338  
           

    Prestige Brands Holdings, Inc.

    Consolidated Balance Sheets

    (Unaudited)

     
    (In thousands)

    Assets

    March 31,

    2012

    March 31,

    2011

    Current assets
    Cash and cash equivalents $ 19,015 $ 13,334
    Accounts receivable, net 60,228 44,393
    Inventories 51,113 39,751
    Deferred income tax assets 5,283 5,292
    Prepaid expenses and other current assets 11,396   4,812  
    Total current assets 147,035 107,582
     
    Property and equipment, net 1,304 1,444
    Goodwill 173,702 154,896
    Intangible assets, net 1,400,522 786,361
    Other long-term assets 35,713   6,635  
    Total Assets $ 1,758,276   $ 1,056,918  
     
    Liabilities and Stockholders' Equity
    Current liabilities
    Accounts payable $ 26,726 $ 21,615
    Accrued interest payable 13,889 10,313
    Other accrued liabilities 23,308   22,280  
    Total current liabilities 63,923   54,208  
     
    Long-term debt
    Principal amount 1,135,000 492,000
    Less unamortized discount (11,092 ) (5,055 )
    Long-term debt, net of unamortized discount 1,123,908   486,945  
     
    Deferred income tax liabilities 167,717   153,933  
    Total Liabilities 1,355,548   695,086  
     
     
    Stockholders' Equity
    Preferred stock - $0.01 par value
    Authorized - 5,000 shares
    Issued and outstanding - None
    Preferred share rights 283
    Common stock - $0.01 par value
    Authorized - 250,000 shares
    Issued - 50,466 shares and 50,276 shares at March 31, 2012 and 2011, respectively 505 503
    Additional paid-in capital 391,898 387,932
    Treasury stock, at cost - 181 shares at March 31, 2012 and 160 shares at March 31, 2011 (687 ) (416 )
    Accumulated other comprehensive loss, net of tax (13 )
    Retained earnings (accumulated deficit) 10,742   (26,187 )
    Total Stockholders' Equity 402,728   361,832  
     
    Total Liabilities and Stockholders' Equity $ 1,758,276   $ 1,056,918  
     
       

    Prestige Brands Holdings, Inc.

    Consolidated Statements of Cash Flows

    (Unaudited)

     
    Year Ended March 31,
    (In thousands) 2012     2011
    Operating Activities
    Net income $ 37,212 $ 29,220
    Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization 10,734 10,108
    Loss on sale of discontinued operations 890
    Deferred income taxes 13,793 9,324
    Amortization of deferred financing costs 1,630 1,043
    Stock-based compensation costs 3,078 3,575
    Loss on extinguishment of debt 5,409 300
    Amortization of debt discount 1,030 702
    Loss on disposal of equipment 153
    Changes in operating assets and liabilities, net of effects of acquisitions
    Accounts receivable (15,854 ) 4,918
    Inventories 3,710 12,443
    Prepaid expenses and other current assets (3,009 ) 154
    Accounts payable 5,127 1,784
    Accrued liabilities 4,592   12,056  
    Net cash provided by operating activities 67,452   86,670  
     
    Investing Activities
    Purchases of equipment (606 ) (655 )
    Proceeds from sale of property and equipment 12
    Proceeds from sale of discontinued operations 4,122
    Acquisition of Blacksmith, net of cash acquired (202,044 )
    Proceeds from escrow of Blacksmith acquisition 1,200
    Acquisition of Dramamine (77,115 )
    Acquisition of GSK Brands (662,800 )  
    Net cash used in investing activities (662,206 ) (275,680 )
     
    Financing Activities
    Proceeds from issuance of Senior Notes 250,000 100,250
    Proceeds from issuance of 2012 Term Loan and 2010 Term Loan 650,100 112,936
    Repayment of 2010 Term Loan (242,000 )
    Payment of deferred financing costs (33,284 ) (830 )
    Repayment of long-term debt (25,000 ) (51,087 )
    Proceeds from exercise of stock options 889 331
    Shares surrendered as payment of tax withholding (271 ) (353 )
    Net cash provided by financing activities 600,434   161,247  
     
    Effects of exchange rate changes on cash and cash equivalents 1
    Increase (decrease) in cash and cash equivalents 5,681 (27,763 )
    Cash and cash equivalents - beginning of year 13,334   41,097  
    Cash and cash equivalents - end of year $ 19,015   $ 13,334  
     
    Interest paid $ 34,977   $ 17,509  
    Income taxes paid $ 12,865   $ 11,894  
     
       

    Prestige Brands Holdings, Inc.

    Consolidated Statements of Operations

    Business Segments

    (Unaudited)

     
    Three Months Ended March 31, 2012
    OTC

    Healthcare

        Household

    Cleaning

        Consolidated
    (In thousands)
    Net sales $ 109,570 $ 23,590 $ 133,160
    Other revenues 167   669   836  
    Total revenues 109,737 24,259 133,996
    Cost of sales 45,953   19,555   65,508  
    Gross profit 63,784 4,704 68,488
    Advertising and promotion 17,149   1,398   18,547  
    Contribution margin $ 46,635   $ 3,306   49,941
    Other operating expenses 27,385  
    Operating income 22,556
    Other expense 21,756
    Provision for income taxes 815  
    Loss from continuing operations (15 )
    Income from discontinued operations, net of income tax
    Loss on sale of discontinued operations, net of income tax  
    Net loss $ (15 )
     
     
    Three Months Ended March 31, 2011
    OTC

    Healthcare

    Household

    Cleaning

    Consolidated
    (In thousands)
    Net sales $ 71,390 $ 24,239 $ 95,629
    Other revenues 175   559   734
    Total revenues 71,565 24,798 96,363
    Cost of sales 33,233   16,825   50,058
    Gross profit 38,332 7,973 46,305
    Advertising and promotion 12,834   1,288   14,122
    Contribution margin $ 25,498   $ 6,685   32,183
    Other operating expenses 13,559
    Operating income 18,624
    Other expense 8,809
    Provision for income taxes 3,401
    Income from continuing operations 6,414
    Income from discontinued operations, net of income tax
    Loss on sale of discontinued operations, net of income tax
    Net income $ 6,414
     
     
    Year Ended March 31, 2012
    OTC

    Healthcare

    Household

    Cleaning

    Consolidated
    (In thousands)
    Net sales $ 344,282 $ 93,556 $ 437,838
    Other revenues 719   2,528   3,247
    Total revenues 345,001 96,084 441,085
    Cost of sales 143,151   70,550   213,701
    Gross profit 201,850 25,534 227,384
    Advertising and promotion 51,895   5,232   57,127
    Contribution margin $ 149,955   $ 20,302   170,257
    Other operating expenses 67,434
    Operating income 102,823
    Other expense 41,666
    Provision for income taxes 23,945
    Income from continuing operations 37,212
    Income from discontinued operations, net of income tax
    Loss on sale of discontinued operations, net of income tax
    Net income $ 37,212
     
     
    Year Ended March 31, 2011
    OTC

    Healthcare

    Household

    Cleaning

    Consolidated
    (In thousands)
    Net sales $ 234,042 $ 99,673 $ 333,715
    Other revenues 543   2,252   2,795  
    Total revenues 234,585 101,925 336,510
    Cost of sales 97,710   67,922   165,632  
    Gross profit 136,875 34,003 170,878
    Advertising and promotion 36,752   6,145   42,897  
    Contribution margin $ 100,123   $ 27,858   127,981
    Other operating expenses 51,836  
    Operating income 76,145
    Other expense 27,617
    Provision for income taxes 19,349  
    Income from continuing operations 29,179
    Income from discontinued operations, net of income tax 591
    Loss on sale of discontinued operations, net of income tax (550 )
    Net income $ 29,220  
     

    About Non-GAAP Financial Measures

    We define Non-GAAP EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations or the sale thereof and Non-GAAP Adjusted EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations and the sale thereof, gain on settlement, loss on extinguishment of debt, certain other legal and professional fees and acquisition-related costs. We define Non-GAAP Adjusted Income from Continuing Operations as Income from Continuing Operations before incremental interest expense to finance future acquisitions, gain on settlement, loss on extinguishment of debt, certain other legal and professional fees, acquisition-related costs, the applicable tax impacts associated with these items and the tax impacts of state tax rate adjustments and other non-deductible items. We define Non-GAAP Adjusted Net Income as Net Income before gain on settlement, loss on extinguishment of debt, certain other legal and professional fees, acquisition-related costs, income or loss from discontinued operations and the sale thereof, the applicable tax impacts associated with these items and the tax impacts of state tax rate adjustments and other non-deductible items. We define Non-GAAP Free Cash Flow as net cash provided by operating activities less cash paid for capital expenditures. Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Net Income and Non-GAAP Free Cash Flow may not be comparable to similarly titled measures reported by other companies.

    We are presenting Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Income from Continuing Operations, Non-GAAP Adjusted Net Income and Non-GAAP Free Cash Flow because they provide additional ways to view our operations, when considered with both our GAAP results and the reconciliation to net income and net cash provided by operating activities, respectively, which we believe provide a more complete understanding of our business than could be obtained absent this disclosure. Each of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Income from Continuing Operations, Non-GAAP Adjusted Net Income and Non-GAAP Free Cash Flow is presented solely as a supplemental disclosure because: (i) we believe it is a useful tool for investors to assess the operating performance of the business without the effect of these items; (ii) we believe that investors will find this data useful in assessing our ability to pursue acquisitions or service or incur indebtedness; and (iii) we use Non-GAAP EBITDA/Non-GAAP Adjusted EBITDA and Non-GAAP Adjusted Net Income internally to evaluate the performance of our personnel and also as a benchmark to evaluate our operating performance or compare our performance to that of our competitors. The use of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Income from Continuing Operations, Non-GAAP Adjusted Net Income and Non-GAAP Free Cash Flow has limitations and you should not consider these measures in isolation from or as an alternative to GAAP measures such as operating income, income from continuing operations, net income, and net cash flow provided by operating activities, or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity.

    The following tables set forth the reconciliation of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Income from Continuing Operations, Non-GAAP Adjusted Net Income and Non-GAAP Free Cash Flow, all of which are non-GAAP financial measures, to GAAP net income and GAAP Net cash provided by operating activities, respectively, our most directly comparable financial measures presented in accordance with GAAP.

    Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA:

       
    Three Months Ended March 31,
    2012       2011
    (In thousands)
    GAAP Net Income (Loss) $ (15 ) $ 6,414
    Income from discontinued operations
    Interest expense, net 16,347 8,809
    Income tax provision 815 3,401
    Depreciation and amortization 3,051   2,540
    Non-GAAP EBITDA: 20,198   21,164

    Adjustments:

    Inventory step-up charges associated with acquisitions 1,795 3,729
    Legal and professional fees associated with acquisitions 8,142 802
    Transition costs associated with GSK 3,588
    Unsolicited proposal costs 1,737
    Loss on extinguishment of debt 5,409  
    Total adjustments 20,671   4,531
    Non-GAAP Adjusted EBITDA $ 40,869   $ 25,695
     
       
    Year Ended March 31,
    2012       2011
    (In thousands)
    GAAP Net Income $ 37,212 $ 29,220
    Income from discontinued operations (591 )
    Loss on sale of discontinued operations 550
    Interest expense, net 41,320 27,317
    Income tax provision 23,945 19,349
    Depreciation and amortization 10,734   9,876  
    Non-GAAP EBITDA: 113,211   85,721  

    Adjustments:

    Inventory step-up charges associated with acquisitions 1,795 7,273
    Legal and professional fees associated with acquisitions 13,807 7,729
    Transition costs associated with GSK 3,588
    Unsolicited proposal costs 1,737
    Gain on settlement (5,063 )
    Loss on extinguishment of debt 5,409   300  
    Total adjustments 21,273   15,302  
    Non-GAAP Adjusted EBITDA $ 134,484   $ 101,023  
     

    Reconciliation of GAAP Income from Continuing Operations to Non-GAAP Adjusted Income from Continuing Operations:

       
    Three Months Ended March 31,
    2012       2011
    (In thousands)
    GAAP Income (Loss) from Continuing Operations $ (15 ) $ 6,414

    Adjustments:

    Inventory step-up charges associated with acquisitions 1,795 3,729
    Acquisition related costs 8,142 802
    Transition costs associated with GSK 3,588
    Unsolicited proposal costs 1,737
    Loss on extinguishment of debt 5,409
    Tax impact of adjustments (7,816 ) (2,094 )
    Total adjustments 12,855   2,437  
    Non-GAAP Adjusted Income from Continuing Operations $ 12,840   $ 8,851  
     
       
    Year Ended March 31,
    2012       2011
    (In thousands)
    GAAP Income from Continuing Operations $ 37,212 $ 29,179

    Adjustments:

    Incremental interest expense to finance Dramamine 800
    Inventory step-up charges associated with acquisitions 1,795 7,273
    Acquisition related costs 13,807 7,729
    Transition costs associated with GSK 3,588
    Unsolicited proposal costs 1,737
    Gain on settlement (5,063 )
    Loss on extinguishment of debt 5,409 300
    Tax impact of adjustments (8,091 ) (5,213 )
    Tax impact of state rate adjustments and other non-deductible items (237 )  
    Total adjustments 12,945   10,889  
    Non-GAAP Adjusted Income from Continuing Operations $ 50,157   $ 40,068  
     

    Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and related Diluted Earnings Per Share:

    Three Months Ended March 31,
        2012           2011
    Diluted Diluted
    2012     EPS 2011     EPS
    (In thousands)
    GAAP Net Income (Loss) $ (15 )     $   $ 6,414       $ 0.13  

    Adjustments:

    Inventory step-up charge associated with acquisitions 1,795 0.04 3,729 0.07
    Legal and professional fees associated with acquisitions 8,142 0.16 802 0.02
    Transition costs associated with GSK 3,588 0.07
    Unsolicited proposal costs 1,737 0.03
    Loss on extinguishment of debt 5,409 0.11
    Tax impact of adjustments (7,816 )     (0.15 ) (2,094 )     (0.04 )
    Total adjustments 12,855       0.26   2,437       0.05  
    Non-GAAP Adjusted Net Income and Adjusted EPS $ 12,840       $ 0.26   $ 8,851       $ 0.18  
     
       
    Year Ended March 31,
        2012           2011
    Diluted Diluted
    2012     EPS 2011     EPS
    (In thousands)
    GAAP Net Income $ 37,212       $ 0.73   $ 29,220       $ 0.58  

    Adjustments:

    Income from discontinued operations (591 ) (0.01 )
    Loss on sale of discontinued operations 550 0.01
    Incremental interest expense to finance Dramamine 800 0.02
    Inventory step-up charge associated with acquisitions 1,795 0.04 7,273 0.14
    Legal and professional fees associated with acquisitions 13,807 0.27 7,729 0.15
    Transition costs associated with GSK 3,588 0.07
    Unsolicited proposal costs 1,737 0.03
    Gain on settlement (5,063 ) (0.10 )
    Loss on extinguishment of debt 5,409 0.11
    Tax impact of adjustments (8,091 ) (0.16 ) (5,213 ) (0.10 )
    Tax impact of state rate adjustments and other non-deductible items (237 )              
    Total adjustments 12,945       0.26   10,548       0.21  
    Non-GAAP Adjusted Net Income and Adjusted EPS $ 50,157       $ 0.99   $ 39,768       $ 0.79  
     

    Reconciliation of GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow:

       
    Three Months Ended March 31,
    2012           2011
    (In thousands)  
    GAAP Net cash provided by operating activities $ 19,459 $ 25,011
    Additions to property and equipment for cash (248 ) (250 )
    Non-GAAP Free Cash Flow $ 19,211   $ 24,761  
     
       
    Year Ended March 31,
    2012           2011
    (In thousands)  
    GAAP Net cash provided by operating activities $ 67,452 $ 86,670
    Additions to property and equipment for cash (606 ) (655 )
    Non-GAAP Free Cash Flow $ 66,846   $ 86,015  

    Source: Prestige Brands Holdings, Inc.

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

    Primary IR Contact

    Irinquiries@prestigebrands.com
    Prestige Brands Holdings, 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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