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    Prestige Brands Holdings, Inc. Announces Second Quarter Results; Confirms Guidance for Balance of Fiscal 2006; Internal Review Results in Restatement of Previously Issued Financial Statements

    IRVINGTON, N.Y.--(BUSINESS WIRE)--Nov. 15, 2005--Prestige Brands Holdings, Inc. (NYSE: PBH), a consumer products company with a diversified portfolio of well-recognized brand names, today announced results for the second fiscal quarter ended September 30, 2005, and provided its outlook for the balance of the fiscal year.

    The Company also announced that management and the Audit Committee of the Company's Board of Directors recently completed an internal review of certain accounting practices at the Company. As a result of that review, the Company concluded that certain prior period financial statements could no longer be relied upon and has reclassified certain cooperative advertising expenses, changed the time at which it recognizes revenue and restated the reported number of common shares outstanding used in the computation of earnings per share. As a result of the conclusion with respect to prior financial statements, the company will restate certain of its historical results. All references in this release to prior periods results are to the restated results.

    September Quarter Results

    Results for the quarter and six months were generally in line with management's expectations as provided in its earnings release of July 27, 2005, and in its conference call of July 28, 2005. Net sales for the quarter ended September 30, 2005, were $73.3 million, compared to net sales of $80.0 million for the prior year quarter. Operating income of $20.8 million compares to operating income of $26.8 million in the second quarter of fiscal 2005. The decline was due to lower sales, a slightly less favorable gross margin as a percentage of sales, as well as a 21% increase in advertising and promotion expenditures compared to prior year.

    Net income for the second quarter of fiscal year 2006 was $7.4 million or $0.15 per basic share and $0.15 per diluted share, compared to net income of $9.9 million in the comparable quarter last year.

    Results for First Half of Fiscal 2006

    Net sales for the six months ended September 30, 2005, were $136.8 million, 1.4% below net sales of $138.7 million for the comparable period last year. Despite the sales shortfall, operating income of $39.1 million was 14% above operating income of $34.4 million in the first six months of fiscal 2005. Fiscal 2005 included a charge of $5.2 million due to an inventory step up adjustment related to the acquisition of Bonita Bay Holdings, Inc. Adjusting for that charge, the $39.1 million of operating income in this year's first half represents a 1.5% decline from last year's adjusted operating income of $39.7 million. The decline compared to last year was due to the sales decline partially offset by a small improvement in gross margin as a percentage of sales due to mix. Advertising and promotional spending was essentially even with the prior year.

    Net income for the first six months of fiscal year 2006 was $12.2 million or $0.25 per basic share and $0.24 per diluted share. This represents an improvement over the prior year comparable period for which we reported net income of $2.8 million. When the prior year results are adjusted to remove one-time expenses arising from the acquisition of Bonita Bay Holdings, Inc., adjusted net income last year would have been $10.0 million. The results for the first half of fiscal year 2006 are a 21 % improvement over the prior year adjusted net income. Please refer to the consolidated financial data at the end of this earnings release for a reconciliation of such amounts.

    For the first six months, the Company's effective tax rate increased to 44.5 %. This resulted from a one-time charge, recorded in the quarter ended June 30, 2005, of approximately $1.2 million due to an increase in the graduated federal income tax rate from 34% to 35% and its related impact on the Company's deferred tax liabilities.

    Results by Segment

    September Quarter

    The reported sales decline in fiscal 2006 affected each of the Company's three business segments: Over-the-Counter medicines (OTC), Household Cleaning products and Personal Care products. For the OTC segment, net sales of $40.8 million were 5% less than last year's second quarter reported net sales of $42.7 million. Fiscal year 2006 results include strong sales of the Little Remedies(R) line of children's health care products which were acquired by the Company late in calendar year 2004 and therefore, were not included in the prior year period's results. Little Remedies contributed $3.9 million to current quarter sales compared to no sales in the prior year. The decline for the segment is attributable to sales declines for Compound W(R) and New Skin(R). Partially offsetting the declines on Compound W and New Skin were gains for Chloraseptic(R) sore throat treatment, Clear eyes(R) eye care products and Dermoplast(R) first aid treatment. In addition, Little Remedies revenues grew strongly over the year ago quarter before the Company owned the brand.

    Net sales for the Household Cleaning products segment were $25.2 million, or 8% below last year's comparable quarter net sales of $27.6 million. The decline was primarily due to the discontinuation of the Comet(R) Clean & Flush product line.

    Net sales of $7.3 million for the Personal Care segment were $2.4 million lower than last year's comparable quarter. This reflects continued softness in the Denorex(R) shampoo line and weaker category trends for nail polish removers affecting Cutex(R).

    First Six Months of Fiscal 2006

    For the OTC segment, net sales of $74.1 million were 3% greater than last year's comparable period reported net sales of $72.1 million. The increase in sales for the segment was driven by six months of sales of Little Remedies compared to no sales last year, plus sales increases for the Chloraseptic, Clear eyes and Dermoplast brands, offset by declines on the Compound W and New Skin brands due to category softness. Had Little Remedies been owned from the beginning of fiscal year 2005, the OTC segment would have shown a decline of 5% compared to the comparable period last year.

    Net sales for the Household Cleaning products segment were $48.1 million, or 3.0% below last year's comparable period net sales of $49.6 million. The prior year period included sales of discontinued Comet items previously mentioned which account for the majority of the decline.

    Net sales of $14.6 million for the Personal Care segment were 14% or $2.4 million below last years comparable net sales. The decline resulted from continuing softness on the Denorex and Cutex brands.

    Restatement of Prior Period Financial Statements

    As a result of a review of certain accounting practices performed in conjunction with the Company's assessment of internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, the Company determined it may have erroneously applied generally accepted accounting principles as they relate to the recognition of revenue, the classification of certain trade promotion allowances, and the computation of earnings per share. At the direction of the Audit Committee of the Company's Board of Directors, an independent review of these issues was performed.

    Management and the Audit Committee concluded that, in light of the accounting errors discussed above, the financial statements for the years ended March 31, 2005, 2004 and 2003 and the quarterly data for the years ended March 31, 2005 and 2004 included in the Company's Annual Report on Forms 10-K and 10-K/A for the year ended March 31, 2005 and the financial statements for the quarters ended June 30, 2005 and 2004 included in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 should no longer be relied upon. The Company will file an amended Form 10-Q/A for the quarter ended June 30, 2005 and an amended Form 10-K/A for the year ended March 31, 2005 as soon as practicable. Because of the review and restatement described above, the Company was unable to file its Quarterly Report on Form 10-Q by November 14, 2005, its due date. The Company will file a Notice on Form 12b-25 with respect to that report today and expects to file the report on or before the extended due date of November 21, 2005.

    With respect to revenue recognition, Staff Accounting Bulletin No. 104 sets forth the criteria for revenue recognition, one of which is that risk of loss has passed to the customer. The Company, consistent with its published pricing and shipping terms, has historically recognized revenue upon shipment of product to the customer. Upon closer examination of its shipping practices and terms, the Company determined that it often was unclear when, from a legal standpoint, risk of loss of its products passed to its customers. Accordingly, the Company has concluded that revenue should not be recognized until product is received by its customers (referred to as "FOB destination point"), unless the risk of loss transfers to the customer at the point of shipment. The Company will restate its previously issued financial statements to reflect its conclusions with respect to how revenue should be recognized. Peter C. Mann, Chairman and Chief Executive Officer said, "Although a restatement is a serous matter, this is not a case of revenues that did not exist; the practical effect of this change is to move the last few days of sales from the end of a quarter to the beginning of the next quarter. It is an issue only of timing; however, it is important to us as a company that we do record our revenues at the appropriate time." The effects of these adjustments for each fiscal period are reflected in Exhibit A, attached to this news release.

    With respect to the classification of trade promotions and allowances, Emerging Issues Task Force Issue 01-09 sets forth the criteria for classifying such promotions and allowances as an expense or a reduction of revenue. Upon review, the Company determined that it had incorrectly classified certain promotion and allowance amounts as expense rather than as a reduction of revenue. The Company will restate its previously issued financial statements for the periods referred to above to correct these misclassifications. These adjustments do not affect net income, operating income or cash flows from operations. The effects of these adjustments are reflected in Exhibit A, attached to this news release.

    With respect to earnings per share, Statement of Financial Accounting Standards No. 128 sets forth the criteria for computing basic and diluted earnings per share. Upon examination of its earnings per share calculations, the Company determined that certain issued and outstanding, but unvested, shares held by management were improperly reflected in the basic earnings per share computations. The effects of this revision are reflected in Exhibit A, attached to this news release.

    Commentary and Outlook

    Commenting on the results of the quarter and the first half, Mann said, "Results were generally in line with the expectations we announced in July, but were below our historical growth rates. Virtually all of the sales softness in this six-month period was related to specific short-term issues which we believe are now largely behind us. The fundamental strength of our business model has not changed, and so the long-term prognosis for the Company continues to be good. We have strong brand names, many of which gained market share during the quarter, and we are fiscally sound with impressive cash earnings and low capital expenditures to enable us to reduce debt and fund acquisitions."

    "As a result of the sales weakness in the first half of the year, we continue to anticipate revenues and profits, excluding the impact of acquisitions, will be essentially flat compared to the restated results for our last fiscal year."

    Mann noted that the Company has closed two important transactions within the past few weeks. "On October 28th, we acquired the Chore Boy(R) brand of household scrubbers from Reckitt Benckiser, and we are already making good progress in implementing plans to grow that brand in the United States and beyond. And, just last week, we closed the transaction whereby we acquired essentially all the assets of Dental Concepts, LLC. The two main product lines within Dental Concepts --The Doctors(R) NightGuard and BrushPicks(R) interproximal cleaning devices -- are exciting, growing OTC brands to which we believe Prestige can add meaningful value. In combination, these two acquisitions are expected to add approximately $30 million in new annual revenues."

    Mann added, "The restatement of previously issued financial statements announced today, while a serious matter, does not affect the Company's fundamental trends or business model. These accounting issues had to be addressed appropriately by us in order for the Company to be 404 compliant at the end of this year. The adjustments and the recent review put us in a better position to do that."

    Conference Call

    The Company will hold a conference all to review its second quarter fiscal 2006 results on Tuesday , November 15, 2005, at 8:30 a.m. (EST). The toll free dial in number for the call is 1-800-857-1849. International callers may dial 1-210-234-0036. The conference password is "Prestige". We will have a live internet web cast of the conference call, as well as an archived replay, which can be accessed from the investor relations page of www.prestigebrandsinc.com.

    Forward Looking Statements

    All statements, other than statements of historical fact included in this release, are forward-looking statements, as that term is defined in 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. There are certain factors that could cause actual results to differ materially from those anticipated by some of the statements made. These include: (1) the ability to achieve business plans; (2) successfully executing, managing and integrating key acquisitions (including the Chore Boy and Dental Concepts acquisitions); (3) the ability to manage and maintain key customer relationships; (4) the ability to maintain key manufacturing and supply sources; (5) the ability to successfully manage regulatory, tax and legal matters (including product liability matters), and to resolve pending matters within current estimates; (6) the ability to successfully manage increases in the prices of raw materials used to make the Company's products; (7) the ability to stay close to consumers in an era of increased media fragmentation; and (8) the ability to stay on the leading edge of innovation. For additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to our most recent 10-K, 10-Q and 8-K reports.

    About Prestige Brands Holdings

    Located in Irvington, New York, Prestige Brands Holdings is a marketer and distributor of brand name over-the-counter drug, personal care and household cleaning products sold throughout the U.S. and Canada. Key brands include Compound W(R) wart remover, Chloraseptic(R) sore throat treatment, New-Skin(R) liquid bandage, Clear eyes(R) and Murine(R) eye care products, Little Remedies(R) pediatric over-the-counter products, Cutex(R) nail polish remover, Comet(R) and Spic and Span(R) household cleaning products and other well-known brands.

                        PRESTIGE BRANDS HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                (in thousands, except share and per share data)
    
                            Three months ended       Six months ended
                               September 30,          September 30,
                            2005         2004        2005        2004
                         ----------- ------------ ----------- ------------
                                      (Restated)               (Restated)
    REVENUES:
    Net sales           $    73,320  $    79,932 $   136,748 $    138,612
    Other revenues               25           26          50          101
                         ----------- ------------ ----------- ------------
    
      Total revenues         73,345       79,958     136,798      138,713
    
    COST OF SALES:
    Cost of sales            35,549       37,941      64,498       71,079
                         ----------- ------------ ----------- ------------
    
      Gross profit           37,796       42,017      72,300       67,634
                         ----------- ------------ ----------- ------------
    
    OPERATING EXPENSES:
     Advertising and
      promotion              10,217        8,449      18,922       19,234
     General and
      administrative          4,117        4,502       9,028        9,423
     Depreciation               487          452         970          938
     Amortization of
      intangible assets       2,148        1,802       4,296        3,605
                         ----------- ------------ ----------- ------------
    
       Total operating
       expenses              16,969       15,205      33,216       33,200
                         ----------- ------------ ----------- ------------
    
       Operating income      20,827       26,812      39,084       34,434
                         ----------- ------------ ----------- ------------
    
    OTHER INCOME
     (EXPENSE):
     Interest income            226           59         307           87
     Interest expense        (8,897)     (10,893)    (17,488)     (21,970)
     Loss on
      extinguishment of
      debt                        -            -           -       (7,567)
                         ----------- ------------ ----------- ------------
    
       Total other income
        (expense)            (8,671)     (10,834)    (17,181)     (29,450)
                         ----------- ------------ ----------- ------------
    
       Income before
        income taxes         12,156       15,978      21,903        4,984
    
    Provision for income
     taxes                   (4,782)      (6,076)     (9,747)      (2,173)
                         ----------- ------------ ----------- ------------
    
       Net income       $     7,374  $     9,902 $    12,156 $      2,811
    
    Cumulative preferred
     dividends on Senior
     Preferred and Class
     B Preferred units            -       (3,827)          -       (7,446)
                         ----------- ------------ ----------- ------------
    
    Net income (loss)
     available to members
     and common
     shareholders       $     7,374  $     6,075 $    12,156 $     (4,635)
                         =========== ============ =========== ============
    Net income (loss)
     per common share:
      Basic             $      0.15  $      0.25 $      0.25 $      (0.19)
                         =========== ============ =========== ============
      Diluted           $      0.15  $      0.23 $      0.24 $      (0.19)
                         =========== ============ =========== ============
    
    Weighted average
     shares outstanding:
      Basic              48,790,856   24,615,066  48,756,535   24,563,238
                         =========== ============ =========== ============
      Diluted            49,949,432   26,512,017  49,932,199   24,563,238
                         =========== ============ =========== ============
    
    
                            Three months ended        Six months ended
                              September 30,            September 30,
                        --------------------------------------------------
    Adjusted Operating      2005         2004        2005         2004
     Income             ------------ ------------ ----------- ------------
    --------------------
    (dollars in
     thousands)
    
     Operating Income   $    20,827  $    26,812 $    39,084 $     34,434
    
     Charges due to
      inventory step-up           -            -           -        5,249
                         ----------- ------------ ----------- ------------
    
    Adjusted Operating
     Income             $    20,827  $    26,812 $    39,084 $     39,683
                         =========== ============ =========== ============
    
    
    
    Adjusted Net Income
    --------------------
    (dollars in
     thousands)
    
    Net Income          $     7,374  $     9,902 $    12,156 $      2,811
    
    Loss on
     extinguishment of
     debt, net of taxes           -            -           -        4,267
    
    Charges due to
     inventory step-up,
     net of taxes                 -            -           -        2,960
                         ----------- ------------ ----------- ------------
    
    Adjusted Net Income $     7,374  $     9,902 $    12,156 $     10,038
                         =========== ============ =========== ============
    
                        Prestige Brands Holdings, Inc.
                          Consolidated Balance Sheet
                                  (Unaudited)
    
    (Dollars in thousands)                                  September 30,
                                                                 2005
                                                            --------------
    Assets
    Current assets
     Cash                                                   $      27,585
     Accounts receivable                                           32,552
     Inventories                                                   32,887
     Deferred income tax assets                                     6,682
     Prepaid expenses and other current assets                      3,256
                                                             -------------
    Total current assets                                          102,962
    
    Property and equipment                                          1,647
    Goodwill                                                      294,731
    Intangible assets                                             604,316
    Other long-term assets                                         14,718
                                                             -------------
    
    Total Assets                                            $   1,018,374
                                                             =============
    
    Liabilities and Shareholders' Equity
    Current liabilities
     Accounts payable                                       $      22,725
     Accrued liabilities                                           12,110
     Current portion of long-term debt                              3,730
                                                             -------------
    Total current liabilities                                      38,565
    
    Long-term debt                                                489,765
    Deferred income tax liabilities                                94,759
                                                             -------------
    
    Total liabilities                                             623,089
                                                             -------------
    
    Shareholders' Equity
    Preferred stock - $0.01 par value
     Authorized - 5,000,000 shares
     Issued and outstanding - None                                     --
    Common stock - $.01 par value
     Authorized - 250,000,000 shares
     Issued and outstanding - 50,055,776 shares                       501
    Additional paid-in capital                                    378,297
    Treasury stock - 14,886 shares at cost                            (25)
    Accumulated other comprehensive income                            229
    Retained earnings                                              16,283
                                                             -------------
    Total shareholders' equity                                    395,285
                                                             -------------
    
    Total Liabilities and Shareholders' Equity              $   1,018,374
                                                             =============
    
    EXHIBIT A - FISCAL YEAR 2006
    ----------------------------
                        PRESTIGE BRANDS HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                           Restated Fiscal Year 2006
                (in thousands, except share and per share data)
    
                                   Three months ended June 30, 2005
                           ----------------------------------------------
                           Previously    Revenue  Cooperative As Restated
                            Reported   Recognition   Trade
                                                     Expense
                                                     Reclass
                           ------------ ----------- ---------- -----------
    REVENUES:
     Net sales             $    63,530 $     1,928 $   (2,030)$    63,428
     Other revenues                 25           -          -          25
                            ----------- ----------- ---------- -----------
       Total revenues           63,555       1,928     (2,030)     63,453
    
    COST OF SALES:
     Cost of sales              28,339         610          -      28,949
                            ----------- ----------- ---------- -----------
       Gross profit             35,216       1,318     (2,030)     34,504
                            ----------- ----------- ---------- -----------
    
    OPERATING EXPENSES:
     Advertising and
      promotion                 10,714          21     (2,030)      8,705
     General and
      administrative             4,911           -          -       4,911
     Depreciation                  483           -          -         483
     Amortization of
      intangible assets          2,148           -          -       2,148
                           ------------ ----------- ---------- -----------
       Total operating
        expenses                18,256          21     (2,030)     16,247
                            ----------- ----------- ---------- -----------
       Operating income         16,960       1,297          -      18,257
                            ----------- ----------- ---------- -----------
    
    OTHER INCOME (EXPENSE):
     Interest income                81           -          -          81
     Interest expense           (8,591)          -          -      (8,591)
                            ----------- ----------- ---------- -----------
       Total other income
        (expense)               (8,510)          -          -      (8,510)
                            ----------- ----------- ---------- -----------
       Income before income
        taxes                    8,450       1,297          -       9,747
    
    Provision for income
     taxes                      (4,443)       (522)         -      (4,965)
                            ----------- ----------- ---------- -----------
       Net income          $     4,007 $       775 $        - $     4,782
                            =========== =========== ========== ===========
    
    Net income (loss) per
     common share:
      Basic                $      0.08                        $      0.10
                            ===========                        ===========
      Diluted              $      0.08                        $      0.10
                            ===========                        ===========
    
    Weighted average shares
     outstanding:
      Basic                 49,997,647                         48,722,342
                            ===========                        ===========
      Diluted               49,997,647                         49,997,647
                            ===========                        ===========
    
                        Prestige Brands Holdings, Inc.
                          Consolidated Balance Sheet
                                  (Unaudited)
    
    (Dollars in thousands)                               June 30, 2005
                                                     ---------------------
    Assets                                               As         As
                                                      Previously  Restated
                                                       Reported
                                                     ----------- ---------
    Current assets
     Cash                                            $   13,945  $ 13,945
     Accounts receivable                                 32,489    26,442
     Inventories                                         27,946    30,589
     Deferred income tax assets                           6,965     6,965
     Prepaid expenses and other current assets            4,039     4,039
                                                      ----------  --------
    Total current assets                                 85,384    81,980
    
    Property and equipment                                2,043     2,043
    Goodwill                                            294,544   294,731
    Intangible assets                                   606,465   606,465
    Other long-term assets                               14,344    14,344
                                                      ----------  --------
    
    Total Assets                                     $1,002,780  $999,563
                                                      ==========  ========
    
    Liabilities and Shareholders' Equity
    Current liabilities
     Accounts payable                                $   18,626  $ 18,626
     Accrued liabilities                                 10,705     9,365
     Current portion of long-term debt                    3,730     3,730
                                                      ----------  --------
    Total current liabilities                            33,061    31,721
    
    Long-term debt                                      490,698   490,698
    Deferred income tax liabilities                      89,916    89,916
                                                      ----------  --------
    
    Total liabilities                                   613,675   612,335
                                                      ----------  --------
    
    Shareholders' Equity
    Preferred stock - $0.01 par value
     Authorized - 5,000,000 shares
     Issued and outstanding - None                           --        --
    Common stock - $.01 par value
     Authorized - 250,000,000 shares
     Issued and outstanding - 50,000,000 shares             500       500
    Additional paid-in capital                          378,188   378,188
    Treasury stock - 2,353 shares at cost                    (4)       (4)
    Accumulated other comprehensive loss                   (365)     (365)
    Retained earnings                                    10,786     8,909
                                                      ----------  --------
    Total shareholders' equity                          389,105   387,228
                                                      ----------  --------
    
    Total Liabilities and Shareholders' Equity       $1,002,780  $999,563
                                                      ==========  ========
    
    EXHIBIT A - FISCAL YEAR 2005
    ----------------------------
    
                        PRESTIGE BRANDS HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                           Restated Fiscal Year 2005
                (in thousands, except share and per share data)
    
                                  Three months ended June 30, 2004
                          ------------------------------------------------
                          Previously    Revenue   Cooperative As Restated
                            Reported   Recognition   Trade
                                                    Expense
                                                    Reclass
                          ------------------------------------------------
    REVENUES:
     Net sales            $    67,682 $    (6,142)$   (2,860)$    58,680
     Other revenues                75           -          -          75
                           ----------- ----------- ---------- -----------
    
       Total revenues          67,757      (6,142)    (2,860)     58,755
    
    COST OF SALES:
     Cost of sales             36,123      (2,985)         -      33,138
                           ----------- ----------- ---------- -----------
    
       Gross profit            31,634      (3,157)    (2,860)     25,617
                           ----------- ----------- ---------- -----------
    
    OPERATING EXPENSES:
     Advertising and
      promotion                13,771        (126)    (2,860)     10,785
     General and
      administrative            4,921           -          -       4,921
     Depreciation                 486           -          -         486
     Amortization of
      intangible assets         1,803           -          -       1,803
    
                          ---------------------------------------------
    
       Total operating
        expenses               20,981        (126)    (2,860)     17,995
                           ----------- ----------- ---------- -----------
    
       Operating income        10,653      (3,031)         -       7,622
                           ----------- ----------- ---------- -----------
    
    OTHER INCOME (EXPENSE):
     Interest income               28           -          -          28
     Interest expense         (11,077)          -          -     (11,077)
     Loss on
      extinguishment of
      debt                     (7,567)          -          -      (7,567)
                           ----------- ----------- ---------- -----------
    
       Total other income
        (expense)             (18,616)          -          -     (18,616)
                           ----------- ----------- ---------- -----------
    
       Income (loss)
        before income
        taxes                  (7,963)     (3,031)         -     (10,994)
    
    (Provision) Benefit
     for income taxes           2,826       1,076          -       3,902
                           ----------- ----------- ---------- -----------
    
       Net income (loss)  $    (5,137)$    (1,955)$        - $    (7,092)
                                       =========== ==========
    
    
    Cumulative preferred dividends on Senior
    Preferred and Class B
     Preferred units           (3,619)                            (3,619)
                           -----------                        -----------
    
    Net income (loss) available to members and
    common shareholders   $    (8,756)                       $   (10,711)
                           ===========                        ===========
    Net income (loss) per common share:
     Basic                $     (0.33)                       $     (0.44)
                           ===========                        ===========
     Diluted              $     (0.33)                       $     (0.44)
                           ===========                        ===========
    
    Weighted average shares outstanding:
     Basic                 26,515,916                         24,511,337
                           ===========                        ===========
     Diluted               26,515,916                         24,511,337
                           ===========                        ===========
    
    
                               Three months ended September 30, 2004
                          ------------------------------------------------
                          Previously    Revenue   Cooperative As Restated
                            Reported   Recognition   Trade
                                                    Expense
                                                    Reclass
                          ------------------------------------------------
    REVENUES:
     Net sales            $    81,320 $       501 $   (1,889)$    79,932
     Other revenues                26           -          -          26
                           ----------- ----------- ---------- -----------
    
       Total revenues          81,346         501     (1,889)     79,958
    
    COST OF SALES:
     Cost of sales             37,843          98          -      37,941
                           ----------- ----------- ---------- -----------
    
       Gross profit            43,503         403     (1,889)     42,017
                           ----------- ----------- ---------- -----------
    
    OPERATING EXPENSES:
     Advertising and
      promotion                10,304          34     (1,889)      8,449
     General and
      administrative            4,502           -          -       4,502
     Depreciation                 452           -          -         452
     Amortization of
      intangible assets         1,802           -          -       1,802
    
                          --------------------------------------------
    
       Total operating
        expenses               17,060          34     (1,889)     15,205
                           ----------- ----------- ---------- -----------
    
       Operating income        26,443         369          -      26,812
                           ----------- ----------- ---------- -----------
    
    OTHER INCOME (EXPENSE):
     Interest income               59           -          -          59
     Interest expense         (10,893)          -          -     (10,893)
                           ----------- ----------- ---------- -----------
    
       Total other income
        (expense)             (10,834)          -          -     (10,834)
                           ----------- ----------- ---------- -----------
    
       Income (loss)
        before income
        taxes                  15,609         369          -      15,978
    
    (Provision) Benefit
     for income taxes          (5,936)       (140)         -      (6,076)
                           ----------- ----------- ---------- -----------
    
       Net income (loss)  $     9,673 $       229 $        - $     9,902
                                       =========== ==========
    
    
    Cumulative preferred dividends on
     Senior
    Preferred and Class B
     Preferred units           (3,827)                           (3,827)
                           -----------                       -----------
    
    Net income (loss) available to
     members and
    common shareholders   $     5,846                       $     6,075
                           ===========                       ===========
    Net income (loss) per common
     share:
     Basic                $      0.22                       $      0.25
                           ===========                       ===========
     Diluted              $      0.22                       $      0.23
                           ===========                       ===========
    
    Weighted average shares
     outstanding:
     Basic                 26,512,017                        24,615,066
                           ===========                       ===========
     Diluted               26,512,017                        26,512,017
                           ===========                       ===========
    
    
                                Three months ended December 31, 2004
                          ------------------------------------------------
                          Previously    Revenue   Cooperative As Restated
                            Reported   Recognition   Trade
                                                    Expense
                                                    Reclass
                          ------------------------------------------------
    REVENUES:
     Net sales            $    75,829 $      (732)$   (2,079)$    73,018
     Other revenues                25           -          -          25
                           ----------- ----------- ---------- -----------
    
       Total revenues          75,854        (732)    (2,079)     73,043
    
    COST OF SALES:
     Cost of sales             33,923        (682)         -      33,241
                           ----------- ----------- ---------- -----------
    
       Gross profit            41,931         (50)    (2,079)     39,802
                           ----------- ----------- ---------- -----------
    
    OPERATING EXPENSES:
     Advertising and
      promotion                 7,265         (18)    (2,079)      5,168
     General and
      administrative            5,690           -          -       5,690
     Depreciation                 457           -          -         457
     Amortization of
      intangible assets         2,148           -          -       2,148
    
                          ---------------------------------------------
    
       Total operating
        expenses               15,560         (18)    (2,079)     13,463
                           ----------- ----------- ---------- -----------
    
       Operating income        26,371         (32)         -      26,339
                           ----------- ----------- ---------- -----------
    
    OTHER INCOME (EXPENSE):
     Interest income               48           -          -          48
     Interest expense         (12,042)          -          -     (12,042)
                           ----------- ----------- ---------- -----------
    
       Total other income
        (expense)             (11,994)          -          -     (11,994)
                           ----------- ----------- ---------- -----------
    
       Income (loss)
        before income
        taxes                  14,377         (32)         -      14,345
    
    (Provision) Benefit
     for income taxes          (5,230)         12          -      (5,218)
                           ----------- ----------- ---------- -----------
    
       Net income (loss)  $     9,147 $       (20)$        - $     9,127
                                       =========== ==========
    
    
    Cumulative preferred dividends on
     Senior
    Preferred and Class B
     Preferred units           (3,895)                            (3,895)
                           -----------                        -----------
    
    Net income (loss) available to
     members and
    common shareholders   $     5,252                        $     5,232
                           ===========                        ===========
    Net income (loss) per common
     share:
     Basic                $      0.20                        $      0.21
                           ===========                        ===========
     Diluted              $      0.20                        $      0.20
                           ===========                        ===========
    
    Weighted average shares
     outstanding:
     Basic                 26,612,876                         24,725,182
                           ===========                        ===========
     Diluted               26,612,876                         26,612,876
                           ===========                        ===========
    
    
                                 Three months ended March 31, 2005
                          ------------------------------------------------
                          Previously    Revenue   Cooperative As Restated
                            Reported   Recognition   Trade
                                                    Expense
                                                    Reclass
                          ------------------------------------------------
    REVENUES:
     Net sales            $    78,336 $       762 $   (1,810)$    77,288
     Other revenues                25           -          -          25
                           ----------- ----------- ---------- -----------
    
       Total revenues          78,361         762     (1,810)     77,313
    
    COST OF SALES:
     Cost of sales             33,459       1,230          -      34,689
                           ----------- ----------- ---------- -----------
    
       Gross profit            44,902        (468)    (1,810)     42,624
                           ----------- ----------- ---------- -----------
    
    OPERATING EXPENSES:
     Advertising and
      promotion                 7,062          43     (1,810)      5,295
     General and
      administrative            5,085           -          -       5,085
     Depreciation                 504           -          -         504
     Amortization of
      intangible assets         2,148           -          -       2,148
    
                          ---------------------------------------------
    
       Total operating
        expenses               14,799          43     (1,810)     13,032
                           ----------- ----------- ---------- -----------
    
       Operating income        30,103        (511)         -      29,592
                           ----------- ----------- ---------- -----------
    
    OTHER INCOME (EXPENSE):
     Interest income              236           -          -         236
     Interest expense         (11,085)          -          -     (11,085)
     Loss on
      extinguishment of
      debt                    (19,296)          -          -     (19,296)
                           ----------- ----------- ---------- -----------
    
       Total other income
        (expense)             (30,145)          -          -     (30,145)
                           ----------- ----------- ---------- -----------
    
       Income (loss)
        before income
        taxes                     (42)       (511)         -        (553)
    
    (Provision) Benefit
     for income taxes            (182)        165          -         (17)
                           ----------- ----------- ---------- -----------
    
       Net income (loss)  $      (224)$      (346)$        - $      (570)
                                       =========== ==========
    
    
    Cumulative preferred dividends on
     Senior
    Preferred and Class B
     Preferred units          (14,054)                           (14,054)
                           -----------                        -----------
    
    Net income (loss) available to
     members and
    common shareholders   $   (14,278)                       $   (14,624)
                           ===========                        ===========
    Net income (loss) per common
     share:
     Basic                $     (0.37)                       $     (0.40)
                           ===========                        ===========
     Diluted              $     (0.37)                       $     (0.40)
                           ===========                        ===========
    
    Weighted average shares
     outstanding:
     Basic                 38,074,074                         36,496,869
                           ===========                        ===========
     Diluted               38,074,074                         36,496,869
                           ===========                        ===========
    
    
                                 Twelve months ended March 31, 2005
                           -----------------------------------------------
                           Previously    Revenue   Cooperative As Restated
                             Reported   Recognition   Trade
                                                     Expense
                                                     Reclass
                           -----------------------------------------------
    REVENUES:
     Net sales             $   303,167 $    (5,611)$   (8,638)$   288,918
     Other revenues                151           -          -         151
                            ----------- ----------- ---------- -----------
    
       Total revenues          303,318      (5,611)    (8,638)    289,069
    
    COST OF SALES:
     Cost of sales             141,348      (2,339)         -     139,009
                            ----------- ----------- ---------- -----------
    
       Gross profit            161,970      (3,272)    (8,638)    150,060
                            ----------- ----------- ---------- -----------
    
    OPERATING EXPENSES:
     Advertising and
      promotion                 38,402         (67)    (8,638)     29,697
     General and
      administrative            20,198           -          -      20,198
     Depreciation                1,899           -          -       1,899
     Amortization of
      intangible assets          7,901           -          -       7,901
    
                           ---------------------------------------------
    
       Total operating
        expenses                68,400         (67)    (8,638)     59,695
                            ----------- ----------- ---------- -----------
    
       Operating income         93,570      (3,205)         -      90,365
                            ----------- ----------- ---------- -----------
    
    OTHER INCOME (EXPENSE):
     Interest income               371           -          -         371
     Interest expense          (45,097)          -          -     (45,097)
     Loss on extinguishment
      of debt                  (26,863)          -          -     (26,863)
                            ----------- ----------- ---------- -----------
    
       Total other income
        (expense)              (71,589)          -          -     (71,589)
                            ----------- ----------- ---------- -----------
    
       Income (loss) before
        income taxes            21,981      (3,205)         -      18,776
    
    (Provision) Benefit for
     income taxes               (8,522)      1,113          -      (7,409)
                            ----------- ----------- ---------- -----------
    
       Net income (loss)   $    13,459 $    (2,092)$        - $    11,367
                                        =========== ==========
    
    
    Cumulative preferred dividends on
     Senior
    Preferred and Class B
     Preferred units           (25,395)                           (25,395)
                            -----------                        -----------
    
    Net income (loss) available to
     members and
    common shareholders    $   (11,936)                       $   (14,028)
                            ===========                        ===========
    Net income (loss) per common
     share:
     Basic                 $     (0.41)                       $     (0.51)
                            ===========                        ===========
     Diluted               $     (0.41)                       $     (0.51)
                            ===========                        ===========
    
    Weighted average shares
     outstanding:
     Basic                  29,389,329                         27,545,898
                            ===========                        ===========
     Diluted                29,389,329                         27,545,898
                            ===========                        ===========
    
                        Prestige Brands Holdings, Inc.
                          Consolidated Balance Sheet
    
    (Dollars in thousands)                              March 31, 2005
                                                     ---------------------
    Assets                                               As         As
                                                      Previously  Restated
                                                       Reported
                                                     ----------- ---------
    Current assets
     Cash                                            $    5,334  $  5,334
     Accounts receivable                                 43,893    35,918
     Inventories                                         21,580    24,833
     Deferred income tax assets                           5,699     5,699
     Prepaid expenses and other current assets            3,152     3,152
                                                      ----------  --------
    Total current assets                                 79,658    74,936
    
    Property and equipment                                2,324     2,324
    Goodwill                                            294,544   294,731
    Intangible assets                                   608,613   608,613
    Other long-term assets                               15,996    15,996
                                                      ----------  --------
    
    Total Assets                                     $1,001,135  $996,600
                                                      ==========  ========
    
    Liabilities and Shareholders' Equity
    Current liabilities
     Accounts payable                                $   21,705  $ 21,705
     Accrued liabilities                                 13,472    11,589
     Current portion of long-term debt                    3,730     3,730
                                                      ----------  --------
    Total current liabilities                            38,907    37,024
    
    Long-term debt                                      491,630   491,630
    Deferred income tax liabilities                      84,752    84,752
                                                      ----------  --------
    
    Total liabilities                                   615,289   613,406
                                                      ----------  --------
    
    Shareholders' Equity
    Preferred stock - $0.01 par value
     Authorized - 5,000,000 shares
     Issued and outstanding - None                           --        --
    Common stock - $.01 par value
     Authorized - 250,000,000 shares
     Issued and outstanding - 50,000,000 shares             500       500
    Additional paid-in capital                          378,251   378,251
    Treasury stock - 2,353 shares at cost                    (4)       (4)
    Accumulated other comprehensive income                  320       320
    Retained earnings                                     6,779     4,127
                                                      ----------  --------
    Total shareholders' equity                          385,846   383,194
                                                      ----------  --------
    
    Total Liabilities and Shareholders' Equity       $1,001,135  $996,600
                                                      ==========  ========
    
    EXHIBIT A - FISCAL YEARS 2003 and 2004
    ---------------------------------------------
                        PRESTIGE BRANDS HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      Restated Fiscal Years 2003 and 2004
                (in thousands, except share and per share data)
    
                                   Twelve months ended March 31, 2003
                               -------------------------------------------
                               Previously  Revenue   Cooperative   As
                                Reported  Recognition   Trade    Restated
                                                       Expense
                                                       Reclass
                               -------------------------------------------
    REVENUES:
     Net sales                  $ 76,048 $    (1,567)$   (3,138)$ 71,343
     Other revenues - related
      parties                        391           -          -      391
                                 -------- ----------- ---------- --------
    
       Total revenues             76,439      (1,567)    (3,138)  71,734
    
    COST OF SALES:
     Cost of sales                27,475        (458)         -   27,017
                                 -------- ----------- ---------- --------
    
       Gross profit               48,964      (1,109)    (3,138)  44,717
                                 -------- ----------- ---------- --------
    
    OPERATING EXPENSES:
     Advertising and promotion    14,274         (20)    (3,138)  11,116
     General and administrative   12,075           -          -   12,075
     Depreciation                    301           -          -      301
     Amortization of intangible
      assets                       4,973           -          -    4,973
                                 -------- ----------- ---------- --------
    
       Total operating expenses   31,623         (20)    (3,138)  28,465
                                 -------- ----------- ---------- --------
    
       Operating income           17,341      (1,089)         -   16,252
                                 -------- ----------- ---------- --------
    
    OTHER INCOME (EXPENSE):
     Interest income                  59           -          -       59
     Interest expense             (9,806)          -          -   (9,806)
     Loss on extinguishment of
      debt                          (685)          -          -     (685)
                                 -------- ----------- ---------- --------
    
       Total other income
        (expense)                (10,432)          -          -  (10,432)
                                 -------- ----------- ---------- --------
    
       Income before income
        taxes                      6,909      (1,089)         -    5,820
    
    Provision for income taxes    (3,902)        615          -   (3,287)
                                 -------- ----------- ---------- --------
    
       Income from continuing
        operations                 3,007        (474)         -    2,533
                                          =========== ==========
    
    Discontinued Operations
     Loss from operations of discontinued Pecos
      reporting unit, net of
       income tax benefit of
       $1,848                     (3,385)                         (3,385)
    
     Loss on disposal of Pecos reporting unit, net of
      income tax benefit of
       $1,233                     (2,259)                         (2,259)
                                 --------                        --------
    
       Income (loss) before cumulative
        effect of
        change in accounting
         principle                (2,637)                         (3,111)
    Cumulative effect of change in accounting
     principle,
     net of income tax benefit
      of $6,467                  (11,785)                        (11,785)
                                 --------                        --------
    
       Net income (loss)        $(14,422)                       $(14,896)
                                 ========                        ========
    
    
                                    April 1, 2003 to February 5, 2004
                                -----------------------------------------
                                Previously  Revenue   Cooperative   As
                                 Reported  Recognition   Trade    Restated
                                                        Expense
                                                        Reclass
                                ------------------------------------------
    REVENUES:
     Net sales                  $  68,726 $     1,930 $   (2,587)$68,069
     Other revenues - related
      parties                         333           -          -     333
                                 --------- ----------- ---------- -------
    
       Total revenues              69,059       1,930     (2,587) 68,402
    
    COST OF SALES:
     Cost of sales                 26,254         601          -  26,855
                                 --------- ----------- ---------- -------
    
       Gross profit                42,805       1,329     (2,587) 41,547
                                 --------- ----------- ---------- -------
    
    OPERATING EXPENSES:
     Advertising and promotion     12,601          47     (2,587) 10,061
     General and administrative    12,068           -          -  12,068
     Depreciation                     247           -          -     247
     Amortization of intangible
      assets                        4,251           -          -   4,251
     Loss on forgiveness of
      related party receivable      1,404                          1,404
                                 -------------------------------- -------
    
       Total operating expenses    30,571          47     (2,587) 28,031
                                 --------- ----------- ---------- -------
    
       Operating income            12,234       1,282          -  13,516
                                 --------- ----------- ---------- -------
    
    OTHER INCOME (EXPENSE):
     Interest income                   38           -          -      38
     Interest expense              (8,195)          -          -  (8,195)
                                 --------- ----------- ---------- -------
    
       Total other income
        (expense)                  (8,157)          -          -  (8,157)
                                 --------- ----------- ---------- -------
    
       Income before income
        taxes                       4,077       1,282          -   5,359
    
    Provision for income taxes     (1,684)       (530)         -  (2,214)
                                 --------- ----------- ---------- -------
    
       Net Income               $   2,393         752          - $ 3,145
                                ========== =========== ========== =======
    
    
    
                                 February 6, 2004 to March 31, 2004
                           -----------------------------------------------
                           Previously    Revenue   Cooperative As Restated
                             Reported   Recognition   Trade
                                                     Expense
                                                     Reclass
                           -----------------------------------------------
    REVENUES:
     Net sales             $    18,807 $    (1,597)$     (388)$    16,822
     Other revenues -
      related parties               54           -          -          54
                            ----------- ----------- ---------- -----------
    
       Total revenues           18,861      (1,597)      (388)     16,876
    
    COST OF SALES:
     Cost of sales              10,023        (672)         -       9,351
                            ----------- ----------- ---------- -----------
    
       Gross profit              8,838        (925)      (388)      7,525
                            ----------- ----------- ---------- -----------
    
    OPERATING EXPENSES:
     Advertising and
      promotion                  1,689         (34)      (388)      1,267
     General and
      administrative             1,649           -          -       1,649
     Depreciation                   41           -          -          41
     Amortization of
      intangible assets            890           -          -         890
                            ---------------------------------- -----------
    
       Total operating
        expenses                 4,269         (34)      (388)      3,847
                            ----------- ----------- ---------- -----------
    
       Operating income          4,569        (891)         -       3,678
                            ----------- ----------- ---------- -----------
    
    OTHER INCOME (EXPENSE):
     Interest income                10           -          -          10
     Interest expense           (1,735)          -          -      (1,735)
                            ----------- ----------- ---------- -----------
    
       Total other income
        (expense)               (1,725)          -          -      (1,725)
                            ----------- ----------- ---------- -----------
    
       Income before income
        taxes                    2,844        (891)         -       1,953
    
    Provision for income
     taxes                      (1,054)        330          -        (724)
                            ----------- ----------- ---------- -----------
    
       Net Income                1,790        (561)         -       1,229
                                        =========== ==========
    
    Cumulative preferred
     dividends on Senior
    Preferred and Class B
     Preferred units            (1,390)                            (1,390)
                                -------                        -----------
    
    Net income (loss) available
     to members and
    common shareholders    $       400                        $      (161)
                            ===========                        ===========
    Net income (loss) per common
     share:
     Basic                 $      0.02                        $     (0.01)
                            ===========                        ===========
     Diluted               $      0.02                        $     (0.01)
                            ===========                        ===========
    
    Weighted average shares
     outstanding:
     Basic                  26,571,155                         24,471,597
                            ===========                        ===========
     Diluted                26,571,155                         24,471,597
                            ===========                        ===========
    
                        Prestige Brands Holdings, Inc.
                          Consolidated Balance Sheet
    
    (Dollars in thousands)                             March 31, 2004
                                                   -----------------------
    Assets                                             As      As Restated
                                                    Previously
                                                     Reported
                                                   ----------- -----------
    Current assets
     Cash                                          $    3,393  $    3,393
     Accounts receivable                               15,732      13,369
     Inventories                                        9,748      10,660
     Deferred income tax assets                         1,647       1,647
     Prepaid expenses and other current assets            234         234
                                                    ----------  ----------
    Total current assets                               30,754      29,303
    
    Property and equipment                                880         880
    Goodwill                                           55,594      55,781
    Intangible assets                                 236,611     236,611
    Other long-term assets                              2,783       2,783
                                                    ----------  ----------
    
    Total Assets                                   $  326,622  $  325,358
                                                    ==========  ==========
    
    Liabilities and Members' and Shareholders'
     Equity
    Current liabilities
     Accounts payable                              $    5,281  $    5,281
     Accrued liabilities                                7,264       6,561
     Current portion of long-term debt                  2,000       2,000
                                                    ----------  ----------
    Total current liabilities                          14,545      13,842
    
    Long-term debt                                    146,694     146,694
    Deferred income tax liabilities                    38,874      38,874
                                                    ----------  ----------
    
    Total liabilities                                 200,113     199,410
                                                    ----------  ----------
    
    Members' and Shareholders' Equity
    Senior Preferred Units - 22,500 units issued
     and outstanding                                   17,768      17,768
    Class B Preferred Units - 106,656 units issued
     and outstanding                                   96,807      96,807
    Common Units - 57,901,655 units issued and
     outstanding                                        5,273       5,273
    Additional paid-in capital                          4,871       4,871
    Retained earnings                                   1,790       1,229
                                                    ----------  ----------
    Total members' and shareholders' equity           126,509     125,948
                                                    ----------  ----------
    
    Total Liabilities and Members' and
     Shareholders' Equity                          $  326,622  $  325,358
                                                    ==========  ==========
    

    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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