Irinquiries@prestigebrands.com
Prestige Consumer Healthcare Inc.
660 White Plains Road – Ste 250
Tarrytown, NY 10591
Telephone: 914-524-6819
================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): November 8, 2005 ------------------------ PRESTIGE BRANDS HOLDINGS, INC. Delaware 001-32433 20-1297589 - ------------ ------------- --------------- (State or Other Jurisdiction (Commission File Number) (I.R.S. Employer of Incorporation) Identification No.) 90 North Broadway, Irvington, New York 10533 -------------------------------------------- (Address of Principal executive offices, including Zip Code) (914) 524-6810 -------------- (Registrant's telephone number, including area code) Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions : [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR.13e-4(c)) ================================================================================Item 2.02. Results of Operations and Financial Condition. On November 15, 2005, Prestige Brands Holdings, Inc. (the "Company") issued the press release that is furnished as Exhibit 99.1 to this Current Report on Form 8-K, which by this reference is incorporated herein as if copied verbatim, with respect to second quarter results and earnings guidance for fiscal 2006, other information and the conference call to be held to discuss this information, as well as the matters discussed under Item 4.02(a) below, which include adjustments to prior period financial results. Item 4.02(a) Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. As a result of a review of certain of its accounting policies and procedures , the Company determined that it may have erroneously applied the guidance in (a) Staff Accounting Bulletin 104 in recognizing revenue upon shipment of product to customers , (b) Emerging Issues Task Force Issue 01-09 as it relates to the proper classification of certain trade promotion allowances, and (c) Statement of Financial Accounting Standards No. 128 as it relates to the inclusion of unvested, restricted common shares in 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 accounting issues was performed with the assistance of independent counsel and forensic accountants. The findings of this review were discussed with the Audit Committee on November 8, 2005. Management and the audit committee discussed their findings with PricewaterhouseCoopers LLP, the Company's independent registered public accounting firm, and 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 Form 10-K 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 amended Form 10-K/A for the year ended March 31, 2005 as soon as practicable. The Company has discussed the matters referenced in the preceding paragraphs and has provided an analysis of the restatement in the press release attached as Exhibit 99.1 (the "Press Release") in the section entitled "Restatement of Prior Period Financial Statements " (the "Restatement Section"), and by this reference the Restatement Section is incorporated herein as if copied verbatim and shall be the only portion of the Press Release deemed filed. The restatement and its effects upon the Company's statements of operations and balance sheets are summarized in a table that is an exhibit to the Press Release, which also is incorporated herein by this reference. Item 7.01. Regulation FD Disclosure. The information set forth in Item 2.02 above is incorporated by reference as if fully set forth herein. Item 9.01. Financial Statements and Exhibits. (a) Financial Statements. None (b) Pro Forma Financial Information. None (c) Exhibits. 99.1 Press Release issued by Prestige Brands Holdings, Inc. dated November 15, 2005.
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: November 15, 2005 PRESTIGE BRANDS HOLDINGS, INC. By: /s/ Charles N. Jolly ----------------------------------- Name: Charles N. Jolly Title: General Counsel
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 FOR IMMEDIATE RELEASE Irvington, New York (November 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 period 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 lastyear'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 September 30, Six months ended 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 September 30, Six months ended September 30, ----------------------------------- ----------------------------------- Adjusted Operating Income 2005 2004 2005 2004 - ------------------------- ----------------- ----------------- ----------------- ----------------- (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) September 30, 2005 (Dollars in thousands) -------------------- 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 ---------------------------------------------------------- Cooperative Previously Revenue Trade Expense Reported Recognition Reclass As Restated ---------------------------------------------------------- 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 -------------------------------------------- As Previously Assets Reported As Restated -------------------- ------------------- 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 ---------------------------------------------- Cooperative Trade Previously Revenue Expense Reported Recognition Reclass As Restated ---------------------------------------------- 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 Three months ended December 31, 2004 ------------------------------------------ --------------------------------------------- Cooperative Cooperative Trade Trade Previously Revenue Expense Previously Revenue Expenses Reported Recognition Reclass As Restated Reported Recognition Reclass As Restated ---------------------------------------------- --------------------------------------------- REVENUES: Net sales $81,320 $ 501 $ (1,889) $ 79,932 $ 75,829 $ (732) $(2,079) $73,018 Other revenues 26 - - 26 25 - - 25 ---------------------------------------------- --------------------------------------------- Total revenues 81,346 501 (1,889) 79,958 75,854 (732) (2,079) 73,043 COST OF SALES: Cost of sales 37,843 98 - 37,941 33,923 (682) - 33,241 ---------------------------------------------- --------------------------------------------- Gross profit 43,503 403 (1,889) 42,017 41,931 (50) (2,079) 39,802 ---------------------------------------------- --------------------------------------------- OPERATING EXPENSES: Advertising and promotion 10,304 34 (1,889) 8,449 7,265 (18) (2,079) 5,168 General and administrative 4,502 - - 4,502 5,690 - - 5,690 Depreciation 452 - - 452 457 - - 457 Amortization of intangible assets 1,802 - - 1,802 2,148 - - 2,148 ---------------------------------------------- --------------------------------------------- Total operating 17,060 34 (1,889) 15,205 15,560 (18) (2,079) 13,463 ---------------------------------------------- --------------------------------------------- Operating income 26,443 369 - 26,812 26,371 (32) - 26,339 ---------------------------------------------- --------------------------------------------- OTHER INCOME (EXPENSE): Interest income 59 - - 59 48 - - 48 Interest expense (10,893) - - (10,893) (12,042) - - (12,042) Loss on extinguishment of debt - - - - - - - - ---------------------------------------------- ---------------------------------------------- Total other income (expense) (10,834) - - (10,834) (11,994) - - (11,994) ---------------------------------------------- ---------------------------------------------- Income (loss) before income taxes 15,609 369 - 15,978 14,377 (32) - 14,345 (Provision) Benefit for income taxes (5,936) (140) - (6,076) (5,230) 12 - (5,218) ---------------------------------------------- --------------------------------------------- Net income (loss) $9,673 $229 $ - $9,902 $9,147 $ (20) $ - $9,127 =================== ====================== Cumulative preferred dividends on Senior Preferred and Class B Preferred units (3,827) (3,827) (3,895) (3,895) ------------ ------------ ------------ ------------ Net income (loss) available to members and common shareholders $5,846 $6,075 $5,252 $5,232 ============ ============ ============ ============ Net income (loss) per common share: Basic $ 0.22 $ 0.25 $ 0.20 $ 0.21 ============ ============ ============ ============ Diluted $ 0.22 $ 0.23 $ 0.20 $ 0.20 ============ ============ ============ ============ Weighted average shares outstanding: Basic 26,512,017 24,615,066 26,612,876 24,725,182 ============ ============ ============ ============ Diluted 26,512,017 26,512,017 26,612,876 26,612,876 ============ ============ ============ ============
Three months ended March 31, 2005 Twelve months ended March 31, 2005 -------------------------------------------------- -------------------------------------------------- Cooperative Cooperative Trade Trade Previously Revenue Expense Previously Revenue Expenses Reported Recognition Reclass As Restated Reported Recognition Reclass As Restated -------------------------------------------------- ----------------------------------------------------- REVENUES: Net sales $78,336 $762 $ (1,810) $77,288 $ 303,167 $ (5,611) $ (8,638) $288,918 Other revenues 25 - - 25 151 - - 151 ------------------------------------------------- ----------------------------------------------------- Total revenues 78,361 762 (1,810) 77,313 303,318 (5,611) (8,638) 289,069 COST OF SALES: Cost of sales 33,459 1,230 - 34,689 141,348 (2,339) - 139,009 ------------------------------------------------- ----------------------------------------------------- Gross profit 44,902 (468) (1,810) 42,624 161,970 (3,272) (8,638) 150,060 ------------------------------------------------- ----------------------------------------------------- OPERATING EXPENSES: Advertising and promotion 7,062 43 (1,810) 5,295 38,402 (67) (8,638) 29,697 General and administrative 5,085 - - 5,085 20,198 - - 20,198 Depreciation 504 - - 504 1,899 - - 1,899 Amortization of intangible assets 2,148 - - 2,148 7,901 - - 7,901 --------------------------------------------- ----------------------------------------------------- Total operating expenses 14,799 43 (1,810) 13,032 68,400 (67) (8,638) 59,695 --------------------------------------------- ----------------------------------------------------- Operating income 30,103 (511) - 29,592 93,570 (3,205) - 90,365 --------------------------------------------- ----------------------------------------------------- OTHER INCOME (EXPENSE): Interest income 236 - - 236 371 - - 371 Interest expense (11,085) - - (11,085) (45,097) - - (45,097) Loss on extinguishment of debt (19,296) - - (19,296) (26,863) - - (26,863) ---------------------------------------------- ----------------------------------------------------- Total other income (expense) (30,145) - - (30,145) (71,589) - - (71,589) ---------------------------------------------- ----------------------------------------------------- Income (loss) before income taxes (42) (511) - (553) 21,981 (3,205) - 18,776 (Provision) Benefit for income taxes (182) 165 - (17) (8,522) 1,113 - (7,409) ---------------------------------------------- ----------------------------------------------------- Net income (loss) $ (224) $ (346) $ - $ (570) $ 13,459 $ (2,092) $ - $11,367 ======================= ====================== Cumulative preferred dividends on Senior Preferred and Class B Preferred units (14,054) (14,054) (25,395) (25,395) -------------- ---------- ------------- --------------- Net income (loss) available to members and common shareholders $ (14,278) $ (14,624) $ (11,936) $ (14,028) ============== ========== ============== =============== Net income (loss) per common share: Basic $ (0.37) $ (0.40) $ (0.41) $ (0.51) ============== ========== ============== =============== Diluted $ (0.37) $ (0.40) $ (0.41) $ (0.51) ============== ========== ============== =============== Weighted average shares outstanding: Basic 38,074,074 36,496,869 29,389,329 27,545,898 ============== =========== ============== =============== Diluted 38,074,074 36,496,869 29,389,329 27,545,898 ============== =========== ============== ===============
Prestige Brands Holdings, Inc. Consolidated Balance Sheet (Dollars in thousands) March 31, 2005 -------------------------------------------- As Previously Assets Reported As Restated -------------------- ------------------- 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 -------------------------------------------------------- Cooperative Trade Previously Revenue Expense Reported Recognition Reclass As Restated -------------------------------------------------------- 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 Loss on forgiveness of related party receivable - - -------------------------------------------------------- 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 --------------------------------------------------------- Cooperative Trade Previously Revenue Expense Reported Recognition Reclass As Restated --------------------------------------------------------- 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) Loss on extinguishment of debt - - - - --------------------------------------------------------- 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) --------------------------------------------------------- Income from continuing operations 2,393 752 - 3,145 ============================= Discontinued Operations Loss from operations of discontinued Pecos reporting unit, net of income tax benefit of $1,848 - - Loss on disposal of Pecos reporting unit, net of income tax benefit of $1,233 - - --------------- --------------- Income (loss) before cumulative effect of change in accounting principle 2,393 3,145 Cumulative effect of change in accounting principle, net of income tax benefit of $6,467 - - --------------- --------------- Net income (loss) $ 2,393 $ 3,145 =============== ===============
February 6, 2004 to March 31, 2004 --------------------------------------------------------- Cooperative Trade Previously Revenue Expense Reported Recognition Reclass As Restated --------------------------------------------------------- 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 Loss on forgiveness of related party receivable - - --------------------------------------------------------- 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) Loss on extinguishment of debt - - - - --------------------------------------------------------- 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) --------------------------------------------------------- Income from continuing operations 1,790 (561) - 1,229 ============================= Discontinued Operations Loss from operations of discontinued Pecos reporting unit, net of income tax benefit of $1,848 - - Loss on disposal of Pecos reporting unit, net of income tax benefit of $1,233 - - --------------- --------------- Income (loss) before cumulative effect of change in accounting principle 1,790 1,229 Cumulative effect of change in accounting principle, net of income tax benefit of $6,467 - - --------------- --------------- Net income (loss) $ 1,790 $ 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 -------------------------------------------- As Previously Assets Reported As Restated -------------------- ------------------- 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 ==================== ===================