Irinquiries@prestigebrands.com
Prestige Consumer Healthcare Inc.
660 White Plains Road – Ste 250
Tarrytown, NY 10591
Telephone: 914-524-6819
Delaware
|
20-1297589
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
90
North Broadway
Irvington,
New York 10533
|
(Address
of Registrants’ Principal Executive Offices)
|
(914)
524-6810
|
(Registrants’
telephone number, including area
code)
|
Larger accelerated filer o |
Accelerated
filer x
|
Non-accelerated
filer o
|
PART I. | FINANCIAL INFORMATION | |
Item 1. | Consolidated Financial Statements | |
Consolidated Statements of Operations - three months ended December
31, 2006
and 2005 and nine months ended December 31, 2006 and
2005 (unaudited)
|
2
|
|
Consolidated Balance Sheets - December 31, 2006 and March 31, 2006 (unaudited) |
3
|
|
Consolidated Statement of Changes in Stockholders' Equity and | ||
Comprehensive Income - nine months ended December 31, 2006 (unaudited) |
4
|
|
Consolidated Statements of Cash Flows - nine months ended
December 31, 2006 and 2005 (unaudited)
|
5
|
|
Notes to Unaudited Consolidated Financial Statements |
6
|
|
Item 2. |
Management’s
Discussion and Analysis of Financial Condition
and Results of Operations
|
23
|
Item 3. | Quantitative and Qualitative Disclosure About Market Risk |
41
|
Item 4. | Controls and Procedures |
41
|
PART
II.
|
OTHER
INFORMATION
|
|
Item 1. | Legal Proceedings |
42
|
Item 1A. | Risk Factors |
43
|
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
43
|
Item 3. | Defaults Upon Senior Securities |
43
|
Item 4. | Submission of Matters to a Vote of Security Holders |
43
|
Item 5. | Other Information |
43
|
Item 6. | Exhibits |
44
|
Signatures |
45
|
|
Three
Months
Ended
December 31
|
Nine
Months
Ended
December 31
|
||||||||||||
(In
thousands, except per share data)
|
2006
|
2005
|
2006
|
2005
|
|||||||||
Revenues
|
|||||||||||||
Net
sales
|
$
|
79,564
|
$
|
79,829
|
$
|
239,164
|
$
|
216,577
|
|||||
Other
revenues
|
560
|
27
|
1,434
|
77
|
|||||||||
Total
revenues
|
80,124
|
79,856
|
240,598
|
216,654
|
|||||||||
Cost
of Sales
|
|||||||||||||
Costs
of sales
|
36,766
|
38,726
|
114,350
|
103,224
|
|||||||||
Gross
profit
|
43,358
|
41,130
|
126,248
|
113,430
|
|||||||||
Operating
Expenses
|
|||||||||||||
Advertising
and promotion
|
8,952
|
7,385
|
25,809
|
26,307
|
|||||||||
General
and administrative
|
7,068
|
6,159
|
20,761
|
15,182
|
|||||||||
Depreciation
|
177
|
520
|
616
|
1,495
|
|||||||||
Amortization
of intangible assets
|
2,627
|
2,314
|
7,013
|
6,610
|
|||||||||
Total
operating expenses
|
18,824
|
16,378
|
54,199
|
49,594
|
|||||||||
Operating
income
|
24,534
|
24,752
|
72,049
|
63,836
|
|||||||||
Other
income (expense)
|
|||||||||||||
Interest
income
|
199
|
144
|
787
|
451
|
|||||||||
Interest
expense
|
(10,355
|
)
|
(9,670
|
)
|
(30,478
|
)
|
(27,158
|
)
|
|||||
Total
other income (expense)
|
(10,156
|
)
|
(9,526
|
)
|
(29,691
|
)
|
(26,707
|
)
|
|||||
Income
before provision for
income
taxes
|
14,378
|
15,226
|
42,358
|
37,129
|
|||||||||
Provision
for income taxes
|
3,735
|
5,881
|
14,675
|
14,481
|
|||||||||
Net
income
|
$
|
10,643
|
$
|
9,345
|
$
|
27,683
|
$
|
22,648
|
|||||
Basic
earnings per share
|
$
|
0.21
|
$
|
0.19
|
$
|
0.56
|
$
|
0.46
|
|||||
Diluted
earnings per share
|
$
|
0.21
|
$
|
0.19
|
$
|
0.55
|
$
|
0.45
|
|||||
Weighted
average shares outstanding:
Basic
|
49,535
|
48,929
|
49,425
|
48,874
|
|||||||||
Diluted
|
50,024
|
50,010
|
50,016
|
50,007
|
(In
thousands)
|
December
31, 2006
|
March
31, 2006
|
|||||
Assets
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
4,802
|
$
|
8,200
|
|||
Accounts
receivable
|
35,230
|
40,042
|
|||||
Inventories
|
31,780
|
33,841
|
|||||
Deferred
income tax assets
|
2,522
|
3,227
|
|||||
Prepaid
expenses and other current assets
|
1,466
|
701
|
|||||
Total
current assets
|
75,800
|
86,011
|
|||||
Property
and equipment
|
1,453
|
1,653
|
|||||
Goodwill
|
303,928
|
297,935
|
|||||
Intangible
assets
|
659,784
|
637,197
|
|||||
Other
long-term assets
|
11,200
|
15,849
|
|||||
Total
Assets
|
$
|
1,052,165
|
$
|
1,038,645
|
|||
Liabilities
and Stockholders’ Equity
|
|||||||
Current
liabilities
|
|||||||
Accounts
payable
|
$
|
20,500
|
$
|
18,065
|
|||
Accrued
interest payable
|
4,872
|
7,563
|
|||||
Income
taxes payable
|
211
|
1,795
|
|||||
Other
accrued liabilities
|
10,167
|
4,582
|
|||||
Current
portion of long-term debt
|
3,550
|
3,730
|
|||||
Total
current liabilities
|
39,300
|
35,735
|
|||||
Long-term
debt
|
467,688
|
494,900
|
|||||
Other
long-term liabilities
|
2,801
|
--
|
|||||
Deferred
income tax liabilities
|
105,490
|
98,603
|
|||||
Total
Liabilities
|
615,279
|
629,238
|
|||||
Commitments
and Contingencies - Note 14
|
|||||||
Stockholders’
Equity
|
|||||||
Preferred
stock - $0.01 par value
|
|||||||
Authorized
- 5,000 shares
|
|||||||
Issued
and outstanding - None
|
--
|
--
|
|||||
Common
stock - $0.01 par value
|
|||||||
Authorized
- 250,000 shares
|
|||||||
Issued
- 50,060 shares at December 31, 2006 and
50,056 shares at March 31, 2006
|
501
|
501
|
|||||
Additional
paid-in capital
|
379,009
|
378,570
|
|||||
Treasury
stock, at cost - 55 shares at December 31, 2006
and
18 shares at March 31, 2006
|
(40
|
)
|
(30
|
)
|
|||
Accumulated
other comprehensive income
|
476
|
1,109
|
|||||
Retained
earnings
|
56,940
|
29,257
|
|||||
Total
stockholders’ equity
|
436,886
|
409,407
|
|||||
Total
Liabilities and Stockholders’ Equity
|
$
|
1,052,165
|
$
|
1,038,645
|
Common
Stock
Par
Shares Value
|
Additional Paid-in
Capital |
Treasury
Stock
Shares
Amount
|
Accumulated
Other
Comprehensive
Income
|
Retained
Earnings
|
Totals
|
||||||||||||||||||||
(In
thousands)
|
|||||||||||||||||||||||||
Balances
- March 31, 2006
|
50,056
|
$
|
501
|
$
|
378,570
|
18
|
$
|
(30
|
)
|
$
|
1,109
|
$
|
29,257
|
$
|
409,407
|
||||||||||
Stock-based
compensation
|
4
|
439
|
439
|
||||||||||||||||||||||
Purchase
of common stock for treasury
|
37
|
(10
|
)
|
(10
|
)
|
||||||||||||||||||||
Components
of
comprehensive income
|
|||||||||||||||||||||||||
Net
income
|
27,683
|
27,683
|
|||||||||||||||||||||||
Amortization
of interest
rate caps reclassified into
earnings, net of tax
benefit of $316
|
493
|
493
|
|||||||||||||||||||||||
Unrealized loss
on interest
rate
caps, net of income
tax benefit of $622
|
(1,126
|
)
|
(1,126
|
)
|
|||||||||||||||||||||
Total
comprehensive income
|
27,050
|
||||||||||||||||||||||||
Balances
- December 31, 2006
|
50,060
|
$
|
501
|
$
|
379,009
|
55
|
$
|
(40
|
)
|
$
|
476
|
$
|
56,940
|
$
|
436,886
|
Nine
Months Ended December 31
|
|||||||
(In
thousands)
|
2006
|
2005
|
|||||
Operating
Activities
|
|||||||
Net
income
|
$
|
27,683
|
$
|
22,648
|
|||
Adjustments
to reconcile net income to net cash provided
by operating activities:
|
|||||||
Depreciation
and amortization
|
7,629
|
8,105
|
|||||
Deferred
income taxes
|
7,686
|
11,543
|
|||||
Amortization
of deferred financing costs
|
2,422
|
1,727
|
|||||
Stock-based
compensation
|
439
|
230
|
|||||
Changes
in operating assets and liabilities, net of the effects of purchases
of
businesses
|
|||||||
Accounts
receivable
|
4,812
|
2,681
|
|||||
Inventories
|
2,707
|
(6,997
|
)
|
||||
Prepaid
expenses and other current assets
|
(765
|
)
|
271
|
||||
Accounts
payable
|
1,366
|
(3,549
|
)
|
||||
Income
taxes payable
|
(1,584
|
)
|
(2,135
|
)
|
|||
Accrued
liabilities
|
2,894
|
1,312
|
|||||
Net
cash provided by operating activities
|
55,289
|
35,836
|
|||||
Investing
Activities
|
|||||||
Purchases
of equipment
|
(429
|
)
|
(452
|
)
|
|||
Purchase
of intangibles
|
--
|
(22,623
|
)
|
||||
Change
in other assets due to purchase price adjustments
|
386
|
--
|
|||||
Purchases
of businesses
|
(31,242
|
)
|
(30,555
|
)
|
|||
Net
cash used for investing activities
|
(31,285
|
)
|
(53,630
|
)
|
|||
Financing
Activities
|
|||||||
Proceeds
from the issuance of long-term debt
|
--
|
30,000
|
|||||
Repayment
of long-term debt
|
(27,392
|
)
|
(7,797
|
)
|
|||
Payment
of deferred financing costs
|
--
|
(13
|
)
|
||||
Purchase
of common stock for treasury
|
(10
|
)
|
(21
|
)
|
|||
Additional
costs associated with initial public offering
|
--
|
(63
|
)
|
||||
Net
cash provided by (used for) financing activities
|
(27,402
|
)
|
22,106
|
||||
Increase
(decrease) in cash
|
(3,398
|
)
|
4,312
|
||||
Cash
- beginning of period
|
8,200
|
5,334
|
|||||
Cash
- end of period
|
$
|
4,802
|
$
|
9,646
|
|||
Supplemental
Cash Flow Information
|
|||||||
Fair
value of assets acquired
|
$
|
35,096
|
$
|
33,909
|
|||
Fair
value of liabilities assumed
|
(3,854
|
)
|
(3,354
|
)
|
|||
Cash
paid to purchase business
|
$
|
31,242
|
$
|
30,555
|
|||
Interest
paid
|
$
|
30,749
|
$
|
28,206
|
|||
Income
taxes paid
|
$
|
8,790
|
$
|
1,335
|
1.
|
Business
and
Basis of Presentation
|
Years
|
||
Machinery
|
5
|
|
Computer
equipment
|
3
|
|
Furniture
and fixtures
|
7
|
|
Leasehold
improvements
|
5
|
(In
thousands)
|
||||
Inventory
|
$
|
769
|
||
Intangible
assets
|
29,600
|
|||
Goodwill
|
4,727
|
|||
Accrued
liabilities
|
(3,854
|
)
|
||
$
|
31,242
|
Three
Months
Ended
December 31
|
Nine
Months
Ended
December 31
|
||||||||||||
(In
thousands, except per share data)
|
2006
|
2005
|
2006
|
2005
|
|||||||||
(Actual
as Reported)
|
|||||||||||||
Revenues
|
$
|
80,124
|
$
|
83,044
|
$
|
248,067
|
$
|
233,629
|
|||||
Income
before provision for income taxes
|
$
|
14,378
|
$
|
15,826
|
$
|
42,521
|
$
|
36,902
|
|||||
Net
income
|
$
|
10,643
|
$
|
9,148
|
$
|
27,783
|
$
|
22,509
|
|||||
Basic
earnings per share
|
$
|
0.21
|
$
|
0.19
|
$
|
0.56
|
$
|
0.46
|
|||||
Diluted
earnings per share
|
$
|
0.21
|
$
|
0.18
|
$
|
0.56
|
$
|
0.45
|
|||||
Weighted
average shares outstanding:
Basic
|
49,535
|
48,929
|
49,425
|
48,874
|
|||||||||
Diluted
|
50,024
|
50,010
|
50,016
|
50,007
|
3.
|
Accounts
Receivable
|
December
31,
2006
|
March
31,
2006
|
||||||
Accounts
receivable
|
$
|
35,199
|
$
|
40,140
|
|||
Other
receivables
|
1,514
|
1,870
|
|||||
36,713
|
42,010
|
||||||
Less
allowances for discounts, returns and
uncollectible
accounts
|
(1,483
|
)
|
(1,968
|
)
|
|||
$
|
35,230
|
$
|
40,042
|
4.
|
Inventories
|
December
31,
2006
|
March
31,
2006
|
||||||
Packaging
and raw materials
|
$
|
3,047
|
$
|
3,278
|
|||
Finished
goods
|
28,733
|
30,563
|
|||||
$
|
31,780
|
$
|
33,841
|
December
31,
2006
|
March
31,
2006
|
||||||
Machinery
|
$
|
1,447
|
$
|
3,722
|
|||
Computer
equipment
|
610
|
987
|
|||||
Furniture
and fixtures
|
263
|
303
|
|||||
Leasehold
improvements
|
371
|
340
|
|||||
2,691
|
5,352
|
||||||
Accumulated
depreciation
|
(1,238
|
)
|
(3,699
|
)
|
|||
$
|
1,453
|
$
|
1,653
|
Over-the-Counter
Drug
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
||||||||||
Balance
- March 31, 2006
|
$
|
222,635
|
$
|
72,549
|
$
|
2,751
|
$
|
297,935
|
|||||
Additions
|
5,993
|
--
|
--
|
5,993
|
|||||||||
Balance
- December 31, 2006
|
$
|
228,628
|
$
|
72,549
|
$
|
2,751
|
$
|
303,928
|
Indefinite
Lived
Intangibles
|
Finite
Lived
Intangibles
|
Total
|
||||||||
Carrying
Amounts
|
||||||||||
Balance
- March 31, 2006
|
$
|
544,963
|
$
|
110,066
|
$
|
655,029
|
||||
Additions
|
--
|
29,600
|
29,600
|
|||||||
Balance
- December 31, 2006
|
$
|
544,963
|
$
|
139,666
|
$
|
684,629
|
||||
Accumulated
Amortization
|
||||||||||
Balance
- March 31, 2006
|
$
|
--
|
$
|
17,832
|
$
|
17,832
|
||||
Amortization
|
--
|
7,013
|
7,013
|
|||||||
Balance
- December 31, 2006
|
$
|
--
|
$
|
24,845
|
$
|
24,845
|
Year
Ending December 31
|
||||
2007
|
$
|
10,507
|
||
2008
|
10,507
|
|||
2009
|
10,502
|
|||
2010
|
9,086
|
|||
2011
|
9,071
|
|||
Thereafter
|
65,148
|
|||
$
|
114,821
|
|
December
31,
2006
|
March
31,
2006
|
|||||
Accrued
marketing costs
|
$
|
6,058
|
$
|
2,513
|
|||
Accrued
payroll
|
2,737
|
813
|
|||||
Accrued
commissions
|
322
|
248
|
|||||
Other
|
1,050
|
1,008
|
|||||
|
$
|
10,167
|
$
|
4,582
|
Long-term
debt consists of the following (in thousands):
|
|||||||
December
31,
2006
|
March
31,
2006
|
||||||
Senior
revolving credit facility (“Revolving Credit Facility”), which expires on
April 6, 2009, is available for maximum borrowings of up to $60.0
million.
The Revolving Credit Facility bears interest at the Company’s option at
either the prime rate plus a variable margin or LIBOR plus a variable
margin. The variable margins range from 0.75% to 2.50% and at December
31,
2006, the interest rate on the Revolving Credit Facility was 9.5%
per
annum. The Company is also required to pay a variable commitment
fee on
the unused portion of the Revolving Credit Facility. At December
31, 2006,
the commitment fee was 0.50% of the unused line. The Revolving Credit
Facility is collateralized by substantially all of the Company’s
assets.
|
$
|
--
|
$
|
7,000
|
|||
Senior
secured term loan facility (“Tranche B Term Loan Facility”) that bears
interest at the Company’s option at either the prime rate plus a margin of
1.25% or LIBOR plus a margin of 2.25%. At December 31, 2006, the
applicable interest rate on the Tranche B Term Loan Facility was
7.71%.
Principal payments of $887,500 and interest are payable quarterly.
In
February 2005, the Tranche B Term Loan Facility was amended to increase
the additional amount available thereunder by $50.0 million to $200.0
million, all of which is available at December 31, 2006. Current
amounts
outstanding under the Tranche B Term Loan Facility mature on April
6,
2011, while amounts borrowed pursuant to the amendment will mature
on
October 6, 2011. The Tranche B Term Loan Facility is collateralized
by
substantially all of the Company’s assets.
|
345,238
|
365,630
|
|||||
Senior
Subordinated Notes (“Senior Notes”) that bear interest at 9.25% which is
payable on April 15th
and October 15th
of
each year. The Senior Notes mature on April 15, 2012; however, the
Company
may redeem some or all of the Senior Notes on or prior to April 15,
2008
at a redemption price equal to 100%, plus a make-whole premium, and
after
April 15, 2008 at redemption prices set forth in the indenture governing
the Senior Notes. The Senior Notes are unconditionally guaranteed
by
Prestige Brands Holdings, Inc., and its domestic wholly-owned subsidiaries
other than Prestige Brands, Inc., the issuer. Each of these guarantees
is
joint and several. There are no significant restrictions on the ability
of
any of the guarantors to obtain funds from their
subsidiaries.
|
126,000
|
126,000
|
|||||
471,238
|
498,630
|
||||||
Current
portion of long-term debt
|
(3,550
|
)
|
(3,730
|
)
|
|||
$
|
467,688
|
$
|
494,900
|
Year
Ending December 31,
|
||||
2007
|
$
|
3,550
|
||
2008
|
3,550
|
|||
2009
|
3,550
|
|||
2010
|
3,550
|
|||
2011
|
331,038
|
|||
Thereafter
|
126,000
|
|||
$
|
471,238
|
Three
Months Ended
December
31
|
Nine
Months Ended
December
31
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Numerator
|
|||||||||||||
Net
income
|
$
|
10,643
|
$
|
9,345
|
$
|
27,683
|
$
|
22,648
|
|||||
Denominator
|
|||||||||||||
Denominator
for basic earnings per share - weighted average shares
|
49,535
|
48,929
|
49,425
|
48,874
|
|||||||||
Dilutive
effect of unvested
restricted common stock,
performance shares and
options
|
489
|
1,081
|
591
|
1,133
|
|||||||||
Denominator
for diluted earnings
per share
|
50,024
|
50,010
|
50,016
|
50,007
|
|||||||||
Earnings
per Common Share:
|
|||||||||||||
Basic
|
$
|
0.21
|
$
|
0.19
|
$
|
0.56
|
$
|
0.46
|
|||||
Diluted
|
$
|
0.21
|
$
|
0.19
|
$
|
0.55
|
$
|
0.45
|
12.
|
Stock-Based
Compensation
|
%
|
||||||||||
Income
tax provision at statutory rate
|
$
|
14,825.0
|
35.0
|
|||||||
Foreign
tax provision
|
(58.2
|
)
|
(0.1
|
)
|
||||||
State
income taxes, net of federal income tax benefit
|
1,595.3
|
3.7
|
||||||||
Decrease
in net deferred tax liability resulting from
an decrease in the effective state tax rate
|
(1,708.0
|
)
|
(4.0
|
)
|
||||||
Other
|
20.9
|
0.0
|
||||||||
Provision
for income taxes from continuing
operations
|
$
|
14,675.0
|
34.6
|
Year
Ending December 31,
|
Facilities
|
Equipment
|
Total
|
|||||||
2007
|
$
|
646
|
$
|
120
|
$
|
766
|
||||
2008
|
499
|
120
|
619
|
|||||||
2009
|
198
|
87
|
285
|
|||||||
2010
|
--
|
49
|
49
|
|||||||
$
|
1,343
|
$
|
376
|
$
|
1,719
|
Three
Months Ended December 31, 2006
|
|||||||||||||
Over-the-Counter
Drug
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
||||||||||
Net
sales
|
$
|
45,574
|
$
|
28,155
|
$
|
5,835
|
$
|
79,564
|
|||||
Other
revenues
|
--
|
560
|
--
|
560
|
|||||||||
Total
revenues
|
45,574
|
28,715
|
5,835
|
80,124
|
|||||||||
Cost
of sales
|
15,800
|
17,787
|
3,179
|
36,766
|
|||||||||
Gross
profit
|
29,774
|
10,928
|
2,656
|
43,358
|
|||||||||
Advertising
and promotion
|
7,089
|
1,595
|
268
|
8,952
|
|||||||||
Contribution
margin
|
$
|
22,685
|
$
|
9,333
|
$
|
2,388
|
34,406
|
||||||
Other
operating expenses
|
9,872
|
||||||||||||
Operating
income
|
24,534
|
||||||||||||
Other
(income) expense
|
10,156
|
||||||||||||
Provision
for income taxes
|
3,735
|
||||||||||||
Net
income
|
$
|
10,643
|
Nine
Months Ended December 31, 2006
|
|||||||||||||
Over-the-Counter
Drug
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
||||||||||
Net
sales
|
$
|
131,427
|
$
|
88,625
|
$
|
19,112
|
$
|
239,164
|
|||||
Other
revenues
|
--
|
1,434
|
--
|
1,434
|
|||||||||
Total
revenues
|
131,427
|
90,059
|
19,112
|
240,598
|
|||||||||
Cost
of sales
|
48,198
|
54,882
|
11,270
|
114,350
|
|||||||||
Gross
profit
|
83,229
|
35,177
|
7,842
|
126,248
|
|||||||||
Advertising
and promotion
|
19,573
|
5,304
|
932
|
25,809
|
|||||||||
Contribution
margin
|
$
|
63,656
|
$
|
29,873
|
$
|
6,910
|
100,439
|
||||||
Other
operating expenses
|
28,390
|
||||||||||||
Operating
income
|
72,049
|
||||||||||||
Other
(income) expense
|
29,691
|
||||||||||||
Provision
for income taxes
|
14,675
|
||||||||||||
Net
income
|
$
|
27,683
|
Three
Months Ended December 31, 2005
|
|||||||||||||
Over-the-Counter
Drug
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
||||||||||
Net
sales
|
$
|
42,051
|
$
|
30,771
|
$
|
7,007
|
$
|
79,829
|
|||||
Other
revenues
|
--
|
27
|
--
|
27
|
|||||||||
Total
revenues
|
42,051
|
30,798
|
7,007
|
79,856
|
|||||||||
Cost
of sales
|
15,821
|
18,951
|
3,954
|
38,726
|
|||||||||
Gross
profit
|
26,230
|
11,847
|
3,053
|
41,130
|
|||||||||
Advertising
and promotion
|
4,926
|
1,735
|
724
|
7,385
|
|||||||||
Contribution
margin
|
$
|
21,304
|
$
|
10,112
|
$
|
2,329
|
33,745
|
||||||
Other
operating expenses
|
8,993
|
||||||||||||
Operating
income
|
24,752
|
||||||||||||
Other
(income) expense
|
9,526
|
||||||||||||
Provision
for income taxes
|
5,881
|
||||||||||||
Net
income
|
$
|
9,345
|
Nine
Months Ended December 31, 2005
|
|||||||||||||
Over-the-Counter
Drug
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
||||||||||
Net
sales
|
$
|
116,199
|
$
|
78,783
|
$
|
21,595
|
$
|
216,577
|
|||||
Other
revenues
|
--
|
77
|
--
|
77
|
|||||||||
Total
revenues
|
116,199
|
78,860
|
21,595
|
216,654
|
|||||||||
Cost
of sales
|
43,044
|
47,873
|
12,307
|
103,224
|
|||||||||
Gross
profit
|
73,155
|
30,987
|
9,288
|
113,430
|
|||||||||
Advertising
and promotion
|
18,192
|
5,245
|
2,870
|
26,307
|
|||||||||
Contribution
margin
|
$
|
54,963
|
$
|
25,742
|
$
|
6,418
|
87,123
|
||||||
Other
operating expenses
|
23,287
|
||||||||||||
Operating
income
|
63,836
|
||||||||||||
Other
(income) expense
|
26,707
|
||||||||||||
Provision
for income taxes
|
14,481
|
||||||||||||
Net
income
|
$
|
22,648
|
Over-the-Counter
Drug
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
||||||||||
Goodwill
|
$
|
228,628
|
$
|
72,549
|
$
|
2,751
|
$
|
303,928
|
|||||
Intangible
assets
|
|||||||||||||
Indefinite
lived
|
374,070
|
170,893
|
--
|
544,963
|
|||||||||
Finite
lived
|
96,676
|
24
|
18,121
|
114,821
|
|||||||||
470,746
|
170,917
|
18,121
|
659,784
|
||||||||||
$
|
699,374
|
$
|
243,466
|
$
|
20,872
|
$
|
963,712
|
FYE
2007
Revenues
|
%
|
FYE
2006
Revenues
|
%
|
Increase
(Decrease)
|
%
|
||||||||||||||
OTC
Drug
|
$
|
45,574
|
56.9
|
$
|
42,051
|
52.6
|
$
|
3,523
|
8.4
|
||||||||||
Household
Cleaning
|
28,715
|
35.8
|
30,798
|
38.6
|
(2,083
|
)
|
(6.8
|
)
|
|||||||||||
Personal
Care
|
5,835
|
7.3
|
7,007
|
8.8
|
(1,172
|
)
|
(16.7
|
)
|
|||||||||||
Total
Revenues
|
$
|
80,124
|
100.0
|
$
|
79,856
|
100.0
|
$
|
268
|
0.3
|
FYE
2007
Gross
Profit
|
%
|
FYE
2006
Gross
Profit
|
%
|
Increase
(Decrease)
|
%
|
||||||||||||||
OTC
Drug
|
$
|
29,774
|
65.3
|
$
|
26,230
|
62.4
|
$
|
3,544
|
13.5
|
||||||||||
Household
Cleaning
|
10,928
|
38.1
|
11,847
|
38.5
|
(919
|
)
|
(7.8
|
)
|
|||||||||||
Personal
Care
|
2,656
|
45.5
|
3,053
|
43.6
|
(397
|
)
|
(13.0
|
)
|
|||||||||||
$
|
43,358
|
54.1
|
$
|
41,130
|
51.5
|
$
|
2,228
|
5.4
|
FYE
2007
Contribution
Margin
|
%
|
FYE
2006
Contribution
Margin
|
%
|
Increase
(Decrease)
|
%
|
||||||||||||||
OTC
Drug
|
$
|
22,685
|
49.8
|
$
|
21,304
|
50.7
|
$
|
1,381
|
6.5
|
||||||||||
Household
Cleaning
|
9,333
|
32.5
|
10,112
|
32.8
|
(779
|
)
|
(7.7
|
)
|
|||||||||||
Personal
Care
|
2,388
|
40.9
|
2,329
|
33.2
|
59
|
2.5
|
|||||||||||||
$
|
34,406
|
42.9
|
$
|
33,745
|
42.3
|
$
|
661
|
2.0
|
FYE
2007
Revenues
|
%
|
FYE
2006
Revenues
|
%
|
Increase
(Decrease)
|
%
|
||||||||||||||
OTC
Drug
|
$
|
131,427
|
54.7
|
$
|
116,199
|
53.6
|
$
|
15,228
|
13.1
|
||||||||||
Household
Cleaning
|
90,059
|
37.4
|
78,860
|
36.4
|
11,199
|
14.2
|
|||||||||||||
Personal
Care
|
19,112
|
7.9
|
21,595
|
10.0
|
(2,483
|
)
|
(11.5
|
)
|
|||||||||||
$
|
240,598
|
100.0
|
$
|
216,654
|
100.0
|
$
|
23,944
|
11.1
|
FYE
2007
Gross
Profit
|
%
|
FYE
2006
Gross
Profit
|
%
|
Increase
(Decrease)
|
%
|
||||||||||||||
OTC
Drug
|
$
|
83,229
|
63.3
|
$
|
73,155
|
63.0
|
$
|
10,074
|
13.8
|
||||||||||
Household
Cleaning
|
35,177
|
39.1
|
30,987
|
39.3
|
4,190
|
13.5
|
|||||||||||||
Personal
Care
|
7,842
|
41.0
|
9,288
|
43.0
|
(1,446
|
)
|
(15.6
|
)
|
|||||||||||
$
|
126,248
|
52.5
|
$
|
113,430
|
52.4
|
$
|
12,818
|
11.3
|
FYE
2007
Contribution
Margin
|
%
|
FYE
2006
Contribution
Margin
|
%
|
Increase
(Decrease)
|
%
|
||||||||||||||
OTC
Drug
|
$
|
63,656
|
48.4
|
$
|
54,963
|
47.3
|
$
|
8,693
|
15.8
|
||||||||||
Household
Cleaning
|
29,873
|
33.2
|
25,742
|
32.6
|
4,131
|
16.0
|
|||||||||||||
Personal
Care
|
6,910
|
36.2
|
6,418
|
29.7
|
492
|
7.7
|
|||||||||||||
$
|
100,439
|
41.7
|
$
|
87,123
|
40.2
|
$
|
13,316
|
15.3
|
Nine
Months Ended December 31
|
|||||||
(In
thousands)
|
2006
|
2005
|
|||||
Cash
provided by (used for):
|
|||||||
Operating
Activities
|
$
|
55,289
|
$
|
35,836
|
|||
Investing
Activities
|
(31,285
|
)
|
(53,630
|
)
|
|||
Financing
Activities
|
(27,402
|
)
|
22,106
|
· |
An
increase of net income of $5.1 million from $22.6 million for the
nine
month period ended December 31, 2005 to $27.7 million for the nine
month
period ended December 31, 2006,
|
· |
A
decrease in non-cash expenses of $3.4 million for the nine month
period
ended December 31, 2006 compared to the nine month period ended December
31, 2005, and
|
· |
An
increase in cash provided by changes in the components of working
capital
for the nine month period ended December 31, 2006 of $17.8 million
over
the nine month period ended December 31,
2005.
|
· |
$345.2
million of borrowings under the Tranche B Term Loan Facility,
and
|
· |
$126.0
million of 9.25% Senior Notes due
2012.
|
· |
have
a leverage ratio of less than 5.0 to 1.0 for the quarter ended December
31, 2006, decreasing over time to 3.75 to 1.0 for the quarter ending
September 30, 2010, and remaining level
thereafter,
|
· |
have
an interest coverage ratio of greater than 2.75 to 1.0 for the quarter
ended December 31, 2006, increasing over time to 3.25 to 1.0 for
the
quarter ending March 31, 2010, and
|
· |
have
a fixed charge coverage ratio of greater than 1.5 to 1.0 for the
quarter
ended December 31, 2006, and for each quarter thereafter until the
quarter
ending March 31, 2011.
|
|
Payments
Due by Period
|
|||||||||||||||
(In Millions)
|
Less than
|
1 to 3
|
4 to 5
|
After 5
|
||||||||||||
Contractual
Obligations
|
Total
|
1 Year
|
Years
|
Years
|
Years
|
|||||||||||
Long-term
debt
|
$
|
471.2
|
$
|
3.5
|
$
|
7.1
|
$
|
334.6
|
$
|
126.0
|
||||||
Interest
on long-term debt (1)
|
173.5
|
38.4
|
75.9
|
55.8
|
3.4
|
|||||||||||
Operating
leases
|
1.7
|
0.7
|
.9
|
0.1
|
--
|
|||||||||||
Total
contractual cash obligations
|
$
|
646.4
|
$
|
42.6
|
$
|
83.9
|
$
|
390.5
|
$
|
129.4
|
(1) |
Represents
the estimated interest obligations on the outstanding balances of
the
Revolving Credit Facility, Tranche B Term Loan Facility and Senior
Notes,
together, assuming scheduled principal payments (based on the terms
of the
loan agreements) were made and assuming a weighted average interest
rate
of 8.12%. Estimated interest obligations would be different under
different assumptions regarding interest rates or timing of principal
payments. If interest rates on borrowings with variable rates increased
by
1%, interest expense would increase approximately $3.4 million, in
the
first year. However, given the protection afforded by the interest
rate
cap agreements, the impact of a one percentage point increase would
be
limited to $2.2 million.
|
Over-the-Counter
Drug
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
||||||||||
Goodwill
|
$
|
228,628
|
$
|
72,549
|
$
|
2,751
|
$
|
303,928
|
|||||
Intangible
assets
|
|||||||||||||
Indefinite
lived
|
374,070
|
170,893
|
--
|
544,963
|
|||||||||
Finite
lived
|
96,676
|
24
|
18,121
|
114,821
|
|||||||||
470,746
|
170,917
|
18,121
|
659,784
|
||||||||||
$
|
699,374
|
$
|
243,466
|
$
|
20,872
|
$
|
963,712
|
· |
Brand
History
|
· |
Market
Position
|
· |
Recent
and Projected Sales Growth
|
· |
History
of and Potential for Product
Extensions
|
· |
Reviews
period-to-period sales and profitability by
brand,
|
· |
Analyzes
industry trends and projects brand growth
rates,
|
· |
Prepares
annual sales forecasts,
|
· |
Evaluates
advertising effectiveness,
|
· |
Analyzes
gross margins,
|
· |
Reviews
contractual benefits or
limitations,
|
· |
Monitors
competitors’ advertising spend and product
innovation,
|
· |
Prepares
projections to measure brand viability over the estimated useful
life of
the intangible asset, and
|
· |
Considers
the regulatory environment, as well as industry
litigation.
|
· |
Type
of instrument (i.e.: restricted shares vs. an option, warrant or
performance shares),
|
· |
Strike
price of the instrument,
|
· |
Market
price of the Company’s common stock on the date of
grant,
|
· |
Discount
rates,
|
· |
Duration
of the instrument, and
|
· |
Volatility
of the Company’s common stock in the public
market.
|
· |
general
economic conditions affecting our products and their respective
markets,
|
· |
the
high level of competition in our industry and
markets,
|
· |
our
dependence on a limited number of customers for a large portion of
our
sales,
|
· |
disruptions
in our distribution center,
|
· |
acquisitions
or other strategic transactions diverting managerial resources, or
incurrence of additional liabilities or integration problems associated
with such transactions,
|
· |
changing
consumer trends or pricing pressures which may cause us to lower
our
prices,
|
· |
increases
in supplier prices,
|
· |
increases
in transportation fees and fuel
charges,
|
· |
changes
in our senior management team,
|
· |
our
ability to protect our intellectual property
rights,
|
· |
our
dependency on the reputation of our brand
names,
|
· |
shortages
of supply of sourced goods or interruptions in the manufacturing
of our
products,
|
· |
our
level of debt, and ability to service our
debt,
|
· | any adverse judgment rendered in any pending litigation or arbitration, |
· |
our
ability to obtain additional financing,
and
|
· |
the
restrictions imposed by our senior credit facility and the indenture
on
our operations.
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
PART
II.
|
OTHER
INFORMATION
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
Issuer
Purchases of Equity Securities
|
|||||||||||||
Period
|
Total
Number
of
Shares Purchased
|
Average
Price
Paid Per
Share
|
Total
Number
of
Shares
Purchased
as
Part
of Publicly Announced
Plans
or
Programs
|
Maximum
Number
of
Shares
that May
Yet
Be Purchased
Under
the Plans
or
Programs
|
|||||||||
10/1/06
- 10/31/06
|
|||||||||||||
11/1/06
- 11/30/06
|
2,300
|
$
|
1.70
|
--
|
--
|
||||||||
12/1/06
- 12/31/06
|
|||||||||||||
Total
|
2,300
|
$
|
1.70
|
--
|
--
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
ITEM
5.
|
OTHER
INFORMATION
|
4.1
|
Supplemental
Indenture, dated as of October 6, 2004, among Vetco, Inc., Prestige
Brands, Inc. and U.S. Bank, National Association.
|
4.2
|
Second
Supplemental Indenture, dated as of December 19, 2006, by and among
Prestige Brands, Inc., U.S. Bank, National Association, Prestige
Brands
Holdings, Inc., Dental Concepts LLC and Prestige International Holdings,
LLC.
|
10.1
|
Joinder
Agreement, dated as of December 19, 2006, by Prestige Brands Holdings,
Inc., Prestige International Holdings, LLC and Dental Concepts LLC
in
favor of Citicorp North America, Inc., as Administrative Agent, to
the
Pledge and Security Agreement, dated as of April 6, 2004, by Prestige
Brands, Inc. and its subsidiaries and affiliates listed on the signature
pages thereof in favor of Citicorp North America, Inc., as Administrative
Agent.
|
10.2
|
Guaranty,
dated as of April 6, 2004, by Prestige Brands International, LLC
and each
of the other entities listed on the signature pages thereof in favor
of
Citicorp North America, Inc., as Administrative Agent.
|
10.3
|
Guaranty
Supplement, dated as of December 19, 2006, by Prestige Brands Holdings,
Inc., Prestige International Holdings, LLC and Dental Concepts LLC
in
favor of Citicorp North America, Inc., as Administrative Agent, to
the
Guaranty, dated as of April 6, 2004, among Prestige Brands International,
LLC and certain subsidiaries and affiliates of Prestige Brands, Inc.
listed on the signature pages thereof in favor of Citicorp North
America,
Inc., as Administrative Agent.
|
10.4
|
Letter
Agreement, dated December 22, 2006, among Prestige Brands Holdings,
Inc.,
Prestige Brands, Inc. and Gerard F. Butler.
|
10.5
|
Employment
Agreement, dated as of January 19, 2007, by and between Prestige
Brands
Holdings, Inc. and Mark Pettie.
|
31.1
|
Certification
of Principal Executive Officer of Prestige Brands Holdings, Inc.
pursuant
to Rule 13a-14(a) of the Securities Exchange Act of
1934.
|
31.2
|
Certification
of Principal Financial Officer of Prestige Brands Holdings, Inc.
pursuant
to Rule 13a-14(a) of the Securities Exchange Act of
1934.
|
32.1
|
Certification
of Principal Executive Officer of Prestige Brands Holdings, Inc.
pursuant
to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United
States Code.
|
32.2
|
Certification
of Principal Financial Officer of Prestige Brands Holdings, Inc.
pursuant
to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United
States Code.
|
Peter J. Anderson |
Chief Financial Officer |
(Principal
Financial Officer and
|
Duly Authorized Officer) |
4.1
|
Supplemental
Indenture, dated as of October 6, 2004, among Vetco, Inc., Prestige
Brands, Inc. and U.S. Bank, National Association.
|
4.2
|
Second
Supplemental Indenture, dated as of December 19, 2006, by and among
Prestige Brands, Inc., U.S. Bank, National Association, Prestige
Brands
Holdings, Inc., Dental Concepts LLC and Prestige International Holdings,
LLC.
|
10.1
|
Joinder
Agreement, dated as of December 19, 2006, by Prestige Brands Holdings,
Inc., Prestige International Holdings, LLC and Dental Concepts LLC
in
favor of Citicorp North America, Inc., as Administrative Agent, to
the
Pledge and Security Agreement, dated as of April 6, 2004, by Prestige
Brands, Inc. and its subsidiaries and affiliates listed on the signature
pages thereof in favor of Citicorp North America, Inc., as Administrative
Agent.
|
10.2
|
Guaranty,
dated as of April 6, 2004, by Prestige Brands International, LLC
and each
of the other entities listed on the signature pages thereof in favor
of
Citicorp North America, Inc., as Administrative Agent.
|
10.3
|
Guaranty
Supplement, dated as of December 19, 2006, by Prestige Brands Holdings,
Inc., Prestige International Holdings, LLC and Dental Concepts LLC
in
favor of Citicorp North America, Inc., as Administrative Agent, to
the
Guaranty, dated as of April 6, 2004, among Prestige Brands International,
LLC and certain subsidiaries and affiliates of Prestige Brands, Inc.
listed on the signature pages thereof in favor of Citicorp North
America,
Inc., as Administrative Agent.
|
10.4
|
Letter
Agreement, dated December 22, 2006, among Prestige Brands Holdings,
Inc.,
Prestige Brands, Inc. and Gerard F. Butler.
|
10.5
|
Employment
Agreement, dated as of January 19, 2007, by and between Prestige
Brands
Holdings, Inc. and Mark Pettie.
|
31.1
|
Certification
of Principal Executive Officer of Prestige Brands Holdings, Inc.
pursuant
to Rule 13a-14(a) of the Securities Exchange Act of
1934.
|
31.2
|
Certification
of Principal Financial Officer of Prestige Brands Holdings, Inc.
pursuant
to Rule 13a-14(a) of the Securities Exchange Act of
1934.
|
32.1
|
Certification
of Principal Executive Officer of Prestige Brands Holdings, Inc.
pursuant
to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United
States Code.
|
32.2
|
Certification
of Principal Financial Officer of Prestige Brands Holdings, Inc.
pursuant
to Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United
States Code.
|
(a)
|
Along
with all Guarantors named in the Indenture, to jointly and severally
Guarantee to each Holder of a Note authenticated and delivered
by
the Trustee
and to the Trustee and its successors and assigns, the Notes or
the
obligations of
the
Company hereunder or thereunder,
that:
|
(b)
|
The
obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or the Indenture,
the
absence of any action to enforce the same, any waiver or consent
by any
Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce
the
same or any other circumstance which might otherwise constitute a
legal or
equitable discharge or defense of a
Guarantor.
|
(c)
|
The
following is hereby waived: diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy
of
the Company, any right to require a proceeding first against the
Company,
protest, notice and all demands
whatsoever.
|
(d)
|
This
Subsidiary Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the Indenture,
and the Guaranteeing Subsidiary accepts all obligations of a Guarantor
under the Indenture.
|
(e)
|
If
any Holder or the Trustee is required by any court or otherwise to
return
to the Company, the Guarantors, or any custodian, trustee, liquidator
or
other similar official acting in relation to either the Company or
the
Guarantors, any amount paid by either to the Trustee or such Holder,
this
Subsidiary Guarantee, to the extent theretofore discharged, shall
be
reinstated in full force and
effect.
|
(f)
|
The
Guaranteeing Subsidiary shall not be entitled to any right of subrogation
in relation to the Holders in respect of any obligations guaranteed
hereby
until payment in full of all obligations guaranteed
hereby.
|
(g)
|
As
between the Guarantors, on the one hand, and the Holders and the
Trustee,
on the other hand, (x) the maturity of the obligations guaranteed
hereby
may be accelerated as provided in Article 6 of
the Indenture for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing
such
acceleration in respect of the obligations guaranteed hereby, and
(y) in
the event of any declaration of acceleration of such obligations
as
provided in Article 6 of the Indenture, such obligations (whether
or not
due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Subsidiary
Guarantee.
|
(h)
|
The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the
rights
of the Holders under the Subsidiary
Guarantee.
|
(i)
|
Pursuant
to Section 10.02 of the Indenture, after giving effect to any maximum
amount and all other contingent and fixed liabilities that are relevant
under any applicable Bankruptcy or fraudulent conveyance laws, and
after
giving effect to any collections from, rights to receive contribution
from
or payments made by or on behalf of any other Guarantor in respect
of the
obligations of such other Guarantor under Article 10 of the Indenture,
this new Subsidiary Guarantee shall be limited to the maximum amount
permissible such that the obligations of such Guarantor under this
Subsidiary Guarantee will not constitute a fraudulent transfer or
conveyance.
|
(a) |
|
The
Guaranteeing Subsidiary may not sell or otherwise dispose of all
substantially all of its assets to, or consolidate with or merge
with or
into (whether or not such Guarantor is the surviving Person) another
Person, other than the Company or another Guarantor
unless:
|
(i) | immediately after giving effect to such transaction, no Default or Event of Default exists; and | ||
(ii) |
either (A) subject to Sections 10.04 and 10,05 of the Indenture,
the
Person acquiring the property in any such sale or disposition
or the
Person formed by or surviving any such consolidation or merger
unconditionally assumes all, the obligations of that
Guarantor, pursuant
to a supplemental indenture in form and substance reasonably satisfactory
to the Trustee, under the Notes,
the Indenture and the Subsidiary Guarantee on the terms set forth
herein
or therein; or (B) the Net Proceeds of such sale or
other disposition are applied in accordance with the applicable
provisions
of the Indenture, including without limitation, Section 4.12
thereof.
|
(b) |
|
In
case of any such consolidation, merger, sale or conveyance and upon
the
assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee,
of
the Subsidiary Guarantee endorsed upon the Notes and the due and
punctual
performance of all of the covenants and conditions of the Indenture
to be
performed by the Guarantor, such successor Person shall succeed to
and be
substituted for the Guarantor with the same effect as if it had been
named
herein as a Guarantor. Such successor Person thereupon may cause
to be
signed any or all of the Subsidiary Guarantees to be endorsed upon
all of
the Notes issuable under the Indenture which theretofore shall not
have
been signed by the Company and delivered to the Trustee. All the
Subsidiary Guarantees so issued shall in all respects have the same
legal
rank and benefit under the Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with
the
|
(c) |
|
Except
as set forth in Articles 4 and 5 and Section 10.05 of Article 10
of the
Indenture, and notwithstanding clauses (a) and (b) above, nothing
contained in the Indenture or in any of the Notes shell prevent any
consolidation or merger of a Guarantor with or into the Company or
another
Guarantor, or shall prevent any sale or conveyance of the property
of a
Guarantor as an entirety or substantially as an entirety to the Company
or
another Guarantor.
|
(a) |
|
In
the event of any sale or other disposition of all or substantially
all of
the assets of any Guarantor, by way of merger, consolidation or otherwise,
or a sale or other disposition of all of the capital stock of any
Guarantor, in each case to a Person that is not (either before or
after
giving effect to such transaction) a Restricted Subsidiary of the
Company,
then such Guarantor (in the event of a sale or other disposition,
by way
of merger, consolidation or otherwise, of all of the capital stock
of such
Guarantor) or the corporation acquiring the property (in the event
of a
sale or other disposition of all or substantial1y all of the assets
of
such Guarantor) will be released and relieved of any obligations
under its
Subsidiary Guarantee; provided
that the Net Proceeds of such sale or other disposition are applied
in
accordance with the applicable provisions of the Indenture, including
without limitation Section 4.12 of the Indenture. Upon delivery by
the
Company to the Trustee of an Officers’ Certificate and an Opinion of
Counsel to the effect that such sale or other disposition was made
by the
Company in accordance with the provisions of the Indenture, including
without limitation Section 4.12 of the Indenture, the Trustee shal1
execute any documents reasonably required in order to evidence the
release
of any Guarantor from its obligations under its Subsidiary
Guarantee.
|
(b) | Any Guarantor not released from its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 10 of the Indenture. |
VETCO, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Vice President | ||
PRESTIGE BRANDS, INC. | ||
By: /s/ Peter C. Mann | ||
Name: Peter C. Mann | ||
Title: President | ||
U.S. BANK, NATIONAL ASSOCIATION, | ||
as Trustee | ||
By: /s/ Benjamin Krueger | ||
Authorized Signatory |
PRESTIGE BRANDS, INC. |
By: /s/ Peter C. Mann |
Name: Peter C. Mann |
Title: President |
U.S. BANK NATIONAL |
ASSOCIATION, AS TRUSTEE |
By: /s/ Raymond S. Haverstock |
Name: Raymond S. Haverstock |
Title: Vice President |
PRESTIGE BRANDS HOLDINGS, INC. |
By: /s/ Peter C. Mann |
Name: Peter C. Mann |
Title: Chief Executive Officer and President |
DENTAL CONCEPTS LLC |
By: /s/ Peter C. Mann |
Name: Peter C. Mann |
Title: Chief Executive Officer |
PRESTIGE INTERNATIONAL |
HOLDINGS, LLC |
By: /s/ Peter C. Mann |
Name: Peter C. Mann |
Title: President |
PRESTIGE BRANDS HOLDINGS, INC. | ||
PRESTIGE INTERNATIONAL | ||
HOLDINGS, LLC | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Chief Financial Officer | ||
DENTAL CONCEPTS LLC | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Treasurer | ||
Acknowledged
and Agreed
as
of the date first above written:
|
||
Citicorp
North America, Inc.,
as
Administrative Agent
|
||
By: /s/ C.P. Mahon | ||
Name: C.P. Mahon | ||
Title: Vice President |
PRESTIGE BRANDS INTERNATIONAL LLC | ||
As Parent | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, CFO and Vice President | ||
PRESTIGE PRODUCTS HOLDINGS, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
Subsidiary Guarantors: | ||
BONITA BAY HOLDINGS, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
MEDTECH HOLDINGS, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
MEDTECH PRODUCTS, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
PECOS PHARMACEUTICAL, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
|
GUARANTY
PRESTIGE
BRANDS, INC.
|
|
PRESTIGE ACQUISITION HOLDINGS, LLC | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
PRESTIGE BRANDS FINANCIAL CORPORATION | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
PRESTIGE BRANDS HOLDINGS, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
PRESTIGE BRANDS INTERNATIONAL, LLC | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
PRESTIGE HOUSEHOLD BRANDS, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
PRESTIGE HOUSEHOLD HOLDINGS, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
PRESTIGE PERSONAL CARE, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President |
GUARANTY
PRESTIGE
BRANDS, INC.
|
||
PRESTIGE PERSONAL CARE HOLDINGS, INC. | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
THE COMET PRODUCTS CORPORATION | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
THE CUTEX COMPANY | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
THE DENOREX COMPANY | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President | ||
THE SPIC AND SPAN COMPANY | ||
By: /s/ Peter J. Anderson | ||
Name: Peter J. Anderson | ||
Title: Secretary, Treasurer and Vice President |
1. |
Incorporation
by Reference.
Except as modified by the terms of this Agreement, Sections 1, 2,
3, 5, 6,
7(b), 8, 9, 10, 11, and 12 (but not Section
12(g)
thereof, concerning choice of law) of the Amended and Restated Senior
Management Agreement between and among Prestige International Holdings,
LLC; Prestige Brands Holdings, Inc.; Prestige Brands, Inc.; and Gerard
F.
Butler, dated February 4, 2005 (the “SMA”), as they may heretofore from
time to time have been amended by the Board of Directors of the Company
and the Compensation Committee thereof, are reaffirmed and are
incorporated herein by reference.
|
2. |
Work
at Home.
Effective on a date to be chosen by the Company, but in any event
prior to
January 31, 2007, you will resign as an officer of Prestige by means
of a
written instrument that is substantially similar to the model letter
of
resignation that is annexed hereto as Exhibit A. Thereafter, until
March
31, 2007, your efforts will be primarily in the area of transitioning
your
responsibilities to your replacement. Effective April 1, 2007, you
will
become a “Work At Home” employee with no specific daily responsibilities
that would require your presence at Prestige’s offices for a period of one
year. During this “Work At Home” period, you will be called upon from time
to time to provide advice, information or guidance to Prestige, but
only
with ample advance notice and response time built in. You may be
invited
to come to the Prestige offices, from time to time, at the Company’s
initiation. Notwithstanding the foregoing, you will be under no obligation
to travel or provide services according to a predetermined schedule.
All
company property, including but not limited to your blackberry, your
mobile phone, company files and other property will be returned to
the
Company prior to the “Work At Home” period. Notwithstanding the
|
foregoing, you will have the option of purchasing your laptop at its net book value at the commencement of your “Work At Home” period. |
3. |
Salary
Continuation.
After your resignation as an officer of the Company and until March
31,
2007, your current salary and benefits, including bonus eligibility,
will
continue. For the year beginning on April 1, 2007, your annual salary
shall be $236,000 and shall be paid bi-weekly, consistent with the
Company’s normal payroll practices. During the “Work At Home” period, your
health, dental, death and disability insurance benefits shall continue;
but your 401(k), vacation and cafeteria plans will not continue.
Your
salary shall be paid notwithstanding any consulting or other non-company
employment you may choose to undertake, so long as you are not in
breach
of the terms set forth in this offer. Notwithstanding the foregoing,
to
the extent that the salary payments required by this Section
3
may be deemed part of a nonqualified deferred compensation plan described
in Section 409A of the Internal Revenue Code (the “Code”), see
26
U.S.C. § 409A (2006), those payments may be deferred as may be required to
avoid adverse tax consequences to the Employee; if any such deferral
is
made, however, the payment of all accrued unpaid salary shall be
made in
one lump sum not more than two weeks after the earliest date permitted
for
that purpose by Section 409A(a)(2)(B)(i) of the Code; and all further
payments shall be made bi-weekly, consistent with the Company’s normal
payroll practices.
|
4. |
Continued
Vesting of Carried Shares.
For the balance of the fiscal year ending March 31, 2007, and during
the
“Work At Home” period, the Carried Shares (as defined in the SMA) held by
you will continue to vest pursuant to the time schedule set forth
in
Section 2 of the SMA. Provided that you are not in breach of this
Agreement on the last day of the “Work At Home” period, any remaining
Unvested Carried Shares shall be repurchased by the Company on the
last
day of said period pursuant to Section 3 of the SMA. Your sale of
any
Vested Carried or Co-invest shares will continue to be subject to
the
terms and conditions set forth in Sections 5 and 6 of the
SMA.
|
5. |
Bonus
Eligibility.
During the fiscal year ending on March 31, 2007, you will be eligible
for
an annual bonus, as determined by the Compensation Committee and
the Board
of Directors and also subject to the performance of the Company against
the established bonus objectives. You will not be eligible to receive
a
bonus for the fiscal year beginning on April 1, 2007. Notwithstanding
the
foregoing, on or about May 1, 2008, you will receive a payment equivalent
to the greater of (i) the bonus paid to you for the fiscal year ending
on
March 31, 2007 (if any), or (ii) a target bonus of 45% of your entire
day-to-day salary set forth in Section
3
of
this Agreement.
|
6. |
Vacation.
Any accrued but unused vacation time for calendar year 2006 will
be paid
to you, subject to applicable withholdings, promptly after beginning
your
“Work At Home” period. You will not accrue vacation during your “Work At
Home” period.
|
7. |
Accelerated
Vesting.
Effective immediately and throughout the term of this Agreement,
if there
should be a Sale of the Company (defined at Section 10 of the SMA)
or if
you should you die or become disabled, all of your Carried Shares
shall
become fully vested immediately upon the closing of the Sale of the
Company or upon your death or the commencement of your
disability.
|
8. |
Non-Disparagement.
Effective immediately, and throughout the term of this Agreement,
you
agree not to disparage, criticize, defame, or make critical comment
regarding Prestige or any of the directors, officers, or employees
of
Prestige in any writing, statement, or other written or oral
communication. During the same period of time, the Company and its
directors, officers and
|
employees agree not to disparage, criticize, defame or make critical comment regarding you in any writing, statement, or other written or oral communication. |
9. |
Confidentiality.
You agree to maintain confidentiality of all non-public, trade secret
or
commercially sensitive information that has been revealed to you
during
the course of your employment, whether such information was first
obtained
during your “Work At Home” period or at any time prior thereto. You agree
that you will not disclose to any third parties, directly or indirectly
(except to the extent required by law, or if requested by the Company),
any such confidential or proprietary information (a) which has not
been
disclosed publicly by the Company, (b) which is otherwise not a matter
of
public knowledge or your personal knowledge from sources unrelated
to the
Company, or (c) which is a matter of public knowledge but you know
that
such information became a matter of public knowledge through an
unauthorized disclosure. You further agree to treat this Agreement
as
confidential and will disclose its terms to no one other than your
family
members and your personal legal and financial advisors, with the
understanding that such disclosures will be treated as confidential.
Notwithstanding the foregoing, you will be permitted to disclose
that this
Agreement imposes upon you the duties set forth in Sections 8, 9
and 14
hereof.
|
10. |
Agreed
Communication.
You and Prestige mutually agree and consent to the text of the
communication attached hereto as Exhibit A, which may not and shall
not be
used for any purposes prior to the date upon which Employee resigns
as an
officer of the Company.
|
11. |
Termination
of Employment.
On
April 1, 2008, your employment with Prestige shall cease altogether.
As of
that date, you will be afforded all customary and usual termination
benefits, including but not limited to the option to purchase COBRA
health
insurance. In the event that any compensation to be paid to Employee
pursuant to the terms of Section
3
above is deemed to be a part of a nonqualified deferred compensation
plan
under Section 409A of the Code, and if such treatment for tax purposes
causes Employee to become ineligible for COBRA benefits for anything
less
than the full term of such benefits to which he would otherwise be
entitled, then the Company shall continue to provide full health
benefits
to Employee, at the Company’s sole expense, until October 1,
2009.
|
12. |
Release
of Claims.
As
a condition precedent to this Agreement, you agree to execute a release
in
the form of Exhibit C hereto. You further acknowledge by your initials
appearing at the end of this Section
12
that Prestige has encouraged you to obtain counsel and to review
this
Agreement prior to execution. /s/ GFB.
|
13. |
Restriction
on Sale of Restricted Stock.
You acknowledge that you have been advised of the possibility that
the
Company will participate in a registered offering of the Company’s common
stock (the “Offering”). In the event that the Offering is consummated, and
as a condition of this Agreement, you agree that you will limit your
participation in the Offering to not more than twenty-five percent
(25%)
of the total number of Common Shares that you will own as of April
1, 2008
(calculated as though you had fully performed all of your obligations
under this Agreement through that date). Notwithstanding anything
to the
contrary herein or in the SMA, including Section
5(b)
thereof, you will retain the right to Transfer, at any future date,
the
difference between the number of shares (i) that, but for the limitations
set forth in the immediately preceding sentence, you would otherwise
be
entitled to sell and (ii) the amount that you actually do sell,
provided that
you may Transfer up to that entire difference in a single transaction
or a
series of transactions, occurring either on a single date or on several
dates, at your sole election; and further provided that
no
such Transfer may take place that would violate the usual and customary
underwriting restrictions
|
associated with the Offering. Otherwise, the sale restrictions imposed by the SMA will remain in full force and effect. You also agree to cooperate in this or other similar Company activities, as requested, to the extent that it is reasonably possible to do so. |
14. |
Non-Compete.
So
long as the Company is not in breach of its obligations under this
Agreement and the release that is annexed hereto as Exhibit C, during
the
two-year period beginning on April 1, 2007, you agree not to compete
with
the Company in the areas of: (a) OTC cryogenic wart treatment products,
(b) Devices for treatment or management of bruxism, (c) Liquid OTC
sore
throat treatment products and lozenges, (d) Inter-proximal devices,
(e)
Copper scrubbers, (f) powdered cleansers and (g) pediatric OTC medicinal
products, except with the express written consent of the Company
(which
consent shall not be unreasonably withheld).
|
15. |
Lawful
Process.
Nothing set forth herein shall preclude you from responding to any
subpoena or other lawful process or order, nor shall anything herein
preclude you from discussing the terms of this Agreement or the release
that is annexed hereto as Exhibit C with your spouse, your attorney,
your
tax advisor, or your accountant. You may also disclose the terms
of this
Agreement as necessary to enforce your rights under this
Agreement.
|
16. |
Death.
In
the event of your death or disability, all amounts payable to you
hereunder shall be paid to your estate or, if you are still living,
to
you, as though you had fully performed all of your obligations hereunder
through April 1, 2008.
|
17. |
Indemnity.
The Company agrees to indemnify, defend and hold you harmless against
any
judgments, expenses, costs, attorneys’ fees, fines, or other amounts that
you may incur for liabilities that arise out of any proceedings,
class
action suits, lawsuits, mediations, arbitrations, depositions, or
litigation of any kind or nature whatsoever, now pending or that
may later
be brought or threatened against you by reason of the fact that you
were
an employee of the Company, in accordance with the Company’s
indemnification provisions existing on the date of execution of this
Agreement. These rights are in addition to any other rights that
you may
have under the Company’s bylaws, the laws of the State of New York, the
Delaware General Corporation Law, and any other applicable laws or
regulations.
|
18. |
Forfeiture
of Restricted Stock Grant.
In consideration of the benefits conferred herein, you agree to surrender
and forfeit the grant of 4,734 shares of restricted stock made as
of July
1, 2006.
|
19. |
Maturation
of Performance Shares.
The 1,184 Performance Shares that were awarded to you as of July
1, 2006,
shall mature pursuant to the terms of the award; and the valuation
of the
same shall be determined as of the close of business on March 31,
2008.
You should contact the Company shortly after that date to discuss
your
entitlements (if any) under that
award.
|
20. |
No
Future Long Term Incentive Awards.
In consideration of the benefits conferred herein, you acknowledge
that
you will receive no additional Long Term Incentive Awards, either
in
calendar year 2007 or 2008, or at any time subsequent
thereto.
|
21. |
Attorney’s
Fees.
The Company will reimburse any reasonable attorney’s fees incurred by you
in connection with the review and negotiation of this document in
an
amount not to exceed $2,500.
|
22. |
Amendment
and Waiver. Nothing in this Agreement abrogates or otherwise amends
Section
12(k)
of
the SMA.
|
2.1 | Initial Term. This employment shall begin as of the Effective Date, and shall continue until it terminates pursuant to this Agreement. Unless extended pursuant to Section 2.2, or earlier terminated pursuant to any of Sections 5, 6, 7, 8 or 9, this Agreement will terminate on March 31, 2008. The specified period during which this Agreement is in effect is the “Term.” |
2.2 | Extensions of Term. |
2.2.1
|
By
Agreement.
The Term may be extended to a specified future date at any time by
the
specific written agreement of the parties signed prior to the original
expiration date specified in Section
2.1,
or any subsequent expiration date established pursuant to Section
2.2.2.
|
2.2.2
|
Annual
Extension.
For purposes of this Agreement, April 1, 2008 and each April 1 thereafter
shall be referred to as an “Anniversary Date,” and the one-year period
from each Anniversary Date to the next shall be referred to as a
“Contract
Year.” On each Anniversary Date, beginning April 1, 2008, unless either
party to this Agreement has notified the other in writing not less
than
three (3) months prior to such Anniversary Date of that party’s intention
to allow this Agreement to expire and not be renewed at the end of
the
then current Term, the Term shall automatically be extended for one
Contract Year on and from each Anniversary
Date.
|
4.2.1
|
Annual
Bonus Plan.
Executive shall be entitled to an annual bonus (including a guaranteed
prorated target bonus of no less than Sixty Two Thousand Eight Hundred
and
Seventy Seven dollars ($62,877) for the fiscal year ended March 31,
2007
based upon days of service from the Effective Date through March
31,
2007), the amount of which shall be determined by the Compensation
Committee of the Board (the "Committee"). The amount of and performance
criteria with respect to any bonus in any fiscal year subsequent
to March
31, 2007 shall be determined not later than the date or time prescribed
by
Treas. Reg. § 1.162-27(e) in accordance with a formula to be agreed upon
by the Company and Executive and approved by the Committee that reflects
the financial and other performance of the Company and the Executive's
contributions thereto. Throughout the Term, the Executive's annual
target
(subject to such performance and other criteria as may be established
by
the Committee) bonus shall be no less than seventy-five percent (75%)
of
the Base Salary and the maximum bonus shall be no less than one hundred
fifty percent (150%) of the Base Salary. Executive’s bonus for the fiscal
year ended March 31, 2008 shall be reduced by any amounts paid to
Executive pursuant to Section
4.2.6.
|
4.2.2
|
Welfare
Benefit Plans.
During the Term, Executive and Executive’s eligible dependents shall be
eligible for participation in, and shall receive all benefits under,
the
welfare benefit plans, practices, policies and programs provided
by the
Company (including, without limitation, medical, prescription, dental,
disability, executive life, group life, accidental death and travel
accident insurance plans and programs) (“Welfare Plans”) to the extent
applicable generally to Senior
Executives.
|
4.2.3
|
Vacation.
From the Effective Date through March 31, 2008 and during each Contract
Year thereafter through
the Term, Executive shall be granted four (4) weeks’ paid vacation in
accordance with the Company’s vacation policy as in effect and as approved
by the Committee from time to time. The
timing of paid vacations shall be scheduled in a reasonable manner
by the
Executive.
|
4.2.4
|
Business
Expenses.
Executive shall be reimbursed for all reasonable business expenses
incurred in carrying out the work hereunder. Executive shall follow
the
Company’s expense procedures that generally apply to other Senior
Executives in accordance with the policies, practices and procedures
of
the Company to the extent applicable generally to such Senior
Executives.
|
4.2.5
|
Perquisites.
Executive shall be entitled to receive such executive perquisites,
fringe
and other benefits as are provided to the senior most executives
and their
families under any of the Company’s plans and/or programs in effect from
time to time and such other benefits as are customarily available
to
Senior Executives.
|
4.2.6
|
Signing
and Retention Bonus.
Provided that Executive continues to be employed by the Company at
the
dates established hereafter in this section for payment, he shall
be paid
a bonus of Seventy-five thousand and 00/100 dollars ($75,000) on
April 1,
2007 and Seventy-five thousand and 00/100 dollars ($75,000) on April
1,
2008.
|
4.2.7
|
LTIP.
Beginning April 2007, Executive shall participate to the same extent
as
other Senior Executives in awards under the Company’s 2005 Long-Term
Equity Incentive Plan (the “LTIP Plan”). Executive’s LTIP Award shall have
at the time of grant a value of 150% of the Executive’s total cash
compensation during the fiscal year immediately preceding the date
of the
LTIP Award. Executive will be granted an LTIP Award, consisting of
restricted stock, in April 2007 with a value of $1,125,000, subject
to all
of the other terms and provisions of the LTIP Plan. The composition
of
future LTIP Awards beginning April 1, 2008 shall be determined in
accordance with the prevailing practice applicable to Senior Executives.
The Company confirms that upon a “Change in Control” (as defined in the
LTIP Plan), all awards to the Executive thereunder fully vest with
no
requirement that the Executive’s employment with the Company have
terminated.
|
(a)
|
Any
willful act by Executive involving fraud and any willful breach by
Executive of applicable regulations of competent authorities in relation
to trading or dealing with stocks, securities, investments, regulation
of
the Company’s business and the
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like or any willful act by Executive resulting in an investigation by applicable regulatory authorities which, in each case, a majority of the Board determines in its sole and absolute discretion materially adversely affects the Company or Executive’s ability to perform his duties under this Agreement; |
(b)
|
Attendance
at work in a state of intoxication or otherwise being found in possession
at his place of work of any prohibited drug or substance, possession
of
which would amount to a criminal
offense;
|
(c)
|
Executive's
personal dishonesty or willful misconduct in connection with his
duties to
the Company;
|
(d)
|
Breach
of fiduciary duty to the Company involving personal profit by the
Executive;
|
(e)
|
Assault
or other act of violence against any employee of the Company or other
person during the course of his
employment;
|
(f)
|
Conviction
of the Executive for any felony or crime involving moral
turpitude;
|
(g)
|
Material
intentional breach by the Executive of any provision of this Agreement
or
of any Company policy adopted by the
Board;
|
(h)
|
The
willful continued failure of Executive to perform substantially
Executive’s duties with the Company (other than any such failure resulting
from incapacity due to Disability, and specifically excluding any
failure
by Executive, after good faith, reasonable and demonstrable efforts,
to
meet performance expectations for any reason), after a written demand
for
substantial performance is delivered to Executive by a majority of
the
Board that specifically identifies the manner in which such Board
believes
that Executive has not substantially performed Executive’s
duties.
|
(a)
|
Other
than his removal for Cause pursuant to Section
5,
without the written consent of Executive, the assignment to Executive
of
any duties inconsistent in any material respect with Executive’s position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as in effect on the Effective Date, or
any
other action by the Company which results in a demonstrable diminution
in
such position, authority, duties or responsibilities (including without
limitation the designation of another person as Chairman); but excluding,
for this purpose an isolated, insubstantial and inadvertent action
not
taken in bad faith and which is remedied by the Company promptly
after
receipt of notice thereof given by
Executive;
|
(b)
|
A
reduction by the Company in Executive’s Base Salary as in effect on the
Effective Date or as the same may be increased from time to
time;
|
(c)
|
A
reduction by the Company in Executive's annual target bonus (expressed
as
a percentage of Base Salary) unless such reduction is a part of an
across-the-board decrease in target bonuses affecting all other Senior
Executives; provided, however that in any event, the Company may
not
reduce Executive’s annual target bonus (expressed as a percentage of Base
Salary) below seventy-five percent (75%) of the Base
Salary;
|
(d)
|
The
Company’s giving notice under Section
2.2.2
of
its intention not to renew this Agreement unless at that time, the
Company
could terminate this Agreement and Executive’s employment for
“Cause.”
|
(e)
|
The
failure by the Company to continue in effect any “pension plan or
arrangement” or any “compensation plan or arrangement” in which Executive
participates or the elimination of Executive’s participation in any such
plan (except for across the board plan changes or terminations similarly
affecting other Senior Executives); provided however that nothing
in this
provision shall have the effect of impairing Executive’s entitlement to an
annual target bonus in the amount set forth in Section 8(c)
above;
|
(f)
|
The
Company’s requiring Executive, without his consent, to be based at any
office or location more than thirty (30) miles from the Company's
current
headquarters in Irvington, New York;
|
(g)
|
The
material breach by the Company of any provision of this Agreement;
or
|
(h)
|
A
“Change in Control” (as defined in the LTIP Plan) occurs and
either the Company repudiates this Agreement or a successor (if any
and
applicable) (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company fails to assume expressly and agree
to
perform this Agreement in the same manner and to the same extent
that the
Company would be required to perform it if no such succession had
taken
place.
|
(a)
|
The
Company shall pay to Executive commencing after the later of the
date of
termination or the execution and effectiveness of a Release, the
aggregate
of the following amounts:
|
(1)
|
in
a lump sum in cash within 30 days, the sum of (i) Executive’s Base Salary
through the date of termination to the extent not theretofore paid,
(ii)
any accrued expenses and vacation pay to the extent not theretofore
paid,
and (iii) unless Executive has elected a different payout date in
a prior
deferral election, any compensation previously deferred by Executive
(together with any accrued interest or earnings thereon) to the extent
not
theretofore paid (the sum of the amounts described in subparagraphs
(i),
(ii) and (iii) shall be referred to in this Agreement as the “Accrued
Obligations”);
|
(2)
|
in
installments ratably over twelve (12) months in accordance with the
Company’s normal payroll cycle and procedures, the amount equal to the sum
of: (i) Executive’s annual Base Salary in effect as of the date of
termination; plus
(ii) Executive’s
Applicable Annual Bonus (as defined below). For purposes of this
Agreement, “Applicable Annual Bonus” means the greater of Executive’s
actual annual incentive bonus from the Company earned in the fiscal
year
immediately preceding the fiscal year in which Executive’s termination
date falls or Executive’s target annual incentive bonus (e.g., 75% of Base
Salary as of the Effective Date) for the year in which Executive’s
termination date falls;
and
|
(3)
|
in
the event the termination of employment occurs prior to March 31,
2010,
for each LTIP Award granted prior to the date of termination pursuant
to
Section
4.2.7,
a
lump sum in cash equal to the product of: (i) a fraction, the numerator
of
which shall be the number “one (1)” if the Executive has been employed for
twelve months or less from the applicable date of the grant of the
LTIP
Award in question (the “Grant Date”), the number “two (2)” if the
Executive has been employed for more than twelve but less than twenty
four
months from the Grant Date and the number “three (3)” if the Executive has
been employed for more than twenty four months from the Grant Date
and the
denominator of which shall be the number “three (3)” multiplied
by (ii)
the value (based, in the case of restricted stock, upon the closing
market
price of the Company’s common stock on the day prior to the date of
termination of employment) of the unvested portion of each LTIP Award;
and
|
(4)
|
With
respect to Section
9(a)(2),
the Company, with the consent of the Executive, may make a lump sum
payment of all amounts, or all remaining amounts, due to Executive;
and
|
(b)
|
The
Executive’s participation in the life, medical and disability insurance
programs in effect on the date of termination of employment shall
on the
same basis as an active employee of the Company for up to twelve
(12)
months after Executive’s date of termination. Executive shall thereafter
be entitled to continuation of benefits pursuant to the provisions
of the
Consolidated Omnibus Budget Reconciliation Act, as from time to time
amended.
|
(c)
|
To
the extent not theretofore paid or provided, the Company shall timely
pay
or provide to Executive any other accrued amounts or accrued benefits
required to be paid or provided or which Executive is eligible to
receive
under any plan, program, policy or practice or contract or agreement
of
the Company (such other amounts and benefits shall be referred to
in this
Agreement as the “Other Benefits”).
|
(1)
|
The
parties shall first use their best efforts to discuss and negotiate
a
resolution of the dispute.
|
(2)
|
If
efforts to negotiate a resolution do not succeed within 5 business
days
after a written request for negotiation has been made, a party
may submit
to the dispute to mediation by sending a letter to the other party
requesting mediation. The dispute shall be mediated by a mediator
agreeable to the parties or, if the parties cannot agree, by a
mediator
selected by the American Arbitration Association. If the parties
cannot
agree to a mediator within 5 business days, either party may submit
the
dispute to the American Arbitration Association for the appointment
of a
mediator. Mediation shall commence within 10 business days after
the
mediator has been named.
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of Prestige Brands
Holdings, Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15(d)-15(f)) for the registrant and
have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
February 9, 2007
|
/s/
Mark
Pettie
|
Mark
Pettie
|
|
Chief
Executive Officer
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of Prestige Brands
Holdings, Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15(d)-15(f)) for the registrant and
have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
February 9, 2007
|
/s/
Peter
J.
Anderson
|
Peter
J. Anderson
|
|
Chief
Financial Officer
|
/s/
Mark
Pettie
|
|
Name: Mark
Pettie
|
|
Title:
Chief Executive
Officer
|
|
Date:
February
9, 2007
|
/s/
Peter
J.
Anderson
|
|
Name: Peter
J. Anderson
|
|
Title: Chief
Financial Officer
|
|
Date:
February
9, 2007
|