[
X ]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the quarterly period ended June 30,
2007
|
|
or
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the transition period from ____ to
_____
|
|
Commission
File Number: 001-32433
|
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 Principal Executive Offices, including zip code)
|
(914)
524-6810
|
(Registrant’s
telephone number, including area
code)
|
PART I. | FINANCIAL INFORMATION | |
Item 1. | Consolidated Financial Statements | |
Consolidated
Statements of Operations – three months ended June 30,
2007
|
||
and 2006 (unaudited)
|
2 | |
Consolidated Balance Sheets – June 30, 2007 and March 31, 2007 (unaudited) | 3 | |
Consolidated
Statement of Changes in Stockholders’ Equity and
|
||
Comprehensive Income – three months ended June 30, 2007
(unaudited)
|
4 | |
Consolidated
Statements of Cash Flows – three months ended
|
||
June 30, 2007 and 2006 (unaudited)
|
5 | |
Notes
to Unaudited Consolidated Financial Statements
|
6 | |
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition
|
|
and Results of Operations
|
22 | |
Item
3.
|
Quantitative and Qualitative Disclosure About Market Risk | 36 |
Item 4. | Controls and Procedures | 36 |
PART II. | OTHER INFORMATION | |
Item 1. | Legal Proceedings | 37 |
Item 1A. | Risk Factors | 37 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37 |
Item 6. | Exhibits | 37 |
Signatures |
PART
I
|
FINANCIAL
INFORMATION
|
Item
1.
|
FINANCIAL
STATEMENTS
|
Three
Months Ended June 30
|
||||||||
(In
thousands, except share data)
|
2007
|
2006
|
||||||
Revenues
|
||||||||
Net
sales
|
$ |
78,041
|
$ |
75,567
|
||||
Other
revenues
|
570
|
356
|
||||||
Total
revenues
|
78,611
|
75,923
|
||||||
Costs
of Sales
|
||||||||
Costs
of sales
|
37,322
|
36,325
|
||||||
Gross
profit
|
41,289
|
39,598
|
||||||
Operating
Expenses
|
||||||||
Advertising
and promotion
|
7,786
|
7,402
|
||||||
General
and administrative
|
7,646
|
6,434
|
||||||
Depreciation
|
124
|
220
|
||||||
Amortization
of intangible assets
|
2,627
|
2,193
|
||||||
Total
operating expenses
|
18,183
|
16,249
|
||||||
Operating
income
|
23,106
|
23,349
|
||||||
Other
income (expense)
|
||||||||
Interest
income
|
187
|
185
|
||||||
Interest
expense
|
(9,874 | ) | (9,977 | ) | ||||
Total
other income (expense)
|
(9,687 | ) | (9,792 | ) | ||||
Income
before income taxes
|
13,419
|
13,557
|
||||||
Provision
for income taxes
|
5,099
|
5,301
|
||||||
Net
income
|
$ |
8,320
|
$ |
8,256
|
||||
Basic
earnings per share
|
$ |
0.17
|
$ |
0.17
|
||||
Diluted
earnings per share
|
$ |
0.17
|
$ |
0.17
|
||||
Weighted
average shares outstanding:
|
||||||||
Basic
|
49,660
|
49,372
|
||||||
Diluted
|
50,038
|
50,005
|
Assets
|
June
30, 2007
|
March
31, 2007
|
||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ |
6,164
|
$ |
13,758
|
||||
Accounts
receivable
|
37,115
|
35,167
|
||||||
Inventories
|
28,510
|
30,173
|
||||||
Deferred
income tax assets
|
2,427
|
2,735
|
||||||
Prepaid
expenses and other current assets
|
2,419
|
1,935
|
||||||
Total
current assets
|
76,635
|
83,768
|
||||||
Property
and equipment
|
1,437
|
1,449
|
||||||
Goodwill
|
310,947
|
310,947
|
||||||
Intangible
assets
|
654,530
|
657,157
|
||||||
Other
long-term assets
|
9,128
|
10,095
|
||||||
Total
Assets
|
$ |
1,052,677
|
$ |
1,063,416
|
||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ |
16,392
|
$ |
19,303
|
||||
Accrued
interest payable
|
4,609
|
7,552
|
||||||
Income
taxes payable
|
1,144
|
--
|
||||||
Other
accrued liabilities
|
9,146
|
10,505
|
||||||
Current
portion of long-term debt
|
3,550
|
3,550
|
||||||
Total
current liabilities
|
34,841
|
40,910
|
||||||
Long-term
debt
|
443,913
|
459,800
|
||||||
Other
long-term liabilities
|
2,801
|
2,801
|
||||||
Deferred
income tax liabilities
|
117,126
|
114,571
|
||||||
Total
Liabilities
|
598,681
|
618,082
|
||||||
Commitments
and Contingencies – Note 13
|
||||||||
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
|
501
|
501
|
||||||
Additional
paid-in capital
|
379,685
|
379,225
|
||||||
Treasury
stock, at cost – 57 shares at June 30, 2007
and 55 shares at March 31, 2007
|
(44 | ) | (40 | ) | ||||
Accumulated
other comprehensive income
|
199
|
313
|
||||||
Retained
earnings
|
73,655
|
65,335
|
||||||
Total
stockholders’ equity
|
453,996
|
445,334
|
||||||
Total
Liabilities and Stockholders’ Equity
|
$ |
1,052,677
|
$ |
1,063,416
|
Common
Stock
Par
Shares Value
|
Additional
Paid-in
Capital
|
Treasury
Stock
Shares
Amount
|
Accumulated
Other
Compre-hensive
Income
|
Retained
Earnings
|
Totals
|
|||||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||
Balances
- March 31, 2007
|
50,060
|
$ |
501
|
$ |
379,225
|
55
|
$ | (40 | ) | $ |
313
|
$ |
65,335
|
$ |
445,334
|
|||||||||||||||||
Stock-based
compensation
|
--
|
--
|
460
|
--
|
--
|
--
|
--
|
460
|
||||||||||||||||||||||||
Purchase
of common stock for treasury
|
--
|
--
|
--
|
2
|
(4 | ) |
--
|
--
|
(4 | ) | ||||||||||||||||||||||
Components
of comprehensive income
|
||||||||||||||||||||||||||||||||
Net
income
|
--
|
--
|
--
|
--
|
--
|
--
|
8,320
|
8,320
|
||||||||||||||||||||||||
Amortization
of interest rate caps reclassified into earnings, net of income tax
expense of $94
|
--
|
--
|
--
|
--
|
--
|
149
|
--
|
149
|
||||||||||||||||||||||||
Unrealized
loss on interest rate caps, net of income tax benefit of
$166
|
--
|
--
|
--
|
--
|
--
|
(263 | ) |
--
|
(263 | ) | ||||||||||||||||||||||
Total
comprehensive income
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
8,206
|
||||||||||||||||||||||||
Balances
– June 30, 2007
|
50,060
|
$ |
501
|
$ |
379,685
|
57
|
$ | (44 | ) | $ |
199
|
$ |
73,655
|
$ |
453,996
|
Three
Months Ended June 30
|
||||||||
(In
thousands)
|
2007
|
2006
|
||||||
Operating
Activities
|
||||||||
Net
income
|
$ |
8,320
|
$ |
8,256
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
2,751
|
2,413
|
||||||
Deferred
income taxes
|
2,934
|
2,657
|
||||||
Amortization
of deferred financing costs
|
780
|
825
|
||||||
Stock-based
compensation
|
460
|
(9 | ) | |||||
Changes
in operating assets and liabilities
|
||||||||
Accounts
receivable
|
(1,948 | ) |
5,841
|
|||||
Inventories
|
1,663
|
2,471
|
||||||
Prepaid
expenses and other current assets
|
(483 | ) | (2,181 | ) | ||||
Accounts
payable
|
(2,911 | ) | (13 | ) | ||||
Income
taxes payable
|
1,144
|
(17 | ) | |||||
Accrued
liabilities
|
(4,302 | ) |
1,252
|
|||||
Net
cash provided by operating activities
|
8,408
|
21,495
|
||||||
Investing
Activities
|
||||||||
Purchases
of equipment
|
(111 | ) | (297 | ) | ||||
Net
cash used for investing activities
|
(111 | ) | (297 | ) | ||||
Financing
Activities
|
||||||||
Repayment
of long-term debt
|
(15,887 | ) | (7,932 | ) | ||||
Purchase
of common stock for treasury
|
(4 | ) | (6 | ) | ||||
Net
cash (used for) financing activities
|
(15,891 | ) | (7,938 | ) | ||||
Increase
(decrease) in cash
|
(7,594 | ) |
13,260
|
|||||
Cash
- beginning of period
|
13,758
|
8,200
|
||||||
Cash
- end of period
|
$ |
6,164
|
$ |
21,460
|
||||
Interest
paid
|
$ |
12,036
|
$ |
11,961
|
||||
Income
taxes paid
|
$ |
551
|
$ |
2,609
|
See
accompanying notes.
|
1.
|
Business
and Basis of Presentation
|
Nature
of Business
|
Basis
of Presentation
|
Years
|
|
Machinery
|
5
|
Computer
equipment
|
3
|
Furniture
and fixtures
|
7
|
Leasehold
improvements
|
5
|
Accounts
Receivable
|
June
30,
2007
|
March
31,
2007
|
|||||||
Accounts
receivable
|
$ |
37,645
|
$ |
35,274
|
||||
Other
receivables
|
1,170
|
1,681
|
||||||
38,815
|
36,955
|
|||||||
Less
allowances for discounts, returns and
uncollectible
accounts
|
(1,700 | ) | (1,788 | ) | ||||
$ |
37,115
|
$ |
35,167
|
Inventories
|
June
30,
2007
|
March
31,
2007
|
|||||||
Packaging
and raw materials
|
$ |
2,931
|
$ |
2,842
|
||||
Finished
goods
|
25,579
|
27,331
|
||||||
$ |
28,510
|
$ |
30,173
|
|
4.
|
Property
and Equipment
|
June
30,
2007
|
March
31,
2007
|
|||||||
Machinery
|
$ |
1,572
|
$ |
1,480
|
||||
Computer
equipment
|
585
|
566
|
||||||
Furniture
and fixtures
|
247
|
247
|
||||||
Leasehold
improvements
|
372
|
372
|
||||||
2,776
|
2,665
|
|||||||
Accumulated
depreciation
|
(1,339 | ) | (1,216 | ) | ||||
$ |
1,437
|
$ |
1,449
|
5.
|
Goodwill
|
Over-the-Counter
Healthcare
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
||||||||||||
Balance
– March 31, 2007
|
$ |
235,647
|
$ |
72,549
|
$ |
2,751
|
$ |
310,947
|
|||||||
Additions
|
--
|
--
|
--
|
--
|
|||||||||||
Balance
– June 30, 2007
|
$ |
235,647
|
$ |
72,549
|
$ |
2,751
|
$ |
310,947
|
6.
|
Intangible
Assets
|
Indefinite
Lived
Trademarks
|
Finite
Lived
Trademarks
|
Non
Compete
Agreement
|
Totals
|
|||||||||||||
Carrying
Amounts
|
||||||||||||||||
Balance
– March 31, 2007
|
$ |
544,963
|
$ |
139,470
|
$ |
196
|
$ |
684,629
|
||||||||
Additions
|
--
|
--
|
--
|
--
|
||||||||||||
Balance
– June 30, 2007
|
$ |
544,963
|
$ |
139,470
|
$ |
196
|
$ |
684,629
|
||||||||
Accumulated
Amortization
|
||||||||||||||||
Balance
– March 31, 2007
|
$ |
--
|
$ |
27,375
|
$ |
97
|
$ |
27,472
|
||||||||
Additions
|
--
|
2,616
|
11
|
2,627
|
||||||||||||
Balance
– June 30, 2007
|
$ |
--
|
$ |
29,991
|
$ |
108
|
$ |
30,099
|
Year
Ending June 30
|
||||
2008
|
$ |
10,507
|
||
2009
|
10,150
|
|||
2010
|
9,078
|
|||
2011
|
9,071
|
|||
2012
|
9,071
|
|||
Thereafter
|
61,690
|
|||
$ |
109,567
|
7.
|
Other
Accrued Liabilities
|
June
30,
2007
|
March
31,
2007
|
|||||||
Accrued
marketing costs
|
$ |
5,830
|
$ |
5,687
|
||||
Accrued
payroll
|
2,147
|
3,721
|
||||||
Accrued
commissions
|
397
|
335
|
||||||
Other
|
772
|
762
|
||||||
$ |
9,146
|
$ |
10,505
|
8.
|
Long-Term
Debt
|
June
30,
2007
|
March
31,
2007
|
|||||||
Senior
revolving credit facility (“Revolving Credit Facility”), which expires on
April 6, 2009 and 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 June 30, 2007, 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 June 30, 2007, the commitment fee was 0.50%
of the unused line. The Revolving Credit Facility is
collateralized by substantially all of the Company’s
assets.
|
$ |
--
|
$ |
--
|
||||
Senior
secured term loan facility (“Tranche B Term Loan Facility” and together
with the Revolving Credit Facility, the “Senior Credit 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 June
30,
2007, the applicable interest rate on the Tranche B Term Loan
Facility was 7.63%. Principal payments of $887,500 plus accrued
interest are payable quarterly. At June 30, 2007, the Company
may borrow up to a maximum amount of $200.0 million under the Tranche
B
Term Loan Facility. Current amounts outstanding under the
Tranche B Term Loan Facility mature on April 6, 2011, while any additional
amounts borrowed will mature on October 6, 2011. The Tranche B
Term Loan Facility is collateralized by substantially all of the
Company’s
assets.
|
321,463
|
337,350
|
||||||
Senior
Subordinated Notes that bear interest at 9.25% which is payable on
April
15th
and
October 15th
of each
year. The Senior Subordinated Notes mature on April 15, 2012;
however, the Company may redeem some or all of the Senior Subordinated
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 Subordinated
Notes. The Senior Subordinated 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
|
||||||
447,463
|
463,350
|
|||||||
Current
portion of long-term debt
|
(3,550 | ) | (3,550 | ) | ||||
$ |
443,913
|
$ |
459,800
|
Year
Ending June 30
|
||||
2008
|
$ |
3,550
|
||
2009
|
3,550
|
|||
2010
|
3,550
|
|||
2011
|
3,550
|
|||
2012
|
307,263
|
|||
Thereafter
|
126,000
|
|||
$ |
447,463
|
9.
|
Stockholders’
Equity
|
10.
|
Earnings
Per Share
|
Three
Months Ended June 30
|
||||||||
2007
|
2006
|
|||||||
Numerator
|
||||||||
Net
income
|
$ |
8,320
|
$ |
8,256
|
||||
Denominator
|
||||||||
Denominator
for basic earnings per share – weighted average shares
|
49,660
|
49,372
|
||||||
Dilutive
effect of unvested restricted common stock, options and stock appreciation
rights issued to employees and directors
|
378
|
633
|
||||||
Denominator
for diluted earnings per share
|
50,038
|
50,005
|
||||||
Earnings
per Common Share:
|
||||||||
Basic
|
$ |
0.17
|
$ |
0.17
|
||||
Diluted
|
$ |
0.17
|
$ |
0.17
|
11.
|
Share-Based
Compensation
|
Restricted
Shares
|
Shares
(000)
|
Weighted-Average
Grant-Date
Fair
Value
|
||||||
Nonvested
at March 31, 2006
|
198.0
|
$ |
12.32
|
|||||
Granted
|
--
|
--
|
||||||
Vested
|
--
|
--
|
||||||
Forfeited
|
(34.5 | ) |
12.89
|
|||||
Nonvested
at June 30, 2006
|
163.5
|
$ |
12.20
|
|||||
Nonvested
at March 31, 2007
|
294.4
|
$ |
11.05
|
|||||
Granted
|
264.0
|
12.52
|
||||||
Vested
|
--
|
--
|
||||||
Forfeited
|
(17.2 | ) |
11.19
|
|||||
Nonvested
at June 30, 2007
|
541.2
|
$ |
11.76
|
2007
|
2006
|
|||||||
Expected
volatility
|
33.2 | % |
--
|
|||||
Expected
dividends
|
--
|
--
|
||||||
Expected
term in years
|
6.0
|
--
|
||||||
Risk-free
rate
|
4.5 | % |
--
|
Options
|
Shares
(000)
|
Weighted-Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term
|
|||||||||
Outstanding
at March 31, 2006
|
61.8
|
$ |
12.95
|
4.3
|
||||||||
Granted
|
--
|
--
|
--
|
|||||||||
Exercised
|
--
|
--
|
--
|
|||||||||
Forfeited
or expired
|
(61.8 | ) |
12.95
|
--
|
||||||||
Outstanding
at June 30, 2006
|
--
|
$ |
--
|
--
|
||||||||
Outstanding
at March 31, 2007
|
--
|
$ |
--
|
--
|
||||||||
Granted
|
255.1
|
12.86
|
10.0
|
|||||||||
Exercised
|
--
|
--
|
--
|
|||||||||
Forfeited
or expired
|
--
|
--
|
--
|
|||||||||
Outstanding
at June 30, 2007
|
255.1
|
$ |
12.86
|
10.0
|
||||||||
Exercisable
at June 30, 2007
|
--
|
$ |
--
|
--
|
2007
|
2006
|
||
Expected
volatility
|
--
|
50.0%
|
|
Expected
dividends
|
--
|
--
|
|
Expected
term in years
|
--
|
2.8
|
|
Risk-free
rate
|
--
|
5.0%
|
SARS
|
Shares
(000)
|
Grant
Date
Stock
Price
|
Weighted-
Average
Remaining
Contractual
Term
|
|||||||||
Outstanding
at March 31, 2007
|
16.1
|
$ |
9.97
|
2.0
|
||||||||
Granted
|
--
|
--
|
--
|
|||||||||
Forfeited
or expired
|
--
|
--
|
--
|
|||||||||
Outstanding
at June 30, 2007
|
16.1
|
$ |
9.97
|
1.75
|
||||||||
Exercisable
at June 30, 2007
|
--
|
$ |
--
|
--
|
12.
|
Income
Taxes
|
Commitments
and Contingencies
|
Facilities
|
Equipment
|
Total
|
||||||||||
Year
Ending June 30,
|
||||||||||||
2008
|
$ |
650
|
$ |
122
|
$ |
772
|
||||||
2009
|
514
|
106
|
620
|
|||||||||
2010
|
11
|
87
|
98
|
|||||||||
2011
|
--
|
6
|
6
|
|||||||||
$ |
1,175
|
$ |
321
|
$ |
1,496
|
Concentrations
of Risk
|
15.
|
Business
Segments
|
Three
Months Ended June 30, 2007
|
||||||||||||||||
Over-the-Counter
|
Household
|
Personal
|
||||||||||||||
Healthcare
|
Cleaning
|
Care
|
Consolidated
|
|||||||||||||
Net
sales
|
$ |
42,426
|
$ |
29,345
|
$ |
6,270
|
$ |
78,041
|
||||||||
Other
revenues
|
--
|
542
|
28
|
570
|
||||||||||||
Total
revenues
|
42,426
|
29,887
|
6,298
|
78,611
|
||||||||||||
Cost
of sales
|
15,386
|
18,393
|
3,543
|
37,322
|
||||||||||||
Gross
profit
|
27,040
|
11,494
|
2,755
|
41,289
|
||||||||||||
Advertising
and promotion
|
5,881
|
1,628
|
277
|
7,786
|
||||||||||||
Contribution
margin
|
$ |
21,159
|
$ |
9,866
|
$ |
2,478
|
33,503
|
|||||||||
Other
operating expenses
|
10,397
|
|||||||||||||||
Operating
income
|
23,106
|
|||||||||||||||
Other
(income) expense
|
9,687
|
|||||||||||||||
Provision
for income taxes
|
5,099
|
|||||||||||||||
Net
income
|
$ |
8,320
|
Three
Months Ended June 30, 2006
|
||||||||||||||||
Over-the-Counter
|
Household
|
Personal
|
||||||||||||||
Healthcare
|
Cleaning
|
Care
|
Consolidated
|
|||||||||||||
Net
sales
|
$ |
39,598
|
$ |
29,738
|
$ |
6,231
|
$ |
75,567
|
||||||||
Other
revenues
|
356
|
--
|
356
|
|||||||||||||
Total
revenues
|
39,598
|
30,094
|
6,231
|
75,923
|
||||||||||||
Cost
of sales
|
14,397
|
18,154
|
3,774
|
36,325
|
||||||||||||
Gross
profit
|
25,201
|
11,940
|
2,457
|
39,598
|
||||||||||||
Advertising
and promotion
|
5,426
|
1,689
|
287
|
7,402
|
||||||||||||
Contribution
margin
|
$ |
19,775
|
$ |
10,251
|
$ |
2,170
|
32,196
|
|||||||||
Other
operating expenses
|
8,847
|
|||||||||||||||
Operating
income
|
23,349
|
|||||||||||||||
Other
(income) expense
|
9,792
|
|||||||||||||||
Provision
for income taxes
|
5,301
|
|||||||||||||||
Net
income
|
$ |
8,256
|
Over-the-Counter
|
Household
|
Personal
|
||||||||||||||
Healthcare
|
Cleaning
|
Care
|
Consolidated
|
|||||||||||||
Goodwill
|
$ |
235,647
|
$ |
72,549
|
$ |
2,751
|
$ |
310,947
|
||||||||
Intangible
assets
|
||||||||||||||||
Indefinite
lived
|
374,070
|
170,893
|
--
|
544,963
|
||||||||||||
Finite
lived
|
92,881
|
18
|
16,668
|
109,567
|
||||||||||||
466,951
|
170,911
|
16,668
|
654,530
|
|||||||||||||
$ |
702,598
|
$ |
243,460
|
$ |
19,419
|
$ |
965,477
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
|
Three
Month Period Ended June 30, 2007 compared to
the
|
|
Three
Month Period Ended June 30,
2006
|
2007
Revenues %
|
2006
Revenues
%
|
Increase
(Decrease) %
|
||||||||||||||||||||
OTC
Healthcare
|
$ |
42,426
|
54.0
|
$ |
39,598
|
52.2
|
$ |
2,828
|
7.1
|
|||||||||||||
Household
Cleaning
|
29,887
|
38.0
|
30,094
|
39.6
|
(207 | ) | (0.7 | ) | ||||||||||||||
Personal
Care
|
6,298
|
8.0
|
6,231
|
8.2
|
67
|
1.1
|
||||||||||||||||
$ |
78,611
|
100.0
|
$ |
75,923
|
100.0
|
$ |
2,688
|
3.5
|
2007
Gross Profit %
|
2006
Gross Profit
%
|
Increase
(Decrease) %
|
||||||||||||||||||||||
OTC
Healthcare
|
$ |
27,040
|
63.7
|
$ |
25,201
|
63.6
|
$ |
1,839
|
7.3
|
|||||||||||||||
Household
Cleaning
|
11,494
|
38.5
|
11,940
|
39.7
|
(446 | ) | (3.7 | ) | ||||||||||||||||
Personal
Care
|
2,755
|
43.7
|
2,457
|
39.4
|
298
|
12.1
|
||||||||||||||||||
$ |
41,289
|
52.5
|
$ |
39,598
|
52.2
|
$ |
1,691
|
4.3
|
2007
Contribution
Margin %
|
2006
Contribution
Margin
%
|
Increase
(Decrease) %
|
||||||||||||||||||||||
OTC
Healthcare
|
$ |
21,159
|
49.9
|
$ |
19,775
|
49.9
|
$ |
1,384
|
7.0
|
|||||||||||||||
Household
Cleaning
|
9,866
|
33.0
|
10,251
|
34.1
|
(385 | ) | (3.8 | ) | ||||||||||||||||
Personal
Care
|
2,478
|
39.3
|
2,170
|
34.8
|
308
|
14.2
|
||||||||||||||||||
$ |
33,503
|
42.6
|
$ |
32,196
|
42.4
|
$ |
1,307
|
4.1
|
Three
Months Ended June 30
|
||||||||
(In
thousands)
|
2007
|
2006
|
||||||
Cash
provided by (used for):
|
||||||||
Operating
Activities
|
$ |
8,408
|
$ |
21,495
|
||||
Investing
Activities
|
(111 | ) | (297 | ) | ||||
Financing
Activities
|
(15,891 | ) | (7,938 | ) |
·
|
An
increase of net income of $64,000 from $8.2 million for 2006 to $8.3
million for 2007,
|
·
|
A
reduction of $14.2 million in the components of operating assets
and
liabilities as the Company used cash to reduce its operating liabilities
in 2007, while generating cash in 2006 from the reduction of its
operating
assets, offset by
|
·
|
An
increase in non-cash expenses of $1.0 million from $5.9 million for
2006
to $6.9 million for 2007.
|
·
|
$321.5
million of borrowings under the Tranche B Term Loan Facility,
and
|
·
|
$126.0
million of 9.25% Senior Subordinated Notes due
2012.
|
·
|
Have
a leverage ratio of less than 5.0 to 1.0 for the quarter ended June
30,
2007, 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 June 30, 2007, 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 June 30, 2007, 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
|
$ |
447.5
|
$ |
3.6
|
$ |
7.1
|
$ |
310.8
|
$ |
126.0
|
||||||||||
Interest
on long-term debt (1)
|
146.7
|
36.2
|
71.5
|
39.0
|
--
|
|||||||||||||||
Operating
leases
|
1.5
|
0.8
|
0.7
|
--
|
--
|
|||||||||||||||
Total
contractual cash obligations
|
$ |
595.7
|
$ |
40.6
|
$ |
79.3
|
$ |
349.8
|
$ |
126.0
|
(1)
|
Represents
the estimated interest obligations on the outstanding balances of
the
Revolving Credit Facility, Tranche B Term Loan Facility and Senior
Subordinated Notes, together, assuming scheduled principal payments
(based
on the terms of the loan agreements) were made and assuming a weighted
average interest rate of 8.09%. 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 $3.2 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 $2.7
million.
|
Over-the-Counter
Healthcare
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
|||||||||||||
Goodwill
|
$ |
235,647
|
$ |
72,549
|
$ |
2,751
|
$ |
310,947
|
||||||||
Intangible
assets
|
||||||||||||||||
Indefinite
lived
|
374,070
|
170,893
|
--
|
544,963
|
||||||||||||
Finite
lived
|
92,881
|
18
|
16,668
|
109,567
|
||||||||||||
466,951
|
170,911
|
16,668
|
654,530
|
|||||||||||||
$ |
702,598
|
$ |
243,460
|
$ |
19,419
|
$ |
965,477
|
·
|
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.
|
·
|
Rules
and regulations promulgated by regulatory
agencies,
|
·
|
Sufficiency
of the evidence in support of our
position,
|
·
|
Anticipated
costs to support our position, and
|
·
|
Likelihood
of a positive outcome.
|
·
|
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 financing agreements on our
operations.
|
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
|
|||||||||||
4/1/07
- 4/30/07
|
--
|
$ |
--
|
--
|
--
|
||||||||||
5/1/07
– 5/31/07
|
1,968
|
1.70
|
--
|
--
|
|||||||||||
6/1/07
- 6/30/07
|
--
|
--
|
--
|
--
|
|||||||||||
Total
|
1,968
|
$ |
1.70
|
--
|
--
|
Prestige Brands Holdings, Inc. | |||
Registrant | |||
Date: | August 9, 2007 | By: | /s/ PETER J. ANDERSON |
Peter J. Anderson | |||
Chief Financial Officer | |||
(Principal
Financial Officer and
|
|||
Duly
Authorized Officer)
|
|||
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.
|