UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





x
            Annual
      Report Pursuant to Section 13 or 15(d) of
      the Securities Exchange Act of 1934 for the Fiscal year ended March 31,
      2009




OR




o
            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





PRESTIGE BRANDS HOLDINGS,
      INC.(Exact
      name of Registrant as specified in its charter)Delaware
                    (State
      or other jurisdiction of
                    incorporation
      or organization)
                  
                  
                  
                  20-1297589
                    (I.R.S.
      Employer Identification No.)90
      North Broadway
                    Irvington,
      New York 10533
                    (914)
      524-6810Securities
      registered pursuant to Section 12(b) of the Act:Title
      of each class:
                  
                  Name
      of each exchange on which registered:Common
      Stock, par value $.01 per share
                  
                  New
      York Stock ExchangeSecurities
      registered pursuant to Section 12(g) of the Act:  None





Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities


Act.           Yes
oNo þ





Indicate
by check mark if the Registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the


Act.           Yes
oNo þ





Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days.  Yes þNo o




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  þ





Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.  (Check one):




Large accelerated
      filer
              o
              Accelerated filer
              þ
              Non-accelerated
      filer
              o
              Smaller reporting
      company
              o
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes  ̈     No
 ̈




Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Act).  Yes oNo þ





The
aggregate market value of voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold as of the last business day of the Registrant’s most recently
completed second fiscal quarter ended September 30, 2008 was $333.3
million.





As of
June 1, 2009, the Registrant had 49,936,277 shares of common stock
outstanding.





Documents
Incorporated by Reference


Portions
of the Registrant’s Definitive Proxy Statement for the 2009 Annual Meeting of
Stockholders (the “2009 Proxy Statement”) presently scheduled for August 4, 2009
are incorporated by reference into Part III of this Annual Report on Form 10-K
to the extent described herein.











Table
of Contents





PagePart
      IItem
      1.
                      Business
                      1Item
      1A.
                      Risk
      Factors
                      16Item
      1B.
                      Unresolved
      Staff Comments
                      26Item
      2.
                      Properties
                      26Item
      3.
                      Legal
      Proceedings
                      26Item
      4.
                      Submission
      of Matters to a Vote of Security Holders
                      28Part
      IIItem
      5.
                      Market for Registrants' Common
      Equity, Related Stockholder
                        Matters and Issuer Purchases of
      Equity Securities
                      29Item
      6.
                      Selected 
      Financial Data
                      31Item
      7.
                      Management's
      Discussion and Analysis of Financial Condition
                        and
      Results of Operations
                      32Item
      7A.
                      Quantitative
      and Qualitative Disclosures About market Risk
                      51Item
      8.
                      Financial
      Statements and Supplementary Data
                      51Item
      9.
                      Changes
      in and Disagreements with Accountants on Accounting
                        and
      Financial Disclosure
                      51Item
      9A.
                      Controls and
      Procedures
                      52Item
      9B.
                      Other
      Information
                      52Part
      IIIItem
      10.
                      Directors,
      Executive Officers and Corporate Governance
                      53Item
      11.
                      Executive
      Compensation
                      53Item
      12.
                      Security
      Ownership of Certain Beneficial Owners and Management
                        and Related Stockholder
      Matters
                      53Item
      13.
                      Certain
      Relationships and Related Transactions, and Director
      Independence
                      53Item
      14.
                      Principal
      Accounting Fees and Services
                      53Part
      IVItem
      15.
                      Exhibits
      and Financial Statement Schedules
                      54Trademarks
      and Trade NamesTrademarks
      and trade names used in this Annual Report on Form 10-K are the property
      of Prestige Brands Holdings, Inc. or its subsidiaries, as the case may
      be.  We have utilized the ® and TM symbols the first time
      each trademark or trade name appears in this Annual Report on Form
      10-K.







Part
I.







ITEM 1.
            BUSINESS





Overview





Unless
otherwise indicated by the context, all references in this Annual Report on Form
10-K to “we”, “us”, “our”, “Company” or “Prestige” refer to Prestige Brands
Holdings, Inc. and its subsidiaries.  Similarly, reference to a year
(e.g. “2009”) refers to our fiscal year ended March 31 of that
year.





We sell
well-recognized, brand name over-the-counter healthcare, household cleaning and
personal care products in a global marketplace.  We use the strength
of our brands, our established retail distribution network, a low-cost operating
model and our experienced management team to our competitive advantage to
compete in these categories and, as a result, grow our sales and
profits.  Our ultimate success is dependent on our ability
to:





·
            Develop
      effective sales, advertising and marketing
  programs,


·
            Grow
      our existing product lines,


·
            Develop
      innovative new products,


·
            Acquire
      new brands,


·
            Respond
      to the technological advances and product introductions of our
      competitors, and


·
            Develop
      a larger presence in international
markets.





Our major
brands, set forth in the table below, have strong levels of consumer awareness
and retail distribution across all major channels.  These brands
accounted for approximately 94.5%, 94.3% and 94.1% of our net revenues for 2009,
2008 and 2007, respectively.


Major Brands
              
              Market
                  Position (1)
              
              Market Segment (2)
              
              Market
                Share (3)
                (%)
              
              ACV(4)
                (%)Over-the-Counter
      Healthcare:Chloraseptic®
              
              #1
              
              Sore
      Throat Liquids/Lozenges
              
              38.9
              
              95Clear
      Eyes®
              
              #2
              
              Eye
      Allergy/Redness Relief
              
              16.4
              
              89Compound
      W®
              
              #2
              
              Wart
      Removal
              
              30.7
              
              90Wartner®
              
              #3
              
              Wart
      Removal
              
              8.2
              
              56The
      Doctor’s® NightGuardTM
              
              #1
              
              Bruxism
      (Teeth Grinding)
              
              43.1
              
              46The
      Doctor’s® Brushpicks®
              
              #2
              
              Interdental
      Picks
              
              20.1
              
              64Little
      Remedies®
              
              #5
              
              Pediatric
      Healthcare
              
              3.1
              
              84Murine®
              
              #1
              
              Personal
      Ear Care
              
              20.8
              
              86New-Skin®
              
              #1
              
              Liquid
      Bandages
              
              44.5
              
              42Dermoplast®
              
              #2
              
              Pain
      Relief Sprays
              
              14.6
              
              47Household
      Cleaning:Comet®
              
              #2
              
              Abrasive
      Tub and Tile Cleaner
              
              31.4
              
              99Chore
      Boy®
              
              #1
              
              Soap
      Free Metal Scrubbers
              
              28.3
              
              37Spic
      and Span®
              
              #6
              
              Dilutable
      All Purpose Cleaner
              
              2.7
              
              49Personal
      Care:Cutex®
              
              #1
              
              Nail
      Polish Remover
              
              25.2
              
              78Denorex®
              
              #5
              
              Medicated
      Shampoo
              
              1.3
              
              42





(1)
            The
      data included in this Annual Report on Form 10-K as regards the market
      share and ranking for our brands, has been prepared by the Company, based
      in part on data generated by the independent market research firm,
      Information Resources, Inc. (“Information
      Resources”).  Information Resources reports retail sales data in
      the food, drug and mass merchandise markets.  However,
      Information Resources’ data does not include Wal-Mart point of sale data,
      as Wal-Mart ceased providing sales data to the industry in
      2001.  Although Wal-Mart represents a significant portion of the
      mass merchandise market for us, as well as our competitors, we believe
      that Wal-Mart’s exclusion from the Information Resources data analyzed by
      the Company above does not significantly change our market share or
      ranking relative to our
competitors.




-1-


Our
products are sold through multiple channels, including mass merchandisers, drug,
grocery, dollar and club stores, which allows us to effectively launch new
products across all distribution channels and reduce our exposure to any single
distribution channel.  We focus our internal resources on our core
competencies:





·
            Effective
      Marketing and Advertising,


·
            Sales
      Excellence,


·
            Extraordinary
      Customer Service, and


·
            Innovation
      and Product Development.





While we
perform the production planning and oversee the quality control aspects of the
manufacturing, warehousing and distribution of our products, we outsource the
operating elements of these functions to entities that offer expertise in these
areas and cost efficiencies due to economies of scale.  Our operating
model allows us to focus on our marketing programs and product development and
innovation, which we believe enables us to achieve attractive margins while
minimizing capital expenditures and working capital requirements.





We have
developed our brand portfolio through the acquisition of strong and
well-recognized brands from larger consumer products and pharmaceutical
companies, as well as other brands from smaller private
companies.  While the brands we have purchased from larger consumer
products and pharmaceutical companies have long histories of support and brand
development, we believe that at the time we acquired them they were considered
“non-core” by their previous owners.  Consequently, they did not
benefit from the focus of senior level personnel or strong marketing
support.  We also believe that the brands we have purchased from
smaller private companies were constrained by the limited financial resources of
their prior owners.  After adding a brand to our portfolio, we seek to
increase its sales, market share and distribution in both new and existing
channels through our established retail distribution network.  We
pursue this growth through increased advertising and promotion, new sales and
marketing strategies, improved packaging and formulations and innovative new
products.  Our business, business model and the following competitive
strengths and growth strategy, however, face various risks that are described in
“Risk Factors” in Item 1A of this Annual Report on Form 10-K.








Competitive
Strengths





Diversified
Portfolio of Well-Recognized and Established Consumer Brands


We own
and market well-recognized consumer brands, many of which were established over
60 years ago.  Our diverse portfolio of products provides us with
multiple sources of growth and minimizes our reliance on any one product or
category.  We provide significant marketing support to our key brands
that is designed to enhance our sales growth and our long-term
profitability.  The markets in which we sell our products, however,
are highly competitive and include numerous national and global manufacturers,
distributors, marketers and retailers.  Many of these competitors have
greater research and development and financial resources than us and may be able
to spend more aggressively on advertising and marketing and research and
development, which may have an adverse effect on our competitive
position.








(2)
            “Market
      segment” has been defined by the Company based on its product offerings
      and the categories in which it
competes.


(3)
            “Market
      share” is based on sales dollars in the United States, as calculated by
      Information Resources for the 52 weeks ended March 22,
    2009.


(4)
            “ACV”
      refers to the All Commodity Volume Food Drug Mass Index, as calculated by
      Information Resources for the 52 weeks ended March 22,
      2009.  ACV measures the weighted sales volume of stores that
      sell a particular product out of all the stores that sell products in that
      market segment generally.  For example, if a product is sold by
      50% of the stores that sell products in that market segment, but those
      stores account for 85% of the sales volume in that market segment, that
      product would have an ACV of 85%.  We believe that ACV is a
      measure of a product’s importance to major retailers.  We
      believe that a high ACV evidences a product’s attractiveness to consumers,
      as major national and regional retailers will carry products that are
      attractive to their customers.  Lower ACV measures would
      indicate that a product is not as available to consumers because the major
      retailers do not carry products for which consumer demand may not be as
      high.  For these reasons, we believe that ACV is an important
      measure for investors to gauge consumer awareness of the Company’s product
      offerings.





-2-


Strong
Competitor in Attractive Categories


We
compete in product categories that address recurring consumer
needs.  We believe we are well positioned in these categories due to
the long history and consumer awareness of our brands, our strong market
positions and our low-cost operating model.  However, a significant
increase in the number of product introductions by our competitors in these
markets could have a material adverse effect on our business, financial
condition and results from operations.





Proven
Ability to Develop and Introduce New Products


We focus
our marketing and product development efforts on the identification of
underserved consumer needs, the design of products that directly address those
needs and the ability to extend our highly recognizable brand names to other
products.  Demonstrative of this philosophy, in 2009 we introduced
Chloraseptic Allergen
Block and Little
Allergies Allergen Block, Food and Drug Administration (“FDA”) cleared,
patented topical gels that help block allergens on contact at the nose to help
prevent allergic symptoms, such as runny nose, sneezing and nasal
congestion.  These product introductions followed a successful 2008
when we introduced Comet Mildew SprayGel, a high
viscosity mildew stain remover spray.  During 2008, we also restaged
Clear Eyes for Dry Eyes ACR Relief as
Clear Eyes for Itchy
Eyes to address the needs of allergy sufferers.  Similarly, our 2007
product introductions included Clear Eyes Maximum Redness
Relief, a fast
acting formula that lubricates as it relieves redness, and Little Tummys®Gripe Water, an herbal
supplement with ginger and fennel for safe, gentle relief of infant colic,
hiccups and upset stomach.  Although line extensions and new product
introductions are important to the overall growth of a brand, our efforts may
reduce sales of existing products within that brand.  In addition,
certain of our product introductions may not be successful.  While we
did not discontinue any of our recent product introductions during 2009 or 2008,
we did discontinue MurineHomeopathic Allergy Eye Relief, MurineHomeopathic Tired
Eye Relief andChlorasepticDaily Defense Strips in 2007,all of which had been
introduced in 2006.





Efficient
Operating Model


To gain
operating efficiencies, we directly manage the production planning and quality
control aspects of the manufacturing, warehousing and distribution of our
products, while we outsource the operating elements of these functions to
well-established third-party providers.  This approach allows us to
benefit from their core competencies and maintain a highly variable cost
structure, with low overhead, limited working capital requirements and minimal
investment in capital expenditures as evidenced by the following:





Gross
                    Profit
      %
                  G&A
      %
                    To
      Net Sales
                  CapEx
      %
                    To
      Net Sales2009
                  52.2
                  10.2
                  0.22008
                  51.6
                  9.6
                  0.12007
                  51.9
                  8.9
                  0.2





In 2009,
our gross profit increased 60 basis points due to the Company’s ongoing efforts
to reduce its supply chain costs, a favorable sales mix, and the absence of
the voluntary withdrawal costs incurred in 2008.  During 2008, our
gross profit was adversely affected by the inventory costs associated with the
voluntary withdrawal from the marketplace of two medicated pediatric cough and
cold products marketed under the Little Remedies brand as part
of an industry-wide withdrawal of certain medicated pediatric cough and cold
products.  During 2007 our gross margin was adversely impacted by the
obsolescence reserves associated with certain of our Chloraseptic
inventory.  General and Administrative costs increased as a percentage
of sales as a result of the $13.9 million or 4.3% reduction of sales for 2009
versus 2008.  During 2007 and 2008, our general and administrative
expenses have been impacted by the overall growth of the organization and
professional fees incurred to protect our intellectual property and other
rights.  Our operating model, however, requires us to depend on
third-party providers for manufacturing and logistics services.  The
inability or unwillingness of our third-party providers to supply or ship our
products could have a material adverse effect on our business, financial
condition and results from operations.





Management
Team with Proven Ability to Acquire, Integrate and Grow Brands


Our
business has grown through acquisition, integration and expansion of the many
brands we have purchased.  Our management team has significant
experience in consumer product marketing, sales, legal and regulatory
compliance, product development and customer service.  Unlike many
larger consumer products companies


-3-


which we
believe often entrust their smaller brands to successive junior employees, we
dedicate experienced managers to specific brands.  Since the Company
has approximately 100 employees, we seek more experienced personnel to bear the
substantial responsibility of brand management and effectuate our growth
strategy.  These managers nurture the brands as they grow and
evolve.








Growth
Strategy





In order
to continue to enhance our brands and drive growth we focus our growth strategy
on our core competencies:





·
            Effective
      Marketing and Advertising,


·
            Sales
      Excellence,


·
            Extraordinary
      Customer Service,


·
            Innovation
      and Product Development, and


·
            Strict
      Adherence to Quality and Regulatory
Standards.





We
execute this strategy through:





·
            Investments
      in Advertising and Promotion


We will
invest in advertising and promotion to drive the growth of our key
brands.  Our marketing strategy is focused primarily on
consumer-oriented programs that include media advertising, targeted coupon
programs and in-store advertising.  While the absolute level of
marketing expenditures differs by brand and category, we have often increased
the amount of investment in our brands after acquiring them.  For
example, in 2009, we spent heavily behind the launch of our innovative allergen
block products introduced under the Chloraseptic and Little Remedies
brands.  In 2008, a very active year, we advertised and promoted the
introduction of Comet
Mildew SprayGel, Murine
Earigate and Chloraseptic Liquid Center
Lozenges.  Given the competition in our industry and the contraction
of the U.S. economy, there is a risk that our marketing efforts may not result
in increased sales and profitability.  Additionally, no assurance can
be given that we can maintain these increased sales and profitability levels
once attained.





·
            Growing
      our Categories and Market Share with Innovative New
    Products


One of
our strategies is to broaden the categories in which we participate and our
share within those categories through ongoing product innovation.  As
mentioned earlier, in 2009 we introduced the Chloraseptic and Little Allergies Allergen
Block products which occupy unique positions in the allergy relief
category.  In addition, we continue to expand the Clear Eyes product line, most
recently with Clear
Eyes Tears which followed the introduction of Clear Eyes Maximum Redness
Relief in 2007.  In 2008, we launched Comet Mildew SprayGel, an
innovative new product to address specific needs and capitalize on the consumer
awareness of the Comet
brand.  This successful product introduction was the primary driver of
the brand's continued growth.  The Company’s planned advertising and
promotion program behind Allergen Block is expected to provide significant
support for the introduction of these products consistent with the Company’s
strategy to extend our product line into new categories.  This
introduction allows the Chloraseptic and Little Remedies brands to
compete in the allergy relief category, a category in which we have not
previously participated.  While there is always a risk that sales of
existing products may be reduced by new product introductions, our goal is to
grow the overall sales of our brands.





·
            Increasing
      Distribution Across Multiple
Channels


Our broad
distribution base ensures that our products are well positioned across all
available channels and that we are able to participate in changing consumer
retail trends.  To ensure continued sales growth, we have altered our
focus and have expanded our reliance on a direct sales force while reducing our
reliance on brokers.  This philosophy will allow us to
better:





·
            Know
      our customer,





·
            Service
      our customer, and





-4-


·
            Support
      our customer.





While we
make great efforts to both maintain our customer base and grow in new markets,
there is a risk however, that we may not be able to maintain or enhance our
relationships across distribution channels, which could adversely impact our
sales, business, financial condition and results from operations.





·
            Growing
      Our International Business


International
sales beyond the borders of North America represented 3.5%, 4.0% and 4.6% of
revenues in 2009, 2008, and 2007, respectively.  We have designed and
developed both product and packaging for specific international markets and
expect that our international revenues will grow as a percentage of total
revenues.  In addition to Clear Eyes, Murine and Chloraseptic, which are
currently sold internationally, we license The Procter & Gamble Company
(“Procter & Gamble”) to market the Comet brand in Eastern
Europe.  Since a number of our other brands have previously been sold
internationally, we seek to expand the number of brands sold through our
existing international distribution network and continue to identify additional
distribution partners for further expansion into other international
markets.





·
            Pursuing
      Strategic Acquisitions


Our
management team has a solid track record of successfully identifying, acquiring
and integrating new brands.  For example, during 2007 we purchased the
Wartner brand of
over-the-counter wart treatment products to augment our ownership of Compound W, the number two
selling brand in the wart treatment category.  While we believe that
there will continue to be a pipeline of acquisition candidates for us to
investigate, strategic fit and relative cost are of the utmost importance in our
decision to pursue such opportunities.  We believe our business model
will allow us to integrate any future acquisitions in an efficient manner, while
also providing opportunities to realize significant cost
savings.  However, there is a risk that our operating results could be
adversely affected in the event we do not realize all of the anticipated
operating synergies and cost savings from future acquisitions, we do not
successfully integrate such acquisitions or we pay too much for these
acquisitions.  Provisions in our senior credit facility and the
indenture governing our senior subordinated notes, however, may limit our
ability to engage in strategic acquisitions.  Should the Company
identify a significant strategic acquisition, it would be required to
restructure its credit facility in order to consummate such an
acquisition.








Market
Position





During
2009 and 2008, approximately 78% of our net revenues were from brands with a
number one or number two market position, compared with approximately 77% during
2007.  Such brands includeChloraseptic,Clear Eyes,Chore Boy, Comet,Compound W,Cutex,
Dermoplast, The
Doctor’sandNew-Skin.





See the
“Business” section on page 1 of this document for information regarding market
share and ACV calculations.








Our
History and Accomplishments





We were
originally formed in 1996 as a joint venture of Medtech Labs and The Shansby
Group (a private equity firm), to acquire certain over-the-counter drug brands
from American Home Products.  Since 2001, our portfolio of brand name
products has expanded from over-the-counter healthcare to include household
cleaning and personal care products.  We have added brands to our
portfolio principally by acquiring strong and well-recognized brands from larger
consumer products and pharmaceutical companies.  In February 2004,
GTCR Golder Rauner II, LLC (“GTCR”), a private equity firm, acquired our
business from the owners of Medtech Labs and The Shansby Group.  In
addition, we acquired the Spic & Span business in March 2004.





In April
2004, we acquired Bonita Bay Holdings, Inc., the parent holding company of
Prestige Brands International, Inc., which conducted its business under the
“Prestige” name.  After we completed the Bonita Bay acquisition,
we began to conduct our business under the “Prestige” name as
well.  The Bonita Bay brand portfolio included Chloraseptic, Comet, Clear
Eyes andMurine.




-5-


In
October 2004, we acquired the Little Remedies brand of
pediatric over-the-counter healthcare products through our purchase of Vetco,
Inc.  Products offered under the Little Remedies brand
includeLittle Noses®
nasal products,Little
Tummys digestive health products,Little Colds® cough/cold
remedies andLittleRemedies
New Parents Survival Kits.  TheLittle Remedies products
deliver relief from common childhood ailments without unnecessary additives such
as saccharin, alcohol, artificial flavors, coloring dyes or harmful
preservatives.





In
February 2005, we raised $448.0 million through an initial public offering of
28.0 million shares of common stock.  We used the net proceeds of the
offering ($416.8 million), plus $3.0 million from our revolving credit facility
and $8.8 million of cash on hand to (i) repay $100.0 million of our existing
senior indebtedness, (ii) redeem $84.0 million in aggregate principal amount of
our existing 9 1/4% senior subordinated notes, (iii) repurchase an aggregate of
4.7 million shares of our common stock held by the investment funds affiliated
with GTCR and TCW/Crescent Mezzanine, LLC (“TWC/Crescent”) for $30.2 million,
and (iv) redeem all outstanding senior preferred units and class B preferred
units of one of our subsidiaries for $199.8 million.





In
October 2005, we acquired the “Chore Boy” brand of metal
cleaning pads, scrubbing sponges, and non-metal soap pads.  The brand
has over 84 years of history in the scouring pad and cleaning accessories
categories.





In
November 2005, we acquired Dental Concepts LLC (“Dental Concepts”), a marketer
of therapeutic oral care products sold under “The Doctor’s”
brand.  The business is driven primarily by two niche segments,
bruxism (nighttime teeth grinding) and interdental cleaning.  Its
products include The
Doctor’s NightGuard Dental Protector,
the first FDA cleared over-the-counter treatment for bruxism and The Doctor’s BrushPicks,which are
disposable interdental toothpicks.





In
September 2006, we acquired Wartner USA B.V. (“Wartner”), the owner of the Wartnerbrand of
over-the-counter wart treatment products.  The Company expects that
the Wartner brand,
which is the number three brand in the United States over-the-counter wart
treatment category, will continue to enhance the Company’s market position in
the category, complementing Compound W.





While we
did not make any strategic acquisitions in either 2008 or 2009, during the
second half of 2009 we strengthened our working capital position through the
accumulation of a $30.0 million cash cushion.  Additionally during
2008 and 2009 we repaid $85.0 million of our senior debt with free cash flow
generated from operations.  These debt repayments reduce our interest
costs on a go-forward basis, and favorably affect our interest coverage and our
debt-to-equity ratios.








Products





We
conduct our operations through three principal business segments:





·
            Over-the-counter
      healthcare,


·
            Household
      cleaning, and


·
            Personal
      care.





Over-the-Counter
Healthcare Segment





Our
portfolio of over-the-counter healthcare products consists primarily ofClear Eyes, Murine, Chloraseptic,
Compound W, Wartner, theLittle Remedies line of
pediatric healthcare products, The Doctor’s brand of oral
care products and first aid products such asNew-Skin andDermoplast.  Our
other brands in this category includePercogesic®, Momentum®, Freezone®,
Mosco®, Outgro®,
Sleep-Eze®andCompoz®.In 2009, the over-the-counter healthcare segment
accounted for 56.6% of our revenues compared to 56.2% and 54.8% in 2008 and
2007, respectively.





-6-


Clear
Eyes


Clear Eyes, with an ACV of
94.0%, has been marketed as an effective eye care product that helps take
redness away and helps moisturize the eye.  In 2009, we launched Clear Eyes Tears to provide
gentle, long lasting relief from dry eyes.  In 2008, we launched Clear Eyes for Itchy Eyes to
address eye symptoms related to allergies.  In February 2007, we
introduced Clear
EyesMaximum Redness
Relief.  Clear Eyes
isamong the leading brands in the over-the-counter personal eye care
category.  The 0.5 oz. size ofClear Eyes redness relief
eye drops is the number two selling product in the eye allergy redness relief
category andClear Eyes
is the number two brand in that category with 16.4% market share.





Murine


Murine products consist of
lubricating, soothing eye drops and ear wax removal aids.  Murine has been on store
shelves for over 100 years and is the leading brand in the over-the-counter ear
care category with a market share of 20.8%.  The ear drop category is
composed of products that loosen earwax and treat trapped water (swimmer’s ear)
and ear aches.  In 2008, we expanded our market share in the ear care
category with the introduction of MurineEarigate, Ear Cleaning
System, a natural and hypoallergenic wax removal system with a patented “reverse
spray action” that safely rinses away ear wax without harming the user’s
sensitive eardrums.  While the introduction of Murine Earigate has been met
with challenges in the marketplace, the Company continues to explore options to
enhance sell through at the retail level.





Chloraseptic


Chloraseptic was originally
developed by a dentist in 1957 to relieve sore throats and mouth pain.Chloraseptic’s
6 oz. cherry liquid sore throat spray is the number one selling product in
the sore throat liquids/sprays segment.  TheChloraseptic brand has an
ACV of 95.0% and is number one in sore throat liquids/sprays with a 47.1% market
share.





Historically,Chloraseptic products were
limited to sore throat lozenges and traditional sore throat sprays that were
stored and used at home.  In 2006, we introduced our first dual-action
product, Sugar Free
Chloraseptic Sore Throat plus Cough Lozenges.  In 2007, we
launched another dual action product, Chloraseptic Center-Filled
Sore Throat Plus Coating Protection lozenges, designed to stop sore throat pain
fast, and to soothe sore throats with the unique center-filled
technology.  In 2009, we launched Chloraseptic Allergen Block,
an FDA cleared, patented topical gel that helps block allergens on contact at
the point of entry, the nose, to help prevent runny nose, sneezing and nasal
congestion.  These product introductions enable us to marketChloraseptic products as a
system, encourage consumers to buy multiple types ofChloraseptic products, and
increase volume for the entire product line.  Also in 2009, we
introduced Chloraseptic
Max Lozenges and Chloraseptic Max Spray to
treat severe cough/cold symptoms.





Compound
W


Compound W has a long
heritage; its wart removal products having been introduced almost 50 years
ago.  Compound
W products are specially designed to provide relief from common and
plantar warts and are sold in multiple forms of treatment depending on the
consumer’s need, including Fast-Acting Liquid, Fast-Acting Gel, One Step Pads
for Kids, One Step Pads for Adults and Freeze Off®, a cryogenic-based wart
removal system.  We believe thatCompound W is one of the
most trusted names in wart removal.





Compound W is the number two
wart removal brand in the United States with a 30.7% market share and an ACV of
90.0%.  SinceCompound W’s acquisition, we have successfully expanded the wart remover
category and enhanced the value associated with theCompound W brand by
introducing several new products, such as CompoundWFreeze Off, Fast Acting
Liquid, One Step Pads for Kids, Waterproof One Step Pads and Invisible Strips
Pads.  CompoundWFreeze Off has achieved
high trade acceptance, as it allows consumers the convenience of a fast-acting
wart freezing treatment similar to that used by doctors.





Wartner


Wartner is the number three
brand in the United States in the wart removal category with a 16.6% share of
the cryogenic segment and an ACV of 56.0%.  Launched in 2003, Wartner is recognized by
consumers and the trade as the first ever over-the-counter wart freezing
(cryogenic therapy) treatment in the U.S. and Canada.





-7-


The
Doctor’s


The Doctor’s is a line of
products designed to help consumers that are highly motivated to maintain good
oral hygiene in between dental office visits.  The product line was
part of the 2006 acquisition of Dental Concepts LLC.  The market is
driven primarily by two niche segments, bruxism (nighttime teeth grinding) and
interdental cleaning.  The Doctor’s NightGuard dental protector
was the first FDA cleared over-the-counter treatment for bruxism and The Doctor’s BrushPicks are disposable
interdental toothpicks.  The Doctor’s OraPik is a
nondisposable, interdental pick and mirror.





Little
Remedies


Little Remedies is a full
line of pediatric over-the-counter products that contain no alcohol, saccharin,
artificial flavors or coloring dyes including: (i) Little Noses, a product line
consisting of an assortment of saline products, including the recently launched
Saline Mist, (ii) Little
Colds, aproduct line consisting
of a multi-symptom cold relief formula, sore throat reliefSaf-T-Pops®, a cough relief
formula, and a combined decongestant plus cough relief formula, (iii) Little Tummys, a product line
consisting of gas relief drops, laxative drops, as well as gripe water, an
herbal supplement used to ease discomfort often associated with colic and
hiccups, and (iv) Little Teethers, a
product line offering teething relief in two formats, a gel and homeopathic
tablets.  In 2009, we launched Little Allergies®
Allergen Block, leveraging the same technology as Chloraseptic Allergen Block,
in a drug free formulation that helps block allergens on contact to help prevent
allergic symptoms such as runny nose, sneezing and nasal congestion in
children.





New-Skin


New-Skin, believed to have
originated over 100 years ago, consists of liquid bandages that are designed to
replace traditional bandages in an effective and easy to use form for the
protection of small cuts and scrapes.  EachNew-Skin product works by
forming a thin, clear, protective covering after it is applied to the skin.New-Skin competes
in the liquid bandage segment of the first aid bandage category where it has a
44.5% market share and a 42.0% ACV.  In 2009, we relaunched Dermoplast Poison Ivy
Treatment, the only poison ivy wash that contains over-the-counter medicine,
under the New-Skin
label to better position the product and leverage the New-Skin name.





Dermoplast


Dermoplast is an aerosol
spray anesthetic for minor topical pain that was traditionally a “hospital-only”
brand dispensed to mothers after giving birth.  The primary use in
hospitals is for post episiotomy pain, post-partum hemorrhoid pain, and for the
relief of female genital itching.





With the
introduction of retail versions of the product, Dermoplast offers sanitary,
convenient first aid relief for pain and itching from minor skin irritations,
including sunburn, insect bites, minor cuts, scrapes and burns to a much larger
audience.  Dermoplast is currently
offered in two formulas: regular strength and antibacterial
strength.








Household
Cleaning Segment





Our
portfolio of household cleaning brands includes theComet, Chore Boy and Spic and Spanbrands.  In both 2009 and 2008, the household cleaning segment
accounted for 37.1% of our revenues, compared with 37.4% in 2007.





Comet


Comet was originally
introduced in 1956 and is one of the most widely recognized household cleaning
brands, with an ACV of 99.0%.  Comet competes in the
abrasive and non-abrasive tub and tile cleaner sub-category of the household
cleaning category that includes abrasive powders, creams, liquids and
non-abrasive sprays.  Comet products include
several varieties of cleaning powders, sprays and cream, both abrasive and
non-abrasive.  The non-abrasive tub and tile cleaner segment is more
fragmented and competitive than the abrasive sector and we havebeen attempting,
through focused advertising and promotions, including free-standing insert
coupons and television advertising, to build momentum in our efforts to increase
Comet’s market share in
the non-abrasive tub and tile cleaner sector.


-8-


We have
expanded the brand’s distribution, increased advertising and promotion and
implemented focused marketing initiatives.  Our 2008 introduction of
Coment Mildew
SprayGel has expanded our product line into the mildew stain cleanser
sub-segment of non-abrasive spray cleaners, where we achieved a 10.0% share of
the mildew segment in 2009.  Previously, we introduced
new fragrances, including Comet Lavender Powder
Abrasive Cleanser.  We have also extended the brand into
underdeveloped demographic targets, and employed new inverted bottle packaging,
which improves evacuation and ease of use, for Comet Soft Cleanser
Cream.  Additionally, multi-packs have been introduced in the
warehouse club trade class extending the brand’s distribution.





Chore
Boy


Chore Boy scrubbing pads and
sponges were initially launched in the 1920's.  Over the years the
line has grown to include metal and non-metal scrubbers that are used for a
variety of household cleaning tasks.  While many of the brand’s
products find use in the kitchen, with cooking clean up being the primary use,
they are also used in clean up jobs in the home workshop, garage, and other
areas, including outdoor grill cleaning.  The newest additions to the
line, launched in 2004, consist of patented mesh materials that clean most
surfaces without scratching.  Chore Boy products are
currently sold in food and drug stores, mass merchandisers, and in hardware and
convenience stores.





Spic
and Span


Spic and Span was introduced
in 1925 and is marketed as the complete home cleaner with three product lines
consisting of (i) dilutables, (ii) an anti-bacterial hard surface spray for
counter tops and (iii) glass cleaners.  Each of these products can be
used for multi-room and multi-surface cleaning.  Following our
acquisition of the brand, the product line has grown from eight to 29 separate
items and we have expanded distribution into new channels such as dollar
stores.








Personal
Care Segment





Our major
personal care brands include Denorex dandruff
shampoo,Cutex nail
products andPrell®
shampoo.  Other portfolio brands in this segment includeEZO® denture cushion,Oxipor VHC® psoriasis
lotion,Cloverine® skin
salve,Zincon®
medicated dandruff shampoo andKerodex® barrier cream.  The Company’s strategy has been to
de-emphasize the personal care segment, and partially as a result, it accounted
for 6.3% of our revenues in 2009 compared with 6.7 and 7.8% in 2008 and 2007,
respectively.





Denorex


Denorex was originally
launched in 1971 as an effective solution to scalp problems.  Denorex competes in the
dandruff shampoo category and holds a 1.3% market share.  The current
lineup ofDenorex
products includes Extra Strength, for moderate dandruff sufferers; and for those
with more serious dandruff conditions, Therapeutic Strength with coal
tar.





Cutex


Cutex is the leading branded
nail polish remover, with a 25.2% share of market.  Cutex, with an ACV of 78.0%,
has products in two main categories: (i) liquids and (ii) convenience
implements, including pads, pump action bottles, and manicure correction
pens.  Cutex’s main competition
comes from a number of private label brands, which collectively have a 56.0%
market share.





Prell


Acquired
from Procter & Gamble in 1999, Prell Shampoo was launched in
1947.  While the shampoo category is fragmented and populated by
hundreds of brands, Prell continues to have
strong brand recognition.  We believePrell has a small, but very
loyal, base of consumers who value its superior cleansing and foaming properties
and who seek a premium shampoo at a more affordable price point.





For
additional information concerning our business segments, please refer to Part
II, Item 7, Management’s Discussion and Analysis of Financial Condition and
Results of Operation and Note 17 to the Consolidated Financial Statements
included elsewhere in this Annual Report on Form 10-K.





-9-


Marketing
and Sales





Our
marketing strategy is based upon the acquisition and the rejuvenation of
established consumer brands that possess what we believe to be significant brand
value and unrealized potential.  Our marketing objective is to
increase sales and market share by developing innovative new products and line
extensions and executing professionally designed, creative and cost-effective
advertising and promotional programs.  After we acquire a brand, we
implement a brand building strategy that uses the brand’s existing consumer
awareness to maximize sales of current products and provides a vehicle to drive
growth through product innovation.  This brand building process
involves the evaluation of the existing brand name, the development and
introduction of innovative new products and the execution of professionally
designed support programs.  Recognizing that financial resources are
limited, we allocate our resources to focus on those brands that we believe have
the greatest opportunities for growth and financial success.  Brand
priorities vary from year-to-year and generally revolve around new product
introductions.





Customers





Our
senior management team and dedicated sales force strive to maintain
long-standing relationships with our top 50 domestic customers, which accounted
for approximately 81.4% of our combined gross sales for 2009 and 80.9% and 77.1%
for 2008 and 2007, respectively.  Our sales management team consists
of 18 people which has grown in order to focus on our key customer
relationships.  We also contract with third-party sales management
enterprises that interface directly with our remaining customers and report
directly to members of our sales management team.





We enjoy
broad distribution across each of the major retail channels, including mass
merchandisers, drug, food, dollar and club stores.  The following
table sets forth the percentage of gross sales across our five major
distribution channels during the three-year period ended March 31,
2009:





Percentage
      of
                    Gross
      Sales(1)Channel
      of Distribution
                  
                  2009
                  
                  2008
                  
                  2007Mass
                  
                  35.9%
                  
                  33.6%
                  
                  35.8%Food
                  
                  21.8
                  
                  22.7
                  
                  23.3Drug
                  
                  25.4
                  
                  28.0
                  
                  25.6Dollar
                  
                  9.6
                  
                  8.3
                  
                  7.2Club
                  
                  2.2
                  
                  2.4
                  
                  2.2Other
                  
                  5.1
                  
                  5.0
                  
                  5.9








(1)         Includes
estimates for some of our wholesale customers that service more than one
distribution channel.





Due to
the diversity of our product line, we believe that each of these channels is
important to our business and we continue to seek opportunities for growth in
each channel.





Our
principal customer relationships include Wal-Mart, Walgreens, CVS, Target and
Dollar Tree.  Sales to our top five and ten customers accounted for
47% and 59% of total gross sales, respectively, in 2009 compared with
approximately 46% and 57%, respectively, in 2008 and approximately 43% and 53%,
respectively, in 2007.  No single customer other than Wal-Mart
accounted for more than 10% of our gross sales in any of those years and none of
our other top five customers accounted for less than 3% of our gross sales in
any of those years.  Our top ten customers each purchase products from
essentially all of our major brands.





Our
strong customer relationships and product recognition provide us with a number
of important benefits including (i) minimization of slotting fees, (ii)
maximization of new product introductions, (iii) maximization of shelf space
prominence and (iv) minimization of cash collection days.  We believe
that management’s emphasis on strong customer relationships, speed and
flexibility, leading sales technology capabilities, including (i) electronic
data interchange, (ii) e-mail, (iii) the Internet, and (iv) integrated retail
coverage, combined with consistent marketing support programs and ongoing
product innovation will continue to maximize our competitiveness in the
increasingly complex retail environment.




-10-


The
following table sets forth a list of our primary distribution channels and our
principal customers for each channel:





Distribution
      Channel
              
              Customers
              
              Distribution
      Channel
              
              CustomersMass
              
              Kmart
              
              Drug
              
              CVSMeijer
              
              
              
              Rite
      AidTarget
              
              
              
              WalgreensWal-MartDollar
              
              Dollar
      GeneralFood
              
              Ahold
              
              
              
              Dollar
      TreeKroger
              
              
              
              Family
      DollarPublixSafeway
              
              Club
              
              BJ’s
      Wholesale ClubSupervalu
              
              
              
              CostcoSam’s
      Club





Outsourcing
and Manufacturing





In order
to maximize our competitiveness and efficiently allocate our resources,
third-party manufacturers fulfill all of our manufacturing needs.  We
have found that contract manufacturing maximizes our flexibility and
responsiveness to industry and consumer trends while minimizing the need for
capital expenditures.  We select contract manufacturers based on their
core competencies and our perception of the best overall value, including
factors such as (i) depth of services, (ii) professionalism and integrity of the
management team, (iii) manufacturing flexibility, (iv) regulatory compliance and
(v) competitive pricing.  We also conduct thorough reviews of each
potential manufacturer’s facilities, quality standards, capacity and financial
stability.  We generally purchase only finished products from our
manufacturers.





Our
primary contract manufacturers provide comprehensive services from product
development through the manufacturing of finished goods.  They are
responsible for such matters as (i) production planning, (ii) product research
and development, (iii) procurement, (iv) production, (v) quality testing, and
(vi) almost all capital expenditures.  In most instances, we provide
our contract manufacturers with guidance in the areas of (i) product
development, (ii) performance criteria, (iii) regulatory guidance, (iv) sourcing
of packaging materials and (v) monthly master production
schedules.  This management approach results in minimal capital
expenditures and maximizes our cash flow, which is reinvested to support our
marketing initiatives, used to fund brand acquisitions or to repay outstanding
indebtedness.





We have
relationships with over 40 third-party manufacturers.  Of those, our
top 10 manufacturers produce items that accounted for 81% of our sales for 2009
compared to 80% in 2008.  At March 31, 2009, we do not have long-term
contracts with the manufacturers of products of approximately 28% of our gross
sales for 2009.  The lack of manufacturing agreements for these
products exposes us to the risk that the manufacturer could stop producing our
products at any time for any reason, increase the cost that we are charged for
our products or fail to provide us with the level of products we need to meet
our customers’ demands.  Should one or more of our manufacturers stop
producing product on our behalf or increase our costs in excess of our ability
to increase our sales prices, it could have a material adverse effect on our
business, financial condition and results from operations.





At March
31, 2009, suppliers for our key brands included (i) Procter & Gamble, (ii)
Access Business Group, (iii) Kolmar Canada and (iv) Altaire Pharmaceuticals,
Inc.  We enter into manufacturing agreements for a majority of our
products by sales volume, each of which vary based on the capabilities of the
third-party manufacturer and the products being supplied.  These
agreements explicitly outline the manufacturer’s obligations and product
specifications with respect to the brand or brands being
produced.  The purchase price of products under these agreements is
subject to change pursuant to the terms of these agreements due to fluctuations
in raw material, packaging and labor costs.  All of our other products
are manufactured on a purchase order basis which is generally based on batch
sizes and result in no long-term obligations or commitments.





-11-


Warehousing
and Distribution





We
receive orders from retailers and/or brokers primarily by electronic data
interchange, which automatically enters each order into our computer systems and
then routes the order to our distribution center.  The distribution
center will, in turn, send a confirmation that the order was received, fill the
order and ship the order to the customer, while sending a shipment confirmation
to us.  Upon receipt of the confirmation, we send an invoice to the
customer.





We manage
product distribution in the mainland United States primarily through one
facility located in St. Louis, owned and operated by The Jacobson Companies
(“Jacobson”).  Jacobson provides warehouse services, including without
limitation, storage, handling and shipping with respect to our full line of
products, as well as transportation services, including without limitation, (i)
complete management services, (ii) claims administration, (iii) proof of
delivery, (iv) procurement, (v) report generation, and (vi) automation and
freight payment services with respect to our full line of products.





If
Jacobson abruptly stopped providing warehousing or transportation services to
us, our business operations could suffer a temporary disruption while new
service providers are engaged.  We believe this process could be
completed quickly and any temporary disruption resulting therefrom would not be
likely to have a significant effect on our operating results and financial
condition.  However, a serious disruption, such as a flood or fire, to
our distribution center could damage our inventory and could materially impair
our ability to distribute our products to customers in a timely manner or at a
reasonable cost.  We could incur significantly higher costs and
experience longer lead times associated with the distribution of our products to
our customers during the time required to reopen or replace our distribution
center.  As a result, any such serious or prolonged disruption could
have a material adverse effect on our business, financial condition and results
from operations.





Competition





The
business of selling brand name consumer products in the over-the-counter
healthcare, household cleaning and personal care categories is highly
competitive.  These markets include numerous national and global
manufacturers, distributors, marketers and retailers that actively compete for
consumers’ business both in the United States and abroad.  Many of
these competitors are larger and have substantially greater research and
development and financial resources than we do.  Consequently, they
may have the ability to spend more aggressively on advertising and marketing and
research and development, and to respond more effectively to changing business
and economic conditions.  If this were to occur, our sales, operating
results and profitability could be adversely affected.  In addition,
we are experiencing increased competition from so called “private label”
products introduced by major retail chains.  While we believe that our
branded products provide superior quality and benefits, we are unable to predict
whether consumers will continue to purchase “private label” products at
increasing rates after the conclusion of the current economic
downturn.  Should the consumer not return to branded products, it
could have a significant impact on our future revenues and
profitability.





Our
principal competitors vary by industry category.  Competitors in the
over-the counter healthcare category include Johnson & Johnson, maker
ofVisine®, which
competes with ourClear
Eyes and Murine
brands; McNeil-PPC, maker ofTylenol® Sore Throat, Procter & Gamble, maker of Vicks®, and Combe
Incorporated, maker of Cepacol®, each of which
compete with ourChloraseptic brand.  Other competitors in the over-the counter
healthcare category include Schering-Plough, maker ofDr. Scholl’s®, which
competes with ourCompound
W and Wartner
brands; Johnson & Johnson, maker ofBAND-AID® Brand Liquid
Bandage, which competes with ourNew-Skin brand;
GlaxoSmithKline, maker ofDebrox®, which competes with ourMurine ear care brand;
Sunstar America, Inc., maker of GUM® line of oral care
products; as well as DenTek® Oral Care, Inc., Power Products, Inc. and Ranir
LLC, each of which markets a dental protector for nighttime teeth grinding,
which competes with The
Doctor’s NightGuard Dental
Protector.





Competitors
in the household cleaning category include Henkel AG & Co., maker ofSoft Scrub®,
Colgate-Palmolive Company, maker of Ajax Cleanser, and The Clorox Company, maker
ofTilex®, each of
which competes with ourComet brand.  Additionally, Clorox’sPine Sol® and Procter &
Gamble’s Mr. Clean®
compete with ourSpic and
Span brand while 3M Company, maker of Scotch-Brite®, O-Cel-O® and Dobie® brands, and Clorox’s
SOS®, compete with our
Chore Boy
brand.




-12-


Competitors
in the personal care category include Johnson & Johnson, maker ofT-Gel® shampoo, and Chattem,
Inc., maker of Selsun
Blue®, which
compete with ourDenorex brand, as well as Coty, Inc., maker ofSally Hansen®, which
competes with ourCutex
brand.





We
compete on the basis of numerous factors, including brand recognition, product
quality, performance, price and product availability at the retail
level.  Advertising, promotion, merchandising and packaging, the
timing of new product introductions and line extensions also have a significant
impact on customers’ buying decisions and, as a result, on our
sales.  The structure and quality of our sales force, as well as
sell-through of our products, affects in-store position, wall display space and
inventory levels in retail outlets.  If we are unable to maintain the
inventory levels and in-store positioning of our products in retail stores, our
sales and operating results will be adversely affected.  Our markets
are also highly sensitive to the introduction of new products, which may rapidly
capture a significant share of the market.  An increase in the amount
of product introductions and the levels of advertising spending by our
competitors could have a material adverse effect on our business, financial
condition and results from operations.






Regulation





Product
Regulation


The
formulation, manufacturing, packaging, labeling, distribution, importation, sale
and storage of our products are subject to extensive regulation by various
federal agencies, including the FDA, the Federal Trade Commission (“FTC”), the
Consumer Product Safety Commission (“CPSC”), the Environmental Protection Agency
(“EPA”), and by various agencies of the states, localities and foreign countries
in which our products are manufactured, distributed and sold.  Our
Regulatory Team is guided by a senior member of management and staffed by
individuals with appropriate legal and regulatory experience.  Our
Regulatory and Operations teams work closely with our third-party manufacturers
on quality related matters while we monitor their compliance with FDA
regulations and perform periodic audits to ensure such
compliance.  This continual evaluation process ensures that our
manufacturing processes and products are of the highest quality and in
compliance with all known regulatory requirements.  When and if the
FDA chooses to audit a particular manufacturing facility, we are required to be
notified immediately and updated on the progress of the audit as it
proceeds.  If we or our manufacturers fail to comply with applicable
regulations, we could become subject to significant claims or penalties or be
required to discontinue the sale of the non-compliant product, which could have
a material adverse effect our business, financial condition and results from
operations.  In addition, the adoption of new regulations or changes
in the interpretations of existing regulations may result in significant
additional compliance costs or discontinuation of product sales and may also
have a material adverse effect on our business, financial condition and results
from operations.





All of
our over-the-counter drug products are regulated pursuant to the FDA’s monograph
system.  The monographs, both tentative and final, set out the active
ingredients and labeling indications that are permitted for certain broad
categories of over-the-counter drug products.  When the FDA has
finalized a particular monograph, it has concluded that a properly labeled
product formulation is generally recognized as safe and effective and not
misbranded.  A tentative final monograph indicates that the FDA has
not made a final determination about products in a category to establish safety
and efficacy for a product and its uses.  However, unless there is a
serious safety or efficacy issue, the FDA typically will exercise enforcement
discretion and permit companies to sell products conforming to a tentative final
monograph until the final monograph is published.  Products that
comply with either final or tentative final monograph standards do not require
pre-market approval from the FDA.





Certain
of the Company’s over-the-counter healthcare products are medical devices which
are regulated by the FDA through a system which usually involves pre-market
clearance.  During the review process, the FDA makes an affirmative
determination as to the sufficiency of the label directions, cautions and
warnings for the medical devices in question.





In
accordance with the Federal Food, Drug and Cosmetic Act (“FDC Act”) and FDA
regulations, the Company and its drug and device manufacturers must also comply
with the FDA’s current Good Manufacturing Processes (“cGMPs”).  The
FDA inspects our facilities and those of our third-party manufacturers
periodically to determine that both the Company and our third-party
manufacturers are complying with cGMPs.




-13-


In
October 2007, we removed two medicated pediatric cough and cold products
marketed under the Little
Remedies brand from the marketplace.  This action was part of
an industry-wide voluntary withdrawal of these items pending the final
recommendations of an FDA advisory board meeting to review the safety and
efficacy of these products.  During 2009, we reintroduced those
products into the marketplace with revised packaging, labeling, directions and
warnings that are in compliance with the latest FDA regulatory
guidance.





Other
Regulations


We are
also subject to a variety of other regulations in various foreign markets,
including regulations pertaining to import/export regulations and antitrust
issues.  To the extent we decide to commence or expand operations in
additional countries, we may be required to obtain an approval, license or
certification from the country’s ministry of health or comparable
agency.  We must also comply with product labeling and packaging
regulations that may vary from country-to-country.  Government
regulations in both our domestic and international markets can delay or prevent
the introduction, or require the reformulation or withdrawal, of some of our
products.  Our failure to comply with these regulations can result in
a product being removed from sale in a particular market, either temporarily or
permanently.  In addition, we are subject to FTC and state
regulations, as well as foreign regulations, relating to our product claims and
advertising.  If we fail to comply with these regulations, we could be
subject to enforcement actions and the imposition of penalties which could have
a material adverse effect on our business, financial condition and results from
operations.





Certain
of our household cleaning products are considered pesticides under the Federal
Insecticide, Fungicide and Rodenticide Act (“FIFRA”).  Generally
speaking, any substance intended for preventing, destroying, repelling, or
mitigating any pest is considered to be a pesticide under FIFRA.  We
market and distribute certain products under our Cometand Spic and Span brands which
make antibacterial and/or disinfectant claims.  Due to the
antibacterial and/or disinfectant claims on certain of the Comet and Spic and Span products, such
products are considered to be pesticides under FIFRA and are required to be
registered with the EPA and contain certain disclosures on the product
labels.  In addition, the contract manufacturers from which we source
these products must be registered with the EPA.  Our Comet and Spic and Span products that
make antibacterial and/or disinfectant claims are also subject to state
regulations and the rules and regulations of the various jurisdictions where
these products are sold.





Intellectual
Property





We own a
number of trademark registrations and applications in the United States, Canada
and other foreign countries.  The following are some of the most
important registered trademarks we own in the United States and/or Canada:Chloraseptic, Chore Boy, Clear
Eyes, Cinch, Comet, Compound W, Freeze Off, Cutex, The Doctor’s Brushpicks,
Denorex, Dermoplast, Little Remedies, Longlast®, Momentum®, Murine, New-Skin,
Percogesic®, Prell®, Spic and Span and Wartner.





Our
trademarks and trade names are how we convey that the products we sell are
“brand name” products.  Our ownership of these trademarks and trade
names is very important to our business as it allows us to compete based on the
value and goodwill associated with these marks.  We may also license
others to use these marks.  Additionally, we own or license patents on
innovative and proprietary technology.  Such patents evidence the
unique nature of our products, provide us with exclusivity and afford us
protection from the encroachment of others.  Enforcing our rights
represented by these trademarks, trade names and patents is critical to our
business, but is expensive.  If we are not able to effectively enforce
our rights, others may be able to dilute our trademarks, trade names and patents
and diminish the value associated with our brands and technologies, which could
have a material adverse effect on our business, financial condition and results
from operations.





Other
intellectual property rights were acquired from Procter & Gamble and Abbott
Laboratories when we acquired the trademarks related to theComet,Chloraseptic,Clear Eyes,Murine andPrell product lines;
however, we did not in all cases obtain title to all of the intellectual
property used to manufacture and sell those products.  Therefore, we
are dependent upon Procter & Gamble and other third parties for
intellectual property used in the manufacture and sale of certain of our
products.





We have
licensed to Procter & Gamble the right to use theComet, Spic and Span
andChlorinol®
trademarks in the commercial/institutional/industrial segment in the United
States and Canada until 2019.  We have also licensed to Procter &
Gamble the Comet and
Chlorinol brands in
Russia and specified Eastern European countries




-14-


until
2015.





Seasonality





The first
quarter of our fiscal year typically has the lowest level of revenue due to the
seasonal nature of certain of our brands relative to the summer and winter
months.  In addition, the first quarter is the least profitable
quarter due to the increased advertising and promotional spending to support
those brands with a summer selling season, such as Chloraseptic and Little Allergies Allergen
Block products, Compound
W, Wartnerand
New-Skin.  The
increased level of advertising and promotional campaigns in the third quarter
influence sales of Chloraseptic and Little Remediescough/cold products during the
fourth quarter cough/cold winter months.  Additionally, the fourth
quarter typically has the lowest level of advertising and promotional spending
as a percent of revenue.





Employees





We
employed 98 full time individuals and two part time individuals at March 31,
2009.  None of our employees is a party to a collective bargaining
agreement.  Management believes that its relations with its employees
are good.





Backlog
Orders





The
Company had no backlog orders at March 31, 2008 or 2009.





Available
Information





Our
Internet address is www.prestigebrandsinc.com.  We make available free
of charge on or through our Internet website our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to
those reports, and the Proxy Statement for our annual stockholders’ meetings, as
soon as reasonably practicable after we electronically file such material with,
or furnish it to, the Securities and Exchange Commission (the
“SEC”).  The information found on our website shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Annual Report on Form 10-K into any filing under the Securities Act of
1933, as amended (the “Securities Act”), or under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and shall not otherwise be deemed filed
under such Acts.  Information on our Internet website does not
constitute a part of this Annual Report on Form 10-K and is not incorporated
herein by reference.





We have
adopted a Code of Conduct Policy, Code of Ethics for Senior Financial Employees,
Complaint Procedures for Accounting and Auditing Matters, Corporate Governance
Guidelines, Audit Committee Pre-Approval Policy, and Charters for our Audit,
Compensation, Nominating and Governance, and Strategic Planning Committees, as
well as a Related Persons Transaction Policy and Stock Ownership
Guidelines.  We will provide to any person without charge, upon
request, a copy of the foregoing materials.  Any requests for the
foregoing documents from us should be made in writing to:





Prestige
Brands Holdings, Inc.


90 North
Broadway


Irvington,
New York 10533


Attention:
Secretary





We intend
to disclose future amendments to the provisions of the foregoing documents,
policies and guidelines and waivers therefrom, if any, on our Internet website
and/or through the filing of a Current Report on Form 8-K with the SEC to the
extent required under the Exchange Act.




-15-


ITEM 1A.
              RISK
  FACTORS


The
high level of competition in our industry, much of which comes from competitors
with greater resources, could adversely affect our business, financial condition
and results from operations.





The
business of selling brand name consumer products in the over-the-counter
healthcare, household cleaning and personal care categories is highly
competitive.  These markets include numerous manufacturers,
distributors, marketers and retailers that actively compete for consumers’
business both in the United States and abroad.  Many of these
competitors are larger and have substantially greater resources than we do, and
may therefore have the ability to spend more aggressively on research and
development, advertising and marketing, and to respond more effectively to
changing business and economic conditions.  If this were to occur, it
could have a material adverse effect on our business, financial condition and
results from operations.





Certain
of our product lines that account for a large percentage of our sales have a
small market share relative to our competitors.  For example,
whileClear Eyes has a
number two market share position of 16.4% within the allergy/redness eye drop
segment, its top competitor,Visine®, has a market share of 34.6% in the same segment.  In
contrast, certain of our brands with number two market positions have a similar
market share relative to our competitors.  For example,Compound W has a number two
market position of 30.7% and its top competitor,Dr. Scholl’s, has a market position
of 44.5% in the same category.  Also, whileCutex is the number one
brand name nail polish remover with a market share of 25.2%, non-branded,
private label nail polish removers account, in the aggregate, for 20.0% of the
market.  Finally, while ourNew-Skin liquid bandage
product has a number one market position of 44.5%, the size of the liquid
bandage market is relatively small, particularly when compared to the much
larger bandage category.  See “Item 1. Business” section on page 1 of
this document for information regarding market share calculations.





We
compete for customers’ attention based on a number of factors, including brand
recognition, product quality, performance, price and product availability at the
retail level.  Advertising, promotion, merchandising and packaging,
the timing of new product introductions and line extensions also have a
significant impact on consumer buying decisions and, as a result, on our
sales.  The structure and quality of our sales force, as well as
sell-through of our products affects in-store position, wall display space and
inventory levels in retail stores.  If we are unable to maintain our
current distribution network, inventory levels and in-store positioning of our
products at our customers, our sales and operating results will be adversely
affected.  Our markets also are highly sensitive to the introduction
of new products, which may rapidly capture a significant share of the
market.  An increase in the number of product innovations by our
competitors or the failure of a new product launch by the Company could have a
material adverse effect on our business, financial condition and results from
operations.





In
addition, competitors may attempt to gain market share by offering products at
prices at or below those typically offered by us.  Competitive pricing
may require us to reduce prices which may result in lost sales or a reduction of
our profit margins.  Future price adjustments, product changes or new
product introductions by our competitors or our inability to react with price
adjustments, product changes or new product introductions of our own could
result in a loss of market share which could have a material adverse effect on
our business, financial condition and results from operations.





We
depend on a limited number of customers with whom we have no long-term
agreements for a large portion of our gross sales and the loss of one or more of
these customers could reduce our gross sales and therefore, could have a
material adverse effect on our business, financial condition and results of
operations.





For 2009,
our top five and ten customers accounted for approximately 47% and 59%,
respectively, of our sales, compared with approximately 46% and 57% and 43% and
53% during 2008 and 2007, respectively.  Wal-Mart, which itself
accounted for approximately 26%, 23% and 24% of our sales in 2009, 2008 and
2007, respectively, is our only customer that accounted for 10% or more of our
sales.  We expect that for future periods, our top five and ten
customers, including Wal-Mart, will, in the aggregate, continue to account for a
large portion of our sales.  The loss of one or more of our top
customers, any significant decrease in sales to these customers, or a
significant decrease in our retail display space in any of these customers’
stores, could reduce our sales, and therefore, could have a material adverse
effect on our business, financial condition and results from
operations.





-16-


In
addition, our business is based primarily upon individual sales
orders.  We typically do not enter into long-term contracts with our
customers.  Accordingly, our customers could cease buying products
from us at any time and for any reason.  The fact that we do not have
long-term contracts with our customers means that we have no recourse in the
event a customer no longer wants to purchase products from us.  If a
significant number of our smaller customers, or any of our significant
customers, elect not to purchase products from us, our business, financial
condition and results from operations could be adversely affected.





Our
business could be adversely affected by a prolonged recession in the United
States.





The
economic uncertainty surrounding the current United States recession could
materially impact our business because such economic challenges could adversely
impact consumers, our customers and
suppliers.  Specifically:





·
            Consumer
      spending may continue to be curtailed resulting in downward pressure on
      our sales,





·
            Our
      customers may continue to rationalize the number of products that reach
      store shelves resulting in a reduction of the number of products that are
      carried at retail, particularly those that are not number one or two in
      their category,





·
            Our
      customers may continue to reduce overall inventory levels to strengthen
      their working capital positions which could result in additional sales
      reductions for us during those periods that our customers implement such
      strategies,





·
            Our
      customers may continue to increase the number and breadth of products that
      are sold via their “private label” to the detriment of our branded
      products,





·
            Our
      customers may continue to rationalize store count, closing additional
      marginally performing stores resulting in sales reductions, potential
      working capital reductions, and an inability to repay amounts owed to us,
      and





·
            Our
      suppliers may suffer from sales reductions which could diminish their
      working capital and impede their ability to provide product to us in a
      timely manner.





We
depend on third-party manufacturers to produce the products we
sell.  If we are unable to maintain these manufacturing relationships
or fail to enter into additional relationships, as necessary, we may be unable
to meet customer demand and our sales and profitability could suffer as a
result.





All of
our products are produced by third-party manufacturers.  Our ability
to retain our current manufacturing relationships and engage in and successfully
transition to new relationships is critical to our ability to deliver quality
products to our customers in a timely manner.  Without adequate
supplies of quality merchandise, sales would decrease materially and our
business would suffer.  In the event that our primary third-party
manufacturers are unable or unwilling to ship products to us in a timely manner,
we would have to rely on secondary manufacturing relationships or identify and
qualify new manufacturing relationships.  We might not be able to
identify or qualify such manufacturers for existing or new products in a timely
manner and such manufacturers may not allocate sufficient capacity to us in
order that we may meet our commitments to customers.  In addition,
identifying alternative manufacturers without adequate lead times can compromise
required product validation and stability protocol, which may involve additional
manufacturing expense, delay in production or product disadvantage in the
marketplace.  The consequences of not securing adequate and timely
supplies of merchandise would negatively impact inventory levels, sales and
gross margins, and could have a material adverse effect on our business,
financial condition and results from operations.





These
manufacturers may also increase the cost of the products we purchase which could
adversely affect our margins in the event we are unable to pass along these
increased costs to our customers.  A situation such as this could also
have a material adverse effect on our business, financial condition and results
from operations.





At March
31, 2009, we had relationships with over 40 third-party
manufacturers.  Of those, our top 10 manufacturers produced items that
accounted for 81% of our sales for 2009 compared to 80% in 2008.  We
do not




-17-


have
long-term contracts with the manufacturers of products that accounted for
approximately 28% of our gross sales for 2009 compared to 23% in
2008.  The fact that we do not have long-term contracts with these
manufacturers means that they could cease manufacturing these products at any
time and for any reason, or initiate arbitrary and costly price increases which
could have a material adverse effect on our business, financial condition and
results from operations.





Price
increases for raw materials, energy and transportation costs could have an
adverse impact on our margins.





Commodity
and energy costs increased over 2008 and while such costs have receded from
their recent highs, volatility in the markets for resins, package materials and
diesel fuel could have a significant impact on our 2010 results from
operations.  Consequently, if the Company is unable to increase the
price for its products or continue to achieve cost savings in a rising cost
environment, such cost increases could have a material adverse effect on our
results from operations.





Disruption
in our St. Louis distribution center may prevent us from meeting customer demand
and our sales and profitability may suffer as a result.





We manage
our product distribution in the continental United States through one primary
distribution center in St. Louis, Missouri.  A serious disruption,
such as a flood or fire, to our primary distribution center could damage our
inventory and could materially impair our ability to distribute our products to
customers in a timely manner or at a reasonable cost.  We could incur
significantly higher costs and experience longer lead times during the time
required to reopen or replace our primary distribution center.  As a
result, any serious disruption could have a material adverse effect on our
business, financial condition and results from operations.





Achievement
of our strategic objectives requires the acquisition, or potentially the
disposition, of certain brands or product lines.  Efforts to effect
and integrate such acquisitions or dispositions may divert our managerial
resources away from our business operations.





The
majority of our growth has been driven by acquiring other brands and
companies.  At any given time, we may be engaged in discussions with
respect to possible acquisitions that are intended to enhance our product
portfolio, enable us to realize cost savings and further diversify our category,
customer and channel focus.  Our ability to successfully grow through
acquisitions depends on our ability to identify, negotiate, complete and
integrate suitable acquisition candidates and to obtain any necessary
financing.  These efforts could divert the attention of our management
and key personnel from our business operations.  If we complete
acquisitions, we may also experience:





·
            Difficulties
      achieving, or an inability to achieve, our expected
    returns,




·
            Difficulties
      in integrating any acquired companies, personnel and products into our
      existing business,




·
            Delays
      in realizing the benefits of the acquired company or
    products,




·
            Higher
      costs of integration than we
anticipated,




·
            Difficulties
      in retaining key employees of the acquired business who are necessary to
      manage the business,




·
            Difficulties
      in maintaining uniform standards, controls, procedures and policies
      throughout our acquired companies,
or




·
            Adverse
      customer or shareholder reaction to the
  acquisition.





In
addition, any acquisition could adversely affect our operating results as a
result of higher interest costs from the acquisition related debt and higher
amortization expenses related to the acquired intangible assets.  The
diversion of management’s attention to pursue acquisitions, or our failure to
successfully integrate acquired companies into our business, could have a
material adverse effect on our business, financial condition and results from
operations.





In the
event that we decide to sell a brand or product line, we may encounter
difficulty finding, or be unable to




-18-


find, a
buyer on acceptable terms in a timely manner.  This could cause a
delay in our efforts to achieve our strategic objectives.





Our risks associated with doing
business internationally increase as we expand our international
footprint.





During
2009, 2008 and 2007, approximately 3.5%, 4.0% and 4.6%, respectively, of our
total revenues were attributable to our international business.  We
operate in several regions and countries where we have little or no experience,
and generally rely on brokers and distributors for the sale of our
products.  In addition to the risks associated with political
instability, changes in the outlook for economic prosperity in these countries
could adversely affect the sales of our products in these
countries.  Other risks of doing business internationally
include:





·
            Changes
      in the legislative or regulatory requirements of the countries or regions
      where we do business,




·
            Currency
      controls which restrict or prohibit the payment of funds or the
      repatriation of earnings to the United
States,




·
            Fluctuating
      foreign exchange rates could result in unfavorable increases in the price
      of our products or cause increases in the cost of certain products
      purchased from our foreign third-party
  manufacturers,




·
            Regulatory
      oversight and its impact on our ability to get products registered for
      sale in certain markets,




·
            Potential
      trade restrictions and exchange
controls,




·
            Inability
      to protect our intellectual property rights in these markets,
      and




·
            Increased
      costs of compliance with general business and tax regulations in these
      countries or regions.





Regulatory
matters governing our industry could have a significant negative effect on our
sales and operating costs.





In both
our U.S. and foreign markets, we are affected by extensive laws, governmental
regulations, administrative determinations, court decisions and similar
constraints.  Such laws, regulations and other constraints exist at
the federal, state or local levels in the United States and at analogous levels
of government in foreign jurisdictions.





The
formulation, manufacturing, packaging, labeling, distribution, importation, sale
and storage of our products are subject to extensive regulation by various
federal agencies, including (i) the FDA, (ii) the FTC, (iii) the CPSC, (iv) the
EPA, and by (v) various agencies of the states, localities and foreign countries
in which our products are manufactured, distributed, stored and
sold.  If we or our third-party manufacturers fail to comply with
those regulations, we could become subject to enforcement actions, significant
penalties or claims, which could materially adversely affect our business,
financial condition and results from operations.  In addition, the
adoption of new regulations or changes in the interpretations of existing
regulations may result in significant compliance costs or the cessation of
product sales and may adversely affect the marketing of our products, resulting
in a significant loss of revenues which could have a material adverse effect on
our business, financial condition and results from operations.





The FDC
Act and FDA regulations require that the manufacturing processes of our
third-party manufacturers must also comply with the FDA’s cGMPs.  The
FDA inspects our facilities and those of our third-party manufacturers
periodically to determine if we and our third-party manufacturers are complying
with cGMPs.  A history of past compliance is not a guarantee that
future cGMPs will not mandate other compliance steps and associated
expense.





If we or
our third-party manufacturers fail to comply with federal, state or foreign
regulations, we could be required to:





·
            Suspend
      manufacturing operations,




·
            Modify
      product formulations or processes,




·
            Suspend
      the sale of products with non-complying
  specifications,




-19-


·
            Initiate
      product recalls, or




·
            Change
      product labeling, packaging or advertising or take other corrective
      action.





Any of
the foregoing actions could have a material adverse effect on our business,
financial condition and results from operations.





In
addition, our failure to comply with FTC or any other federal and state
regulations, or with similar regulations in foreign markets, that cover our
product claims and advertising, including direct claims and advertising by us,
may result in enforcement actions and imposition of penalties or otherwise
materially adversely affect the distribution and sale of our products, which
could have a material adverse effect on our business, financial condition and
results from operations.





Product
liability claims and related negative publicity could adversely affect our sales
and operating results.





We may be
required to pay for losses or injuries purportedly caused by our
products.  From time-to-time we have been and may again be subjected
to various product liability claims.  Claims could be based on
allegations that, among other things, our products contain contaminants, include
inadequate instructions or warnings regarding their use or inadequate warnings
concerning side effects and interactions with other substances.  For
example, certain Denorex products contain coal
tar which the State of California has determined allegedly causes cancer.
Consequently, in order to comply with California law and to mitigate our risks,
the Denorex packaging
contains a warning to that effect.  Any product liability claims may
result in negative publicity that may adversely affect our sales and operating
results.  Also, if one of our products is found to be defective we may
be required to recall it.  This may result in substantial costs and
negative publicity which may adversely affect our sales and operating
results.  Although we maintain, and require our suppliers and
third-party manufacturers to maintain, product liability insurance coverage,
potential product liability claims may exceed the amount of insurance coverage
or potential product liability claims may be excluded under the terms of the
policy, which could have a material adverse effect on our business, financial
condition and results from operations.  In addition, in the future we
may not be able to obtain adequate insurance coverage or we may be required to
pay higher premiums and accept higher deductibles in order to secure adequate
insurance coverage.





If
we are unable to protect our intellectual property rights our ability to compete
effectively in the market for our products could be negatively
impacted.





The
market for our products depends to a significant extent upon the goodwill
associated with our trademarks, trade names and patents.  Our
trademarks and trade names convey that the products we sell are “brand name”
products.  We believe consumers ascribe value to our brands, some of
which are over 100 years old.  We own or license the material
trademark, trade names and patents used in connection with the packaging,
marketing and sale of our products.  These rights prevent our
competitors or new entrants to the market from using our valuable brand names
and technologies.  Therefore, trademark, trade name and patent
protection is critical to our business.  Although most of our material
intellectual property is registered in the United States and in applicable
foreign countries, we may not be successful in asserting
protection.  If we were to lose the exclusive right to use one or more
of our intellectual property rights, the loss of such exclusive right could have
a material adverse effect on our business, financial condition and results from
operations.





Other
parties may infringe on our intellectual property rights and may thereby dilute
the value of our brands in the marketplace.  Brand dilution or the
introduction of competitive brands could cause confusion in the marketplace and
adversely affect the value that consumers associate with our brands, and thereby
negatively impact our sales.  Any such infringement of our
intellectual property rights would also likely result in a commitment of our
time and resources, financial or otherwise, to protect these rights through
litigation or other means.  In addition, third parties may assert
claims against our intellectual property rights and we may not be able to
successfully resolve those claims causing us to lose our ability to use our
intellectual property that is the subject of those claims.  Such loss
could have a material adverse effect on our business, financial condition and
results from operations.  Furthermore, from time-to-time, we may be
involved in litigation in which we are enforcing or defending our intellectual
property rights which could require us to incur substantial fees and expenses
and have a material adverse effect on our business, financial condition and
results from operations.





-20-


Virtually
all of our assets consist of goodwill and intangibles.





As our
financial statements indicate, virtually all of our assets consist of goodwill
and intangibles, principally the trademarks, trade names and patents that we
have acquired.  We recorded a substantial charge in 2009 for
impairment of those assets and in the event that the value of those assets
become impaired or our business is materially adversely affected in any way, we
would not have tangible assets that could be sold to repay our
liabilities.  As a result, our creditors and investors may not be able
to recoup the amount of the indebtedness that they have extended to us or the
amount they have invested in us.





We
depend on third parties for intellectual property relating to some of the
products we sell, and our inability to maintain or enter into future license
agreements may result in our failure to meet customer demand, which would
adversely affect our operating results.





We have
licenses or manufacturing agreements with third parties that own intellectual
property (e.g., formulae, copyrights, trademarks, trade dress, patents and other
technology) used in the manufacture and sale of certain of our
products.  In the event that any such license or manufacturing
agreement expires or is otherwise terminated, we will lose the right to use the
intellectual property covered by such license or agreement and will have to
develop or obtain rights to use other intellectual
property.  Similarly, our rights could be reduced if the applicable
licensor or third-party manufacturer fails to maintain the licensed intellectual
property because, in such event, our competitors could obtain the right to use
the intellectual property without restriction.  If this were to occur,
we might not be able to develop or obtain replacement intellectual property in a
timely manner.  Additionally, any modified products may not be
well-received by customers.  The consequences of losing the right to
use or having reduced rights to such intellectual property could negatively
impact our sales due to our failure to meet consumer demand for the affected
products or require us to incur costs for development of new or different
intellectual property, either of which could have a material adverse effect on
our business, financial condition and results from operations.  In
addition, development of replacement products may be time-consuming and
ultimately may not be feasible.





We
depend on our key personnel and the loss of the services provided by any of our
executive officers or other key employees could harm our business and results of
operations.





Our
success depends to a significant degree upon the continued contributions of our
senior management, many of whom would be difficult to replace.  These
employees may voluntarily terminate their employment with us at any
time.  We may not be able to successfully retain existing personnel or
identify, hire and integrate new personnel.  While we believe we have
developed depth and experience among our key personnel, our business may be
adversely affected if one or more of these key individuals were to
leave.  We do not maintain any key-man or similar insurance policies
covering any of our senior management or key personnel.





Our indebtedness
could adversely affect our financial condition and the significant amount of
cash we need to service our debt will not be available to reinvest in our
business.





At March
31, 2009, our total indebtedness, including current maturities, is approximately
$378.3 million.





Our indebtedness
could:





·
            Increase
      our vulnerability to general adverse economic and industry
      conditions,




·
            Limit
      our ability to engage in strategic
acquisitions,




·
            Require
      us to dedicate a substantial portion of our cash flow from operations
      toward repayment of our indebtedness, thereby reducing the availability of
      our cash flow to fund working capital, capital expenditures, acquisitions
      and investments and other general corporate
  purposes,




·
            Limit
      our flexibility in planning for, or reacting to, changes in our business
      and the markets in which we
operate,




·
            Place
      us at a competitive disadvantage compared to our competitors that have
      less debt, and




·
            Limit,
      among other things, our ability to borrow additional funds on favorable
      terms or at all.




-21-


The terms
of the indenture governing the 91⁄4% senior subordinated notes and the senior
credit facility allow us to issue and incur additional debt upon satisfaction of
conditions set forth in the respective agreements.  If new debt is
added to current debt levels, the related risks described above could
increase.





At March
31, 2009, we had $60.0 million of borrowing capacity available under the
Revolving Credit Facility to support our operating activities; however, this
facility expired in April 2009.  Our ability to borrow up to an
additional $200.0 million for acquisitions pursuant to our Senior Credit
Facility under the Tranche B Term Loan Facility expired in April
2008.  While management intends to replace these credit facilities
during the ensuing year, the uncertainties of the credit markets could impede
our ability to do so.  As an example, the following factors could
influence the amounts available to us and the interest rates associated with
such a refinancing:




·
              A
      deterioration of the Company’s earnings and its strong cash flows from
      operations,
 
 ·
              Prevailing
      interest rates in the market for similar offerings by companies with
      comparable credit ratings,
 
 ·
              Total
      amount borrowed and the Company’s intended use of such
      proceeds,
 
 ·
              Ratio
      of amounts bearing fixed and variable rates of
  interest,
 
 ·
              Ratio
      of amounts raised through a bond offering compared to a syndicated bank
      facility, and
 
 ·
              Total
      amount outstanding at the time, giving effect to the Company’s ability to
      repay principal in excess of stated
maturities.
 
 In the
current credit environment, management would expect the average interest rate
associated with such a refinancing to be in excess of the Company’s current
average borrowing rate of 4.93%.  However,





Our
operating flexibility is limited in significant respects by the restrictive
covenants in our senior credit facility and the indenture governing our senior
subordinated notes.




Our
senior credit facility and the indenture governing our senior subordinated notes
impose restrictions that could impede our ability to enter into certain
corporate transactions, as well as increase our vulnerability to adverse
economic and industry conditions by limiting our flexibility in planning for,
and reacting to, changes in our business and industry.  These
restrictions limit our ability to, among other things:





·
            Borrow
      money or issue guarantees,




·
            Pay
      dividends, repurchase stock from or make other restricted payments to
      stockholders,




·
            Make
      investments or acquisitions,




·
            Use
      assets as security in other
transactions,




·
            Sell
      assets or merge with or into other
companies,




·
            Enter
      into transactions with affiliates,




·
            Sell
      stock in our subsidiaries, and




·
            Direct
      our subsidiaries to pay dividends or make other payments to our
      Company.





Our
ability to engage in these types of transactions is generally limited by the
terms of the senior credit facility and the indenture governing the senior
subordinated notes, even if we believe that a specific transaction would
positively contribute to our future growth, operating results or
profitability.  However, if we are able to enter into these types of
transactions under the terms of the senior credit facility and the indenture, or
if we obtain a waiver with respect to any specific transaction, that transaction
may cause our indebtedness to increase, may not result in the benefits we
anticipate or may cause us to incur greater costs or suffer greater disruptions
in our business than




-22-


we
anticipate, and could therefore, have a material adverse effect on our business,
financial condition and results from operations. 
 In
addition, the senior credit facility requires us to maintain certain leverage,
interest and fixed charge coverage ratios.  Although we believe we can
continue to meet and/or maintain the financial ratios contained in our credit
agreement, our ability to do so may be affected by events outside our
control.  Covenants in our senior credit facility also require us to
use 100% of the proceeds we receive from debt issuances to repay outstanding
borrowings under our senior credit facility.  Any failure by us to
comply with the terms and conditions of the credit agreement and the indenture
governing the senior subordinated notes could have a material adverse effect on
our business, financial condition and results from operations.
 
 The
senior credit facility and the indenture governing the senior subordinated notes
contain cross-default provisions that could result in the acceleration of all of
our indebtedness.
 
 The
senior credit facility and the indenture governing the senior subordinated notes
contain provisions that allow the respective creditors to declare all
outstanding borrowings under one agreement to be immediately due and payable as
a result of a default under the other agreement.  Consequently, under
the senior credit facility, failure to make a payment required by the indenture
governing the senior subordinated notes, among other things, may lead





Any
failure to comply with the restrictions of the senior credit facility, the
indenture governing the senior subordinated notes or any other subsequent
financing agreements may result in an event of default.  Such default
may allow the creditors to accelerate the related debt, as well as any other
debt to which the cross-acceleration or cross-default provisions
apply.  In addition, the lenders may be able to terminate any
commitments they had made to supply us with additional funding.  As a
result, any default by us under our credit agreement, indenture governing the
senior subordinated notes or any other financing agreement, could have a
material adverse effect on our business, financial condition and results from
operations.





Litigation may adversely affect our business,
financial condition and results of operations.





Our
business is subject to the risk of litigation by employees, consumers,
suppliers, stockholders or others through private actions, class actions,
administrative proceedings, regulatory actions or other
litigation.  The outcome of litigation, particularly class action
lawsuits and regulatory actions, is difficult to assess or
quantify.  Plaintiffs in these types of lawsuits may seek recovery of
very large or indeterminate amounts, and the magnitude of the potential loss
relating to such lawsuits may remain unknown for substantial periods of
time.  The cost to defend current and future litigation may be
significant.  There may also be adverse publicity associated with
litigation that could decrease customer acceptance of our products, regardless
of whether the allegations are valid or whether we are ultimately found
liable.  Conversely, we may be required to initiate litigation against
others to protect the value of our intellectual property and the goodwill
associated therewith.  These matters are extremely time consuming and
expensive, but absolutely necessary to maintain enterprise value and safeguard
our future.  As a result, litigation may adversely affect our
business, financial condition and results of operations.





The
trading price of our common stock may be volatile.





The
trading price of our common stock could be subject to significant fluctuations
in response to several factors, some of which are beyond our control, including
(i) general stock market volatility, (ii) variations in our quarterly




-23-


operating
results, (iii) our leveraged financial position, (iv) potential sales of
additional shares of our common stock, (v) perceptions associated with the
identification of material weaknesses in internal control over financial
reporting, (vi) general trends in the consumer products industry, (vii) changes
by securities analysts in their estimates or investment ratings, (viii) the
relative illiquidity of our common stock, (ix) voluntary withdrawal or recall of
products, (x) news regarding litigation in which we are or become involved, and
(xi) general marketplace conditions brought on by economic recession. 
 Our
principal stockholders have the ability to significantly influence our business,
which may be disadvantageous to other stockholders and adversely affect the
trading price of our common stock.  In addition, substantial sales of
our common stock by either GTCR or management or the perception that these sales
could occur could cause the price of our common stock to decline.
 
 At March
31, 2009, entities affiliated with GTCR collectively owned approximately 23.0%
of our outstanding common stock, down from 30.0% at March 31,
2008.  Thereafter, these entities sold an additional 4.5 million
shares reducing their ownership interests to 14.0% at June 1,
2009.  As a result of this concentration, these stockholders, acting
together, will have the ability to exert substantial influence over all matters
requiring approval by our stockholders, including the election and removal of
directors and any proposed merger, consolidation or sale of all or substantially
all of our assets and other corporate transactions.  Subject to
applicable





Sales of
substantial amounts of our common stock in the public market by the affiliates
of GTCR or management, or the perception that these sales could occur, could
adversely affect the price of our common stock and could impair our ability to
raise capital through the sale of additional equity securities.





We
have no current intention of paying dividends to holders of our common
stock.





We
presently intend to retain our earnings, if any, for use in our operations, to
facilitate strategic acquisitions, or to repay our outstanding indebtedness and
have no current intention of paying dividends to holders of our common
stock.  In addition, our debt instruments limit our ability to declare
and pay cash dividends on our common stock.  As a result, your only
opportunity to achieve a return on your investment in our common stock will be
if the market price of our common stock appreciates and you sell your shares at
a profit.





Our
annual and quarterly results from operations may fluctuate significantly and
could fall below the expectations of securities analysts and investors due to a
number of factors, many of which are beyond our control, resulting in a decline
in the price of our securities.





Our
annual and quarterly results from operations may fluctuate significantly because
of several factors, including:





·
            Increases
      and decreases in average quarterly revenues and
    profitability,




·
            The
      rate at which we make acquisitions or develop new products and
      successfully market them,




·
            Our
      inability to increase the sales of our existing products and expand their
      distribution,




·
            Adverse
      regulatory or market events in our international
  markets,




·
            Litigation
      matters,






-24-


·
            Changes
      in consumer preferences, spending habits and competitive conditions,
      including the effects of competitors’ operational, promotional or
      expansion activities,




·
            Seasonality
      of our products,




·
            Fluctuations
      in commodity prices, product costs, utilities and energy costs, prevailing
      wage rates, insurance costs and other
costs,




·
            Our
      ability to recruit, train and retain qualified employees, and the costs
      associated with those activities,




·
            Changes
      in advertising and promotional activities and expansion to new
      markets,




·
            Negative
      publicity relating to us and the products we
  sell,




·
            Unanticipated
      increases in infrastructure costs,




·
            Impairment
      of goodwill or long-lived assets,




·
            Changes
      in interest rates, and




·
            Changes
      in accounting, tax, regulatory or other rules applicable to our
      business.









We
can be adversely affected by the implementation of new, or changes in the
interpretation of existing, accounting principles generally accepted in the
United States of America (“GAAP”).





Our
financial reporting complies with GAAP which is subject to change over
time.  If new rules or interpretations of existing rules require us to
change our financial reporting, our financial condition and results from
operations could be adversely affected.





Identification
of a material weakness in internal controls over financial reporting may
adversely affect our financial results.





We are
subject to the ongoing internal control provisions of Section 404 of the
Sarbanes-Oxley Act of 2002 and the regulations promulgated
thereunder.  Those provisions provide for the identification and
reporting of material weaknesses in our system of internal controls over
financial reporting.  If such a material weakness is identified, it
could indicate a lack of controls adequate to generate accurate financial
statements.  We routinely assess our internal controls over financial
reporting, but we cannot assure you that we will be able to timely remediate any
material weaknesses that may be identified in future periods, or maintain all of
the controls necessary for continued compliance.  Likewise, we cannot
assure you that we will be able to retain sufficient skilled finance and
accounting personnel, especially in light of the increased demand for such
personnel among publicly-traded companies.





Provisions
in our amended and restated certificate of incorporation and Delaware law may
discourage potential acquirers of our company, which could adversely affect the
value of our securities.





Our
amended and restated certificate of incorporation provides that our board of
directors is authorized to issue from time to time, without further stockholder
approval, up to 5.0 million shares of preferred stock in one or more series of
preferred stock issuances.  Our board of directors may establish the
number of shares to be included in each series of preferred stock and determine,
as applicable, the voting and other powers, designations, preferences, rights,
qualifications, limitations and restrictions for such series of preferred
stock.  The shares of preferred stock could have preferences over our
common stock with respect to dividends and liquidation rights.  We may
issue additional preferred stock in ways which may delay, defer or prevent a
change in control of the Company without further action by our
stockholders.  The shares of preferred stock may be issued with voting


-25-


Our
amended and restated certificate of incorporation contains additional provisions
that may have the effect of making it more difficult for a third party to
acquire or attempt to acquire control of our company.  In addition, we
are subject to certain provisions of Delaware law that limit, in some cases, our
ability to engage in certain business combinations with significant
stockholders.
 
 These
provisions, either alone, or in combination with each other, give our current
directors and executive officers the ability to significantly influence the
outcome of a proposed acquisition of the Company.  These provisions
would apply even if an acquisition or other significant corporate transaction
was considered beneficial by some of our stockholders.  If a change in
control or change in management is delayed or prevented by these provisions, the
market price of our outstanding securities could be adversely
impacted.
  ITEM 1B.
                  UNRESOLVED STAFF
      COMMENTS
 None.
 ITEM 2.
              PROPERTIES


Our
corporate headquarters are located in Irvington, New York, a suburb of New York
City.  Primary functions undertaken at the Irvington facility include
senior management, marketing, sales, operations, quality control and regulatory
affairs, finance and legal.  The lease on our Irvington facility
expires on April 30, 2014.  We also have an administrative center in
Jackson, Wyoming.  Primary functions undertaken at the Jackson
facility include back office functions, such as invoicing, credit and
collection, general ledger and customer service.  The lease on the
Jackson facility expires on December 31, 2009; however, we have the option to
renew this lease on an annual basis.  We conduct business regarding
all of our business segments at each of the Irvington, New York and Jackson,
Wyoming facilities.






ITEM 3.
            LEGAL
    PROCEEDINGS


Securities Class Action
Litigation





The
Company and certain of its officers and directors are defendants in a
consolidated securities class action lawsuit filed in the United States District
Court for the Southern District of New York (the “Consolidated
Action”).  The first of the six consolidated cases was filed on August
3, 2005.  Plaintiffs purport to represent a class of stockholders of
the Company who purchased shares from February 9, 2005 through November 15, 2005
(the “Class Period”).  Plaintiffs also name as defendants the
underwriters in the Company’s initial public offering and a private equity fund
that was a selling stockholder in the offering.  The District Court
has appointed a Lead Plaintiff.  On December 23, 2005, the Lead
Plaintiff filed a Consolidated Class Action Complaint, which asserted claims
under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections
10(b), 20(a) and 20A of the Securities Exchange Act of 1934.  The Lead
Plaintiff generally alleged that the Company issued a series of materially false
and misleading statements in connection with its initial public offering and
thereafter in regard to the following areas: the accounting issues described in
the Company’s press release issued on or about November 15, 2005; and the
alleged failure to disclose that demand for certain of the Company’s products
was declining and that the Company was planning to withdraw several products
from the market.  Plaintiffs seek an unspecified amount of
damages.  The Company filed a motion to dismiss the Consolidated Class
Action Complaint in February 2006.  On July 10, 2006, the Court
dismissed all claims against the Company and the individual defendants arising
under the Securities Exchange Act of 1934.





On June
1, 2007, a hearing before the Court was held regarding Plaintiffs’ pending
motion for class certification in the Consolidated Action.  On
September 4, 2007, the United States District Court for the Southern District of
New York issued an Order certifying a class consisting of all persons who
purchased the Company’s common


-26-


stock
pursuant, or traceable to, the Company’s initial public offering during the
Class Period and were damaged thereby. 
 On
January 16, 2009, the Court ordered that notice of the pending class action
lawsuit be sent to all persons who purchased the Company’s common stock during
the Class Period pursuant or traceable to the Company’s initial public
offering.  In March 2009, the notice of class action law suit was
mailed.  The
defendants and the lead plaintiffs have reached an agreement in principle to
settle the class action lawsuit without any admission of liability by the
defendants, subject to the execution of appropriate settlement documents and
court approval.  It is expected that the settlement funds will come
entirely out of insurance proceeds.  If approved, the settlement would
result in dismissal of all claims against us, our officers and directors and the
other defendants in the action with prejudice.  If the settlement is not
completed, then the parties may attempt to reach agreement on another settlement
or resume the litigation.
  DenTek
Litigation
 
 In April
2007, the Company filed a lawsuit in the U.S. District Court in the Southern
District of New York against DenTek Oral Care, Inc. (“DenTek”) alleging (i)
infringement of intellectual property associated with The Doctor’s NightGuard Dental Protector which
is used for the protection of teeth from nighttime teeth grinding; and (ii) the
violation of unfair competition and consumer protection laws.  On
October 4, 2007, the Company filed a Second Amended Complaint in which it named
Kelly M. Kaplan, Raymond Duane and C.D.S. Associates, Inc. ("CDS") as
additional defendants in this action and added other claims to the
previously filed complaint. The Court
has ordered the Company’s motion for a preliminary injunction to be held in
abeyance pending a determination of the motions to
dismiss.





On
September 30, 2008, after considering the defendants' motions to dismiss, the
Company's responses (including a motion to strike the motions to dismiss) and
the Magistrate's Report and Recommendations, the Court granted in part and
denied in part the defendants’ Motions to Dismiss, with the following claims
being dismissed without prejudice: (1) breach of the Proprietary Information and
Inventions Agreement (“PIIA”) against Duane; (2) breach of the PIIA
against Kaplan; (3) tortious interference with contractual relations
against DenTek; (4) tortious interference with contractual relations
against Duane; and (5) tortious interference with advantageous business
relationship/economic advantage against all defendants.  The Court
denied the Company’s Motions to Strike the Motions to Dismiss filed by DenTek
and CDS.  The following claims included in the Company’s Second
Amended Complaint remain in the action: (1) patent, trademark and copyright
infringement against DenTek; (2) unjust enrichment against DenTek; (3) violation
of a New York consumer protection statute against DenTek; (4) breach of the
consulting agreement against Duane; (5) breach of the PIIA against CDS; (6)
breach of the release against Kaplan and Duane; and (7) trade secret
misappropriation against DenTek, Kaplan, Duane and CDS.





In
October 2008, DenTek, Kaplan, Duane and CDS filed Answers to the
Second Amended Complaint.  In their Answers, each of
DenTek, Duane and CDS has asserted counterclaims against the
Company.  DenTek’s counterclaims allege false advertising, violation
of New York consumer protection statutes and unfair competition relating to
The Doctor’s® NightGuardTM
ClassicTM dental protector.  Duane’s counterclaim is a
contractual indemnity claim seeking to recover attorneys’ fees pursuant to the
release between Duane and Dental Concepts LLC (“Dental Concepts”), a
predecessor-in-interest to Medtech Products Inc., plaintiff in the DenTek
litigation and another wholly-owned subsidiary of Prestige Brands Holdings,
Inc.  CDS’s counterclaim alleges a breach of the consulting agreement
between CDS and Dental Concepts.




-27-


In
November 2008, in response to the counterclaims filed against the Company by
DenTek, Duane and CDS, the Company filed a Motion to Dismiss and Strike the
counterclaims made by DenTek, which motion is currently pending before the
Court.  The Company is also continuing with its discovery efforts for
the remaining causes of action.  However, on March 24,
2009, Duane submitted a petition for a Chapter 7 bankruptcy with the United
States Bankruptcy Court for the District of Nevada which automatically
stayed the DenTek litigation in which Duane is
a defendant.  The Company is pursuing on an expedited basis the
lifting of the automatic stay and, on April 23, 2009, filed a Motion for Relief
from the Automatic Stay to Proceed with Pending Litigation (the DenTek
litigation). 
 The
Company’s management believes that the counterclaims asserted by
DenTek, Duane and CDS are legally deficient and that it has meritorious
defenses to the counterclaims.  The Company intends to vigorously
defend against the counterclaims; however, the Company cannot, at this time,
reasonably estimate the potential range of loss, if any.
 
 In
addition to the matters described above, the Company is involved from time to
time in other routine legal matters and other claims incidental to its
business.  The Company reviews outstanding claims and proceedings
internally and with external counsel as necessary to assess probability and
amount of potential loss.  These







ITEM 4.
              SUBMISSION OF MATTERS TO A VOTE
      OF SECURITY HOLDERS


None.




-28-


Part
II








ITEM 5.
            MARKET FOR REGISTRANT’S COMMON
      EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES





Market
Information





Prestige
Brands Holdings, Inc.’s common stock is listed on The New York Stock Exchange
(“NYSE”) under the symbol “PBH.”  The high and low closing prices of
the Company’s common stock as reported by the NYSE for the Company’s two most
recently completed fiscal years on a quarterly basis and the current year
through June 11, 2009 are as follows:





High
                    
                    
                    LowYear
      Ending March 31, 2010April
      1, 2009 - June 11, 2009
                    
                    $
                    7.40
                    
                    
                    $
                    5.01Year
      Ended March 31, 2009Quarter
      Ended:June
      30, 2008
                    
                    $
                    11.93
                    
                    
                    $
                    8.08September
      30, 2008
                    
                    
                    11.54
                    
                    
                    
                    8.60December
      31, 2008
                    
                    
                    10.55
                    
                    
                    
                    6.00March
      31, 2009
                    
                    
                    10.12
                    
                    
                    
                    4.08Year
      Ended March 31, 2008Quarter
      Ended:June
      30, 2007
                    
                    $
                    13.60
                    
                    
                    $
                    11.20September
      30, 2007
                    
                    
                    13.67
                    
                    
                    
                    10.23December
      31, 2007
                    
                    
                    11.43
                    
                    
                    
                    7.47March
      31, 2008
                    
                    
                    8.58
                    
                    
                    
                    6.77





Unregistered
      Sales of Equity Securities and Use of
Proceeds





There
were no equity securities sold by the Company during the quarter ended March 31,
2009 that were not registered under the Securities Act of 1933, as
amended.





The were
no purchases of shares of the Company’s common stock made during the quarter
ended March 31, 2009, by or on behalf of the Company or any “affiliated
purchaser,” as defined by Rule 10b-18(a)(3) of the Exchange Act.





Holders





As of
June 1, 2009, there were 56 holders of record of our common
stock.  The number of record holders does not include beneficial
owners whose shares are held in the names of banks, brokers, nominees or other
fiduciaries.





Dividend
Policy





We have
not in the past paid, and do not expect for the foreseeable future, to pay
dividends on our common stock.  Instead, we anticipate that all of our
earnings in the foreseeable future will be used in our operations, to facilitate
strategic acquisitions, or to pay down our outstanding
indebtedness.  Any future determination to pay dividends will be at
the discretion of our board of directors and will depend upon, among other
factors, our results from operations, financial condition, capital requirements
and contractual restrictions, including restrictions under our senior credit
facility and the indenture governing our 9 1/4% senior subordinated notes, and
any other considerations our board of directors deems relevant.





-29-


PERFORMANCE
GRAPH





The
following graph (“Performance Graph”) compares our cumulative total stockholder
return since February 9, 2005, the date of our initial public offering, with the
cumulative total stockholder return for our Peer Group Index and the Russell
2000 Index (in which the Company is included).  The Performance Graph
assumes that the value of the investment in the Company’s common stock and each
index was $100.00 on February 9, 2005.  The Performance Graph was also
prepared based on the assumption that all dividends paid, if any, were
reinvested.  The Peer Group Index was established by the Company in
connection with its research and subsequent implementation of an executive
compensation program.  Based on the Company’s use of the peer group
for benchmarking purposes, the Company believes the peer group should be
included in the Performance Graph.







February
      9,
                  
                  
                  March
      312005
      (1)
                  
                  
                  2006
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2009Prestige
      Brands Holdings
                  
                  $
                  100.00
                  
                  
                  $
                  76.06
                  
                  
                  $
                  74.06
                  
                  
                  $
                  51.13
                  
                  
                  $
                  32.38The
      Peer Group Index (2)
                  
                  
                  100.00
                  
                  
                  
                  105.00
                  
                  
                  
                  122.45
                  
                  
                  
                  115.89
                  
                  
                  
                  71.50The
      Russell 2000 Index
                  
                  
                  100.00
                  
                  
                  
                  122.61
                  
                  
                  
                  127.78
                  
                  
                  
                  107.83
                  
                  
                  
                  66.26





(1)
            The
      Company’s initial public offering priced at $16.00 per share on February
      9, 2005.  Shares of the Company’s common stock closed at $17.75
      per share on February 10, 2005, the first day the shares of the Company’s
      common stock were traded on the
NYSE.





(2)
            The
      Peer Group Index is a self-constructed peer group consisting of companies
      in the consumer products industry with comparable revenues and market
      capitalization, from which the Company has been excluded.  Such
      Peer Group Index was constructed in connection with the Company’s
      benchmark analysis of executive compensation and is comprised of the
      following companies: (i) Chattem Inc., (ii) Elizabeth Arden, Inc., (iii)
      Hain Celestial Group, Inc., (iv) Helen of Troy Limited, (v) Inter Parfums,
      Inc., (vi) Lifetime Brands, Inc., (vii) Maidenform Brands, Inc. and (viii)
      WD-40 Company.  At March 31, 2008, the Peer Group analysis
      included Alpharma, Inc. which was acquired by King Pharmaceuticals, Inc.
      on December 20, 2008.  All periods presented have been adjusted
      to exclude Alpharma, Inc.





The
Performance Graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Annual Report on Form 10-K into any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
to the extent that we specifically incorporate this information by reference,
and shall not otherwise be deemed filed under such Acts.




-30-


ITEM 6.
              SELECTED FINANCIAL
      DATA


Prestige
Brands Holdings, Inc.


(In
      Thousands, except per share data)
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          Year
      Ended March 312009
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2008
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2007
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2006
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2005Income
      Statement DataTotal
      revenues
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          312,715
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          326,603
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          318,634
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          296,668
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          289,069Cost
      of sales (1)
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          149,445
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          158,096
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          153,147
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          139,430
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          139,009Gross
      profit
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          163,270
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          168,507
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          165,487
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          157,238
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          150,060Advertising
      and promotion expenses
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          38,099
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          34,665
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          32,005
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          32,082
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          29,697Depreciation
      and amortization
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          11,219
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          11,014
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          10,384
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          10,777
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          9,800General
      and administrative
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          31,888
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          31,414
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          28,416
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          21,158
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          20,198Impairment
      of goodwill and intangibles
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          249,590
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          9,317
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --Interest
      expense, net(2)
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          28,436
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          37,393
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          39,506
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          36,346
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          44,726Other
      (income) expense
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (187
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          26,863Income
      (loss) before income taxes
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (195,962
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          54,208
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          55,176
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          47,558
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          18,776Provision
      (benefit) for income taxes
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (9,186
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          20,289
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          19,098
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          21,281
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          8,556Net
      income (loss)
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (186,776
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          33,919
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          36,078
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          26,277
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          10,220Cumulative
      preferred dividends
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          --
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (25,395
                                                                                                                                                                                                                                          )Net
      income (loss) available to common stockholders
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (186,776
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          33,919
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          36,078
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          26,277
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (15,175
                                                                                                                                                                                                                                          )Net
      income (loss) per common share:Basic
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (3.74
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          0.68
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          0.73
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          0.54
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (0.55
                                                                                                                                                                                                                                          )Diluted
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (3.74
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          0.68
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          0.72
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          0.53
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          (0.55
                                                                                                                                                                                                                                          )Weighted
      average shares outstanding:Basic
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          49,935
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          49,751
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          49,460
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          48,908
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          27,546Diluted
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          49,935
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          50,039
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          50,020
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          50,008
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          27,546Year
      Ended March 31Other
      Financial Data
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2009
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2008
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2007
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2006
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2005Capital
      expenditures
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          481
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          521
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          540
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          519
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          365Cash
      provided by (used in):Operating
      activities
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          66,679
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          44,989
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          71,899
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          53,861
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          51,042Investing
      activities
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (4,672
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (537
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (31,051
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (54,163
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (425,844
                                                                                                                                                                                                                                          )Financing
      activities
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (32,904
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (52,132
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          (35,290
                                                                                                                                                                                                                                          )
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          3,168
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          376,743March
      31Balance
      Sheet Data
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2009
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2008
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2007
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2006
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          2005Cash
      and cash equivalents
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          35,181
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          6,078
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          13,758
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          8,200
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          $
                                                                                                                                                                                                                                          5,334Total
      assets
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          801,381
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          1,049,156
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          1,063,416
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          1,038,645
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          996,600Total
      long-term debt, including current maturities
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          378,337
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          411,225
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          463,350
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          498,630
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          495,360Stockholders’
      equity
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          294,385
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          479,073
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          445,334
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          409,407
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                          382,047








(1)
            For
      2005, 2006 and 2007, cost of sales includes $5.3 million, $248,000 and
      $276,000, respectively, of charges related to the step-up of
      inventory.


(2)
            For
      2005, other expense includes a loss on debt extinguishment of $26.9
      million.




-31-


ITEM
      7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION








The
following discussion of our financial condition and results of operations should
be read together with the “Selected Financial Data” and the consolidated
financial statements and the related notes included elsewhere in this Annual
Report on Form 10-K.  This discussion and analysis may contain
forward-looking statements that involve certain risks, assumptions and
uncertainties.  Future results could differ materially from the
discussion that follows for many reasons, including the factors described in
Item 1A., “Risk Factors” in this Annual Report on Form 10-K, as well as those
described in future reports filed with the SEC.





General


We are
engaged in the marketing, sales and distribution of brand name over-the-counter
healthcare, household cleaning and personal care products to mass merchandisers,
drug stores, supermarkets and club stores primarily in the United States and
Canada.  We continue to use the strength of our brands, our
established retail distribution network, a low-cost operating model and our
experienced management team as a competitive advantage to grow our presence in
these categories and, as a result, grow our sales and profits.





We have
grown our brand portfolio by acquiring strong and well-recognized brands from
larger consumer products and pharmaceutical companies, as well as other brands
from smaller private companies.  While the brands we have purchased
from larger consumer products and pharmaceutical companies have long histories
of support and brand development, we believe that at the time we acquired them
they were considered “non-core” by their previous owners and did not benefit
from the focus of senior level management or strong marketing
support.  We believe that the brands we have purchased from smaller
private companies have been constrained by the limited resources of their prior
owners.  After acquiring a brand, we seek to increase its sales,
market share and distribution in both existing and new channels.  We
pursue this growth through increased spending on advertising and promotion, new
marketing strategies, improved packaging and formulations and innovative new
products.





Critical
      Accounting Policies and
Estimates





The
Company’s significant accounting policies are described in the notes to the
audited financial statements included elsewhere in this Annual Report on Form
10-K.  While all significant accounting policies are important to our
consolidated financial statements, certain of these policies may be viewed as
being critical.  Such policies are those that are both most important
to the portrayal of our financial condition and results from operations and
require our most difficult, subjective and complex estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues, expenses or
the related disclosure of contingent assets and liabilities.  These
estimates are based upon our historical experience and on various other
assumptions that we believe to be reasonable under the
circumstances.  Actual results may differ materially from these
estimates under different conditions.  The most critical accounting
policies are as follows:





Revenue
Recognition


We comply
with the provisions of SEC Staff Accounting Bulletin No. 104 “Revenue
Recognition,” which states that revenue should be recognized when the following
revenue recognition criteria are met: (i) persuasive evidence of an arrangement
exists; (ii) the product has been shipped and the customer takes ownership and
assumes the risk of loss; (iii) the selling price is fixed or determinable; and
(iv) collection of the resulting receivable is reasonably assured.  We
have determined that the transfer of risk of loss generally occurs when product
is received by the customer, and, accordingly recognize revenue at that
time.  Provision is made for estimated discounts related to customer
payment terms and estimated product returns at the time of sale based on our
historical experience.





As is
customary in the consumer products industry, we participate in the promotional
programs of our customers to enhance the sale of our products.  The
cost of these promotional programs is recorded in accordance with Emerging
Issues Task Force 01-09, “Accounting for Consideration Given
by a Vendor to a Customer (Including a Reseller of the Vendor’s
Products)” as either advertising and promotional expenses or as a
reduction of sales.  Such costs vary from period-to-period based on
the actual number of units sold during a finite period of time.  We
estimate the cost of such promotional programs at their inception based on
historical experience and current




-32-


market
conditions and reduce sales by such estimates.  These promotional
programs consist of direct to consumer incentives such as coupons and temporary
price reductions, as well as incentives to our customers, such as slotting fees
and cooperative advertising.  We do not provide incentives to
customers for the acquisition of product in excess of normal inventory
quantities since such incentives increase the potential for future returns, as
well as reduce sales in the subsequent fiscal periods.





Estimates
of costs of promotional programs are based on (i) historical sales experience,
(ii) the current offering, (iii) forecasted data, (iv) current market
conditions, and (v) communication with customer purchasing/marketing
personnel.  At the completion of the promotional program, the
estimated amounts are adjusted to actual results.  While our
promotional expense for the year ended March 31, 2009 was $21.6 million, we
participated in 5,759 promotional campaigns, resulting in an average cost of
$2,884 per campaign.  Of such amount, only 782 payments were in excess
of $5,000.  We believe that the estimation methodologies employed,
combined with the nature of the promotional campaigns, makes the likelihood
remote that our obligation would be misstated by a material
amount.  However, for illustrative purposes, had we underestimated the
promotional program rate by 10% for the year ended March 31, 2009, our sales and
operating income would have been adversely affected by approximately $2.2
million.  Net income would have been adversely affected by
approximately $1.4 million.





We also
periodically run coupon programs in Sunday newspaper inserts or as on-package
instant redeemable coupons.  We utilize a national clearing house to
process coupons redeemed by customers.  At the time a coupon is
distributed, a provision is made based upon historical redemption rates for that
particular product, information provided as a result of the clearing house’s
experience with coupons of similar dollar value, the length of time the coupon
is valid, and the seasonality of the coupon drop, among other
factors.  During 2009, we had 16 coupon events.  The amount
recorded against revenues and accrued for these events during the year was $1.4
million, of which $1.3 million was redeemed during the year.





Allowances
for Product Returns


Due to
the nature of the consumer products industry, we are required to estimate future
product returns.  Accordingly, we record an estimate of product
returns concurrent with the recording of sales.  Such estimates are
made after analyzing (i) historical return rates, (ii) current economic trends,
(iii) changes in customer demand, (iv) product acceptance, (v) seasonality of
our product offerings, and (vi) the impact of changes in product formulation,
packaging and advertising.





We
construct our returns analysis by looking at the previous year’s return history
for each brand.  Subsequently, each month, we estimate our current
return rate based upon an average of the previous six months’ return rate and
review that calculated rate for reasonableness giving consideration to the other
factors described above.  Our historical return rate has been
relatively stable; for example, for the years ended March 31, 2009, 2008 and
2007, returns represented 4.2%, 4.6% and 3.7%, respectively, of gross
sales.  While the returns rate increased 0.9% from 2007 to 2008, such
amount exclusive of the voluntary withdrawal from the marketplace of Little Remedies medicated
pediatric cough and cold products in October 2007, would have been
4.1%.  At March 31, 2009 and 2008, the allowance for sales returns was
$2.4 million and $1.8 million, respectively.





While we
utilize the methodology described above to estimate product returns, actual
results may differ materially from our estimates, causing our future financial
results to be adversely affected.  Among the factors that could cause
a material change in the estimated return rate would be significant unexpected
returns with respect to a product or products that comprise a significant
portion of our revenues in a manner similar to the Little Remedies voluntary
withdrawal discussed above.  Based upon the methodology described
above and our actual returns’ experience, management believes the likelihood of
such an event remains remote.  As noted, over the last three years our
actual product return rate has stayed within a range of 4.6% to 3.7% of gross
sales.  An increase of 0.1% in our estimated return rate as a
percentage of gross sales would have adversely affected our reported sales and
operating income for the year ended March 31, 2009 by approximately
$370,000.  Net income would have been adversely affected by
approximately $230,000.





Allowances
for Obsolete and Damaged Inventory


We value
our inventory at the lower of cost or market value.  Accordingly, we
reduce our inventories for the diminution of value resulting from product
obsolescence, damage or other issues affecting marketability equal to the
difference between the cost of the inventory and its estimated market
value.  Factors utilized in the




-33-


determination
of estimated market value include (i) current sales data and historical return
rates, (ii) estimates of future demand, (iii) competitive pricing pressures,
(iv) new product introductions, (v) product expiration dates, and (vi) component
and packaging obsolescence.





Many of
our products are subject to expiration dating.  As a general rule our
customers will not accept goods with expiration dating of less than 12 months
from the date of delivery.  To monitor this risk, management utilizes
a detailed compilation of inventory with expiration dating between zero and 15
months and reserves for 100% of the cost of any item with expiration dating of
12 months or less.  At March 31, 2009 and 2008, the allowance for
obsolete and slow moving inventory was $1.4 million, representing 4.9% and 4.6%,
respectively, of total inventory.  The year-over-year increase
percentage increase was the result of the $2.8 million inventory reduction at
March 31, 2009 compared to March 31, 2008.  Inventory obsolescence
costs charged to operations for 2009, 2008, and 2007 were $2.2 million, $1.4
million and $3.1 million, respectively, or 0.7%, 0.4% and 1.0%, respectively, of
net sales.  A 1.0% increase in our allowance for obsolescence at March
31, 2009 would have adversely affected our reported operating income and net
income for the year ended March 31, 2009 by approximately $284,000 and $176,000,
respectively.





Allowance
for Doubtful Accounts


In the
ordinary course of business, we grant non-interest bearing trade credit to our
customers on normal credit terms.  We maintain an allowance for
doubtful accounts receivable which is based upon our historical collection
experience and expected collectibility of the accounts receivable.  In
an effort to reduce our credit risk, we (i) establish credit limits for all of
our customer relationships, (ii) perform ongoing credit evaluations of our
customers’ financial condition, (iii) monitor the payment history and aging of
our customers’ receivables, and (iv) monitor open orders against an individual
customer’s outstanding receivable balance.





We
establish specific reserves for those accounts which file for bankruptcy, have
no payment activity for 180 days or have reported major negative changes to
their financial condition.  The allowance for bad debts amounted to
0.3% and 0.1% of accounts receivable at March 31, 2009 and 2008,
respectively.  Bad debt expense (recoveries) for 2009, 2008 and 2007
were $130,000, $124,000, and $(100,000), respectively, each representing 0.0% of
net sales in each of the years.





While
management believes that it is diligent in its evaluation of the adequacy of the
allowance for doubtful accounts, an unexpected event, such as the bankruptcy
filing of a major customer, could have an adverse effect on our future financial
results.  A 0.1% increase in our bad debt expense as a percentage of
sales in 2009 would have resulted in a decrease in reported operating income of
approximately $313,000, and a decrease in our reported net income of
approximately $194,000.





Valuation
of Intangible Assets and Goodwill


Goodwill
and intangible assets amounted to $691.8 and $955.6 million at March 31, 2009
and 2008, respectively.  At March 31, 2009, goodwill and intangible
assets were apportioned among our three operating segments as
follows:





Over-the-
                      Counter
                      Healthcare
                    
                    
                    Household
                      Cleaning
                    
                    
                    Personal
                      Care
                    
                    
                    Consolidated(In
      Thousands)Goodwill
                    
                    $
                    104,100
                    
                    
                    $
                    7,389
                    
                    
                    $
                    2,751
                    
                    
                    $
                    114,240Intangible
      assetsIndefinite
      lived
                    
                    
                    345,467
                    
                    
                    
                    154,709
                    
                    
                    
                    --
                    
                    
                    
                    500,176Finite
      lived
                    
                    
                    67,564
                    
                    
                    
                    --
                    
                    
                    
                    9,869
                    
                    
                    
                    77,433413,031
                    
                    
                    
                    154,709
                    
                    
                    
                    9,869
                    
                    
                    
                    577,609$
                    517,131
                    
                    
                    $
                    162,098
                    
                    
                    $
                    12,620
                    
                    
                    $
                    691,849




-34-


Our Clear Eyes, New-Skin,
Chloraseptic,Compound
W and Wartnerbrands comprise the majority of the value of the intangible assets within
the Over-The-Counter Healthcare segment.  The Comet, Spic and Spanand
Chore Boybrands
comprise substantially all of the intangible asset value within the Household
Cleaning segment.  Denorex, Cutexand Prellcomprised substantially
all of the intangible asset value within the Personal Care segment.





Goodwill
and intangible assets comprise substantially all of our
assets.  Goodwill represents the excess of the purchase price over the
fair value of assets acquired and liabilities assumed in a purchase business
combination.  Intangible assets generally represent our trademarks,
brand names and patents.  When we acquire a brand, we are required to
make judgments regarding the value assigned to the associated intangible assets,
as well as their respective useful lives.  Management considers many
factors, both prior to and after, the acquisition of an intangible asset in
determining the value, as well as the useful life, assigned to each intangible
asset that the Company acquires or continues to own and promote.  The
most significant factors are:





·
            Brand
      History


A brand
that has been in existence for a long period of time (e.g.,25, 50 or 100 years)
generally warrants a higher valuation and longer life (sometimes indefinite)
than a brand that has been in existence for a very short period of
time.  A brand that has been in existence for an extended period of
time generally has been the subject of considerable investment by its previous
owner(s) to support product innovation and advertising and
promotion.





·
            Market
      Position


Consumer
products that rank number one or two in their respective market generally have
greater name recognition and are known as quality product offerings, which
warrant a higher valuation and longer life than products that lag in the
marketplace.





·
            Recent
      and Projected Sales Growth


Recent
sales results present a snapshot as to how the brand has performed in the most
recent time periods and represent another factor in the determination of brand
value.  In addition, projected sales growth provides information about
the strength and potential longevity of the brand.  A brand that has
both strong current and projected sales generally warrants a higher valuation
and a longer life than a brand that has weak or declining
sales.  Similarly, consideration is given to the potential investment,
in the form of advertising and promotion, which is required to reinvigorate a
brand that has fallen from favor.





·
            History
      of and Potential for Product
Extensions


Consideration
also is given to the product innovation that has occurred during the brand’s
history and the potential for continued product innovation that will determine
the brand’s future.  Brands that can be continually enhanced by new
product offerings generally warrant a higher valuation and longer life than a
brand that has always “followed the leader”.





After
consideration of the factors described above, as well as current economic
conditions and changing consumer behavior, management prepares a determination
of the intangible’s value and useful life based on its analysis of the
requirements of Financial Accounting Standards Board (“FASB”) Statement of
Financial Accounting Standards (“Statement”) No. 141, “Business
Combinations” and Statement No. 142 “Goodwill and Other Intangible Assets”
(“Statement No. 142”).  Under Statement 142, goodwill is no longer
amortized, but must be tested for impairment annually, or more frequently if an
event or circumstances change that would more likely than not reduce the fair
value of the reporting unit below the carrying amount.  In a similar
manner, indefinite-lived assets are no longer amortized.  They are
also subject to an annual impairment test, or more frequently if events or
changes in circumstances indicate that the asset may be
impaired.  Additionally, at each reporting period an evaluation must
be made to determine whether events and circumstances continue to support an
indefinite useful life.  Intangible assets with finite lives are
amortized over their respective estimated useful lives and must also be tested
for impairment whenever events or changes in circumstances indicate that the
carrying value of the asset may not be recoverable and exceeds its fair
value.





On an
annual basis, or more frequently if conditions indicate that the carrying value
of the asset may not be




-35-


recovered,
management performs a review of both the values and useful lives assigned to
goodwill and intangible assets and tests for impairment.





Finite-Lived
Intangible Assets


As
mentioned above, when events or changes in circumstances indicate the carrying
value of the assets may not be recoverable, management performs a review to
ascertain the impact of events and circumstances on the estimated useful lives
and carrying values of our trademarks and trade names.  In connection
with this analysis, management:





·
            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.





Should
analysis of any of the aforementioned factors warrant a change in the estimated
useful life of the intangible asset, management will reduce the estimated useful
life and amortize the carrying value prospectively over the shorter remaining
useful life.  Management’s projections are utilized to assimilate all
of the facts, circumstances and expectations related to the trademark or trade
name and estimate the cash flows over its useful life.  In the event
that the long-term projections indicate that the carrying value is in excess of
the undiscounted cash flows expected to result from the use of the intangible
assets, management is required to record an impairment charge.  Once
that analysis is completed, a discount rate is applied to the cash flows to
estimate fair value.  The impairment charge is measured as the excess
of the carrying amount of the intangible asset over fair value as calculated
using the discounted cash flow analysis.  Future events, such as
competition, technological advances and reductions in advertising support for
our trademarks and trade names could cause subsequent evaluations to utilize
different assumptions.





Indefinite-Lived
Intangible Assets


In a
manner similar to finite-lived intangible assets, at each reporting period,
management analyzes current events and circumstances to determine whether the
indefinite life classification for a trademark or trade name continues to be
valid.  Should circumstance warrant a finite life, the carrying value
of the intangible asset would then be amortized prospectively over the estimated
remaining useful life.





Management
tests the indefinite-lived intangible assets for impairment by comparing the
carrying value of the intangible asset to its estimated fair
value.  Since quoted market prices are seldom available for trademarks
and trade names such as ours, we utilize present value techniques to estimate
fair value.  Accordingly, management’s projections are utilized to
assimilate all of the facts, circumstances and expectations related to the
trademark or trade name and estimate the cash flows over its useful
life.  In performing this analysis, management considers the same
types of information as listed above in regards to finite-lived intangible
assets.  Once that analysis is completed, a discount rate is applied
to the cash flows to estimate fair value.  Future events, such as
competition, technological advances and reductions in advertising support for
our trademarks and trade names could cause subsequent evaluations to utilize
different assumptions.





Goodwill


As part
of its annual test for impairment of goodwill, management estimates the
discounted cash flows of each reporting unit, which is at the brand level, and
one level below the operating segment level, to estimate their respective fair
values.  In performing this analysis, management considers the same
types of information as listed above in regards to finite-lived intangible
assets.  In the event that the carrying amount of the reporting unit
exceeds the fair value, management would then be required to allocate the
estimated fair value of the assets and liabilities of the reporting unit as if
the unit was acquired in a business combination, thereby revaluing the carrying
amount of goodwill.  In a manner similar to indefinite-lived assets,
future events, such as competition,




-36-


technological
advances and reductions in advertising support for our trademarks and trade
names could cause subsequent evaluations to utilize different
assumptions.





Impairment
Analysis


In
estimating the value of trademarks and trade names, as well as goodwill at March
31, 2009, management applied a discount rate of 11.0%, the Company’s estimated
future weighted-average cost of funds, to the projected cash
flows.  This discounted cash flow methodology is a widely-accepted
valuation technique utilized by market participants in the valuation process and
has been applied consistently.  In addition, we considered the
Company’s market capitalization at March 31, 2009, as compared to the aggregate
fair values of our reporting units to assess the reasonableness of our estimates
pursuant to the discounted cash flow methodology.





During
the three month period ended March 31, 2009, as a direct consequence of the
challenging economic environment, the dislocation of the debt and equity
markets, and contracting consumer demand for our branded products, we recorded a
non-cash charge in the amount of $249.6 million related to the impairment of
intangible assets and goodwill across the entire product line because the
carrying amount of these “branded” assets exceeded their respective fair
values.  A summary of the impairment activity by segment is as
follows:





Over-the-
                      Counter
                      Healthcare
                    
                    
                    Household
                      Cleaning
                    
                    
                    Personal
                      Care
                    
                    
                    Consolidated(In
      Thousands)Goodwill
                    
                    $
                    125,527
                    
                    
                    $
                    65,160
                    
                    
                    $
                    --
                    
                    
                    $
                    190,687Intangible
      assetsIndefinite
      lived
                    
                    
                    28,603
                    
                    
                    
                    16,184
                    
                    
                    
                    --
                    
                    
                    
                    44,787Finite
      lived
                    
                    
                    12,420
                    
                    
                    
                    --
                    
                    
                    
                    1,696
                    
                    
                    
                    14,11641,023
                    
                    
                    
                    16,184
                    
                    
                    
                    1,696
                    
                    
                    
                    58,903$
                    166,550
                    
                    
                    $
                    81,344
                    
                    
                    $
                    1,696
                    
                    
                    $
                    249,590





The
discount rate utilized in the analyses, as well as future cash flows may be
influenced by such factors as changes in interest rates and rates of
inflation.  Additionally, should the related fair values of goodwill
and intangible assets continue to be adversely affected as a result of declining
sales or margins caused by competition, changing consumer preferences,
technological advances or reductions in advertising and promotional expenses,
the Company may be required to record additional impairment charges in the
future.





Stock-Based
Compensation


FASB Statement No. 123(R),
“Share-Based Payment” (“Statement No. 123(R)”)requires us to measure the
cost of services to be rendered based on the grant-date fair value of the equity
award.  Compensation expense is to be recognized over the period which
an employee is required to provide service in exchange for the award, generally
referred to as the requisite service period.  Information utilized in
the determination of fair value includes the following:





·
            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.





Additionally,
management must estimate the expected attrition rate of the recipients to enable
it to estimate the amount of non-cash compensation expense to be recorded in our
financial statements.  While management uses diligent analysis to
estimate the respective variables, a change in assumptions or market conditions,
as well as changes in the anticipated attrition rates, could have a significant
impact on the future amounts recorded as non-cash compensation
expense.  The Company recorded net non-cash compensation expense of
$2.4 million, $1.1 million and $655,000 during 2009, 2008 and 2007,
respectively.  However, in 2009, management was required to


-37-


reverse
previously recorded stock-based compensation costs of $193,000 and $705,000
related to the May 2008 and 2007 grants, respectively, as it was determined that
the Company would not meet the performance goals associated with such grants of
restricted stock.  In 2008, management for the same reasons was
required to reverse previously recorded stock-based compensation costs of
$538,000, $394,000 and $166,000 related to the October 2005, July 2006 and May
2007 grants, respectively.  Assuming no changes in assumptions and no
new awards authorized by the Compensation Committee of the Board of Directors,
we will record non-cash compensation expense of approximately $2.1 million
during 2010.





Loss
Contingencies


Loss
contingencies are recorded as liabilities when it is probable that a liability
has been incurred and the amount of such loss is reasonably
estimable.  Contingent losses are often resolved over longer periods
of time and involve many factors including:





·
            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.





Recent
Accounting Pronouncements


In April
2009, the FASB issued Staff Position No. FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (“Staff Position No.
107-1”) which requires disclosures about the fair values of financial
instruments at interim reporting periods in addition to annual financial
statements.  Effective April 1, 2009, Staff Position No. 107-1
involves only enhanced disclosures and will not have any impact on the Company’s
financial position, results from operations or cash flows.





In April
2009, the FASB issued Staff Position FAS 115-2 and FAS 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments” (“Staff Position FAS 115-2”)
which modified the threshold a company must meet to avoid recognizing
other-than-temporary impairments of debt securities purchased as
investments.  Effective April 1, 2009, the implementation of Staff
Position No. 115-2 will not have any impact on the Company’s financial position,
results from operations or cash flows.





In March
2008, the FASB issued SFAS No. 161 “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No. 133”
(“Statement No. 161”) that requires a company with derivative instruments to
disclose information to enable users of the financial statements to understand
(i) how and why the company uses derivative instruments, (ii) how derivative
instruments and related hedged items are accounted for, and (iii) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows.  Accordingly, Statement No. 161
requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of and gains and
losses on derivative instruments, and disclosures about credit-risk-related
contingent features in derivative agreements.  Statement No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. The implementation of Statement No.
161 involves enhanced disclosures of derivative instruments and the Company’s
hedging activities and did not have any impact on the Company’s financial
position, results from operations or cash flows.





In
December 2007, the FASB ratified Emerging Issues Task Force 07-01, “Accounting
for Collaborative Arrangements” (“EITF 07-01”).  EITF 07-01 provides
guidance for determining if a collaborative arrangement exists and establishes
procedures for reporting revenues and costs generated from transactions with
third parties, as well as between the parties within the collaborative
arrangement, and provides guidance for financial statement disclosures of
collaborative arrangements.  EITF 07-01 is effective for fiscal years
beginning after December 15, 2008 and is required to be applied retrospectively
to all prior periods where collaborative arrangements existed as of the
effective date.  The adoption of EITF 07-01 on April 1, 2009 will not
have any impact on the Company’s financial position, results from operations or
cash flows at that date.  However, the future impact on the Company’s
financial, results from operations and cash flows is dependent on the nature,
terms and size of any collaborative arrangements that the Company may
initiate.





In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business
Combinations” (“Statement No.




-38-


141(R)”), as
amended by FASB Staff Position No. 141(R)-1, “Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies”, to
improve consistency and comparability in the accounting and financial reporting
of business combinations.  Accordingly, Statement 141(R), as amended,
requires the acquiring entity in a business combination to (i) recognize all
assets acquired and liabilities assumed in the transaction, (ii) establishes
acquisition-date fair value as the amount to be ascribed to the acquired assets
and liabilities and (iii) requires certain disclosures to enable users of the
financial statements to evaluate the nature, as well as the financial aspects of
the business combination.  Statement 141(R), as amended, is effective
for business combinations consummated by the Company on or after April 1,
2009.  The impact of adopting this standard will depend on the nature,
terms and size of any business combinations completed after the effective
date.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities -Including an amendment
of FASB Statement No. 115” (“Statement No.
159”).  StatementNo. 159 permits
companies to choose to measure certain financial instruments and certain other
items at fair value.  Unrealized gains and losses on items for which
the fair value option has been elected will be recognized in earnings at each
subsequent reporting date.  The implementation of Statement No. 159,
effective April 1, 2008, did not have a material effect on the Company’s
consolidated financial statements.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“Statement No. 157”) to address inconsistencies in the definition and
determination of fair value pursuant to generally accepted accounting principles
(“GAAP”).  Statement No. 157 provides a single definition of fair
value, establishes a framework for measuring fair value in GAAP and expands
disclosures about fair value measurements in an effort to increase comparability
related to the recognition of market-based assets and liabilities and their
impact on earnings.  Statement No. 157 is effective for the Company’s
interim financial statements issued after April 1, 2008.  However, on
February 12, 2008, the FASB deferred the effective date of Statement No. 157 for
one year for non-financial assets and non-financial liabilities that are
recognized or disclosed at fair value in the financial statements on a
nonrecurring basis.  The implementation of Statement No. 157,
effective April 1, 2008, did not have a material effect on financial assets
and liabilities included in the Company’s consolidated financial statements as
fair value is based on readily available market prices.  The
application of Statement No. 157 is not expected to have a material effect on
the Company's consolidated financial statements as it relates to the
non-financial assets and liabilities.





Management
has reviewed and continues to monitor the actions of the various financial and
regulatory reporting agencies and is currently not aware of any other
pronouncement that could have a material impact on the
Company’s consolidated financial position, results of operations or cash
flows.





-39-





Fiscal
2009 compared to Fiscal 2008





Revenues





2009
                                                      Revenues
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    2008
                                                      Revenues
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    Increase
                                                      (Decrease)
                                                    
                                                    
                                                    %OTC
      Healthcare
                                                    
                                                    $
                                                    176,975
                                                    
                                                    
                                                    
                                                    56.6
                                                    
                                                    
                                                    $
                                                    183,692
                                                    
                                                    
                                                    
                                                    56.2
                                                    
                                                    
                                                    $
                                                    (6,717
                                                    )
                                                    
                                                    
                                                    (3.7
                                                    )Household
      Cleaning
                                                    
                                                    
                                                    116,015
                                                    
                                                    
                                                    
                                                    37.1
                                                    
                                                    
                                                    
                                                    121,127
                                                    
                                                    
                                                    
                                                    37.1
                                                    
                                                    
                                                    
                                                    (5,112
                                                    )
                                                    
                                                    
                                                    (4.2
                                                    )Personal
      Care
                                                    
                                                    
                                                    19,725
                                                    
                                                    
                                                    
                                                    6.3
                                                    
                                                    
                                                    
                                                    21,784
                                                    
                                                    
                                                    
                                                    6.7
                                                    
                                                    
                                                    
                                                    (2,059
                                                    )
                                                    
                                                    
                                                    (9.5
                                                    )$
                                                    312,715
                                                    
                                                    
                                                    
                                                    100.0
                                                    
                                                    
                                                    $
                                                    326,603
                                                    
                                                    
                                                    
                                                    100.0
                                                    
                                                    
                                                    $
                                                    (13,888
                                                    )
                                                    
                                                    
                                                    (4.3
                                                    )





Revenues
decreased across all reporting segments during fiscal 2009 by an aggregate $13.9
million, or 4.3% compared to 2008.  Revenues from customers outside of
North America, which represents 3.5% of total revenues, decreased 16.5% in 2009
compared to 2008.





Over-the-Counter
Healthcare Segment


Revenues
of the Over-the-Counter Healthcare segment decreased $6.7 million, or 3.7%,
during 2009 versus 2008.  Revenue from the launch of the new Allergen
Block products, marketed under theChloraseptic andLittle
Allergies trademarks, and revenue increases forClearEyes, Little RemediesandNew-Skin were more than
offset by revenue decreases on our wart care brands, as well as theMurine Ear, The Doctor’s and Dermoplast brands. Allergen Block is a
new, innovative and non-medicated allergy product targeted toward allergy
sufferers looking for an alternative to medicated products.  Clear Eyes revenue increased as a
result of increased consumer consumption whileLittle Remedies revenue
increased as a result of the introduction of the Saline Nasal Mist spray, as
well as distribution gains and increased consumer consumption of its
non-medicated pediatric products.  New-Skin revenue increased as a result of new
distribution and pipeline shipments of a new Poison Ivy skin treatment
product.  Revenues for the wart care brands,Compound W andWartner, decreased primarily
due to a price reduction taken on the cryogenic products.  This
pricing reduction, along with a down-sizing ofCompound W Freeze-off, was
in response to price reductions taken by a major competitor in the
category. Murine
Ear’s revenue decreased as a result of slowing consumer
consumption.  Increased competition in the bruxism category resulted
in lower sales of TheDoctor’s
NightGuard Dental Protector while Dermoplast revenue decreased
due to timing of shipments of the institutional spray item and discontinuation
of a skin treatment product which had limited distribution.





Household
Cleaning Segment


Revenues
for the Household Cleaning segment decreased $5.1 million, or 4.2%, during 2009
versus 2008.  Revenues for theComet brand increased
slightly during the period primarily as a result of increased sales ofCometMildew
SprayGel.  Comet’s revenue increase was
offset by lower revenues from the other two brands in this segment –Spic and Span andChore Boy.  The
decline inSpic and
Span’s revenue
reflected a decline in consumer consumption whileChore Boy sales declined as
a result of weaker consumption and lower shipments to small grocery wholesale
accounts.





Personal
Care Segment


Revenues
of the Personal Care segment declined $2.1 million, or 9.5%, during 2009 versus
2008.  Increased revenues for Cutex were offset by declines
on all other brands in this segment.  The increase in revenue for
Cutex was the result of
improving consumer consumption.  The decreases in revenues for the
other smaller brands in this segment resulted from lower consumption and
distribution losses.





-40-


Gross
Profit


2009
                                                      Gross
      Profit
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    2008
                                                      Gross
      Profit
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    Increase
                                                      (Decrease)
                                                    
                                                    
                                                    %OTC
      Healthcare
                                                    
                                                    $
                                                    113,516
                                                    
                                                    
                                                    
                                                    64.1
                                                    
                                                    
                                                    $
                                                    114,348
                                                    
                                                    
                                                    
                                                    62.2
                                                    
                                                    
                                                    $
                                                    (832
                                                    )
                                                    
                                                    
                                                    (0.7
                                                    )Household
      Cleaning
                                                    
                                                    
                                                    41,558
                                                    
                                                    
                                                    
                                                    35.8
                                                    
                                                    
                                                    
                                                    45,668
                                                    
                                                    
                                                    
                                                    37.7
                                                    
                                                    
                                                    
                                                    (4,110
                                                    )
                                                    
                                                    
                                                    (9.0
                                                    )Personal
      Care
                                                    
                                                    
                                                    8,196
                                                    
                                                    
                                                    
                                                    41.5
                                                    
                                                    
                                                    
                                                    8,491
                                                    
                                                    
                                                    
                                                    39.0
                                                    
                                                    
                                                    
                                                    (295
                                                    )
                                                    
                                                    
                                                    (3.5
                                                    )$
                                                    163,270
                                                    
                                                    
                                                    
                                                    52.2
                                                    
                                                    
                                                    $
                                                    168,507
                                                    
                                                    
                                                    
                                                    51.6
                                                    
                                                    
                                                    $
                                                    (5,237
                                                    )
                                                    
                                                    
                                                    (3.1
                                                    )





Gross
profit for 2009 decreased by $5.2 million, or 3.1%, versus 2008.  As a
percent of total revenue, gross profit increased from 51.6% in 2008 to 52.2% in
2009.  The increase in gross profit as a percent of revenues was the
result of favorable sales mix, the absence of costs related to the voluntary
recall of pediatric cough/cold products, price increases taken on select items,
and the benefits of our cost reduction program that was initiated in 2008,
partially offset by an increase in promotional allowances and unfavorable
foreign currency exchange rates.





Over-the-Counter
Healthcare Segment


Gross
profit for the Over-the-Counter Healthcare segment decreased $832,000, or 0.7%,
during 2009 versus 2008.  As a percent of Over-the-Counter Healthcare
revenue, gross profit increased from 62.2% during 2008 to 64.1% during
2009.  The increase in gross profit as a percent of revenues was the
result of favorable sales mix toward higher gross margin brands, selling price
increases implemented at the end of March 2008, the absence of costs related to
the 2008Little
Remedies voluntary recall of medicated pediatric cough/cold products and
cost reductions, partially offset by higher promotional allowances.





Household
Cleaning Segment


Gross
profit for the Household Cleaning segment decreased by $4.1 million, or 9.0%,
during 2009 versus 2008.  As a percent of Household Cleaning revenue,
gross profit decreased from 37.7% during 2008 to 35.8% during
2009.  The decrease in gross profit percentage was a result of an
increase in promotional allowances and higher product costs related toComet andSpic and Span.





Personal
Care Segment


Gross
profit for the Personal Care segment decreased $295,000, or 3.5%, during 2009
versus 2008.  As a percent of Personal Care revenue, gross profit
increased from 39.0% during 2008 to 41.5% during 2009.  The increase
in gross profit percentage was due to cost savings achieved relative to theCutex andPrell product lines, as
well as lower inventory obsolescence costs related toCutex.








Contribution
Margin


2009
                                                      Contribution
      Margin
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    2008
                                                      Contribution
      Margin
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    Increase
                                                      (Decrease)
                                                    
                                                    
                                                    %OTC
      Healthcare
                                                    
                                                    $
                                                    83,821
                                                    
                                                    
                                                    
                                                    47.4
                                                    
                                                    
                                                    $
                                                    88,160
                                                    
                                                    
                                                    
                                                    48.0
                                                    
                                                    
                                                    $
                                                    (4,339
                                                    )
                                                    
                                                    
                                                    (4.9
                                                    )Household
      Cleaning
                                                    
                                                    
                                                    33,933
                                                    
                                                    
                                                    
                                                    29.3
                                                    
                                                    
                                                    
                                                    38,185
                                                    
                                                    
                                                    
                                                    31.5
                                                    
                                                    
                                                    
                                                    (4,252
                                                    )
                                                    
                                                    
                                                    (11.1
                                                    )Personal
      Care
                                                    
                                                    
                                                    7,417
                                                    
                                                    
                                                    
                                                    37.6
                                                    
                                                    
                                                    
                                                    7,497
                                                    
                                                    
                                                    
                                                    34.4
                                                    
                                                    
                                                    
                                                    (80
                                                    )
                                                    
                                                    
                                                    (1.1
                                                    )$
                                                    125,171
                                                    
                                                    
                                                    
                                                    40.0
                                                    
                                                    
                                                    $
                                                    133,842
                                                    
                                                    
                                                    
                                                    41.0
                                                    
                                                    
                                                    $
                                                    (8,671
                                                    )
                                                    
                                                    
                                                    (6.5
                                                    )





Contribution
margin, defined as gross profit less advertising and promotional expenses,
decreased by $8.7 million, or 6.5%, for 2009 versus 2008.  The
contribution margin decrease was the result of the decrease in gross profit as
previously discussed, and an increase of $3.4 million, or 9.9%, in advertising
and promotional spending.  The increase in advertising and promotional
spending was primarily attributable to introductory media support behind the
launch of the two new Allergen Block products in the Over-the-Counter Healthcare
segment.





Over-the-Counter
Healthcare Segment


Contribution
margin for the Over-the-Counter Healthcare segment decreased $4.3 million, or
4.9% during 2009 versus 2008.  The decrease in contribution margin was
the result of a decrease in gross profit as previously




-41-


discussed,
coupled with an increase in advertising and promotional spending of $3.5
million, or 13.4%.  An increase in television media support behind the
launch of Allergen Block was offset by a decrease in media support forTheDoctor’s NightGuard
Dental Protector andChloraseptic sore throat products.





Household
Cleaning Segment


Contribution
margin for the Household Cleaning segment decreased $4.3 million, or 11.1%,
during 2009 versus 2008.  The contribution margin decrease was the
result of the decrease in gross profit as previously discussed, and an increase
in advertising and promotional spending of $141,000 or 1.9%.  The
increase was the result of increased television media support behindComet Mildew
SprayGel.





Personal
Care Segment


Contribution
margin for the Personal Care segment decreased $80,000, or 1.1%, during 2009
versus 2008.  The contribution margin decrease was primarily the
result of the gross profit decrease previously discussed, slightly offset by a
$216,000, or 21.6% decrease in advertising and promotional
expenses.





General
and Administrative


General
and administrative expenses were $31.9 million for 2009 versus $31.4 million for
2008.  The increase in G&A is primarily related to an increase in
stock-based compensation costs and unfavorable currency translation costs,
partially offset by a decrease in legal expenses and elimination of certain
employee incentive compensation expenses.  The increase in stock-based
compensation resulted from the issuance of options to purchase common stock to
members of management in 2009.  While the Company reversed
performance-based compensation in each of 2008 and 2009, the vesting of options
is not subject to performance measurements, being subject only to time
vesting.  The increase in currency translation costs resulted from the
strengthening of the Canadian dollar against the United States
dollar.  The decrease in legal expenses is due to the absence of
arbitration costs in 2009 versus 2008 and a decrease in legal costs related to
the defense of certain intellectual property.





Depreciation
and Amortization


Depreciation
and amortization expense was $11.2 million for 2009 versus $11.0 million for
2008.  The slight increase in amortization of intangible assets is
related to licensing rights related to the Allergen Block
trademark.





Impairment
of Intangible Assets and Goodwill


During
2009, an impairment analysis of intangible assets and goodwill was performed in
accordance with FASB Statements No. 142 and 144.  As a result,
non-cash charges were recorded in 2009 related to the impairment of certain
intangible assets and goodwill of $58.9 million and $190.7 million,
respectively.  The impairment charges related to intangible assets and
goodwill were the result of their carrying value exceeding their fair market
value as a result of declining sales and current market
conditions.  The impairment charges for Over-the-Counter, Household
and Personal Care segments were $166.6 million, $81.3 million and $1.7 million
respectively.  No impairment charges were recorded in
2008.





Interest
Expense


Net
interest expense was $28.4 million during 2009 versus $37.4 million in
2008.  The reduction in interest expense was primarily the result of a
lower level of indebtedness combined with a reduction of interest rates on our
senior debt.  The average cost of funds decreased from 8.6% for 2008
to 7.2% for 2009, while the average indebtedness decreased from $437.3 million
during 2008 to $394.8 million for 2009.





Income
Taxes


The
benefit for income taxes during 2009 was $9.2 million versus a provision for
income taxes of $20.3 million in 2008.  The effective income tax rates
were (4.7%) and 37.9% for 2009 and 2008, respectively.  The 2009 tax
rate includes a tax benefit of $29.5 million related the impairment charges of
intangible assets and goodwill recorded during the period.








-42-





Fiscal
2008 compared to Fiscal 2007





Revenues


2008
                                                      Revenues
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    2007
                                                      Revenues
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    Increase
                                                      (Decrease)
                                                    
                                                    
                                                    %OTC
      Healthcare
                                                    
                                                    $
                                                    183,692
                                                    
                                                    
                                                    
                                                    56.2
                                                    
                                                    
                                                    $
                                                    174,704
                                                    
                                                    
                                                    
                                                    54.8
                                                    
                                                    
                                                    $
                                                    8,988
                                                    
                                                    
                                                    
                                                    5.1Household
      Cleaning
                                                    
                                                    
                                                    121,127
                                                    
                                                    
                                                    
                                                    37.1
                                                    
                                                    
                                                    
                                                    119,036
                                                    
                                                    
                                                    
                                                    37.4
                                                    
                                                    
                                                    
                                                    2,091
                                                    
                                                    
                                                    
                                                    1.8Personal
      Care
                                                    
                                                    
                                                    21,784
                                                    
                                                    
                                                    
                                                    6.7
                                                    
                                                    
                                                    
                                                    24,894
                                                    
                                                    
                                                    
                                                    7.8
                                                    
                                                    
                                                    
                                                    (3,110
                                                    )
                                                    
                                                    
                                                    (12.5
                                                    )$
                                                    326,603
                                                    
                                                    
                                                    
                                                    100.0
                                                    
                                                    
                                                    $
                                                    318,634
                                                    
                                                    
                                                    
                                                    100.0
                                                    
                                                    
                                                    $
                                                    7,969
                                                    
                                                    
                                                    
                                                    2.5





The 2.5%
increase in revenues for 2008 versus 2007 was primarily a result of the
acquisition of the Wartner brand, acquired in
September of 2006.  Excluding the impact of this acquisition, revenues
increased 0.8%.  Revenue increases in the Over-the-Counter Healthcare
and Household Cleaning segments were partially offset by a decrease in the
Personal Care segment.  Revenues from customers outside of North
America, which represent 4.0% of total revenues, decreased 11.4% in 2008 versus
the comparable period in 2007.





During
2008, the Company increased its allowance for returns by $1.7 million in
connection with the voluntary withdrawal from the marketplace in October 2007 of
two medicated pediatric cough and cold products marketed under the Little Remedies
brand.  This action was part of an industry-wide voluntary withdrawal
of pediatric cough and cold products pending the final results of an FDA safety
and efficacy review.  Excluding the impact of the withdrawal, total
revenues for the Company would have been $328.3 million, or 3.0% greater than
2007 and up 1.3% excluding the Wartner acquisition.





Over-the-Counter
Healthcare Segment


Revenues
of the Over-the-Counter Healthcare segment increased by $9.0 million, or 5.1%,
for 2008 versus 2007.  The revenue increase was primarily due to the
acquisition of the Wartner brand in September
2006 and the launch of Murine Earigate, a new product that
helps prevent earwax build-up with its patented reverse spray
technology.  Excluding the impact of the Wartner acquisition, revenues
increased by 2.1% for the year.  Revenue increases from Murine Earigate, Clear Eyes, New-Skin, Dermoplast and Compound W were partially
offset by decreases in Chloraseptic, The Doctor’s NightGuard Dental Protector
and Little
Remedies.  Clear Eyes and New-Skin’s revenue increases
were the result of increased consumer consumption and distribution
gains.  Dermoplast’s revenue increase
was due to improved consumer consumption.  Compound W revenues were up
primarily due to lower promotional allowances as gross shipments were flat due
to softness in the cryogenic sub-segment of the wart category.  Chloraseptic’s revenue
decreased due to weaker consumer consumption as a result of the decline in the
number of sore throat incidences nationwide versus 2007.  The Doctor’s NightGuard Dental Protector
revenue decreased as a result of increased competition in the bruxism
category.  Little
Remedies’ revenue declined due to a $1.7 million increase in the
allowance for returns, as well as lost sales in connection with the voluntary
withdrawal from the marketplace of Little Remedies medicated
pediatric cough and cold products in October 2007.





Household
Cleaning Segment


Revenues
of the Household Cleaning segment increased $2.1 million, or 1.8% during the
year versus 2007.  Increased revenues on the Cometbrand offset declines in
theSpic
and SpanandChore
Boybrands.  Revenue forCometMildew SprayGel, which
launched in the last quarter of 2007, was partially offset by weaker consumer
consumption ofComet bathroom
sprays.  The decline in Spic and Span’s revenue was
the result of weaker consumption and in line with overall declines in the
all-purpose cleaning category.  Chore Boy’s revenue decreases
were in line with consumption trends partially offset by strong shipments to
small grocery wholesale accounts.





Personal
Care Segment


Revenues
of the Personal Care segment declined $3.1 million or 12.5% for 2008 versus
2007.  All major brands in this segment, except for Prell, experienced revenue
declines during the year.  The decrease in revenues of Cutex and Denorexwas a result of declining
consumption and lost market share.Prell’s revenue increased for
the




-43-


period
primarily due to improved consumption.  The Personal Care segment
continues to perform in accordance with management’s expectations.








Gross
Profit


2008
                                                      Gross
      Profit
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    2007
                                                      Gross
      Profit
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    Increase
                                                      (Decrease)
                                                    
                                                    
                                                    %OTC
      Healthcare
                                                    
                                                    $
                                                    114,348
                                                    
                                                    
                                                    
                                                    62.2
                                                    
                                                    
                                                    $
                                                    109,103
                                                    
                                                    
                                                    
                                                    62.5
                                                    
                                                    
                                                    $
                                                    5,245
                                                    
                                                    
                                                    
                                                    4.8Household
      Cleaning
                                                    
                                                    
                                                    45,668
                                                    
                                                    
                                                    
                                                    37.7
                                                    
                                                    
                                                    
                                                    46,034
                                                    
                                                    
                                                    
                                                    38.7
                                                    
                                                    
                                                    
                                                    (366
                                                    )
                                                    
                                                    
                                                    (0.8
                                                    )Personal
      Care
                                                    
                                                    
                                                    8,491
                                                    
                                                    
                                                    
                                                    39.0
                                                    
                                                    
                                                    
                                                    10,350
                                                    
                                                    
                                                    
                                                    41.6
                                                    
                                                    
                                                    
                                                    (1,859
                                                    )
                                                    
                                                    
                                                    (18.0
                                                    )$
                                                    168,507
                                                    
                                                    
                                                    
                                                    51.6
                                                    
                                                    
                                                    $
                                                    165,487
                                                    
                                                    
                                                    
                                                    51.9
                                                    
                                                    
                                                    $
                                                    3,020
                                                    
                                                    
                                                    
                                                    1.8





Gross
profit for 2008 increased by $3.0 million, or 1.8%, versus 2007.  As a
percent of total revenue, gross profit decreased from 51.9% in 2007 to 51.6%
during 2008.  The decrease in gross profit as a percent of revenues
was primarily a result of unfavorable sales mix toward lower margin products, an
increase in promotional allowances and higher raw material costs.





Over-the-Counter
Healthcare Segment


Gross
profit increased $5.2 million, or 4.8%, versus 2007.  As a percent of
OTC revenue, gross profit decreased from 62.5% in 2007 to 62.2% during
2008.  The decrease in gross profit percentage was primarily the
result of an increase in promotional price allowances behind The Doctor’s and Little Remedies brands to
stimulate consumer takeaway, as well as an increase in sales of the Murine Earigate which has a lower
margin than the segment’s average gross profit percentage.





Household
Cleaning Segment


Gross
profit for the Household Cleaning segment decreased by $366,000, or 0.8%, in
2008 versus 2007.  As a percent of household cleaning revenue, gross
profit decreased from 38.7% in 2007 to 37.7% during 2008.  The
decrease in gross profit percentage was primarily the result of higher product
costs, primarily for raw material purchases, partially offset by lower
distribution costs.





Personal
Care Segment


Gross
profit decreased $1.9 million, or 18.0%, versus 2007.  As a percent of
personal care revenue, gross profit decreased from 41.6% for 2007 to 39.0%
during 2008.  The decrease in gross profit percentage is a result of
increased product and distribution costs.








Contribution
Margin


2008
                                                      Contribution
      Margin
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    2007
                                                      Contribution
      Margin
                                                    
                                                    
                                                    %
                                                    
                                                    
                                                    Increase
                                                      (Decrease)
                                                    
                                                    
                                                    %OTC
      Healthcare
                                                    
                                                    $
                                                    88,160
                                                    
                                                    
                                                    
                                                    48.0
                                                    
                                                    
                                                    $
                                                    84,902
                                                    
                                                    
                                                    
                                                    48.6
                                                    
                                                    
                                                    $
                                                    3,258
                                                    
                                                    
                                                    
                                                    3.8Household
      Cleaning
                                                    
                                                    
                                                    38,185
                                                    
                                                    
                                                    
                                                    31.5
                                                    
                                                    
                                                    
                                                    39,355
                                                    
                                                    
                                                    
                                                    33.1
                                                    
                                                    
                                                    
                                                    (1,170
                                                    )
                                                    
                                                    
                                                    (3.0
                                                    )Personal
      Care
                                                    
                                                    
                                                    7,497
                                                    
                                                    
                                                    
                                                    34.4
                                                    
                                                    
                                                    
                                                    9,225
                                                    
                                                    
                                                    
                                                    37.1
                                                    
                                                    
                                                    
                                                    (1,728
                                                    )
                                                    
                                                    
                                                    (18.7
                                                    )$
                                                    133,842
                                                    
                                                    
                                                    
                                                    41.0
                                                    
                                                    
                                                    $
                                                    133,482
                                                    
                                                    
                                                    
                                                    41.9
                                                    
                                                    
                                                    $
                                                    360
                                                    
                                                    
                                                    
                                                    0.3





Contribution
margin, defined as gross profit less advertising and promotional expenses,
increased by $360,000, or 0.3% for 2008 versus 2007.  The contribution
margin increase was a result of the increase in sales and gross profit as
previously discussed, offset by a $2.6 million, or 8.3% increase in advertising
and promotional spending.  The increase in advertising and promotional
spending was primarily attributable to support behind the launches of Murine Earigate and Comet Mildew
SprayGel.





-44-


Over-the-Counter
Healthcare Segment


Contribution
margin in the Over-the-Counter Healthcare segment increased by $3.3 million, or
3.8%, for 2008 versus 2007.  The contribution margin increase was a
result of the increase in sales and gross profit as previously discussed,
partially offset by a $2.0 million, or an 8.2%, increase in advertising and
promotional spending.  The increase in advertising and promotional
spending was primarily a result of television media support behind the launch of
Murine Earigate, an increase in
spending against the Compound
W and Little
Remedies brands, partially offset by a reduction in Chloraseptic and Clear Eyes
spending.





Household
Cleaning Segment


Contribution
margin for the Household Cleaning segment decreased by $1.2 million, or 3.0%,
for 2008 versus 2007.  The contribution margin decrease was a result
of the sales increase and gross profit decrease previously discussed and an
$800,000, or 12.0%, increase for advertising in support of the Comet Mildew SprayGel
launch.





Personal
Care Segment


Contribution
margin for the Personal Care segment decreased $1.7 million, or 18.7%, for 2008
versus 2007.  The contribution margin decrease was primarily the
result of the sales and gross profit decreases previously discussed, offset by a
$100,000 reduction in advertising and promotional spending.





General
and Administrative


General
and administrative expenses were $31.4 million for 2008 versus $28.4 million for
2007.  Higher professional fees associated with the termination of a
product distribution agreement for the Company’s cryosurgical wart removal
product, as well as protective actions initiated by the Company in connection
with The Doctor’s NightGuard Dental Protector
intellectual property were partially offset by lower professional fees related
primarily to efficiencies gained in the area of Sarbanes-Oxley
compliance.





Depreciation
and Amortization


Depreciation
and amortization expense was $11.0 million for 2008 versus $10.4 million for
2007.  The increase in amortization of intangible assets is primarily
related to the Wartner acquisition.





Interest
Expense


Net
interest expense was $37.4 million for 2008 versus $39.5 million for
2007.  The reduction in interest expense was the result of a lower
level of total indebtedness, partially offset by higher interest rates on our
variable rate indebtedness.  The average cost of funds increased from
8.2% for 2007 to 8.6% for 2008, while the average indebtedness decreased from
$481.0 million for 2007 to $437.3 million for 2008.





Income
Taxes


The
income tax provision for 2008 was $20.3 million, with an effective rate of
37.4%, compared to $19.1 million, with an effective rate of 34.6% for
2007.  The 2007 amount includes a $2.2 million tax benefit resulting
from the reduction of the deferred income tax rate to 38.4% from 39.1% in
connection with the implementation of initiatives to obtain operational, as well
as tax, efficiencies.  As a result of operational efficiencies
identified during 2008, the Company has reduced its ongoing income tax rate to
37.9%.








-45-


Liquidity
and Capital Resources





Liquidity


We have
financed and expect to continue to finance our operations with a combination of
borrowings and funds generated from operations. Our principal uses of cash
are for operating expenses, debt service, brand acquisitions, working capital
and capital expenditures.  Since our Revolving Credit Facility expired
in April 2009 and due to the uncertain credit markets, the Company has increased
its cash reserves by an additional $30.0 million to provide an additional margin
of liquidity.





Year
      Ended March 31(In
      thousands)
                      
                      2009
                      
                      
                      2008
                      
                      2007Net
      cash provided by (used in):Operating
      activities
                      
                      $
                      66,679
                      
                      
                      $
                      44,989
                      
                      
                      $
                      71,899Investing
      activities
                      
                      
                      (4,672
                      )
                      
                      
                      (537
                      )
                      
                      
                      (31,051
                      )Financing
      activities
                      
                      
                      (32,904
                      )
                      
                      
                      (52,132
                      )
                      
                      
                      (35,290
                      )








Fiscal
2009 compared to fiscal 2008


Operating
Activities


Net cash
provided by operating activities was $66.7 million for 2009 compared to $45.0
million for 2008.  The $21.7 million increase in net cash provided by
operating activities was primarily the result of the following:





·
            A
      decrease of net income, net of adjustments for the impact of the charge
      for the impairment of goodwill and intangible assets of $600,000 from
      $33.9 million for 2008 to $33.3 million for
  2009,


·
            A
      change in the components of operating assets and liabilities of $22.1
      million as a result of net operating assets and liabilities decreasing by
      $7.9 million in 2009 compared to an increase of $14.2 million in 2008,
      and


·
            An
      increase in non-cash expenses of $731,000 from $15.2 million for 2008 to
      $15.9 million for 2009.





As a
result of the late cough/cold season and the timing of our March 2008 price
increase, accounts receivable increased $9.1 million at March 31, 2008 versus
March 31, 2007, while at March 31, 2009, accounts receivable were $8.2 million
less than those reported at March 31, 2008.





Consistent
with 2008, the Company’s cash flow from operations exceeded net income due to
the substantial non-cash charges related to depreciation and amortization of
intangibles, increases in deferred income tax liabilities resulting from
differences in the amortization of intangible assets and goodwill for income tax
and financial reporting purposes, the amortization of certain deferred financing
costs and stock-based compensation, as well as the 2009 goodwill and intangible
impairments.





Investing
Activities


Net cash
used for investing activities was $4.7 million for 2009 compared to $537,000 for
2008.  The net cash used for investing activities in 2009 was
primarily for the settlement of purchase price contingencies associated with the
2006 acquisition of Wartner USA, B.V., while during 2008, net cash used for
investing activities was for the acquisition of property and
equipment.





Financing
Activities


Net cash
used for financing activities was $32.9 million for 2009 compared to $52.1
million for 2008.  Due to the expiration of the Company’s revolving
line of credit, general economic conditions and the state of the credit markets,
the Company limited its debt repayments during the latter half of 2009 to only
scheduled maturities until it had accumulated an additional $30.0 million in
operating funds.  During 2009, the Company repaid $29.3 million of
indebtedness in excess of normal maturities with cash generated from operations,
while during 2008 such repayments amounted to $48.6 million.  This
reduced our outstanding indebtedness to $378.3 million at March 31, 2009 from
$463.3 million at March 31, 2007.





-46-


Fiscal
2008 compared to fiscal 2007


Operating
Activities


Net cash
provided by operating activities was $45.0 million for 2008 compared to $71.9
million 2007.  The $26.9 million decrease in net cash provided by
operating activities was primarily the result of the following:





·
            A
      decrease of net income of $2.1 million from $36.1 million for 2007 to
      $34.0 million for 2008,


·
            A
      change in the components of operating assets and liabilities of $26.0
      million as a result of net operating assets and liabilities increasing by
      $14.2 million in 2008 compared to a decrease of $11.8 million in 2007,
      and


·
            An
      increase in non-cash expenses of $1.3 million from $24.0 million for 2007
      to $25.3 million for 2008.





As a
result of the late cough/cold season and the timing of our March 2008 price
increase, accounts receivable increased $9.1 million versus March 31,
2007.  Additionally, our accrued liabilities were reduced by $4.3
million versus March 31, 2007.





Consistent
with 2007, the Company’s cash flow from operations exceeded net income due to
the substantial non-cash charges related to depreciation and amortization of
intangibles, increases in deferred income tax liabilities resulting from
differences in the amortization of intangible assets and goodwill for income tax
and financial reporting purposes, the amortization of certain deferred financing
costs and stock-based compensation.





Investing
Activities


Net cash
used for investing activities was $537,000 for 2008 compared to $31.1 million
for 2007.  The net cash used for investing activities in 2008 was for
the acquisition of property and equipment, while during 2007, net cash used for
investing activities was primarily for the acquisition of Wartner USA
B.V.





Financing
Activities


Net cash
used for financing activities was $52.1 million for 2008 compared to $35.3
million for 2007.  During 2008, the Company repaid $48.6 million of
indebtedness in excess of normal maturities with cash generated from operations,
while during 2007 such repayments amounted to $31.6 million.  This
reduced our outstanding indebtedness to $411.2 million at March 31, 2008 from
$498.6 million at March 31, 2006.








Capital
Resources





As of
March 31, 2009, we had an aggregate of $378.3 million of outstanding
indebtedness, which consisted of the following:





·
            $252.3
      million of borrowings under the Tranche B Term Loan Facility,
      and





·
            $126.0
      million of 9.25% Senior Subordinated Notes due
  2012.





All loans
under the Senior Credit Facility bear interest at floating rates, based on
either the prime rate, or at our option, the LIBOR rate, plus an applicable
margin.  At March 31, 2009, an aggregate of $252.3 million was
outstanding under the Senior Credit Facility at a weighted average interest rate
of 2.77%.





As deemed
appropriate, the Company uses derivative financial instruments to mitigate the
impact of changing interest rates associated with its long-term debt
obligations.  While the Company does not enter into derivative
financial instruments for trading purposes, all of the Company’s derivatives are
straightforward over-the-counter instruments with liquid markets.  The
notional, or contractual, amount of the Company’s derivative financial
instruments is used to measure the amount of interest to be paid or received and
does not represent an actual liability.  The Company accounts for
these financial instruments as cash flow hedges.





-47-


In March
2005, the Company purchased interest rate cap agreements with a total notional
amount of $180.0 million, the terms of which were as follows:





Notional
                        Amount
                      
                      
                      Interest
      Rate
                        Cap
      Percentage
                      
                      Expiration
                        Date(In
      millions)$
                      50.0
                      
                      
                      
                      3.25
                      %
                      May
      31, 200680.0
                      
                      
                      
                      3.50
                      
                      May
      30, 200750.0
                      
                      
                      
                      3.75
                      
                      May
      30,
2008





In
February 2008, the Company entered into an interest rate swap agreement in the
notional amount of $175.0 million, decreasing to $125.0 million at March 26,
2009 to replace and supplement the interest rate cap agreement that expired on
May 30, 2008.  The Company has agreed to pay a fixed rate of 2.88%
while receiving a variable rate based on LIBOR.  The agreement
terminates on March 26, 2010.  The fair value of the interest rate
swap agreement is included in either other assets or current liabilities at the
balance sheet date.  At March 31, 2009 and 2008 the fair values of the
interest rate swap were $2.2 million and $1.5 million,
respectively.  Such amounts were included in other current
liabilities.





The
Senior Credit Facility contains various financial covenants, including
provisions that require us to maintain certain leverage ratios, interest
coverage ratios and fixed charge coverage ratios.  The Senior Credit
Facility, as well as the Indenture governing the Senior Subordinated Notes,
contain provisions that accelerate our indebtedness on certain changes in
control and restrict us from undertaking specified corporate actions, including
asset dispositions, acquisitions, payment of dividends and other specified
payments, repurchasing the Company’s equity securities in the public markets,
incurrence of indebtedness, creation of liens, making loans and investments and
transactions with affiliates.  Specifically, we must:





·
            Have
      a leverage ratio of less than 4.25 to 1.0 for the quarter ended March 31,
      2009, 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 3.00 to 1.0 for the quarter
      ended March 31, 2009, increasing over time to 3.25 to 1.0 for the quarter
      ending March 31, 2010, and remaining level thereafter,
  and





·
            Have
      a fixed charge coverage ratio of greater than 1.5 to 1.0 for the quarter
      ended March 31, 2009, and for each quarter thereafter until the quarter
      ending March 31, 2011.





At March
31, 2009, we were in compliance with the applicable financial and restrictive
covenants under the Senior Credit Facility and the Indenture governing the
Senior Subordinated Notes.





At March
31, 2009, we had $60.0 million of borrowing capacity available under the
Revolving Credit Facility to support our operating activities; however, this
facility expired in April 2009.  Additionally, we have $252.3 million
outstanding under the Tranche B Term Loan Facility which matures in April
2011.  We are obligated to make quarterly principal payments on the
Tranche B Term Loan Facility equal to $887,500, representing 0.25% of the
initial principal amount of the term loan.  Our ability to borrow an
additional $200.0 million pursuant to our Senior Credit Facility under the
Tranche B Term Loan Facility expired during the three month period ended June
30, 2008.





As a
result of the current economic environment and the state of the credit markets,
the Company established and reached its goal of enhancing its liquidity position
and used its strong cash flow generated from operations to build its cash
reserves.  Management estimated that cash reserves of approximately
$30.0 million would be sufficient to provide adequate liquidity, allowing the
Company to meet its current and future obligations as they come
due.  As a consequence of this action, management made repayments
against outstanding indebtedness of $29.3 million in excess of scheduled
maturities through March 31, 2009 compared to $48.6 million during
2008.  While management intends to replace these credit facilities
during the ensuing year, the uncertainties of the credit markets could impede
our ability to do so.  As an example, the following factors could
influence the amounts




-48-


available
to us and the interest rates associated with such a refinancing:




·
              A
      deterioration of the Company’s earnings and its strong cash flows from
      operations,
 
 ·
              Prevailing
      interest rates in the market for similar offerings by companies with
      comparable credit ratings,
 
 ·
              Total
      amount borrowed and the Company’s intended use of such
      proceeds,
 
 ·
              Ratio
      of amounts bearing fixed and variable rates of
  interest,
 
 ·
              Ratio
      of amounts raised through a bond offering compared to a syndicated bank
      facility, and
 
 ·
              Total
      amount outstanding at the time, giving effect to the Company’s ability to
      repay principal in excess of stated
maturities.
 
 In the
current credit environment, management would expect the average interest rate
associated with such a refinancing to be in excess of the Company’s current
average borrowing rate of 4.93%.  However, we can give no assurances
that financing will beavailable, or if available, that it can be
obtained on terms favorable to us or on a basis that is not dilutive to our
stockholders.





Commitments





As of
March 31, 2009, we had ongoing commitments under various contractual and
commercial obligations as follows:




Payments
      Due by Period(In
      Millions)
                
                
                
                
                Less than
                
                
                1 to 3
                
                
                4 to 5
                
                
                After 5Contractual
      Obligations
                
                Total
                
                
                1 Year
                
                
                Years
                
                
                Years
                
                
                YearsLong-term
      debt
                
                $
                378.3
                
                
                $
                3.6
                
                
                $
                248.7
                
                
                $
                126.0
                
                
                $
                --Interest
      on long-term debt (1)
                
                
                49.4
                
                
                
                18.6
                
                
                
                30.3
                
                
                
                0.5
                
                
                
                --Purchase
      obligations:Inventory
      costs (2)
                
                
                64.2
                
                
                
                41.5
                
                
                
                15.1
                
                
                
                2.3
                
                
                
                5.3Other
      costs (3)
                
                
                1.9
                
                
                
                1.9
                
                
                
                --
                
                
                
                --
                
                
                
                --Operating
      leases
                
                
                3.2
                
                
                
                0.8
                
                
                
                1.2
                
                
                
                1.2
                
                
                
                --Total
      contractual cash obligations
                
                $
                497.0
                
                
                $
                66.4
                
                
                $
                295.3
                
                
                $
                130.0
                
                
                $
                5.3





(1)
            Represents
      the estimated interest obligations on the outstanding balances of the
      Tranche B Term Loan Facility and Senior Subordinated Notes, together,
      assuming scheduled principal payments (based on the terms of the loan
      agreements) are made and assuming a weighted average interest rate of
      4.93%.  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 $2.5
      million, in the first year.  However, given the contractual
      obligation pursuant to the interest rate swap agreement, the impact of a
      one percentage point increase would be $3.3
  million.





(2)
            Purchase
      obligations for inventory costs are legally binding commitments for
      projected inventory requirements to be utilized during the normal course
      of our operations.





(3)
            Purchase
      obligations for other costs are legally binding commitments for marketing,
      advertising and capital expenditures.  Activity costs for molds
      and equipment to be paid, based solely on a per unit basis without any
      deadlines for final payment, have been excluded from the table because we
      are unable to determine the time period over which such activity costs
      will be paid.




-49-


Off-Balance
Sheet Arrangements





We
do not have any off-balance sheet arrangements or financing activities with
special-purpose entities.





Inflation





Inflationary
factors such as increases in the costs of raw materials, packaging materials,
purchased product and overhead may adversely affect our operating
results.  Although we do not believe that inflation has had a material
impact on our financial condition or results from operations for the periods
referred to above, a high rate of inflation in the future could have a material
adverse effect on our business, financial condition or results from
operations.  The recent volatility in crude oil prices has had an
adverse impact on transportation costs, as well as, certain petroleum based raw
materials and packaging material.  Although the Company takes efforts
to minimize the impact of inflationary factors, including raising prices to our
customers, a high rate of pricing volatility associated with crude oil supplies
may continue to have an adverse effect on our operating results.






CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS





This
Annual Report on Form 10-K contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”),
including, without limitation, information within Management’s Discussion and
Analysis of Financial Condition and Results of Operations.  The
following cautionary statements are being made pursuant to the provisions of the
PSLRA and with the intention of obtaining the benefits of the “safe harbor”
provisions of the PSLRA.  Although we believe that our expectations
are based on reasonable assumptions, actual results may differ materially from
those in the forward-looking statements.





Forward-looking
statements speak only as of the date of this Annual Report on
Form 10-K.  Except as required under federal securities laws and
the rules and regulations of the SEC, we do not have any intention to update any
forward-looking statements to reflect events or circumstances arising after the
date of this Annual Report on Form 10-K, whether as a result of new information,
future events or otherwise.  As a result of these risks and
uncertainties, readers are cautioned not to place undue reliance on
forward-looking statements included in this Annual Report on Form 10-K or that
may be made elsewhere from time to time by, or on behalf of, us.  All
forward-looking statements attributable to us are expressly qualified by these
cautionary statements.





These
forward-looking statements generally can be identified by the use of words or
phrases such as “believe,” “anticipate,” “expect,” “estimate,” “project,” “will
be,” “will continue,” “will likely result,” or other similar words and
phrases.  Forward-looking statements and our plans and expectations
are subject to a number of risks and uncertainties that could cause actual
results to differ materially from those anticipated, and our business in general
is subject to such risks.  For more information, see “Risk Factors”
contained in Item 1A. of this Annual Report on Form 10-K.  In
addition, our expectations or beliefs concerning future events involve risks and
uncertainties, including, without limitation:





·
            General
      economic conditions affecting our products and their respective
      markets,




·
            Our
      ability to increase organic growth via new product introductions or line
      extensions,




·
            The
      high level of competition in our industry and
  markets,




·
            Our
      ability to invest in research and
development,




·
            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,




-50-


·
            Increases
      in transportation 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 indebtedness, and ability to service our
  debt,




·
            Any
      adverse judgments 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 7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





We are
exposed to changes in interest rates because our senior credit facility is
variable rate debt.  Interest rate changes generally do not affect the
market value of the senior credit facility, but do impact the amount of our
interest payments and, therefore, our future earnings and cash flows, assuming
other factors are held constant.  At March 31, 2009 we had variable
rate debt of approximately $252.3 million related to our Tranche B term
loan.





In an
effort to protect the Company from the adverse impact that rising interest rates
would have on our variable rate debt, we have entered into various interest rate
cap agreements to hedge this exposure.  In March 2005, the Company
purchased interest rate cap agreements with a total notional amount of $180.0
million the terms of which are as follows:





Notional
                    Amount
                  
                  
                  Interest
      Rate
                    Cap
      Percentage
                  
                  Expiration
                    Date(In
      millions)$
                  50.0
                  
                  
                  
                  3.25
                  %
                  May
      31, 200680.0
                  
                  
                  
                  3.50
                  
                  May
      30, 200750.0
                  
                  
                  
                  3.75
                  
                  May
      30, 2008





In
February 2008, the Company entered into an interest rate swap agreement,
effective March 26, 2008, in the notional amount of $175.0 million, decreasing
to $125.0 million at March 26, 2009 to replace and supplement the interest rate
cap agreement that expired on May 30, 2008.  The Company has agreed to
pay a fixed rate of 2.88% while receiving a variable rate based on
LIBOR.  The fair value of the
interest rate
swap agreement of $2.2 millionwasincluded in current
liabilities at March 31, 2009.The agreement terminates on
March 26, 2010.





Holding
other variables constant, including levels of indebtedness, a one percentage
point increase in interest rates on our variable rate debt would have an adverse
impact on pre-tax earnings and cash flows for the year ending March 31, 2010 of
approximately $3.3 million.







ITEM 8.
              FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA


The
financial statements and supplementary data required by this Item are described
in Part IV, Item 15 of this Annual Report on Form 10-K and are presented
beginning on page F-1.








ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE





None.




-51-


ITEM
      9A.
              CONTROLS AND
      PROCEDURES
 Disclosure
Controls and Procedures
 
 The
Company’s management, with the participation of its Chief Executive Officer and
the Chief Financial Officer, evaluated the effectiveness of the Company’s
disclosure controls and procedures, as defined in Rule 13a–15(e) of the
Securities Exchange Act of 1934 (“Exchange Act”) as of March 31,
2009.  Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that, as of March 31, 2009, the Company’s
disclosure controls and procedures were effective to ensure that information
required to be disclosed by the Company in the reports the Company files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the SEC’s rules and forms and that such
information is accumulated and communicated to the Company’s management,
including the Company’s Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure.
  Management’s
Annual Report on Internal Control over Financial
Reporting





Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act).  Internal control over financial reporting is a process designed
by, or under the supervision of the Chief Executive Officer and Chief Financial
Officer and effected by the Board of Directors, Management and other personnel,
to provide reasonable assurance regarding reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Therefore, even those systems
determined to be effective can provide only reasonable, not absolute, assurance
that the control objectives will be met.  Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies and procedures may deteriorate over
time.





Management,
with the participation of the Chief Executive Officer and Chief Financial
Officer, has assessed the effectiveness of the Company’s internal control over
financial reporting as of March 31, 2009.  In making its assessment,
management has used the criteria established by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control – Integrated
Framework (the “COSO Criteria”).





Based on
our assessment utilizing the COSO Criteria, management has concluded that the
Company’s internal control over financial reporting was effective as of March
31, 2009.




PricewaterhouseCoopers
LLP, an independent registered public accounting firm, has issued an attestation
report on our internal control over financial reporting, which appears at page
F-1 and is incorporated in Item 15 of this Annual Report on Form
10-K.


Changes
in Internal Control over Financial Reporting





There
have been no changes during the quarter ended March 31, 2009 in the Company’s
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.







ITEM 9B.
              OTHER
    INFORMATION


None.





-52-


Part
III




ITEM
      10.
              DIRECTORS, EXECUTIVE OFFICERS
      AND CORPORATE GOVERNANCE


Information
required to be disclosed by this Item will be contained in the Company’s 2009
Proxy Statement, which is incorporated herein by reference.





ITEM
      11.
              EXECUTIVE
      COMPENSATION


Information
required to be disclosed by this Item will be contained in the Company’s 2009
Proxy Statement, which is incorporated herein by reference.







ITEM 12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





Information
required to be disclosed by this Item will be contained in the Company’s 2009
Proxy Statement, which is incorporated herein by reference.









ITEM 13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR
    INDEPENDENCE





Information
required to be disclosed by this Item will be contained in the Company’s 2009
Proxy Statement, which is incorporated herein by reference.





ITEM
      14.
              PRINCIPAL ACCOUNTING FEES AND
      SERVICES


Information
required to be disclosed by this Item will be contained in the Company’s 2009
Proxy Statement, which is incorporated herein by reference.




-53-


Part
IV





ITEM
      15.
              EXHIBITS AND FINANCIAL
      STATEMENT SCHEDULES


(a) (1)
              Financial
      Statements


The
financial statements and financial statement schedules listed below are set
forth at pages F-1 through F-32 of this Annual Report on Form 10-K, which are
incorporated herein to this Item as if copied verbatim.





Prestige
      Brands Holdings, Inc.Report
      of Independent Registered Public Accounting Firm,
              PricewaterhouseCoopers
      LLPConsolidated
      Statements of Operations for each of the three years in
              the
      period ended March 31, 2009Consolidated
      Balance Sheets at March 31, 2009 and 2008Consolidated
      Statements of Stockholders’ Equity and Comprehensive
              Income
      for each of the three years in the period ended March 31,
    2009Consolidated
      Statements of Cash Flows for each of the three years
              in
      the period ended March 31, 2009Notes
      to Consolidated Financial StatementsSchedule
      II—Valuation and Qualifying
Accounts





(a) (2)
              Financial Statement
      Schedules


Schedule
II - Valuation and Qualifying Accounts listed in (a)(1) above is incorporated
herein by reference as if copied verbatim.  Schedules other than those
listed in the preceding sentence have been omitted as they are either not
required, not applicable, or the information has otherwise been shown in the
consolidated financial statements or notes thereto.




(b)
              Exhibits


See
Exhibit Index immediately following the financial statements and financial
statement schedules of this Annual Report on Form 10-K.




-54-


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.




PRESTIGE BRANDS HOLDINGS,
      INC.By:
                          /s/ PETER J.
ANDERSONName:    Peter
      J. AndersonTitle:      Chief Financial
      OfficerDate:      June
      15, 2009







Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant in the
capacities and on the dates indicated.





Signature
            
            Title
            
            Date/s/MARK
      PETTIE
            
            Chairman
      of the Board
              and
      Chief Executive Officer
            
            June
      15, 2009Mark
      Pettie
            
            (Principal
      Executive Officer)/s/PETER J.
      ANDERSON
            
            Chief
      Financial Officer
            
            June
      15, 2009Peter
      J. Anderson
            
            (Principal
      Financial Officer andPrincipal
      Accounting Officer)/s/
      L. DICK BUELL
            
            Director
            
            June
      15, 2009L.
      Dick Buell/s/ JOHN E.
      BYOM
            
            Director
            
            June
      15, 2009John
      E. Byom/s/
      GARY E. COSTLEY
            
            Director
            
            June
      15, 2009Gary
      E. Costley/s/
      DAVID A. DONNINI
            
            Director
            
            June
      15, 2009David
      A. Donnini/s/
      RONALD B. GORDON
            
            Director
            
            June
      15, 2009Ronald
      B. Gordon/s/
      VINCENT J. HEMMER
            
            Director
            
            June
      15, 2009Vincent
      J. Hemmer/s/
      PATRICK M. LONERGAN
            
            Director
            
            June
      15, 2009Patrick
      M. Lonergan/s/
      PETER C. MANN
            
            Director
            
            June
      15, 2009Peter
      C. Mann/s/
      RAYMOND P. SILCOCK
            
            Director
            
            June
      15, 2009Raymond
      P. Silcock







-55-




INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS








Prestige
Brands Holdings, Inc.





Audited
Financial Statements





March
31, 2009








Report
      of Independent Registered Public Accounting Firm,
                PricewaterhouseCoopers
      LLP
              
              F-1Consolidated
      Statements of Operations for each of the three years in
                the
      period ended March 31, 2009
              
              F-2Consolidated
      Balance Sheets at March 31, 2009 and 2008
              
              F-3Consolidated
      Statements of Stockholders’ Equity and Comprehensive Income for
                each
      of the three years in the period ended March 31, 2009
              
              F-4Consolidated
      Statements of Cash Flows for each of the three years
                in
      the period ended March 31, 2009
              
              F-6Notes
      to Consolidated Financial Statements
              
              F-7Schedule
      II—Valuation and Qualifying Accounts
              
              F-32








-56-


Report
of Independent Registered Public Accounting Firm








To the
Board of Directors and Stockholders


Prestige
Brands Holdings, Inc.





In our
opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and comprehensive
income and of cash flows present fairly, in all material respects, the financial
position of Prestige Brands Holdings, Inc. and its subsidiariesat March 31,
2009 and 2008, and the results of their operations and their cash flows for
each of the three years in the period ended March 31, 2009 in conformity with
accounting principles generally accepted in the United States of
America.  In addition, in our opinion, the financial statement
schedule listed under Item 15(a)(2) presents fairly, in all material respects,
the information set forth therein when read in conjunction with the related
consolidatedfinancial
statements.  Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of
March 31, 2009, based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).  The Company’s management is responsible
for these financial statements and financial statement schedule, for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in
Management’s Annual Report on Internal Control over Financial Reporting
appearing under Item 9A.  Our responsibility is to express opinions on
these financial statements, on the financial statement schedule, and on the
Company’s internal control over financial reporting based on our integrated
audits.  We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States).  Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was
maintained in all material respects.  Our audits of the financial
statements included examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation.  Our audit of internal control over
financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk.  Our audits also included
performing such other procedures as we considered necessary in the
circumstances.  We believe that our audits provide a reasonable basis for
our opinions.





A
company’s internal control over financial reporting is a process designed 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.  A company’s internal
control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.








/s/
PricewaterhouseCoopers LLP





Salt Lake
City, Utah


June 15,
2009




F-1


Prestige
Brands Holdings, Inc.


Consolidated
Statements of Operations











Year
      Ended March 31(In
      thousands, except per share data)
                  
                  2009
                  
                  
                  2008
                  
                  
                  2007RevenuesNet
      sales
                  
                  $
                  310,505
                  
                  
                  $
                  324,621
                  
                  
                  $
                  316,847Other
      revenues
                  
                  
                  2,210
                  
                  
                  
                  1,982
                  
                  
                  
                  1,787Total
      revenues
                  
                  
                  312,715
                  
                  
                  
                  326,603
                  
                  
                  
                  318,634Cost
      of SalesCost
      of sales
                  
                  
                  149,445
                  
                  
                  
                  158,096
                  
                  
                  
                  153,147Gross
      profit
                  
                  
                  163,270
                  
                  
                  
                  168,507
                  
                  
                  
                  165,487Operating
      ExpensesAdvertising
      and promotion
                  
                  
                  38,099
                  
                  
                  
                  34,665
                  
                  
                  
                  32,005General
      and administrative
                  
                  
                  31,888
                  
                  
                  
                  31,414
                  
                  
                  
                  28,416Depreciation
      and amortization
                  
                  
                  11,219
                  
                  
                  
                  11,014
                  
                  
                  
                  10,384Impairment
      of goodwill and intangible assets
                  
                  
                  249,590
                  
                  
                  
                  --
                  
                  
                  
                  --Total
      operating expenses
                  
                  
                  330,796
                  
                  
                  
                  77,093
                  
                  
                  
                  70,805Operating
      income (loss)
                  
                  
                  (167,526
                  )
                  
                  
                  91,414
                  
                  
                  
                  94,682Other
      (income) expenseInterest
      income
                  
                  
                  (143
                  )
                  
                  
                  (675
                  )
                  
                  
                  (972
                  )Interest
      expense
                  
                  
                  28,579
                  
                  
                  
                  38,068
                  
                  
                  
                  40,478Miscellaneous
                  
                  
                  --
                  
                  
                  
                  (187
                  )
                  
                  
                  --Total
      other (income) expense
                  
                  
                  28,436
                  
                  
                  
                  37,206
                  
                  
                  
                  39,506Income
      (loss) before income taxes
                  
                  
                  (195,962
                  )
                  
                  
                  54,208
                  
                  
                  
                  55,176Provision
      (benefit) for income taxes
                  
                  
                  (9,186
                  )
                  
                  
                  20,289
                  
                  
                  
                  19,098Net
      income (loss)
                  
                  $
                  (186,776
                  )
                  
                  $
                  33,919
                  
                  
                  $
                  36,078Basic
      earnings (loss) per share
                  
                  $
                  (3.74
                  )
                  
                  $
                  0.68
                  
                  
                  $
                  0.73Diluted
      earnings (loss) per share
                  
                  $
                  (3.74
                  )
                  
                  $
                  0.68
                  
                  
                  $
                  0.72Weighted
      average shares outstanding:
                    Basic
                  
                  
                  49,935
                  
                  
                  
                  49,751
                  
                  
                  
                  49,460Diluted
                  
                  
                  49,935
                  
                  
                  
                  50,039
                  
                  
                  
                  50,020





See
accompanying notes.




F-2


Prestige
Brands Holdings, Inc.


Consolidated
Balance Sheets








(In
      thousands)
                              
                              March
      31Assets
                              
                              2009
                              
                              
                              2008Current
      assetsCash
      and cash equivalents
                              
                              $
                              35,181
                              
                              
                              $
                              6,078Accounts
      receivable
                              
                              
                              36,025
                              
                              
                              
                              44,219Inventories
                              
                              
                              26,977
                              
                              
                              
                              29,696Deferred
      income tax assets
                              
                              
                              4,022
                              
                              
                              
                              3,066Prepaid
      expenses and other current assets
                              
                              
                              1,358
                              
                              
                              
                              2,316Total
      current assets
                              
                              
                              103,563
                              
                              
                              
                              85,375Property
      and equipment
                              
                              
                              1,367
                              
                              
                              
                              1,433Goodwill
                              
                              
                              114,240
                              
                              
                              
                              308,915Intangible
      assets
                              
                              
                              577,609
                              
                              
                              
                              646,683Other
      long-term assets
                              
                              
                              4,602
                              
                              
                              
                              6,750Total
      Assets
                              
                              $
                              801,381
                              
                              
                              $
                              1,049,156Liabilities
      and Stockholders’ EquityCurrent
      liabilitiesAccounts
      payable
                              
                              $
                              18,050
                              
                              
                              $
                              20,539Accrued
      interest payable
                              
                              
                              5,371
                              
                              
                              
                              5,772Other
      accrued liabilities
                              
                              
                              7,255
                              
                              
                              
                              8,030Current
      portion of long-term debt
                              
                              
                              3,550
                              
                              
                              
                              3,550Total
      current liabilities
                              
                              
                              34,226
                              
                              
                              
                              37,891Long-term
      debt
                              
                              
                              374,787
                              
                              
                              
                              407,675Other
      long-term liabilities
                              
                              
                              --
                              
                              
                              
                              2,377Deferred
      income tax liabilities
                              
                              
                              97,983
                              
                              
                              
                              122,140Total
      Liabilities
                              
                              
                              506,996
                              
                              
                              
                              570,083Commitments
      and Contingencies – Note 15Stockholders’
      EquityPreferred
      stock - $0.01 par valueAuthorized – 5,000
      sharesIssued and outstanding –
      None
                              
                              
                              --
                              
                              
                              
                              --Common
      stock - $0.01 par valueAuthorized – 250,000
      sharesIssued – 50,060 shares at March
      31, 2009 and 2008
                              
                              
                              501
                              
                              
                              
                              501Additional
      paid-in capital
                              
                              
                              382,803
                              
                              
                              
                              380,364Treasury
      stock, at cost – 124 shares and 59 shares at
                                March
      31, 2009 and 2008, respectively
                              
                              
                              (63
                              )
                              
                              
                              (47
                              )Accumulated
      other comprehensive income (loss)
                              
                              
                              (1,334
                              )
                              
                              
                              (999
                              )Retained
      earnings (deficit)
                              
                              
                              (87,522
                              )
                              
                              
                              99,254Total
      stockholders’ equity
                              
                              
                              294,385
                              
                              
                              
                              479,073Total
      Liabilities and Stockholders’ Equity
                              
                              $
                              801,381
                              
                              
                              $
                              1,049,156


See
accompanying notes.




F-3


Prestige
Brands Holdings, Inc.


Consolidated
Statement of Changes in Stockholders’


Equity
and Comprehensive Income








Common Stock
                Par
                Shares                
      Value
              
              
              Additional
                Paid-in
                Capital
              
              
              Treasury Stock
                Shares                  
      Amount
              
              
              Accumulated
                Other
                Comprehensive
                Income
              
              
              Retained
                Earnings
              
              
              Totals(In
      thousands)Balances
      at March 31, 2006
              
              
              50,056
              
              
              $
              501
              
              
              $
              378,570
              
              
              
              18
              
              
              $
              (30
              )
              
              $
              1,109
              
              
              $
              29,257
              
              
              $
              409,407Stock-based
      compensation
              
              
              4
              
              
              
              --
              
              
              
              655
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              655Purchase
      of common stock for treasury
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              37
              
              
              
              (10
              )
              
              
              --
              
              
              
              --
              
              
              
              (10
              )Components
      of comprehensive incomeNet
      income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              36,078
              
              
              
              36,078Amortization
      of interest rate caps reclassified into earnings, net of income tax
      expense of $429
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              678
              
              
              
              --
              
              
              
              678Unrealized
      loss on interest rate caps, net of income tax benefit of
    $931
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (1,474
              )
              
              
              --
              
              
              
              (1,474
              )Total
      comprehensive income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              35,282Balances
      at March 31, 2007
              
              
              50,060
              
              
              
              501
              
              
              
              379,225
              
              
              
              55
              
              
              
              (40
              )
              
              
              313
              
              
              
              65,335
              
              
              
              445,334Stock-based
      compensation
              
              
              --
              
              
              
              --
              
              
              
              1,139
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              1,139Purchase
      of common stock for treasury
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              4
              
              
              
              (7
              )
              
              
              --
              
              
              
              --
              
              
              
              (7
              )Components
      of comprehensive incomeNet
      income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              33,919
              
              
              
              33,919Amortization
      of interest rate caps reclassified into earnings, net of income tax
      expense of $228
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              373
              
              
              
              --
              
              
              
              373Unrealized
      loss on interest rate caps, net of income tax benefit of
    $458
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (738
              )
              
              
              --
              
              
              
              (738
              )Unrealized
      loss on interest rate swap, net of income tax benefit of
    $580
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (947
              )
              
              
              --
              
              
              
              (947
              )Total
      comprehensive income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              32,607Balances
      at March 31, 2008
              
              
              50,060
              
              
              $
              501
              
              
              $
              380,364
              
              
              
              59
              
              
              $
              (47
              )
              
              $
              (999
              )
              
              $
              99,254
              
              
              $
              479,073





See
accompanying notes.




F-4


Prestige
Brands Holdings, Inc.


Consolidated
Statement of Changes in Stockholders’


Equity
and Comprehensive Income








Common Stock
                Par
                Shares                  
      Value
              
              
              Additional
                Paid-in
                Capital
              
              
              Treasury Stock
                Shares               
      Amount
              
              
              Accumulated
                Other
                Comprehensive
                Income
              
              
              Retained
                Earnings
              
              
              TotalsBalances
      at March 31, 2008
              
              
              50,060
              
              
              $
              501
              
              
              $
              380,364
              
              
              
              59
              
              
              $
              (47
              )
              
              $
              (999
              )
              
              $
              99,254
              
              
              $
              479,073Stock-based
      compensation
              
              
              --
              
              
              
              --
              
              
              
              2,439
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              2,439Purchase
      of common stock for treasury
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              65
              
              
              
              (16
              )
              
              
              --
              
              
              
              --
              
              
              
              (16
              )Components
      of comprehensive lossNet
      loss
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (186,776
              )
              
              
              (186,776
              )Amortization
      of interest rate caps reclassified into earnings, net of income tax
      expense of $32
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              53
              
              
              
              --
              
              
              
              53Unrealized
      loss on interest rate caps, net of income tax benefit of
    $238
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (388
              )
              
              
              --
              
              
              
              (388
              )Total
      comprehensive loss
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (187,111
              )Balances
      at March 31, 2009
              
              
              50,060
              
              
              $
              501
              
              
              $
              382,803
              
              
              
              124
              
              
              $
              (63
              )
              
              $
              (1,334
              )
              
              $
              (87,522
              )
              
              $
              294,385





See
accompanying notes.




F-5


Prestige
Brands Holdings, Inc.


Consolidated
Statements of Cash Flows








Year
      Ended March 312009
                          
                          
                          2008
                          
                          
                          2007(In
      thousands)Operating
      ActivitiesNet
      income (loss)
                          
                          $
                          (186,776
                          )
                          
                          $
                          33,919
                          
                          
                          $
                          36,078Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
      and amortization
                          
                          
                          11,219
                          
                          
                          
                          11,014
                          
                          
                          
                          10,384Amortization
      of financing costs
                          
                          
                          2,233
                          
                          
                          
                          3,007
                          
                          
                          
                          3,257Impairment
      of goodwill and intangible assets
                          
                          
                          249,590
                          
                          
                          
                          --
                          
                          
                          
                          --Deferred
      income taxes
                          
                          
                          (19,955
                          )
                          
                          
                          10,096
                          
                          
                          
                          9,662Stock-based
      compensation costs
                          
                          
                          2,439
                          
                          
                          
                          1,139
                          
                          
                          
                          655Changes
      in operating assets and liabilities, net of effects of purchases of
      businessesAccounts
      receivable
                          
                          
                          8,193
                          
                          
                          
                          (9,052
                          )
                          
                          
                          4,875Inventories
                          
                          
                          2,719
                          
                          
                          
                          477
                          
                          
                          
                          4,292Prepaid
      expenses and other assets
                          
                          
                          458
                          
                          
                          
                          (381
                          )
                          
                          
                          (1,235
                          )Accounts
      payable
                          
                          
                          (2,265
                          )
                          
                          
                          (975
                          )
                          
                          
                          (186
                          )Other
      accrued liabilities
                          
                          
                          (1,176
                          )
                          
                          
                          (4,255
                          )
                          
                          
                          4,117Net
      cash provided by operating activities
                          
                          
                          66,679
                          
                          
                          
                          44,989
                          
                          
                          
                          71,899Investing
      ActivitiesPurchases
      of equipment
                          
                          
                          (481
                          )
                          
                          
                          (488
                          )
                          
                          
                          (540
                          )Purchases
      of intangible assets
                          
                          
                          --
                          
                          
                          
                          (33
                          )
                          
                          
                          --Business
      acquisition purchase price adjustments
                          
                          
                          (4,191
                          )
                          
                          
                          (16
                          )
                          
                          
                          750Purchases
      of businesses, net
                          
                          
                          --
                          
                          
                          
                          --
                          
                          
                          
                          (31,261
                          )Net
      cash used for investing activities
                          
                          
                          (4,672
                          )
                          
                          
                          (537
                          )
                          
                          
                          (31,051
                          )Financing
      ActivitiesRepayment
      of notes
                          
                          
                          (32,888
                          )
                          
                          
                          (52,125
                          )
                          
                          
                          (35,280
                          )Redemption
      of equity interests
                          
                          
                          (16
                          )
                          
                          
                          (7
                          )
                          
                          
                          (10
                          )Net
      cash used for financing activities
                          
                          
                          (32,904
                          )
                          
                          
                          (52,132
                          )
                          
                          
                          (35,290
                          )Increase
      (decrease) in cash
                          
                          
                          29,103
                          
                          
                          
                          (7,680
                          )
                          
                          
                          5,558Cash
      - beginning of year
                          
                          
                          6,078
                          
                          
                          
                          13,758
                          
                          
                          
                          8,200Cash
      - end of year
                          
                          $
                          35,181
                          
                          
                          $
                          6,078
                          
                          
                          $
                          13,758Supplemental
      Cash Flow InformationPurchases of BusinessesFair
      value of assets acquired, net of cash acquired
                          
                          $
                          --
                          
                          
                          $
                          --
                          
                          
                          $
                          42,115Fair
      value of liabilities assumed
                          
                          
                          --
                          
                          
                          
                          --
                          
                          
                          
                          (10,854
                          )Cash
      paid to purchase businesses
                          
                          $
                          --
                          
                          
                          $
                          --
                          
                          
                          $
                          31,261Interest
      paid
                          
                          $
                          26,745
                          
                          
                          $
                          36,840
                          
                          
                          $
                          37,234Income
      taxes paid
                          
                          $
                          9,844
                          
                          
                          $
                          9,490
                          
                          
                          $
                          11,751


See
accompanying notes.




F-6


Prestige
Brands Holdings, Inc.


Notes
to Consolidated Financial Statements











1.
            Business
      and Basis of Presentation





Nature
      of Business


Prestige
Brands Holdings, Inc. (referred to herein as the “Company” which reference
shall, unless the context requires otherwise, be deemed to refer to Prestige
Brands Holdings, Inc. and all of its direct or indirect wholly-owned
subsidiaries on a consolidated basis) is engaged in the marketing, sales and
distribution of over-the-counter healthcare, personal care and household
cleaning brands to mass merchandisers, drug stores, supermarkets and club stores
primarily in the United States, Canada and certain other international
markets.  Prestige Brands Holdings, Inc. is a holding company with no
assets or operations and is also the parent guarantor of the senior credit
facility and the senior subordinated notes more fully described in Note 9 to the
consolidated financial statements.





Basis
      of Presentation


The
Company’s consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States.  All
significant intercompany transactions and balances have been eliminated in
consolidation.  The Company’s fiscal year ends on March 31st of each
year.  References in these consolidated financial statements or notes
to a year (e.g., “2009”) means the Company’s fiscal year ended on March 31st of
that year.





Use
of Estimates


The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period.  Although these estimates are
based on the Company’s knowledge of current events and actions that the Company
may undertake in the future, actual results could differ from those
estimates.  As discussed below, the Company’s most significant
estimates include those made in connection with the valuation of intangible
assets, sales returns and allowances, trade promotional allowances and inventory
obsolescence.




Cash
      and Cash Equivalents


The
Company considers all short-term deposits and investments with original
maturities of three months or less to be cash
equivalents.  Substantially all of the Company’s cash is held by a
large regional bank with headquarters in California.  The Company does
not believe that, as a result of this concentration, it is subject to any
unusual financial risk beyond the normal risk associated with commercial banking
relationships.





Accounts
      Receivable


The
Company extends non-interest bearing trade credit to its customers in the
ordinary course of business.  The Company maintains an allowance for
doubtful accounts receivable based upon historical collection experience and
expected collectibility of the accounts receivable.  In an effort to
reduce credit risk, the Company (i) has established credit limits for all of its
customer relationships, (ii) performs ongoing credit evaluations of customers’
financial condition, (iii) monitors the payment history and aging of customers’
receivables, and (iv) monitors open orders against an individual customer’s
outstanding receivable balance.





Inventories


Inventories
are stated at the lower of cost or fair value, where cost is determined by using
the first-in, first-out method.  The Company provides an allowance for
slow moving and obsolete inventory, whereby it reduces inventories for the
diminution of value, resulting from product obsolescence, damage or other issues
affecting marketability, equal to the difference between the cost of the
inventory and its estimated market value.  Factors utilized in the
determination of estimated market value include (i) current sales data and
historical return rates, (ii) estimates of future demand, (iii) competitive
pricing pressures, (iv) new product introductions, (v) product expiration dates,
and (vi) component and packaging obsolescence.




F-7


Property
and Equipment


Property
and equipment are stated at cost and are depreciated using the straight-line
method based on the following estimated useful lives:


YearsMachinery
                
                5Computer
      equipment
                
                3Furniture
      and fixtures
                
                7





Leasehold
improvements are amortized over the lesser of the term of the lease or 5
years.





Expenditures
for maintenance and repairs are charged to expense as incurred.  When
an asset is sold or otherwise disposed of, the cost and associated accumulated
depreciation are removed from the accounts and the resulting gain or loss is
recognized in the consolidated statement of operations.




Property
and equipment are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be
recoverable.  An impairment loss is recognized if the carrying amount
of the asset exceeds its fair value.





Goodwill


The
excess of the purchase price over the fair market value of assets acquired and
liabilities assumed in purchase business combinations is classified as
goodwill.  In accordance with Financial Accounting Standards Board
(“FASB”) Statement of Financial Accounting Standards (“Statement”) No. 142,
“Goodwill and Other Intangible Assets,” the Company does not amortize goodwill,
but performs impairment tests of the carrying value at least
annually.  The Company tests goodwill for impairment at the “brand”
level which is one level below the operating segment level.





Intangible
      Assets


Intangible
assets, which are composed primarily of trademarks, are stated at cost less
accumulated amortization.  For intangible assets with finite lives,
amortization is computed on the straight-line method over estimated useful lives
ranging from five to 30 years.





Indefinite
lived intangible assets are tested for impairment at least annually; however, at
each reporting period an evaluation is made to determine whether events and
circumstances continue to support an indefinite useful
life.  Intangible assets with finite lives are reviewed for impairment
whenever events or changes in circumstances indicate that their carrying amounts
exceed their fair values and may not be recoverable.  An impairment
loss is recognized if the carrying amount of the asset exceeds its fair
value.





Deferred
Financing Costs


The
Company has incurred debt origination costs in connection with the issuance of
long-term debt.  These costs are capitalized as deferred financing
costs and amortized using the straight-line method, which approximates the
effective interest method, over the term of the related debt.





Revenue
      Recognition


Revenues
are recognized in accordance with Securities and Exchange Commission (“SEC”)
Staff Accounting Bulletin 104, “Revenue Recognition,” when the following
criteria are met: (i) persuasive evidence of an arrangement exists; (ii) the
selling price is fixed or determinable; (iii) the product has been shipped and
the customer takes ownership and assumes the risk of loss; and (iv) collection
of the resulting receivable is reasonably assured.  The Company has
determined that the transfer of the risk of loss generally occurs when product
is received by the customer and, accordingly, recognizes revenue at that
time.  Provision is made for estimated discounts related to customer
payment terms and estimated product returns at the time of sale based on the
Company’s historical experience.





As is customary in the
consumer products industry,the Company
participatesin the
promotional programs of its customers to enhance the sale of its
products.The cost of these promotional programs varies based
on the actual number of units sold during a finite period of time.The
Company estimates the cost of such promotional programs at their inception based
on historical experience and current market conditions and reduces sales by such
estimates.These promotional programs
consist of direct to consumer incentives such ascoupons and




F-8


temporary
price reductions, as well as incentives to the Company’s customers, such as
slotting fees and cooperative advertising.  Estimates of the costs of
these promotional programs are based on (i) historical sales experience, (ii)
the current offering, (iii) forecasted data, (iv) current market conditions, and
(v) communication with customer purchasing/marketing personnel.  At
the completion of the promotional program, the estimated amounts are adjusted to
actual results.





Due to
the nature of the consumer products industry, the Company is required to
estimate future product returns.  Accordingly, the Company records an
estimate of product returns concurrent with recording sales which is made after
analyzing (i) historical return rates, (ii) current economic trends, (iii)
changes in customer demand, (iv) product acceptance, (v) seasonality of the
Company’s product offerings, and (vi) the impact of changes in product
formulation, packaging and advertising.





Costs
      of Sales


Costs of
sales include product costs, warehousing costs, inbound and outbound shipping
costs, and handling and storage costs.  Shipping, warehousing and
handling costs were $23.5 million for 2009 and $24.3 million for each of 2008
and 2007.





Advertising
      and Promotion Costs


Advertising
and promotion costs are expensed as incurred.  Slotting fees
associated with products are recognized as a reduction of
sales.  Under slotting arrangements, the retailers allow the Company’s
products to be placed on the stores’ shelves in exchange for such
fees.  Direct reimbursements of advertising costs are reflected as a
reduction of advertising costs in the period earned.





Stock-based
      Compensation


The Company recognizes
stock-based compensation in accordance with FASB, Statement No. 123(R),
“Share-Based Payment” (“Statement No. 123(R)”).Statement No.
123(R) requires the Company to measure the cost of services to be rendered based
on the grant-date fair value of the equity award.  Compensation
expense is to be recognized over the period an employee is required to provide
service in exchange for the award, generally referred to as the requisite
service period.





Income
      Taxes


Income
taxes are recorded in accordance with the provisions of FASB Statement No. 109,
“Accounting for Income Taxes” (“Statement No. 109”) and FASB Interpretation No.
48, “Accounting for Uncertainty in Income Taxes--an interpretation of FASB
Statement 109” (“FIN 48”).  Pursuant to Statement No. 109,
deferred tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities using
the enacted tax rates and laws that will be in effect when the differences are
expected to reverse.  A valuation allowance is established when
necessary to reduce deferred tax assets to the amounts expected to be
realized.





FIN 48
clarified the accounting for uncertainty in income taxes recognized in a
company’s financial statements in accordance with Statement No. 109 and
prescribed a recognition threshold and measurement attributes for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return.  As a result, the Company has applied a
more-likely-than-not recognition threshold for all tax
uncertainties.  FIN 48 only allows the recognition of those tax
benefits that have a greater than 50% likelihood of being sustained upon
examination by the various taxing authorities.  The adoption of FIN
48, effective April 1, 2007, did not result in a cumulative effect adjustment to
the opening balance of retained earnings or adjustment to any of the components
of assets, liabilities or equity in the consolidated balance sheet.





The
Company is subject to taxation in the US, various state and foreign
jurisdictions.  The Company remains subject to examination by tax
authorities for years after 2004.





The
Company classifies penalties and interest related to unrecognized tax benefits
as income tax expense in the Statement of Operations.





F-9


Derivative
      Instruments


FASB
Statement No. 133, “Accounting for Derivative Instruments and Hedging
Activities”, as amended (“Statement No. 133”), requires companies to recognize
derivative instruments as either assets or liabilities in the consolidated
balance sheet at fair value.  The accounting for changes in the fair
value of a derivative instrument depends on whether it has been designated and
qualifies as part of a hedging relationship and further, on the type of hedging
relationship.  For those derivative instruments that are designated
and qualify as hedging instruments, a company must designate the hedging
instrument, based upon the exposure being hedged, as a fair value hedge, a cash
flow hedge or a hedge of a net investment in a foreign operation.





The
Company has designated its derivative financial instruments as cash flow hedges
because they hedge exposure to variability in expected future cash flows that
are attributable to interest rate risk.  For these hedges, the
effective portion of the gain or loss on the derivative instrument is reported
as a component of other comprehensive income (loss) and reclassified into
earnings in the same line item associated with the forecasted transaction in the
same period or periods during which the hedged transaction affects
earnings.  Any ineffective portion of the gain or loss on the
derivative instruments is recorded in results of operations
immediately.  Cash flows from these instruments are classified as
operating activities.





Earnings
Per Share


Basic
earnings per share is calculated based on income available to common
stockholders and the weighted-average number of shares outstanding during the
reporting period.  Diluted earnings per share is calculated based on
income available to common stockholders and the weighted-average number of
common and potential common shares outstanding during the reporting
period.  Potential common shares, composed of the incremental common
shares issuable upon the exercise of stock options, stock appreciation rights
and unvested restricted shares, are included in the earnings per share
calculation to the extent that they are dilutive.





Recently
      Issued Accounting Standards


In April
2009, the FASB issued Staff Position No. FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (“Staff Position No.
107-1”) which requires disclosures about the fair values of financial
instruments at interim reporting periods in addition to annual financial
statements.  Effective April 1, 2009, Staff Position No. 107-1
involves only enhanced disclosures and will not have any impact on the Company’s
financial position, results from operations or cash flows.





In April
2009, the FASB issued Staff Position FAS 115-2 and FAS 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments” (“Staff Position FAS 115-2”)
which modified the threshold a company must meet to avoid recognizing
other-than-temporary impairments of debt securities purchased as
investments.  Effective April 1, 2009, the implementation of Staff
Position No. 115-2 will not have any impact on the Company’s financial position,
results from operations or cash flows.





In March
2008, the FASB issued Statement No. 161 “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No. 133”
(“Statement No. 161”) that requires a company with derivative instruments to
disclose information to enable users of the financial statements to understand
(i) how and why the company uses derivative instruments, (ii) how derivative
instruments and related hedged items are accounted for, and (iii) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows.  Accordingly, Statement No. 161
requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of and gains and
losses on derivative instruments, and disclosures about credit-risk-related
contingent features in derivative agreements.  Statement No. 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008.  The implementation of Statement
No. 161 involves enhanced disclosures of derivative instruments and the
Company’s hedging activities and did not have any impact on the Company’s
financial position, results from operations or cash flows.





In
December 2007, the FASB ratified Emerging Issues Task Force 07-01, “Accounting
for Collaborative Arrangements” (“EITF 07-01”).  EITF 07-01 provides
guidance for determining if a collaborative arrangement exists and establishes
procedures for reporting revenues and costs generated from transactions with
third parties, as well as between the parties within the collaborative
arrangement, and provides guidance for financial statement disclosures of
collaborative arrangements.  EITF 07-01 is effective for fiscal years
beginning after December 15,




F-10


2008 and
is required to be applied retrospectively to all prior periods where
collaborative arrangements existed as of the effective date.  The
adoption of EITF 07-01 on April 1, 2009 will not have any impact on the
Company’s financial position, results from operations or cash flows at that
date.  However, the future impact on the Company’s financial, results
from operations and cash flows is dependent on the nature, terms and size of any
collaborative arrangements that the Company may initiate.





In
December 2007, the FASB issued Statement No. 141 (Revised 2007), “Business
Combinations” (“Statement No. 141(R)”), as amended by FASB Staff Position
No. 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination That Arise from Contingencies” to improve consistency and
comparability in the accounting and financial reporting of business
combinations.  Accordingly, Statement 141(R), as amended, requires the
acquiring entity in a business combination to (i) recognize all assets acquired
and liabilities assumed in the transaction, (ii) establishes acquisition-date
fair value as the amount to be ascribed to the acquired assets and liabilities
and (iii) requires certain disclosures to enable users of the financial
statements to evaluate the nature, as well as the financial aspects of the
business combination.  Statement 141(R), as amended, is effective for
business combinations consummated by the Company on or after April 1,
2009.  The impact of adopting this standard will depend on the nature,
terms and size of any business combinations completed after the effective
date.





In
February 2007, the FASB issued Statement No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115”(“Statement No.
159”).  Statement No. 159 permits
companies to choose to measure certain financial instruments and certain other
items at fair value.  Unrealized gains and losses on items for which
the fair value option has been elected will be recognized in earnings at each
subsequent reporting date.  The implementation of Statement No. 159,
effective April 1, 2008, did not have a material effect on the Company’s
consolidated financial statements.





In
September 2006, the FASB issued Statement No. 157, “Fair Value Measurements”
(“Statement No. 157”) to address inconsistencies in the definition and
determination of fair value pursuant to GAAP.  Statement No. 157
provides a single definition of fair value, establishes a framework for
measuring fair value in GAAP and expands disclosures about fair value
measurements in an effort to increase comparability related to the recognition
of market-based assets and liabilities and their impact on
earnings.  Statement No. 157 is effective for the Company’s interim
financial statements issued after April 1, 2008.  However, on November
14, 2007, the FASB deferred the effective date of Statement No. 157 for one year
for non-financial assets and non-financial liabilities that are recognized or
disclosed at fair value in the financial statements on a nonrecurring
basis.  The implementation of Statement No. 157, effective April 1,
2008, did not have a material effect on financial assets and liabilities
included in the Company’s consolidated financial statements as fair value is
based on readily available market prices.  The application of
Statement No. 157 is not expected to have a material effect on the Company’s
consolidated financial statements as it relates to the non-financial assets and
liabilities.





Management
has reviewed and continues to monitor the actions of the various financial and
regulatory reporting agencies and is currently not aware of any other
pronouncement that could have a material impact on the Company’s consolidated
financial position, results of operations or cash flows.






2.
            Acquisition
      of Businesses





Acquisition
of Wartner USA B.V.


On
September 21, 2006, the Company completed the acquisition of the ownership
interests of Wartner USA B.V., the owner of the Wartner brand of
over-the-counter wart treatment products.  The Company expects that
the Wartner brand,
which is the #3 brand in the United States over-the-counter wart treatment
category, along with the acquired technology, will continue to enhance the
Company’s leadership in the category.  Additionally, the Company
believes that the brand will continue to benefit from a targeted advertising and
marketing program, as well as the Company’s business model of outsourcing
manufacturing and the elimination of redundant operations.  The
results from operations of the Wartner brand have been
included within the Company’s consolidated financial statements as a component
of the over-the-counter healthcare segment commencing September 21,
2006.





The
purchase price of the ownership interests was approximately $31.2 million,
including fees and expenses of




F-11


the
acquisition of $216,000 and the assumption of approximately $5.0 million of
contingent payments, with an estimated fair value of $3.8 million, owed to the
former owner of Wartner
through 2011.  The Company funded the cash acquisition price from
operating cash flows.  During 2009, the Company paid the former owner
$4.0 million in full satisfaction of all obligations due to such former
owner.





The
following table summarizes the fair values of the assets acquired and the
liabilities assumed at the date of acquisition.





(In
      thousands)Inventory
                      
                      $
                      769Intangible
      assets
                      
                      
                      29,600Goodwill
                      
                      
                      11,746Accrued
      liabilities
                      
                      
                      (3,854
                      )Deferred
      tax liabilities
                      
                      
                      (7,000
                      )$
                      31,261





The
amount allocated to intangible assets of $29.6 million includes $17.8 million
related to the Wartner
brand trademark which the Company estimates to have a useful life of 20 years,
as well as $11.8 million related to a patent estimated to have a useful life of
14 years.  Goodwill resulting from this transaction was $11.7 million,
inclusive of a deferred income tax liability recorded for the difference between
the assigned values of assets acquired and liabilities assumed, and their
respective taxes bases.  It is estimated that of such amount,
approximately $4.7 million will be deductible for income tax
purposes.








3.
            Accounts
      Receivable





Accounts
receivable consist of the following (in thousands):


March
      312009
                  
                  
                  2008Accounts
      receivable
                  
                  $
                  37,521
                  
                  
                  $
                  44,918Other
      receivables
                  
                  
                  1,081
                  
                  
                  
                  1,37838,602
                  
                  
                  
                  46,296Less
      allowances for discounts, returns and
                    uncollectible
      accounts
                  
                  
                  (2,577
                  )
                  
                  
                  (2,077
                  )$
                  36,025
                  
                  
                  $
                  44,219








4.
            Inventories





Inventories
consist of the following (in thousands):


March
      312009
                  
                  
                  2008Packaging
      and raw materials
                  
                  $
                  1,978
                  
                  
                  $
                  2,463Finished
      goods
                  
                  
                  24,999
                  
                  
                  
                  27,233$
                  26,977
                  
                  
                  $
                  29,696





Inventories
are shown net of allowances for obsolete and slow moving inventory of $1.4
million at March 31, 2009 and 2008.




F-12








5.
            Property
      and Equipment





Property
and equipment consist of the following (in thousands):


March
      312009
                        
                        
                        2008Machinery
                        
                        $
                        1,556
                        
                        
                        $
                        1,516Computer
      equipment
                        
                        
                        1,021
                        
                        
                        
                        627Furniture
      and fixtures
                        
                        
                        239
                        
                        
                        
                        205Leasehold
      improvements
                        
                        
                        357
                        
                        
                        
                        3443,173
                        
                        
                        
                        2,692Accumulated
      depreciation
                        
                        
                        (1,806
                        )
                        
                        
                        (1,259
                        )$
                        1,367
                        
                        
                        $
                        1,433








6.
            Goodwill





A
reconciliation of the activity affecting goodwill by operating segment is as
follows (in thousands):





Over-the-
                        Counter
                      
                      
                      Household
                      
                      
                      PersonalHealthcare
                      
                      
                      Cleaning
                      
                      
                      Care
                      
                      
                      ConsolidatedBalance
      – March 31, 2007
                      
                      $
                      235,647
                      
                      
                      $
                      72,549
                      
                      
                      $
                      2,751
                      
                      
                      $
                      310,947Acquisition
      purchase price adjustments
                      
                      
                      (2,032
                      )
                      
                      
                      --
                      
                      
                      
                      --
                      
                      
                      
                      (2,032
                      )Balance
      – March 31, 2008
                      
                      
                      233,615
                      
                      
                      
                      72,549
                      
                      
                      
                      2,751
                      
                      
                      
                      308,915Acquisition
      purchase price adjustments
                      
                      
                      (3,988
                      )
                      
                      
                      --
                      
                      
                      
                      --
                      
                      
                      
                      (3,988
                      )Impairments
                      
                      
                      (125,527
                      )
                      
                      
                      (65,160
                      )
                      
                      
                      --
                      
                      
                      
                      (190,687
                      )Balance
      – March 31, 2009
                      
                      $
                      104,100
                      
                      
                      $
                      7,389
                      
                      
                      $
                      2,751
                      
                      
                      $
                      114,240





At March
31, 2009, in conjunction with the annual test for goodwill impairment, the
Company recorded an impairment charge aggregating $190.7 million to adjust the
carrying amounts of goodwill related to several reporting units within the
over-the-counter healthcare and household cleaning segments to their fair values
as determined by use of a discounted cash flow methodology.  This
discounted cash flow methodology is a widely-accepted valuation technique
utilized by market participants in the transaction evaluation process and has
been applied consistently.  However, we did consider the Company’s
market capitalization at March 31, 2009, as compared to the aggregate fair
values of our reporting units to assess the reasonableness of our estimates
pursuant to the discounted cash flow methodology.  These charges were
a consequence of the challenging economic environment experienced in 2008 and
thus far in 2009, the dislocation of the debt and equity markets, and
contracting consumer demand for the Company’s product
offerings.  Although the impairment charges represent management’s
best estimate, the estimates and assumptions made in assessing the fair value of
the Company’s reporting units and the valuation of the underlying assets and
liabilities are inherently subject to significant
uncertainties.  Consequently, changing rates of interest and
inflation, declining sales or margins, increases in competition, changing
consumer preferences, technical advances or reductions in advertising and
promotion may require additional impairments in the future.




F-13


7.
            Intangible
      Assets





A
reconciliation of the activity affecting intangible assets is as follows (in
thousands):





Year
      Ended March 31, 2009Indefinite
                      Lived
                    
                    
                    Finite
                      Lived
                    
                    
                    Non
                      CompeteTrademarks
                    
                    
                    Trademarks
                    
                    
                    Agreement
                    
                    
                    TotalsCarrying
      AmountsBalance
      – March 31, 2008
                    
                    $
                    544,963
                    
                    
                    $
                    139,503
                    
                    
                    $
                    196
                    
                    
                    $
                    684,662Additions
                    
                    
                    --
                    
                    
                    
                    500
                    
                    
                    
                    --
                    
                    
                    
                    500Deletions
                    
                    
                    --
                    
                    
                    
                    --
                    
                    
                    
                    (38
                    )
                    
                    
                    (38
                    )Impairments
                    
                    
                    (44,787
                    )
                    
                    
                    (14,116
                    )
                    
                    
                    --
                    
                    
                    
                    (58,903
                    )Balance
      – March 31, 2009
                    
                    $
                    500,176
                    
                    
                    $
                    125,887
                    
                    
                    $
                    158
                    
                    
                    $
                    626,221Accumulated
      AmortizationBalance
      – March 31, 2008
                    
                    $
                    --
                    
                    
                    $
                    37,838
                    
                    
                    $
                    141
                    
                    
                    $
                    37,979Additions
                    
                    
                    --
                    
                    
                    
                    10,632
                    
                    
                    
                    39
                    
                    
                    
                    10,671Deletions
                    
                    
                    --
                    
                    
                    
                    --
                    
                    
                    
                    (38
                    )
                    
                    
                    (38
                    )Balance
      – March 31, 2009
                    
                    $
                    --
                    
                    
                    $
                    48,470
                    
                    
                    $
                    142
                    
                    
                    $
                    48,612








Year
      Ended March 31, 2008Indefinite
                      Lived
                    
                    
                    Finite
                      Lived
                    
                    
                    Non
                      CompeteTrademarks
                    
                    
                    Trademarks
                    
                    
                    Agreement
                    
                    
                    TotalsCarrying
      AmountsBalance
      – March 31, 2007
                    
                    $
                    544,963
                    
                    
                    $
                    139,470
                    
                    
                    $
                    196
                    
                    
                    $
                    684,629Additions
                    
                    
                    --
                    
                    
                    
                    33
                    
                    
                    
                    --
                    
                    
                    
                    33Balance
      – March 31, 2008
                    
                    $
                    544,963
                    
                    
                    $
                    139,503
                    
                    
                    $
                    196
                    
                    
                    $
                    684,662Accumulated
      AmortizationBalance
      – March 31, 2007
                    
                    $
                    --
                    
                    
                    $
                    27,375
                    
                    
                    $
                    97
                    
                    
                    $
                    27,472Additions
                    
                    
                    --
                    
                    
                    
                    10,463
                    
                    
                    
                    44
                    
                    
                    
                    10,507Balance
      – March 31, 2008
                    
                    $
                    --
                    
                    
                    $
                    37,838
                    
                    
                    $
                    141
                    
                    
                    $
                    37,979





In a
manner similar to goodwill, the Company completed a test for impairment of its
intangible assets.  Accordingly, the Company recorded an impairment
charge aggregating $58.9 million to the over-the-counter healthcare and
household cleaning segments as facts and circumstances indicated that the
carrying values of the assets exceeded their fair values and may not be
recoverable.





F-14


At March
31, 2009, intangible assets are expected to be amortized over a period of five
to 30 years as follows (in thousands):





Year Ending March 312010
                      
                      $
                      8,2112011
                      
                      
                      8,1952012
                      
                      
                      8,0282013
                      
                      
                      8,0282014
                      
                      
                      7,388Thereafter
                      
                      
                      37,583$
                      77,433








8.
            Other
      Accrued Liabilities





Other
accrued liabilities consist of the following (in thousands):





March
      312009
                        
                        
                        2008Accrued
      marketing costs
                        
                        $
                        3,519
                        
                        
                        $
                        4,136Accrued
      payroll
                        
                        
                        750
                        
                        
                        
                        2,845Accrued
      commissions
                        
                        
                        312
                        
                        
                        
                        464Accrued
      income taxes
                        
                        
                        679
                        
                        
                        
                        --Accrued
      professional fees
                        
                        
                        1,906
                        
                        
                        
                        338Other
                        
                        
                        89
                        
                        
                        
                        247$
                        7,255
                        
                        
                        $
                        8,030




F-15


9.
            Long-Term
      Debt




Long-term
debt consists of the following (in thousands):


March
      312009
                          
                          
                          2008Senior
      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 March 31,
      2009, the average interest rate on the Tranche B Term Loan Facility
      was 2.77%.  The interest rate is adjusted either monthly or
      quarterly at the Company’s option.  Principal payments of
      $887,500 plus accrued interest are payable quarterly.  Current
      amounts outstanding under the Tranche B Term Loan Facility mature on April
      6, 2011 and are collateralized by substantially all of the Company’s
      assets.
                          
                          $
                          252,337
                          
                          
                          $
                          285,225Senior
      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 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
                          
                          
                          
                          126,000378,337
                          
                          
                          
                          411,225Current
      portion of long-term debt
                          
                          
                          (3,550
                          )
                          
                          
                          (3,550
                          )$
                          374,787
                          
                          
                          $
                          407,675





The
Company’s senior revolving credit facility that was available for maximum
borrowings of $60.0 million expired on April 6, 2009.  The Tranche B
Term Loan Facility contain various financial covenants, including provisions
that require the Company to maintain certain leverage ratios, interest coverage
ratios and fixed charge coverage ratios.  The Tranche B Term Loan
Facility and the Senior Subordinated Notes also contain provisions that restrict
the Company from undertaking specified corporate actions, such as asset
dispositions, acquisitions, dividend payments, repurchase of common shares
outstanding, changes of control, incurrence of indebtedness, creation of liens,
making of loans and transactions with affiliates.  Additionally, the
Tranche B Term Loan Facility and the Senior Subordinated Notes contain
cross-default provisions whereby a default pursuant to the terms and conditions
of either indebtedness will cause a default on the remaining
indebtedness.  At March 31, 2009, the Company was in compliance with
its applicable financial and other covenants under the Tranche B Term Loan
Facility and the Indenture.





Future
principal payments required in accordance with the terms of the Tranche B Term
Loan Facility and the Senior Subordinated Notes are as follows (in
thousands):





Year Ending March 312010
                          
                          $
                          3,5502011
                          
                          
                          3,5502012
                          
                          
                          245,2372013
                          
                          
                          126,000$
                          378,337





F-16


10.
            Fair
      Value Measurements





As deemed
appropriate, the Company uses derivative financial instruments to mitigate the
impact of changing interest rates associated with its long-term debt
obligations.  At March 31, 2009, the outstanding obligation under the
Company’s variable rate Tranche B Term Loan Facility was $252.3
million.  While the Company does not enter into derivative financial
instruments for trading purposes, all of the Company’s derivatives are
over-the-counter instruments with liquid markets.  The notional, or
contractual, amount of the Company’s derivative financial instruments is used to
measure the amount of interest to be paid or received and does not represent an
actual liability.  The Company is accounting for the interest rate cap
and swap agreements as cash flow hedges.





In March
2005, the Company purchased interest rate cap agreements with a total notional
amount of $180.0 million, the terms of which were as follows:





Notional
                    Amount
                  
                  
                  Interest
      Rate
                    Cap
      Percentage
                  
                  Expiration
                    Date(In
      millions)$
                  50.0
                  
                  
                  
                  3.25
                  %
                  May
      31, 200680.0
                  
                  
                  
                  3.50
                  
                  May
      30, 200750.0
                  
                  
                  
                  3.75
                  
                  May
      30, 2008





The
Company entered into an interest rate swap agreement, effective March 26, 2008,
in the notional amount of $175.0 million, decreasing to $125.0 million at March
26, 2009 to replace and supplement the interest rate cap agreement that expired
on May 30, 2008.  The Company has agreed to pay a fixed rate of 2.88%
while receiving a variable rate based on LIBOR.  The agreement
terminates on March 26, 2010.





Effective April 1, 2008,
the Company adoptedStatement No. 157, “Fair Value Measurements”, for all
financial instruments accounted for at fair value.  Statement No. 157
established a new framework for measuring fair value and provides for expanded
disclosures.  Accordingly, Statement No. 157 requires fair value to be
determined based on the exchange price that would be received for an asset or
paid to transfer a liability in the principal or most advantageous market
assuming an orderly transaction between market
participants.  Statement No. 157 established market (observable
inputs) as the preferred source of fair value to be followed by the Company’s
assumptions of fair value based on hypothetical transactions (unobservable
inputs) in the absence of observable market inputs.





Based
upon the above, the following fair value hierarchy was created:





Level
      1 –
              Quoted
      market prices for identical instruments in active markets,Level
      2 –
              Quoted
      prices for similar instruments in active markets, as well as quoted prices
      for identical or similar instruments in markets that are not considered
      active, and





Level
      3 –
            Unobservable
      inputs developed by the Company using estimates and assumptions reflective
      of those that would be utilized by a market
  participant.





Quantitative
disclosures about the fair value of the Company’s derivative hedging instruments
are as follows:





Fair
      Value Measurements at March 31, 2009(In
      Thousands)
                Description
              
              March
      31, 2009
              
              
              Quoted
      Prices
                in
      Active
                Markets
      for
                Identical
                Assets
                (Level
      1)
              
              
              Significant
                Other
                Observable
                Inputs
                (Level
      2)
              
              
              Significant
                Unobservable
                Inputs
                (Level
      3)Interest
      Rate Swap Liability
              
              $
              2,152
              
              
              $
              --
              
              
              $
              2,152
              
              
              $
              --





F-17


A summary
of the fair value of the Company’s derivatives instruments, their impact on the
consolidated statements of operations and comprehensive income and the amounts
reclassified from other comprehensive income is as follows (in
thousands):





Cash
      Flow Hedging
                Instruments
              
              Balance
                Sheet
                Location
              
              
              Notional
                Amount
              
              
              Fair
      Value
                Asset/
                (Liability)
              
              Income
                Statement
                Account
                Gains/
                Losses
                Charged
              
              Amounts
                Recognized
                In
      Income
              
              
              Amount
                Gains
                (Losses)
                Recognized
                In
      OCIInterest
      Rate Cap(1)
              
              
              N/A
              
              
              $
              50,000
              
              
              $
              --
              
              Interest
                Expense
              
              $
              85
              
              
              $
              --Interest
      Rate Swap
              
              Accounts
                Payable
              
              
              
              125,000
              
              
              
              (2,152
              )
              Interest
                Expense
              
              
              480
              
              
              
              (1,105
              )








(1) The
final tranche with a notional amount of $50.0 million expired on May 30,
2008.





The
Company recorded a charge to interest expense of $480,000 during 2009 in
connection with this interest rate swap agreement.  Additionally, the
Company estimates that during the year ending March 31, 2010, it will recognize
approximately $2.7 million in interest expense.





At March
31, 2009 and 2008, the fair values of the interest rate swap were $2.2 million
and $1.5 million, respectively.  Such amounts were included in current
liabilities.  The determination of fair value is based on closing
prices for similar instruments traded in liquid over-the-counter
markets.  The changes in the fair value of this interest rate swap are
recorded in Accumulated Other Comprehensive Income in the balance sheet due to
its designation as a cash flow hedge.





For
certain of our financial instruments, including cash, accounts receivable,
accounts payable and other current liabilities, the carrying amounts approximate
their respective fair values due to the relatively short maturity of these
amounts.





At March
31, 2009, the carrying value of the Tranche B Term Loan Facility was $252.3
million.  The terms of the facility provide that the interest rate is
adjusted, at the Company’s option, on either a monthly or quarterly basis, to
the prime rate plus a margin of 1.25% or LIBOR plus a margin of
2.25%.  The market value of the Company’s Tranche B Term Loan Facility
was approximately $244.8 million.  At March 31, 2009, the carry value
of the Company’s 9.25% Senior Subordinate Notes was $126.0 million with a market
value of approximately $119.7 million.  The market values have been
determined from market transactions in the Company’s debt
securities.






11.
              Stockholders’
      Equity


The
Company is authorized to issue 250.0 million shares of common stock, $0.01 par
value per share, and 5.0 million shares of preferred stock, $0.01 par value per
share.  The Board of Directors may direct the issuance of the
undesignated preferred stock in one or more series and determine preferences,
privileges and restrictions thereof.





Each
share of common stock has the right to one vote on all matters submitted to a
vote of stockholders.  The holders of common stock are also entitled
to receive dividends whenever funds are legally available and when declared by
the Board of Directors, subject to prior rights of holders of all classes of
stock outstanding having priority rights as to dividends.  No
dividends have been declared or paid on the Company’s common stock through March
31, 2009.





During
2009, 2008 and 2007, the Company repurchased 65,000, 4,000 and 6,000 shares,
respectively, of restricted common stock from former employees pursuant to the
provisions of the various employee stock purchase agreements.  The
2009 purchases were at an average price of $0.24 per share while the 2008 and
2007 purchases




F-18


were at
an average purchase price of $1.70 per share.  Additionally, during
2007, the Company recovered 30,888 shares of restricted stock upon the departure
of a former member of management.  All of such shares have been
recorded as treasury stock.








12.
            Earnings
      Per Share





The
following table sets forth the computation of basic and diluted earnings per
share (in thousands):





Year
      Ended March 312009
                    
                    
                    2008
                    
                    
                    2007NumeratorNet
      income
                    
                    $
                    (186,776
                    )
                    
                    $
                    33,919
                    
                    
                    $
                    36,078DenominatorDenominator
      for basic earnings per share
                    
                    
                    49,935
                    
                    
                    
                    49,751
                    
                    
                    
                    49,460Dilutive
      effect of unvested restricted common stock and stock appreciation
                      rights
      issued to employees and directors
                    
                    
                    --
                    
                    
                    
                    288
                    
                    
                    
                    560Denominator
      for diluted earnings per share
                    
                    
                    49,935
                    
                    
                    
                    50,039
                    
                    
                    
                    50,020Earnings
      per Common Share:Basic
                    
                    $
                    (3.74
                    )
                    
                    $
                    0.68
                    
                    
                    $
                    0.73Diluted
                    
                    $
                    (3.74
                    )
                    
                    $
                    0.68
                    
                    
                    $
                    0.72








At March
31, 2009, 183,000 shares of restricted stock granted to employees have been
excluded from the calculation of both basic and diluted earnings per share since
vesting of such shares is subject to contingencies.  Additionally, at
March 31, 2009, there were options to purchase 663,000 shares of common stock
outstanding that were not included in the computation of diluted earnings per
share because their exercise price was greater than the average market price of
the common stock, and therefore, their inclusion would be
antidilutive.





At March
31, 2008, 314,000 restricted shares issued to employees, subject only to
time-vesting, were unvested and excluded from the calculation of basic earnings
per share; however, such shares were included in the calculation of diluted
earnings per share.  Additionally, at March 31, 2008, 324,000 shares
of restricted stock granted to management and employees, as well as 16,000 stock
appreciation rights have been excluded from the calculation of both basic and
diluted earnings per share since vesting of such shares is subject to
contingencies.  Lastly, at March 31, 2008, there were options to
purchase 254,000 shares of common stock outstanding that were not included in
the computation of diluted earnings per share because their exercise price was
greater than the average market price of the common stock, and therefore, their
inclusion would be antidilutive.





At March
31, 2007, 373,000 restricted shares issued to employees, subject only to
time-vesting, were unvested and excluded from the calculation of basic earnings
per share; however, such shares were included in the calculation of diluted
earnings per share.  Additionally, at March 31, 2007, 254,000 shares
of restricted stock granted to management and employees, as well as 16,000 stock
appreciation rights have been excluded from the calculation of both basic and
diluted earnings per share since vesting of such shares is subject to
contingencies.  There were no stock options outstanding at March 31,
2007.








13.
            Share-Based
      Compensation





In
connection with the Company’s initial public offering, the Board of Directors
adopted the 2005 Long-Term Equity Incentive Plan (“Plan”) which provides for the
grant, to a maximum of 5.0 million shares, of restricted




F-19


stock,
stock options, restricted stock units, deferred stock units and other
equity-based awards.  Directors, officers and other employees of the
Company and its subsidiaries, as well as others performing services for the
Company, are eligible for grants under the Plan.  The Company believes
that such awards better align the interests of its employees with those of its
stockholders.





During
2009, net compensation costs charged against income and the related income tax
benefit recognized were $2.4 million and $924,000,
respectively.  During the year management determined that the Company
would not meet the performance goals associated with the grants of stock to
management and employees in May 2007 and 2008.  In accordance with
Statement 123(R), management reversed previously recorded stock compensation
costs of $705,000 and $193,000 related to the May 2007 and May 2008 grants,
respectively.





During
2008, net compensation costs charged against income, and the related tax
benefits recognized were $1.1 million and $433,000,
respectively.  During the year management determined that the Company
would not meet the performance goals associated with the grants of restricted
stock to management and employees in October 2005, July 2006 and May
2007.  Therefore, management reversed previously recorded stock-based
compensation costs of $538,000, $394,000 and $166,000 related to the October
2005, July 2006 and May 2007 grants, respectively.





Restricted
Shares


Restricted
shares granted to employees under the Plan generally vest in 3 to 5 years,
contingent on attainment of Company performance goals, including revenue and
either earnings before income taxes, depreciation and amortization or earnings
per share growth targets, or the attainment of certain time vesting
thresholds.  Certain restricted share awards provide for accelerated
vesting if there is a change of control.  The fair value of nonvested
restricted shares is determined as the closing price of the Company’s common
stock on the day preceding the grant date.  The weighted-average
grant-date fair values during 2009, 2008 and 2007 were $10.85, $12.52 and $9.83,
respectively.





A summary
of the Company’s restricted shares granted under the Plan is presented
below:





Nonvested
      Shares
                
                Shares
                  (000)
                
                
                Weighted-Average
                  Grant-Date
                  Fair
      ValueNonvested
      at March 31, 2006
                
                
                198.0
                
                
                $
                12.32Granted
                
                
                156.5
                
                
                
                9.83Vested
                
                
                (13.1
                )
                
                
                10.67Forfeited
                
                
                (47.0
                )
                
                
                12.47Nonvested
      at March 31, 2007
                
                
                294.4
                
                
                
                11.05Granted
                
                
                292.0
                
                
                
                12.52Vested
                
                
                (24.8
                )
                
                
                10.09Forfeited
                
                
                (76.9
                )
                
                
                12.35Nonvested
      at March 31, 2008
                
                
                484.7
                
                
                
                11.78Granted
                
                
                303.5
                
                
                
                10.85Vested
                
                
                (29.9
                )
                
                
                10.88Forfeited
                
                
                (415.9
                )
                
                
                11.55Nonvested
      at March 31, 2009
                
                
                342.4
                
                
                $
                11.31








Options


The Plan
provides that the exercise price of the option granted shall be no less than the
fair market value of the Company’s common stock on the date the option is
granted.  Options granted have a term of no greater than 10 years from
the date of grant and vest in accordance with a schedule determined at the time
the option is granted, generally 3 to 5 years.  Certain option awards
provide for accelerated vesting if there is a change in control.




F-20


The fair
value of each option award is estimated on the date of grant using the
Black-Scholes Option Pricing Model (“Black-Scholes Model”) that uses the
assumptions noted in the following table.  Expected volatilities are
based on the historical volatility of the Company’s common stock and other
factors, including the historical volatilities of comparable
companies.  The Company uses appropriate historical data, as well as
current data, to estimate option exercise and employee termination
behaviors.  Employees that are expected to exhibit similar exercise or
termination behaviors are grouped together for the purposes of
valuation.  The expected terms of the options granted are derived from
management’s estimates and consideration of information derived from the public
filings of companies similar to the Company and represent the period of time
that options granted are expected to be outstanding.  The risk-free
rate represents the yield on U.S. Treasury bonds with a maturity equal to the
expected term of the granted option.  The weighted-average grant-date
fair value of the options granted during 2009 and 2008 were $5.04 and $5.30,
respectively.  There were no options granted during 2007.





Year
      Ended March 312009
                    
                    
                    2008Expected
      volatility
                    
                    
                    43.3
                    %
                    
                    
                    33.2
                    %Expected
      dividends
                    
                    
                    --
                    
                    
                    
                    --Expected
      term in years
                    
                    
                    6.0
                    
                    
                    
                    6.0Risk-free
      rate
                    
                    
                    3.2
                    %
                    
                    
                    4.5
                    %





A summary
of option activity under the Plan is as follows:





Options
                
                Shares
                  (000)
                
                
                Weighted-Average
                  Exercise
                  Price
                
                
                Weighted-
                  Average
                  Remaining
                  Contractual
      Term
                
                
                Aggregate
                  Intrinsic
                  Value
                  (000)Outstanding
      at March 31, 2006
                
                
                61.8
                
                
                $
                12.95
                
                
                
                4.3
                
                
                $
                --Granted
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Exercised
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Forfeited
      or expired
                
                
                (61.8
                )
                
                
                12.95
                
                
                
                4.3
                
                
                
                --Outstanding
      at March 31, 2007
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Granted
                
                
                255.1
                
                
                
                12.86
                
                
                
                10.0
                
                
                
                --Exercised
                
                
                --
                
                
                
                --
                
                
                
                
                
                
                
                --Forfeited
      or expired
                
                
                (1.6
                )
                
                
                12.86
                
                
                
                9.2
                
                
                
                --Outstanding
      at March 31, 2008
                
                
                253.5
                
                
                
                12.86
                
                
                
                9.2
                
                
                
                --Granted
                
                
                413.2
                
                
                
                10.91
                
                
                
                10.0
                
                
                
                --Exercised
                
                
                --
                
                
                
                --
                
                
                
                --
                
                
                
                --Forfeited
      or expired
                
                
                (4.1
                )
                
                
                11.83
                
                
                
                9.2
                
                
                
                --Outstanding
      at March 31, 2009
                
                
                662.6
                
                
                
                11.65
                
                
                
                8.8
                
                
                
                --Exercisable
      at March 31, 2009
                
                
                83.9
                
                
                $
                12.86
                
                
                
                8.1
                
                
                $
                --





Since the
exercise price of the options exceeded the Company’s closing stock price of
$5.18 at March 31, 2009 and $8.18 at March 31, 2008, the aggregate intrinsic
value of outstanding options was $0 at both March 31, 2009 and
2008.





Stock
Appreciation Rights (“SARS”)


During
2007, the Board of Directors granted SARS to a group of selected executives;
however, there were no SARS granted during 2008 or 2009.  The terms of
the SARS provide that on the vesting date, the executive will receive the excess
of the market price of the stock award over the market price of the stock award
on the date of issuance.  The Board of Directors, in its sole
discretion, may settle the Company’s obligation to the executive in shares of
the Company’s common stock, cash, other securities of the Company or any
combination thereof.





F-21


The Plan
provides that the issuance price of a SAR shall be no less than the market price
of the Company’s common stock on the date the SAR is granted.  SARS
may be granted with a term of no greater than 10 years from the date of grant
and will vest in accordance with a schedule determined at the time the SAR is
granted, generally 3 to 5 years.  The weighted-average grant date fair
value of the SARS granted during 2007 was $3.68.  The fair value of
each SAR award was estimated on the date of grant using the Black-Scholes Model
using the assumptions noted in the following table.





Year
      Ended
                      March
      31, 2007Expected
      volatility
                    
                    
                    50.00
                    %Expected
      dividend
                    
                    
                    --Expected
      term in years
                    
                    
                    2.75Risk-free
      rate
                    
                    
                    5.00
                    %





A summary
of SARS activity under the Plan is as follows:





SARS
              
              Shares
                (000)
              
              
              Grant
                Date
                Stock
                Price
              
              
              Weighted-
                Average
                Remaining
                Contractual
      Term
              
              
              Aggregate
                Intrinsic
                Value
                (000)Granted
      – July 1, 2006
              
              
              16.1
              
              
              $
              9.97
              
              
              
              2.0
              
              
              $
              --Forfeited
      or expired
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Outstanding
      at March 31, 2007
              
              
              16.1
              
              
              
              9.97
              
              
              
              2.0
              
              
              
              30,300Granted
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Forfeited
      or expired
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Outstanding
      at March 31, 2008
              
              
              16.1
              
              
              
              9.97
              
              
              
              1.0
              
              
              
              --Granted
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --Forfeited
      or expired
              
              
              (16.1
              )
              
              
              (9.97
              )
              
              
              --
              
              
              
              --Outstanding
      at March 31, 2009
              
              
              --
              
              
              $
              --
              
              
              
              --
              
              
              $
              --Exercisable
      at March 31, 2009
              
              
              --
              
              
              $
              --
              
              
              
              --
              
              
              $
              --





At March
31, 2009, 2008 and 2007, there were $3.2 million, $2.6 million and $1.4 million,
of unrecognized compensation costs related to nonvested share-based compensation
arrangements under the Plan based on management’s estimate of the shares that
will ultimately vest.  The Company expects to recognize such costs
over the next 2.5 years.  However, certain of the restricted shares
vest upon the attainment of Company performance goals and if such goals are not
met, no compensation costs would ultimately be recognized and any previously
recognized compensation cost would be reversed.  The total fair value
of shares vested during 2009, 2008 and 2007, was $325,000, $277,000, and
$104,000, respectively.  There were no options exercised during 2009,
2008 or 2007; hence there were no tax benefits realized during these
periods.  At March 31, 2009, there were 3.9 million shares available
for issuance under the Plan.








F-22


14.
            Income
      Taxes





The
provision (benefit) for income taxes consists of the following (in
thousands):





Year
      Ended March 312009
                  
                  
                  2008
                  
                  
                  2007CurrentFederal
                  
                  $
                  9,284
                  
                  
                  $
                  8,599
                  
                  
                  $
                  7,547State
                  
                  
                  1,266
                  
                  
                  
                  1,208
                  
                  
                  
                  1,739Foreign
                  
                  
                  218
                  
                  
                  
                  386
                  
                  
                  
                  150DeferredFederal
                  
                  
                  (17,606
                  )
                  
                  
                  8,851
                  
                  
                  
                  10,391State
                  
                  
                  (2,348
                  )
                  
                  
                  1,245
                  
                  
                  
                  (729
                  )$
                  (9,186
                  )
                  
                  $
                  20,289
                  
                  
                  $
                  19,098





The
principal components of the Company’s deferred tax balances are as follows (in
thousands):





March
      312009
                      
                      
                      2008Deferred
      Tax AssetsAllowance
      for doubtful accounts and sales returns
                      
                      $
                      1,152
                      
                      
                      $
                      966Inventory
      capitalization
                      
                      
                      574
                      
                      
                      
                      538Inventory
      reserves
                      
                      
                      553
                      
                      
                      
                      577Net
      operating loss carryforwards
                      
                      
                      747
                      
                      
                      
                      951Property
      and equipment
                      
                      
                      8
                      
                      
                      
                      78State
      income taxes
                      
                      
                      4,125
                      
                      
                      
                      4,951Accrued
      liabilities
                      
                      
                      315
                      
                      
                      
                      364Interest
      rate derivative instruments
                      
                      
                      818
                      
                      
                      
                      612Other
                      
                      
                      1,511
                      
                      
                      
                      669Deferred
      Tax LiabilitiesIntangible
      assets
                      
                      
                      (103,764
                      )
                      
                      
                      (128,780
                      )$
                      (93,961
                      )
                      
                      $
                      (119,074
                      )





At March
31, 2009, Medtech Products Inc., a wholly-owned subsidiary of the Company, had a
net operating loss carryforward of approximately $2.1 million which may be used
to offset future taxable income of the consolidated group and begins to expire
in 2020.  The net operating loss carryforward is subject to an annual
limitation as to usage under Internal Revenue Code Section 382 of approximately
$240,000.





F-23


A
reconciliation of the effective tax rate compared to the statutory U.S. Federal
tax rate is as follows:





Year
      Ended March 31(In
      thousands)
                                        
                                        2009
                                        
                                        
                                        2008
                                        
                                        
                                        2007%
                                        
                                        
                                        
                                        
                                        
                                        %
                                        
                                        
                                        
                                        
                                        
                                        %Income
      tax provision at statutory rate
                                        
                                        $
                                        (68,586
                                        )
                                        
                                        
                                        (35.0
                                        )
                                        
                                        $
                                        18,973
                                        
                                        
                                        
                                        35.0
                                        
                                        
                                        $
                                        19,312
                                        
                                        
                                        
                                        35.0Foreign
      tax provision
                                        
                                        
                                        83
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        16
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        (69
                                        )
                                        
                                        
                                        (0.1
                                        )State
      income taxes, net of federal income tax benefit
                                        
                                        
                                        (5,467
                                        )
                                        
                                        
                                        (2.8
                                        )
                                        
                                        
                                        1,284
                                        
                                        
                                        
                                        2.4
                                        
                                        
                                        
                                        2,029
                                        
                                        
                                        
                                        3.7Increase
      (decrease) in net deferred tax liability resulting from an increase
      (decrease) in the effective state tax rate
                                        
                                        
                                        --
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        (2,200
                                        )
                                        
                                        
                                        (4.0
                                        )Goodwill
                                        
                                        
                                        64,770
                                        
                                        
                                        
                                        33.1
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        --Other
                                        
                                        
                                        14
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        16
                                        
                                        
                                        
                                        --
                                        
                                        
                                        
                                        26
                                        
                                        
                                        
                                        --Provision
      for income taxes
                                        
                                        $
                                        (9,186
                                        )
                                        
                                        
                                        (4.7
                                        )
                                        
                                        $
                                        20,289
                                        
                                        
                                        
                                        37.4
                                        
                                        
                                        $
                                        19,098
                                        
                                        
                                        
                                        34.6





Uncertain
tax liability activity is as follows:





2009
                    
                    
                    2008(In
      thousands)Balance
      – beginning of year
                    
                    $
                    --
                    
                    
                    $
                    --Additions
      based on tax positions related to the
                      current
      year
                    
                    
                    225
                    
                    
                    
                    --Balance
      – end of year
                    
                    $
                    225
                    
                    
                    $
                    --





The
Company recognizes interest and penalties related to uncertain tax positions as
a component of income tax expense.  The Company does not anticipate
any significant events or circumstances that would cause a change to these
uncertainties during the ensuing year.








15.
            Commitments
      and Contingencies





Securities Class Action
Litigation





The
Company and certain of its officers and directors are defendants in a
consolidated securities class action lawsuit filed in the United States District
Court for the Southern District of New York (the “Consolidated
Action”).  The first of the six consolidated cases was filed on August
3, 2005.  Plaintiffs purport to represent a class of stockholders of
the Company who purchased shares from February 9, 2005 through November 15, 2005
(the “Class Period”).  Plaintiffs also name as defendants the
underwriters in the Company’s initial public offering and a private equity fund
that was a selling stockholder in the offering.  The District Court
has appointed a Lead Plaintiff.  On December 23, 2005, the Lead
Plaintiff filed a Consolidated Class Action Complaint, which asserted claims
under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections
10(b), 20(a) and 20A of the Securities Exchange Act of 1934.  The Lead
Plaintiff generally alleged that the Company issued a series of materially false
and misleading statements in connection with its initial public offering and
thereafter in regard to the following areas: the accounting issues described in
the Company’s press release issued on or about November 15, 2005; and the
alleged failure to disclose that demand for certain of the Company’s products
was declining and that the Company was planning to withdraw several products
from the market.  Plaintiffs seek an unspecified amount of
damages.  The Company filed a motion to dismiss the Consolidated Class
Action Complaint in February 2006.  On July 10, 2006, the Court
dismissed all claims against the Company and the individual defendants arising
under the Securities Exchange Act of 1934.





On June
1, 2007, a hearing before the Court was held regarding Plaintiffs’ pending
motion for class certification in the Consolidated Action.  On
September 4, 2007, the United States District Court for the Southern District of
New York issued an Order certifying a class consisting of all persons who
purchased the Company’s common




F-24


stock
pursuant, or traceable to, the Company’s initial public offering during the
Class Period and were damaged thereby.





On
January 16, 2009, the Court ordered that notice of the pending class action
lawsuit be sent to all persons who purchased the Company’s common stock during
the Class Period pursuant or traceable to the Company’s initial public
offering.  In March 2009, the notice of class action lawsuit was
mailed.  The
defendants and the lead plaintiffs have reached an agreement in principle to
settle the class action lawsuit without any admission of liability by the
defendants, subject to the execution of appropriate settlement documents and
court approval.  It is expected that the settlement funds will come
entirely out of insurance proceeds.  If approved, the settlement would
result in dismissal of all claims against us, our officers and directors and the
other defendants in the action with prejudice.  If the settlement is not
completed, then the parties may attempt to reach agreement on another settlement
or resume the litigation.





DenTek
Litigation




In April
2007, the Company filed a lawsuit in the U.S. District Court in the Southern
District of New York against DenTek Oral Care, Inc. (“DenTek”) alleging (i)
infringement of intellectual property associated with The Doctor’s NightGuard Dental Protector which
is used for the protection of teeth from nighttime teeth grinding; and (ii) the
violation of unfair competition and consumer protection laws.  On
October 4, 2007, the Company filed a Second Amended Complaint in which it named
Kelly M. Kaplan, Raymond Duane and C.D.S. Associates, Inc. ("CDS") as additional
defendants in this action and added other claims to the previously filed
complaint.  Kaplan and Duane were formerly employed by the
Company and CDS, a corporation controlled by Duane.  In the
Second Amended Complaint, the Company has asserted claims for patent, trademark
and copyright infringement, unfair competition, unjust enrichment, violation of
New York’s Consumer Protection Act, breach of contract, tortious interference
with contractual and business relations, civil conspiracy and trade secret
misappropriation.  On October 19, 2007, the Company filed a motion for
preliminary injunction, asking the Court to enjoin the defendants from (i)
continuing to improperly use the Company’s trade secrets; (ii) continuing to
breach any contractual agreements with the Company; and (iii) marketing and
selling any dental protector products or other products in which Duane
or Kaplan has had any involvement or provided any assistance to
DenTek.  A hearing date for the motion for preliminary injunction has
not yet been set by the Court.  Discovery requests have been served by
the parties and discovery is ongoing. The Court
has ordered the Company’s motion for a preliminary injunction to be held in
abeyance pending a determination of the motions to
dismiss.





On
September 30, 2008, after considering the defendants' motions to dismiss, the
Company's responses (including a motion to strike the motions to dismiss) and
the Magistrate's Report and Recommendations, the Court granted in part and
denied in part the defendants’ Motions to Dismiss, with the following claims
being dismissed without prejudice: (1) breach of the Proprietary Information and
Inventions Agreement (“PIIA”) against Duane; (2) breach of the PIIA
against Kaplan; (3) tortious interference with contractual relations
against DenTek; (4) tortious interference with contractual relations against
Duane; and (5) tortious interference with advantageous business
relationship/economic advantage against all defendants.  The Court
denied the Company’s Motions to Strike the Motions to Dismiss filed by DenTek
and CDS.  The following claims included in the Company’s Second
Amended Complaint remain in the action: (1) patent, trademark and copyright
infringement against DenTek; (2) unjust enrichment against DenTek; (3) violation
of a New York consumer protection statute against DenTek; (4) breach of the
consulting agreement against Duane; (5) breach of the PIIA against CDS; (6)
breach of the release against Kaplan and Duane; and (7) trade secret
misappropriation against DenTek, Kaplan, Duane and CDS.





In
October 2008, DenTek, Kaplan, Duane and CDS filed Answers to the
Second Amended Complaint.  In their Answers, each of
DenTek, Duane and CDS has asserted counterclaims against the
Company.  DenTek’s counterclaims allege false advertising, violation
of New York consumer protection statutes and unfair competition relating to
The Doctor’s® NightGuardTM
ClassicTM dental protector.  Duane’s counterclaim is a
contractual indemnity claim seeking to recover attorneys’ fees pursuant to the
release between Duane and
Dental Concepts LLC (“Dental Concepts”), a predecessor-in-interest to Medtech
Products Inc., plaintiff in the DenTek litigation and another wholly-owned
subsidiary of Prestige Brands Holdings, Inc.  CDS’s counterclaim
alleges a breach of the consulting agreement between CDS and Dental
Concepts.




F-25


In
November 2008, in response to the counterclaims filed against the Company by
DenTek, Duane and CDS, the Company filed a Motion to Dismiss and Strike the
counterclaims made by DenTek, which motion is currently pending before the
Court.  The Company is also continuing with its discovery efforts for
the remaining causes of action.  However, on March 24,
2009, Duane submitted a petition for a Chapter 7 bankruptcy with the United
States Bankruptcy Court for the District of Nevada which automatically
stayed the DenTek litigation in which Duane is
a defendant.  The Company is pursuing on an expedited basis the
lifting of the automatic stay and, on April 23, 2009, filed a Motion for
Relief from the Automatic Stay to Proceed with Pending Litigation (the DenTek
litigation).





The
Company’s management believes that the counterclaims asserted by
DenTek, Duane and CDS are legally deficient and that it has meritorious
defenses to the counterclaims.  The Company intends to vigorously
defend against the counterclaims; however, the Company cannot, at this time,
reasonably estimate the potential range of loss, if any.





In
addition to the matters described above, the Company is involved from time to
time in other routine legal matters and other claims incidental to its
business.  The Company reviews outstanding claims and proceedings
internally and with external counsel as necessary to assess probability and
amount of potential loss.  These assessments are re-evaluated at each
reporting period and as new information becomes available to determine whether a
reserve should be established or if any existing reserve should be
adjusted.  The actual cost of resolving a claim or proceeding
ultimately may be substantially different than the amount of the recorded
reserve.  In addition, because it is not permissible under GAAP to
establish a litigation reserve until the loss is both probable and estimable, in
some cases there may be insufficient time to establish a reserve prior to the
actual incurrence of the loss (upon verdict and judgment at trial, for example,
or in the case of a quickly negotiated settlement).  The Company
believes the resolution of routine matters and other incidental claims, taking
into account reserves and insurance, will not have a material adverse effect on
its business, financial condition or results from operations.





Lease
Commitments


The
Company has operating leases for office facilities and equipment in New
York and Wyoming, which expire at various dates through 2014.





The
following summarizes future minimum lease payments for the Company’s operating
leases (in thousands):




Facilities
                    
                    
                    Equipment
                    
                    
                    TotalYear Ending March 312010
                    
                    $
                    676
                    
                    
                    $
                    82
                    
                    
                    $
                    7582011
                    
                    
                    542
                    
                    
                    
                    53
                    
                    
                    
                    5952012
                    
                    
                    559
                    
                    
                    
                    34
                    
                    
                    
                    5932013
                    
                    
                    577
                    
                    
                    
                    --
                    
                    
                    
                    5772014
                    
                    
                    596
                    
                    
                    
                    --
                    
                    
                    
                    596Thereafter
                    
                    
                    50
                    
                    
                    
                    --
                    
                    
                    
                    50$
                    3,000
                    
                    
                    $
                    169
                    
                    
                    $
                    3,169





Rent
expense for 2009, 2008 and 2007 was $612,000, $597,000 and $565,000,
respectively.





Purchase
Commitments


The
Company has entered into a 10 year supply agreement for the exclusive
manufacture of a portion of one of its household cleaning
products.  Although the Company is committed under the supply
agreement to pay the minimum amounts set forth in the table below, the Company
estimates that it will purchase in excess of $270.0




F-26


million
of the product during the term of the agreement.





(In
      thousands)Year Ending March 312010
                          
                          $
                          7,0342011
                          
                          
                          10,7322012
                          
                          
                          4,3722013
                          
                          
                          1,1702014
                          
                          
                          1,127Thereafter
                          
                          
                          5,347$
                          29,782








16.
            Concentrations
      of Risk





The
Company’s sales are concentrated in the areas of over-the-counter healthcare,
household cleaning and personal care products.  The Company sells its
products to mass merchandisers, food and drug accounts, and dollar and club
stores.  During 2009, 2008 and 2007, approximately 59%, 58% and 57%,
respectively, of the Company’s total sales were derived from its four major
brands.  During 2009, 2008 and 2007, approximately 26%, 23% and 24%,
respectively, of the Company’s net sales were made to one
customer.  At March 31, 2009, approximately 23% of accounts receivable
were owed by the same customer.





The
Company manages product distribution in the continental United States through a
main distribution center in St. Louis, Missouri.  A serious
disruption, such as a flood or fire, to the main distribution center could
damage the Company’s inventories and could materially impair the Company’s
ability to distribute its products to customers in a timely manner or at a
reasonable cost.  The Company could incur significantly higher costs
and experience longer lead times associated with the distribution of its
products to its customers during the time that it takes the Company to reopen or
replace its distribution center.  As a result, any such disruption
could have a material adverse affect on the Company’s sales and
profitability.





The
Company has relationships with over 40 third-party manufacturers.  Of
those, the top 10 manufacturers produced items that accounted for approximately
81% of the Company’s gross sales for 2009 compared to 80% in
2008.  The Company does not have long-term contracts with
manufacturers of product of approximately 28% of our gross sales for 2009
compared to 23% in 2009.  The lack of manufacturing agreements for
these products exposes the Company to the risk that a manufacturer could stop
producing the Company’s products at any time for any reason, increase the cost
we are charged for our products, or fail to provide the Company with the level
of products the Company needs to meet its customers’ demands.  Should
one or more of our manufacturers stop producing product on our behalf or
increase our costs in excess of our ability to increase our sales price, it
could have a material adverse effect on our business, financial condition and
results from operations.








17.
            Business
      Segments





Segment
information has been prepared in accordance with FASB Statement No. 131,
“Disclosures about Segments of an Enterprise and Related
Information.”  The Company’s operating and reportable segments consist
of (i) Over-the-Counter Healthcare, (ii) Household Cleaning and (iii) Personal
Care.




F-27


There
were no inter-segment sales or transfers during any of the periods
presented.  The Company evaluates the performance of its operating
segments and allocates resources to them based primarily on contribution
margin.  The table below summarizes information about the Company’s
operating and reportable segments.





Year
      Ended March 31, 2009Over-the-
                          Counter
                        
                        
                        Household
                        
                        
                        PersonalHealthcare
                        
                        
                        Cleaning
                        
                        
                        Care
                        
                        
                        Consolidated(In
      Thousands)Net
      sales
                        
                        $
                        176,878
                        
                        
                        $
                        113,923
                        
                        
                        $
                        19,704
                        
                        
                        $
                        310,505Other
      revenues
                        
                        
                        97
                        
                        
                        
                        2,092
                        
                        
                        
                        21
                        
                        
                        
                        2,210Total
      revenues
                        
                        
                        176,975
                        
                        
                        
                        116,015
                        
                        
                        
                        19,725
                        
                        
                        
                        312,715Cost
      of sales
                        
                        
                        63,459
                        
                        
                        
                        74,457
                        
                        
                        
                        11,529
                        
                        
                        
                        149,445Gross
      profit
                        
                        
                        113,516
                        
                        
                        
                        41,558
                        
                        
                        
                        8,196
                        
                        
                        
                        163,270Advertising
      and promotion
                        
                        
                        29,695
                        
                        
                        
                        7,625
                        
                        
                        
                        779
                        
                        
                        
                        38,099Contribution
      margin
                        
                        $
                        83,821
                        
                        
                        $
                        33,933
                        
                        
                        $
                        7,417
                        
                        
                        
                        125,171Other
      operating expenses
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        43,107Impairment
      of goodwill and intangibles
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        249,590Operating
      loss
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (167,526
                        )Other
      expenses
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        28,436Income
      tax benefit
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (9,186
                        )Net
      loss
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        $
                        (186,776
                        )








Year
      Ended March 31, 2008Over-the-
                      Counter
                    
                    
                    Household
                    
                    
                    PersonalHealthcare
                    
                    
                    Cleaning
                    
                    
                    Care
                    
                    
                    Consolidated(In
      Thousands)Net
      sales
                    
                    $
                    183,641
                    
                    
                    $
                    119,224
                    
                    
                    $
                    21,756
                    
                    
                    $
                    324,621Other
      revenues
                    
                    
                    51
                    
                    
                    
                    1,903
                    
                    
                    
                    28
                    
                    
                    
                    1,982Total
      revenues
                    
                    
                    183,692
                    
                    
                    
                    121,127
                    
                    
                    
                    21,784
                    
                    
                    
                    326,603Cost
      of sales
                    
                    
                    69,344
                    
                    
                    
                    75,459
                    
                    
                    
                    13,293
                    
                    
                    
                    158,096Gross
      profit
                    
                    
                    114,348
                    
                    
                    
                    45,668
                    
                    
                    
                    8,491
                    
                    
                    
                    168,507Advertising
      and promotion
                    
                    
                    26,188
                    
                    
                    
                    7,483
                    
                    
                    
                    994
                    
                    
                    
                    34,665Contribution
      margin
                    
                    $
                    88,160
                    
                    
                    $
                    38,185
                    
                    
                    $
                    7,497
                    
                    
                    
                    133,842Other
      operating expenses
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    42,428Operating
      income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    91,414Other
      expenses
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    37,206Provision
      for income taxes
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    20,289Net
      income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    $
                    33,919








F-28


Year
      Ended March 31, 2007Over-the-
                      Counter
                    
                    
                    Household
                    
                    
                    PersonalHealthcare
                    
                    
                    Cleaning
                    
                    
                    Care
                    
                    
                    Consolidated(In
      Thousands)Net
      sales
                    
                    $
                    174,704
                    
                    
                    $
                    117,249
                    
                    
                    $
                    24,894
                    
                    
                    $
                    316,847Other
      revenues
                    
                    
                    --
                    
                    
                    
                    1,787
                    
                    
                    
                    --
                    
                    
                    
                    1,787Total
      revenues
                    
                    
                    174,704
                    
                    
                    
                    119,036
                    
                    
                    
                    24,894
                    
                    
                    
                    318,634Cost
      of sales
                    
                    
                    65,601
                    
                    
                    
                    73,002
                    
                    
                    
                    14,544
                    
                    
                    
                    153,147Gross
      profit
                    
                    
                    109,103
                    
                    
                    
                    46,034
                    
                    
                    
                    10,350
                    
                    
                    
                    165,487Advertising
      and promotion
                    
                    
                    24,201
                    
                    
                    
                    6,679
                    
                    
                    
                    1,125
                    
                    
                    
                    32,005Contribution
      margin
                    
                    $
                    84,902
                    
                    
                    $
                    39,355
                    
                    
                    $
                    9,225
                    
                    
                    
                    133,482Other
      operating expenses
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    38,800Operating
      income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    94,682Other
      expenses
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    39,506Provision
      for income taxes
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    19,098Net
      income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    $
                    36,078








During
2009 and 2008, approximately 96% of the Company’s sales were made to customers
in the United States and Canada, while during 2007 approximately 95% of the
Company’s sales were made to customers in the United States and
Canada.  Other than the United States, no individual geographical area
accounted for more than 10% of net sales in any of the periods
presented.  At March 31, 2009, substantially all of the Company’s
long-term assets were located in the United States of America and have been
allocated to the operating segments as follows:





Over-the-
                        Counter
                      
                      
                      Household
                      
                      
                      Personal(In
      Thousands)
                      
                      Healthcare
                      
                      
                      Cleaning
                      
                      
                      Care
                      
                      
                      ConsolidatedGoodwill
                      
                      $
                      104,100
                      
                      
                      $
                      7,389
                      
                      
                      $
                      2,751
                      
                      
                      $
                      114,240Intangible
      assetsIndefinite
      lived
                      
                      
                      345,467
                      
                      
                      
                      154,709
                      
                      
                      
                      --
                      
                      
                      
                      500,176Finite
      lived
                      
                      
                      67,564
                      
                      
                      
                      --
                      
                      
                      
                      9,869
                      
                      
                      
                      77,433413,031
                      
                      
                      
                      154,709
                      
                      
                      
                      9,869
                      
                      
                      
                      577,609$
                      517,131
                      
                      
                      $
                      162,098
                      
                      
                      $
                      12,620
                      
                      
                      $
                      691,849





F-29





18.
            Unaudited
      Quarterly Financial Information





Unaudited
quarterly financial information for 2009 and 2008 is as follows:





Year
Ended March 31, 2009


Quarterly
      Period Ended(In
      thousands, except for
                      per
      share data)
                    
                    June
      30,
                      2008
                    
                    
                    September
      30,
                      2008
                    
                    
                    December
      31,
                      2008
                    
                    
                    March
      31,
                      2009Total
      revenues
                    
                    $
                    73,534
                    
                    
                    $
                    88,051
                    
                    
                    $
                    80,278
                    
                    
                    $
                    70,852Cost
      of sales
                    
                    
                    34,272
                    
                    
                    
                    41,792
                    
                    
                    
                    37,817
                    
                    
                    
                    35,564Gross
      profit
                    
                    
                    39,262
                    
                    
                    
                    46,259
                    
                    
                    
                    42,461
                    
                    
                    
                    35,288Operating
      expensesAdvertising
      and promotion
                    
                    
                    7,319
                    
                    
                    
                    13,638
                    
                    
                    
                    11,428
                    
                    
                    
                    5,714General
      and administrative
                    
                    
                    7,973
                    
                    
                    
                    9,363
                    
                    
                    
                    8,311
                    
                    
                    
                    6,241Depreciation
      and amortization
                    
                    
                    2,756
                    
                    
                    
                    2,757
                    
                    
                    
                    2,760
                    
                    
                    
                    2,946Impairment
      of goodwill and intangible assets
                    
                    
                    --
                    
                    
                    
                    --
                    
                    
                    
                    --
                    
                    
                    
                    249,59018,048
                    
                    
                    
                    25,758
                    
                    
                    
                    22,499
                    
                    
                    
                    264,491Operating
      income (loss)
                    
                    
                    21,214
                    
                    
                    
                    20,501
                    
                    
                    
                    19,962
                    
                    
                    
                    (229,203
                    )Net
      interest expense
                    
                    
                    8,683
                    
                    
                    
                    6,779
                    
                    
                    
                    7,051
                    
                    
                    
                    5,923Income
      (loss) before income taxes
                    
                    
                    12,531
                    
                    
                    
                    13,722
                    
                    
                    
                    12,911
                    
                    
                    
                    (235,126
                    )Provision
      (benefit) for income taxes
                    
                    
                    4,750
                    
                    
                    
                    5,200
                    
                    
                    
                    4,893
                    
                    
                    
                    (24,029
                    )Net
      income (loss)
                    
                    $
                    7,781
                    
                    
                    $
                    8,522
                    
                    
                    $
                    8,018
                    
                    
                    $
                    (211,097
                    )Net
      income (loss) per share:Basic
                    
                    $
                    0.16
                    
                    
                    $
                    0.17
                    
                    
                    $
                    0.16
                    
                    
                    $
                    (4.22
                    )Diluted
                    
                    $
                    0.16
                    
                    
                    $
                    0.17
                    
                    
                    $
                    0.16
                    
                    
                    $
                    (4.22
                    )Weighted
      average shares outstanding:Basic
                    
                    
                    49,880
                    
                    
                    
                    49,924
                    
                    
                    
                    49,960
                    
                    
                    
                    49,976Diluted
                    
                    
                    50,035
                    
                    
                    
                    50,037
                    
                    
                    
                    50,040
                    
                    
                    
                    49,976





F-30





Year
Ended March 31, 2008


Quarterly
      Period Ended(In
      thousands, except for
                      per
      share data)
                    
                    June
      30,
                      2007
                    
                    
                    September
      30,
                      2007
                    
                    
                    December
      31,
                      2007
                    
                    
                    March
      31,
                      2008Total
      revenues
                    
                    $
                    78,611
                    
                    
                    $
                    87,337
                    
                    
                    $
                    80,222
                    
                    
                    $
                    80,433Cost
      of sales
                    
                    
                    37,322
                    
                    
                    
                    42,770
                    
                    
                    
                    38,783
                    
                    
                    
                    39,221Gross
      profit
                    
                    
                    41,289
                    
                    
                    
                    44,567
                    
                    
                    
                    41,439
                    
                    
                    
                    41,212Operating
      expensesAdvertising
      and promotion
                    
                    
                    7,786
                    
                    
                    
                    11,017
                    
                    
                    
                    9,572
                    
                    
                    
                    6,290General
      and administrative
                    
                    
                    7,646
                    
                    
                    
                    10,184
                    
                    
                    
                    6,209
                    
                    
                    
                    7,375Depreciation
      and amortization
                    
                    
                    2,751
                    
                    
                    
                    2,756
                    
                    
                    
                    2,753
                    
                    
                    
                    2,75418,183
                    
                    
                    
                    23,957
                    
                    
                    
                    18,534
                    
                    
                    
                    16,419Operating
      income
                    
                    
                    23,106
                    
                    
                    
                    20,610
                    
                    
                    
                    22,905
                    
                    
                    
                    24,793Net
      interest expense
                    
                    
                    9,687
                    
                    
                    
                    9,595
                    
                    
                    
                    9,326
                    
                    
                    
                    8,598Income
      before income taxes
                    
                    
                    13,419
                    
                    
                    
                    11,015
                    
                    
                    
                    13,579
                    
                    
                    
                    16,195Provision
      for income taxes
                    
                    
                    5,099
                    
                    
                    
                    4,186
                    
                    
                    
                    5,160
                    
                    
                    
                    5,844Net
      income
                    
                    $
                    8,320
                    
                    
                    $
                    6,829
                    
                    
                    $
                    8,419
                    
                    
                    $
                    10,351Net
      income per share:Basic
                    
                    $
                    0.17
                    
                    
                    $
                    0.14
                    
                    
                    $
                    0.17
                    
                    
                    $
                    0.21Diluted
                    
                    $
                    0.17
                    
                    
                    $
                    0.14
                    
                    
                    $
                    0.17
                    
                    
                    $
                    0.21Weighted
      average shares outstanding:Basic
                    
                    
                    49,660
                    
                    
                    
                    49,970
                    
                    
                    
                    49,799
                    
                    
                    
                    49,842Diluted
                    
                    
                    50,038
                    
                    
                    
                    50,046
                    
                    
                    
                    50,035
                    
                    
                    
                    50,037





F-31


SCHEDULE
      II


VALUATION
AND QUALIFYING ACCOUNTS








(In
      Thousands)
                
                Balance
      at
                  Beginning
      of
                  Year
                
                
                Amounts
                  Charged
      to
                  Expense
                
                
                
                
                
                Deductions
                
                
                Other
                
                
                
                Balance
      at
                  End
      of
                  YearYear
      Ended March 31, 2009Reserves
      for sales returns and allowance
                
                $
                2,052
                
                
                $
                14,086
                
                
                
                
                
                $
                (13,681
                )
                
                $
                --
                
                
                
                $
                2,457Reserves
      for trade promotions
                
                
                1,867
                
                
                
                18,277
                
                
                
                
                
                
                (17,704
                )
                
                
                --
                
                
                
                
                2,440Reserves
      for consumer coupon redemptions
                
                
                215
                
                
                
                1,480
                
                
                
                
                
                
                (1,398
                )
                
                
                --
                
                
                
                
                297Allowance
      for doubtful accounts
                
                
                25
                
                
                
                130
                
                
                
                
                
                
                (35
                )
                
                
                --
                
                
                
                
                120Allowance
      for inventory obsolescence
                
                
                1,445
                
                
                
                2,215
                
                
                
                
                
                
                (2,268
                )
                
                
                --
                
                
                
                
                1,392Year
      Ended March 31, 2008Reserves
      for sales returns and allowance
                
                $
                1,753
                
                
                $
                18,785
                
                
                
                (1)
                
                
                $
                (18,486
                )
                
                $
                --
                
                
                
                $
                2,052Reserves
      for trade promotions
                
                
                2,161
                
                
                
                3,074
                
                
                
                
                
                
                
                (3,368
                )
                
                
                --
                
                
                
                
                1,867Reserves
      for consumer coupon redemptions
                
                
                401
                
                
                
                1,926
                
                
                
                
                
                
                
                (2,112
                )
                
                
                --
                
                
                
                
                215Allowance
      for doubtful accounts
                
                
                35
                
                
                
                124
                
                
                
                
                
                
                
                (134
                )
                
                
                --
                
                
                
                
                25Allowance
      for inventory obsolescence
                
                
                1,854
                
                
                
                1,404
                
                
                
                
                
                
                
                (1,813
                )
                
                
                --
                
                
                
                
                1,445Year
      Ended March 31, 2007Reserves
      for sales returns and allowance
                
                $
                1,868
                
                
                $
                12,611
                
                
                
                
                
                
                $
                (12,726
                )
                
                $
                --
                
                
                
                $
                1,753Reserves
      for trade promotions
                
                
                1,671
                
                
                
                2,974
                
                
                
                
                
                
                
                (2,484
                )
                
                
                --
                
                
                
                
                2,161Reserves
      for consumer coupon redemptions
                
                
                283
                
                
                
                2,674
                
                
                
                
                
                
                
                (2,556
                )
                
                
                --
                
                
                
                
                401Allowance
      for doubtful accounts
                
                
                100
                
                
                
                100
                
                
                
                
                
                
                
                (165
                )
                
                
                --
                
                
                
                
                35Allowance
      for inventory obsolescence
                
                
                1,019
                
                
                
                3,096
                
                
                
                
                
                
                
                (2,397
                )
                
                
                136
                
                (2)
                
                
                1,854





(1)
            The
      Company increased its allowance for sales returns by $2.2
      million as a result of the voluntary withdrawal from the marketplace
      of two medicated pediatric cough and cold products marketed under the
      Little Remedies
      brand.  This action was part of an industry-wide voluntary
      withdrawal of these items pending the final results of an FDA safety and
      efficacy review.





(2)
            As
      a result of the acquisition of Dental Concepts LLC, the Company recorded
      an allowance for inventory obsolescence in purchase
      accounting.




F-32


EXHIBIT
INDEX








Exhibit No.
              
              Description3.1
              
              Amended
      and Restated Certificate of Incorporation of Prestige Brands
      Holdings, Inc. (filed as Exhibit 3.1 to Prestige Brands
      Holdings, Inc.’s Form S-1/A filed on February 8, 2005).+3.2
              
              Amended
      and Restated Bylaws of Prestige Brands Holdings, Inc., as
      amended  (filed as Exhibit 3.1 to Prestige Brands Holdings,
      Inc.’s Form 10-Q filed on August 9, 2006).+4.1
              
              Form of
      stock certificate for common stock (filed as Exhibit 4.1 to Prestige
      Brands Holdings, Inc.’s Form S-1/A filed on January 26,
      2005).+4.2
              
              Indenture,
      dated April 6, 2004, among Prestige Brands, Inc., each Guarantor
      thereto and U.S. Bank National Association, as Trustee (filed as
      Exhibit 4.1 to Prestige Brands, Inc.’s Form S-4 filed on July 6,
      2004).+4.3
              
              Form
      of 91⁄4% Senior Subordinated Note due 2012 (contained in Exhibit 4.2 to this
      Annual Report on Form 10-K).+4.4
              
              Supplemental
      Indenture, dated as of October 6, 2004, among Vetco, Inc., Prestige
      Brands, Inc. and U.S. Bank, National Association (filed as Exhibit 4.1 to
      Prestige Brands Holdings, Inc.’s Form 10-Q filed on February 9,
      2007).+4.5
              
              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 (filed as Exhibit 4.2 to Prestige Brands Holdings, Inc.’s Form 10-Q
      filed on February 9, 2007).+10.1
              
              Credit
      Agreement, dated April 6, 2004, among Prestige Brands, Inc.,
      Prestige Brands International, LLC, the Lenders thereto, the Issuers
      thereto, Citicorp North America, Inc., as Administrative Agent, Bank
      of America, N.A., as Syndication Agent, and Merrill Lynch Capital, a
      division of Merrill Lynch Business Financial Services Inc., as
      Documentation Agent (filed as Exhibit 10.1 to Prestige Brands
      Holdings, Inc.’s Form S-1 filed on July 28, 2004).+10.2
              
              Form of
      Amendment No. 1 to the Credit Agreement, dated as of April 6,
      2004, among Prestige Brands, Inc., Prestige Brands International,
      LLC, the Lenders thereto, the Issuers thereto, Citicorp North
      America, Inc., as Administrative Agent, Bank of America, N.A., as
      Syndication Agent, and Merrill Lynch Capital, a division of Merrill Lynch
      Business Financial Services, Inc., as Documentation Agent (filed
      as Exhibit 10.1.1 to Prestige Brands Holdings, Inc.’s Form S-1/A filed on
      February 8, 2005).+10.3
              
              Pledge
      and Security Agreement, dated April 6, 2004, by Prestige
      Brands, Inc. and each of the Grantors party thereto, in favor of
      Citicorp North America, Inc. as Administrative Agent (filed as
      Exhibit 10.2 to Prestige Brands Holdings, Inc.’s Form S-1 filed on July
      28, 2004).+10.4
              
              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 (filed as Exhibit 10.1 to Prestige Brands Holdings, Inc.’s Form 10-Q
      filed on February 9, 2007).+10.5
              
              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 (filed as Exhibit
      10.2 to Prestige Brands Holdings, Inc.’s Form 10-Q filed on February 9,
      2007).+10.6
              
              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 (filed as Exhibit 10.3 to Prestige Brands
      Holdings, Inc.’s Form 10-Q filed on February 9, 2007).+








10.7
            
            Securityholders
      Agreement, dated February 6, 2004, among Medtech/Denorex, LLC (now
      known as Prestige International Holdings, LLC), GTCR Fund VIII, L.P.,
      GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P., GTCR Capital
      Partners, L.P., the TCW/Crescent Purchasers and the TCW/Crescent Lenders
      thereto, each Executive thereto and each of the Other Securityholders
      thereto (filed as Exhibit 10.11 to Prestige Brands Holdings, Inc.’s Form
      S-1 filed on July 28, 2004).+10.8
            
            First
      Amendment and Acknowledgement to Securityholders Agreement, dated
      April 6, 2004, to the Securityholders Agreement, dated
      February 6, 2004, among Medtech/Denorex, LLC (now known as Prestige
      International Holdings, LLC), GTCR Fund VIII, L.P., GTCR
      Fund VIII/B, L.P., GTCR Co-Invest II, L.P., GTCR Capital
      Partners, L.P., the TCW/Crescent Purchasers and the TCW/Crescent Lenders
      thereto, each Executive thereto and each of the Other Securityholders
      thereto (filed as Exhibit 10.12 to Prestige Brands Holdings, Inc.’s Form
      S-1 filed on July 28, 2004).+10.9
            
            Registration
      Rights Agreement, dated February 6, 2004, among Medtech/Denorex, LLC
      (now known as Prestige International Holdings, LLC), GTCR Fund VIII,
      L.P., GTCR Fund VIII/B, L.P., GTCR Co-Invest II, L.P., GTCR
      Capital Partners, L.P., the TCW/Crescent Purchasers and the TCW/Crescent
      Lenders thereto, each Executive thereto and each of the Other
      Securityholders thereto (filed as Exhibit 10.13 to Prestige Brands
      Holdings, Inc.’s Form S-1 filed on July 28, 2004).+10.10
            
            First
      Amendment and Acknowledgement to Registration Rights Agreement, dated
      April 6, 2004, to the Registration Rights Agreement, dated
      February 6, 2004, among Medtech/Denorex, LLC (now known as Prestige
      International Holdings, LLC), GTCR Fund VIII, L.P., GTCR
      Fund VIII/B, L.P., GTCR Co-Invest II, L.P., GTCR Capital
      Partners, L.P., the TCW/Crescent Purchasers and the TCW/Crescent Lenders
      thereto, each Executive thereto and each of the Other Securityholders
      thereto (filed as Exhibit 10.14 to Prestige Brands Holdings, Inc.’s
      Form S-1 filed on July 28, 2004).+10.11
            
            Omnibus
      Consent and Amendment to Securityholders Agreement, Registration Rights
      Agreement, Senior Management Agreements and Unit Purchase Agreement, dated
      as of July 6, 2004 (filed as Exhibit 10.29.1 to Prestige Brands
      Holdings, Inc.’s Form S-1/A filed on November 12, 2004).+10.12
            
            Form of
      Exchange Agreement by and among Prestige Brands Holdings, Inc.,
      Prestige International Holdings, LLC and the common
      unit holders listed on the signature pages thereto (filed
      as Exhibit 10.39 to Prestige Brands Holdings, Inc.’s Form S-1/A filed on
      January 26, 2005).+10.13
            
            Amended
      and Restated Employment Agreement, dated as of January 1, 2009, by and
      between Prestige Brands Holdings, Inc. and Mark Pettie (amended and
      restated solely for IRC 409A compliance purposes which amendments were not
      material to the prior employment agreement).*@10.14
            
            Form of
      Amended and Restated Senior Management Agreement, dated as of January 28,
      2005, by and among Prestige International Holdings, LLC, Prestige
      Brands Holdings, Inc., Prestige Brands, Inc., and Peter J.
      Anderson (filed as Exhibit 10.29.7 to Prestige Brands Holdings,
      Inc.’s Form S-1/A filed on January 26, 2005).+@10.15
            
            Executive
      Employment Agreement, dated as of January 17, 2006, between Prestige
      Brands Holdings, Inc. and Charles N. Jolly (filed as Exhibit 10.35 to
      Prestige Brands Holdings, Inc.’s Form 10-K filed on June 14,
      2006).+@10.16
            
            Letter
      Agreement between Prestige Brands Holdings, Inc. and James E. Kelly (filed
      as Exhibit 10.17 to Prestige Brands Holdings, Inc.’s Form 10-K filed on
      June 14, 2007).+@10.17
            
            Executive
      Employment Agreement, dated as of August 21, 2006, between Prestige Brands
      Holdings, Inc. and Jean A. Boyko (filed as Exhibit 10.1 to Prestige Brands
      Holdings, Inc.’s Form 10-Q filed on November 9, 2006).+@10.18
            
            Executive
      Employment Agreement, dated as of October 1, 2007, between Prestige Brands
      Holdings, Inc. and John Parkinson (filed as Exhibit 10.3 to Prestige
      Brands Holdings, Inc.’s Form 10-Q filed on February 8,
      2008).+@








10.19
            
            Form of
      Amended and Restated Senior Management Agreement, dated as of January 28,
      2005, by and among Prestige International Holdings, LLC, Prestige Brands
      Holdings, Inc., Prestige Brands, Inc., and Charles Shrank (filed
      as Exhibit 10.29.10 to Prestige Brands Holdings, Inc.’s Form S-1/A filed
      on January 26, 2005).+@10.20
            
            Prestige
      Brands Holdings, Inc. 2005 Long-Term Equity Incentive
      Plan (filed as Exhibit 10.38 to Prestige Brands Holdings, Inc.’s Form
      S-1/A filed on January 26, 2005).+#10.21
            
            Form
      of Restricted Stock Grant Agreement (filed as Exhibit 10.1 to Prestige
      Brands Holdings, Inc.’s Form 10-Q filed on August 9, 2005).+#10.22
            
            Form
      of Performance Share Grant Agreement (filed as Exhibit 10.3 to Prestige
      Brands Holdings, Inc.’s Form 10-Q filed on November 9,
      2006).+#10.23
            
            Form
      of Nonqualified Stock Option Agreement (filed as Exhibit 10.28 to Prestige
      Brands Holdings, Inc.’s Form 10-K filed on June 14, 2007).+#10.24
            
            Form
      of Award Agreement for Restricted Stock Units.*#10.25
            
            Form
      of Director Indemnification Agreement.*@10.26
            
            Form
      of Officer Indemnification Agreement.*@10.27
            
            Contract
      Manufacturing Agreement, dated February 1, 2001, among The
      Procter & Gamble Manufacturing Company, P&G International
      Operations SA, Prestige Brands International, Inc. and Prestige
      Brands International (Canada) Corp. (filed as Exhibit 10.31 to
      Prestige Brands, Inc.’s Form S-4/A filed on August 4, 2004).+
      †10.28
            
            Patent
      and Technology License Agreement, dated October 2, 2001, between The
      Procter & Gamble Company and Prestige Brands
      International, Inc. (filed as Exhibit 10.29 to Prestige Brands,
      Inc.’s Form S-4/A filed on August 19, 2004).+ †10.29
            
            Amendment
      No. 4 and Restatement of Contract Manufacturing Agreement, dated
      May 1, 2002, by and between The Procter & Gamble Company and
      Prestige Brands International, Inc. (filed as Exhibit 10.33 to
      Prestige Brands, Inc.’s Form S-4/A filed on August 4, 2004).+
      †10.30
            
            Amendment
      No. 1 dated April 30, 2003 to the Patent and Technology License
      Agreement, dated October 2, 2001, between The Procter &
      Gamble Company and Prestige Brands International, Inc. (filed as
      Exhibit 10.30 to Prestige Brands, Inc.’s Form S-4/A filed on August 19,
      2004).+10.31
            
            Trademark
      License and Option to Purchase Agreement, dated September 8, 2005, by and
      among The Procter & Gamble Company and Prestige Brands Holdings, Inc.
      (filed as Exhibit 10.1 to Prestige Brands Holdings, Inc.’s Form 8-K filed
      on September 12, 2005).+10.32
            
            Exclusive
      Supply Agreement, dated as of September 18, 2006, among Medtech Products
      Inc., Pharmacare Limited, Prestige Brands Holdings, Inc. and Aspen
      Pharmacare Holdings Limited (filed as Exhibit 10.2 to Prestige Brands
      Holdings, Inc.’s Form 10-Q filed on November 9, 2006).+10.33
            
            Contract
      Manufacturing Agreement, dated December 21, 2007, between Medtech Products
      Inc. and Pharmaspray B.V. (filed as Exhibit 10.1 to Prestige Brands
      Holdings, Inc.’s Form 10-Q filed on February 8, 2008).+10.34
            
            Contract
      Manufacturing Agreement, dated December 21, 2007, between Medtech Products
      Inc. and Pharmaspray B.V. (filed as Exhibit 10.2 to Prestige Brands
      Holdings, Inc.’s Form 10-Q filed on February 8, 2008).+10.35
            
            Supply
      Agreement, dated May 15, 2008, by and between Fitzpatrick Bros., Inc. and
      The Spic and Span Company (filed as Exhibit 10.1 to Prestige Brands
      Holdings, Inc.’s Form 10-Q filed on August 11, 2008).+†








21.1
            
            Subsidiaries
      of the Registrant.*23.1
            
            Consent
      of PricewaterhouseCoopers LLP.*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, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*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, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
            
            Certification
      of Principal Executive Officer of Prestige Brands Holdings, Inc. pursuant
      to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350
      of Chapter 63 of Title 18 of the United States Code, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
            
            Certification
      of Principal Financial Officer of Prestige Brands Holdings, Inc. pursuant
      to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350
      of Chapter 63 of Title 18 of the United States Code, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.*





*
              Filed
      herewith.





†
              Certain
      confidential portions have been omitted pursuant to a confidential
      treatment request separately filed with the Securities and Exchange
      Commission.+
              Incorporated
      herein by reference.@
              Represents
      a management contract.#
              Represents
      a compensatory plan.