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,
2010





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.           Yeso Noþ





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


Act.           Yeso Noþ





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.  Yesþ
Noo





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 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 is a shell company (as defined in Rule
12b-2 of the Act).  Yeso Noþ





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, 2009 was $352.2
million.





As of
June 4, 2010, the Registrant had 50,049,150 shares of common stock
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE


Portions
of the Registrant’s Definitive Proxy Statement for the 2010 Annual Meeting of
Stockholders (the “2010 Proxy Statement”) presently scheduled for August 3, 2010
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
            15Item
      1B.
            Unresolved
      Staff Comments
            25Item
      2.
            Properties
            25Item
      3.
            Legal
      Proceedings
            25Item
      4.
            [Removed
      and Reserved]
            25Part
      IIItem
      5.
            Market
      for Registrants' Common Equity, Related Stockholder
              Matters
      and Issuer Purchases of Equity Securities
            26Item
      6.
            Selected Financial
      Data
            28Item
      7.
            Management's
      Discussion and Analysis of Financial Condition
              and
      Results of Operations
            29Item
      7A.
            Quantitative
      and Qualitative Disclosures About Market Risk
            50Item
      8.
            Financial
      Statements and Supplementary Data
            50Item
      9.
            Changes
      in and Disagreements with Accountants on Accounting
              and
      Financial Disclosure
            50Item
      9A.
            Controls
      and Procedures
            51Item
      9B.
            Other
      Information
            51Part
      IIIItem
      10.
            Directors,
      Executive Officers and Corporate Governance
            52Item
      11.
            Executive
      Compensation
            52Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management
              and
      Related Stockholder Matters
            52Item
      13.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            52Item
      14.
            Principal
      Accounting Fees and Services
            52Part
      IVItem
      15.
            Exhibits
      and Financial Statement Schedules
            53TRADEMARKS
      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 italicized our trademarks or trade names when they
      appear 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. “2010”) 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 97.1%, 97.0% and 96.7% of our net revenues for 2010,
2009 and 2008, respectively.


Major Brands
            
            Market
              Position (1)
            
            Market Segment (2)
            
            Market
              Share (3)
              (%)
            
            ACV(4)
              (%)Over-the-Counter
      Healthcare:Chloraseptic®
            
            #1
            
            Sore
      Throat Liquids/Lozenges
            
            38.6
            
            94Clear
      Eyes®
            
            #2
            
            Eye
      Allergy/Redness Relief
            
            16.0
            
            88Compound
      W®
            
            #2
            
            Wart
      Removal
            
            32.9
            
            90Wartner®
            
            #3
            
            Wart
      Removal
            
            4.8
            
            23The
      Doctor’s® NightGuardTM
            
            #2
            
            Bruxism
      (Teeth Grinding)
            
            32.0
            
            41The
      Doctor’s® Brushpicks®
            
            #2
            
            Interdental
      Picks
            
            22.0
            
            58Little
      Remedies®
            
            #5
            
            Pediatric
      Healthcare
            
            2.8
            
            84Murine®
            
            #3
            
            Personal
      Ear Care
            
            12.3
            
            73New-Skin®
            
            #1
            
            Liquid
      Bandages
            
            54.4
            
            84Dermoplast®
            
            #3
            
            Pain
      Relief Sprays
            
            15.2
            
            63Household
      Cleaning:Comet®
            
            #2
            
            Abrasive
      Tub and Tile Cleaner
            
            33.6
            
            99Chore
      Boy®
            
            #1
            
            Soap
      Free Metal Scrubbers
            
            29.8
            
            37Spic
      and Span®
            
            #6
            
            Dilutable
      All Purpose Cleaner
            
            3.0
            
            50Personal
      Care:Cutex®
            
            #1
            
            Nail
      Polish Remover
            
            24.2
            
            77





(1)
            The
      data included in this Annual Report on Form 10-K with regard to 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,
      Symphony IRI Group, Inc., formerly known as 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.(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 21,
    2010.





(4)
            “ACV”
      refers to the All Commodity Volume Food Drug Mass Index, as calculated by
      Information Resources for the 52 weeks ended March 21,
      2010.  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 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 generally would
      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 and of the importance of those products to major
      retailers.




-1-





Our
products are sold through multiple channels, including mass merchandisers, drug,
grocery, dollar and club stores, which reduces our exposure to any single
distribution channel.





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 Part I, 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-


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 or increased advertising,
marketing and trade support 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 2010 we introduced,
under our Little
Remedies pediatric product line, two new products called Sore Throat
Relief and Mucus Relief and restaged our entireChlorasepticlozenge product
line with a new soothing liquid center formula.  In addition, our
Clear Eyes product line
added the benefit claim of up to 8 hour soothing comfort on the
packaging.  In 2009, we introducedChloraseptic Allergen Block
andLittle Allergies
Allergen Block, 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 2008 when we
introducedComet Mildew
SprayGel, a high viscosity mildew stain remover spray.  During 2008,
we also restagedClear
Eyes for Dry Eyes ACR Relief asClear Eyes for Itchy Eyes to
address the needs of allergy sufferers.   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 and may be
discontinued.





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
      Total Revenues
            CapEx
      %
              To
      Total Revenues2010
            52.1
            11.3
            0.22009
            52.4
            10.5
            0.22008
            51.8
            10.0
            0.2





On
October 29, 2009, we divested our three shampoo brands- Denorex, Prell and Zincon. (See Note 2 to our
consolidated financial statements.)  As a result of the divestiture, the
shampoo brands are presented as discontinued operations in the Consolidated
Financial Statements for all periods presented. Unless otherwise noted, the
Annual Report on Form 10-K relates only to results from continuing
operations.





In 2010,
our gross profit decreased 30 basis points due to unfavorable product mix and
transition costs associated with transferring manufacturing in one of our
household product lines to a new supplier.   In 2009, our gross
profit increased 60 basis points due to our ongoing efforts to reduce our 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 theLittle Remedies brand as part of an industry-wide withdrawal of certain
medicated pediatric cough and cold products.  General and
Administrative costs, as a percentage of total revenues, increased 80 basis
points in 2010 versus 2009 as a result of the severance and related expenses
associated with the August 2009 reduction in force and the CEO transition in
September 2009, and an increase in incentive compensation as a result of our
achieving 2010 performance targets.  In 2009, our general and
administrative expenses increased as a percentage of total revenues as a result
of the $11.9 million or 3.8% reduction of total revenues for 2009 versus
2008.   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 which we believe often entrust their smaller
brands to successive junior employees, we dedicate experienced managers to
specific brands.  Since the Company has approximately 87 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.


-3-


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, and





·
            Innovation
      and Product Development.





We
execute this strategy through:





·
            
            Investments
      in Advertising and Promotion







We 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 2010 and 2009, we spent heavily to support the launch of our
innovative Allergen Block products introduced under theChloraseptic andLittle Remedies
brands.  In 2008, a very active year, we advertised and promoted the
introduction ofComet
Mildew SprayGel andMurine
Earigate.  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 increase
our share within those categories through ongoing product
innovation.  In 2010, we introduced Little Remedies Sore Throat
Relief and Mucus Relief and restaged the Chloraseptic solid lozenge
product line to a soothing liquid center lozenge.  In addition, our
Clear Eyes product line
added the benefit claim of up to 8 hours of soothing comfort to the
packaging.  In 2009, we introduced theChloraseptic andLittle Allergies Allergen
Block products which occupy unique positions in the allergy relief
category.  In 2008, we launchedComet Mildew SprayGel, an
innovative new product to address specific needs and capitalize on the consumer
awareness of theComet
brand.    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 while reducing our
reliance on brokers.  This philosophy allows us to
better:





·  Know our
customer,





·  Service
our customer, and





·  Support
our customer.




-4-





While we
make great efforts to both maintain our customer base and grow in new markets,
there is a risk 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 4.2%, 3.6% and 4.1% of
revenues in 2010, 2009, and 2008, 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 toClear Eyes,Murine andChloraseptic, which are
currently sold internationally, we license The Procter & Gamble Company
(“Procter & Gamble”) to market theComet 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 intends that acquisitions be a part of our overall strategy of
growing revenue.  We have a history of growth through acquisition (see
Our History and Accomplishments below) with the last purchase being the 2007
acquisition of theWartner brand of over-the-counter wart treatment
products.  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 allows 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.    In 2010, we
refinanced our long-term debt and significantly improved our liquidity position,
debt maturities and covenants, all of which better position us to pursue
acquisition targets.








Market
Position





During
2010, approximately 77.0% of our net revenues were from brands with a number one
or number two market position, compared with approximately 83.3% and 80.9%
during 2009 and 2008, respectively.  Such brands includeChloraseptic,Clear Eyes,Chore Boy, Comet,Compound W,Cutex, The Doctor’s andNew-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
and 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 includedChloraseptic, Comet, Clear
Eyes andMurine.




-5-


In
October 2004, we acquired theLittle Remedies brand of pediatric over-the-counter healthcare products
through our purchase of Vetco, Inc.  Products offered under theLittle Remedies brand
includeLittle Noses®
nasal products,Little Tummys®digestive health products,Little Colds® cough/cold
remedies andLittle
Remedies 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.  Products
marketed under The
Doctor’s brand includeThe Doctor’s NightGuard Dental Protector, the first Food and Drug
Administration (“FDA”) cleared over-the-counter treatment for bruxism, andThe Doctor’s BrushPicks,
disposable interdental toothpicks.





In
September 2006, we acquired Wartner USA B.V. (“Wartner”), the owner of theWartner brand of
over-the-counter wart treatment products.  The Company expects that
theWartner 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, complementingCompound W.





On
October 28, 2009, we sold our three shampoo brands - Prell Shampoo, Denorex Dandruff Shampoo and
Zincon Dandruff Shampoo
from the Personal Care segment.  The terms of the sale included an
upfront payment of $8.0 million in cash, with a subsequent payment of $1.0
million due on October 28, 2010.  We used the proceeds from the sale
to reduce outstanding bank indebtedness.





Although
we did not make any strategic acquisitions in 2008, 2009 or 2010, in March 2010
we refinanced our outstanding long-term indebtedness through entry into a $150
million senior term loan facility due April 1, 2016, and the issuance of $150
million in senior notes with an 8.25% interest rate due
2018.  Proceeds from the new indebtedness were used to retire our
senior term loan facility due April 1, 2011 and 9.25% senior subordinated notes
due April 15, 2012.  Additionally, our new credit agreement included a
$30 million revolving credit facility due April 1, 2015.  The
refinancing and new credit facility improved the Company’s liquidity, extended
maturities and improved covenant ratios, all of which better position us to
pursue strategic acquisitions.








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®,Freezone®, Mosco®, Outgro®,
Sleep-Eze®  andCompoz®. In
2010, the Over-the-Counter Healthcare segment accounted for 59.8% of our net
revenues compared to 58.4% and 58.3% in 2009 and 2008,
respectively.




-6-


Clear
Eyes


Clear Eyes, with an ACV of
88.0%, has been marketed as an effective eye care product that helps take
redness away and helps moisturize the eye.  Clear Eyesis among 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 16.0% 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 number three brand in the over-the-counter
ear care category with a market share of 12.3%.





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 93.9% and is number one in sore throat liquids/sprays with a 49.8% market
share.





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 32.9% market share and an ACV of
89.8%.





Wartner


Wartner is the number three
brand in the United States in the wart removal category with a 4.8% share of the
cryogenic segment and an ACV of 23.2%.





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.  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.





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 a Saline Mist spray,
(ii)Little Colds, a
product line consisting of a multi-symptom cold relief formula, sore throat
relief products, a cough relief formula, a decongestant 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.





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. New-Skin competes in
the liquid bandage segment of the first aid bandage category where it has a
54.4% market share and a 84.0% ACV.





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.




-7-


Household
Cleaning Segment





Our
portfolio of household cleaning brands includes theComet,Chore Boy and Spic and Span
brands.  During 2010, the Household Cleaning segment accounted for
36.6% of our revenues, compared with 38.3% and 38.4% in 2009 and 2008,
respectively.





Comet


Comet was originally
introduced in 1956 and is one of the most widely recognized household cleaning
brands, with an ACV of 98.5%.  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, spray and cream, both abrasive and
non-abrasive.





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.  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.





Personal
Care Segment





Our major
personal care brand isCutex nail products.   The Personal Care segment accounted for
3.6% of our revenues in 2010 compared with 3.3% in 2009 and 2008.





Cutex


Cutex is the leading branded
nail polish remover, with a 24.2% share of market.  Cutex, with an ACV of 76.6%,
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 58.7% market share.





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 18 to the Consolidated Financial Statements
included elsewhere in this Annual Report on Form 10-K.




-8-


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 79.8% of our combined gross sales for 2010 and 80.9% and 80.0%
for 2009 and 2008, respectively.  Our sales management team has grown
to 18 people 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,
2010:





Percentage
      of
              Gross Sales(1)Channel
      of Distribution
            
            2010
            
            
            2009
            
            2008Mass
            
            
            33.5%
            
            
            
            35.0%
            
            
            32.6%Food
            
            
            23.2
            
            
            
            23.2
            
            
            24.3Drug
            
            
            25.5
            
            
            
            25.9
            
            
            27.7Dollar
            
            
            10.0
            
            
            
            8.7
            
            
            7.4Club
            
            
            2.4
            
            
            
            2.4
            
            
            2.6Other
            
            
            5.4
            
            
            
            4.8
            
            
            5.4





(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
45.5% and 57.5% of total gross sales, respectively, in 2010 compared with
approximately 47.3% and 58.7%, respectively, in 2009 and approximately 45.5% and
56.7%, respectively, in 2008.  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
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 and leading sales technology capabilities, combined with consistent
marketing support programs and ongoing product innovation, will continue to
maximize our competitiveness in the increasingly complex retail
environment.




-9-


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.





At March
31, 2010, we had relationships with over 40 third-party
manufacturers.  Of those, we had long-term contracts with 20
manufacturers that produced items that accounted for approximately 68.7% of our
gross sales for 2010 compared to 18 manufacturers with long-term contracts that
produced approximately 64.0% of gross sales in 2009.  The fact that we
do not have long-term contracts with certain 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.





At March
31, 2010, suppliers for our key brands included (i) Fitzpatrick Bros. Inc., (ii)
Procter & Gamble, (iii) Access Business Group, (iv) Aspen Pharmacare and (v)
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 results in no long-term obligations or commitments.




-10-


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.





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 andMurine
brands; McNeil-PPC, maker ofTylenol® Sore Throat, Procter & Gamble, maker ofVicks®, and Combe
Incorporated, maker ofCepacol®, 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 andWartner
brands; GlaxoSmithKline, maker ofDebrox®, which competes with
ourMurine ear care
brand; Sunstar America, Inc., maker ofGUM® line of oral care
products; as well as DenTek® Oral Care, Inc., which markets a dental protector
for nighttime teeth grinding and interdental toothpicks, which compete withThe Doctor’sNightGuard Dental Protector
and The Doctor’s Brushpicks,
respectively.





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’sMr. Clean®
compete with ourSpic and
Span brand while 3M Company, maker ofScotch-Brite®,
O-Cel-O® andDobie® brands, and
Clorox’sSOS®, compete
with ourChore Boy
brand.




-11-


Competitors
in the personal care category include 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 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 Practices (“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.




-12-


A number
of our products are regulated by the CPSC under the Federal Hazardous Substances
Act (the “FHSA”), the Poison Prevention Packaging Act of 1970 (the “PPPA”) and
the Consumer Products Safety Improvement Act of 2008 (the “CPSIA”). 
Certain of our household products are considered to be hazardous substances
under the FHSA and therefore require specific cautionary warnings to be included
in their labeling for such products to be legally marketed.  In addition, a
small number of our products are subject to regulation under the PPPA and can
only be legally marketed if they are dispensed in child-resistant packaging or
labeled for use in households where there are no children.  The CPSIA
requires us to make available to our customers certificates stating that we are
in compliance with any applicable regulation administered by the CPSC.





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 household products under ourComet andSpic and Span brands which
make antibacterial and/or disinfectant claims.  Due to the
antibacterial and/or disinfectant claims on certain of theComet andSpic 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.  OurComet andSpic 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.








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.








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, The Doctor’s NightGuard, Dermoplast, Little Remedies, Longlast®,
Momentum®, Murine, New-Skin, Percogesic®, 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.  None of our patents that
we own or license, however, is material to us on a consolidated basis. Enforcing
our rights, or the rights of any of our licensors, 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.





We do not
own all of the intellectual property rights applicable to our
products.  In those cases where our third-party manufacturers own
patents that protect our products, we are dependent on them as a source of
supply for our products.  Unless other non-infringing technologies are
available, we must continue to purchase patented products from our suppliers who
sell patented products to us.  In addition, we rely on our suppliers
for their enforcement of their intellectual property rights against infringing
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 theComet
andChlorinol brands in
Russia and specified Eastern European countries until 2015.




-13-





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 asClear Eyes products,Compound W,Wartner andNew-Skin.  The
increased level of advertising and promotional campaigns in the third quarter
influence sales ofChloraseptic andLittle
Remedies cough/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 87 full time individuals and two part time individuals at March 31,
2010.  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, 2009 or 2010.





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.





The
public may read and copy any materials that we file with the SEC at the SEC’s
Public Reference Room at 100 F Street, NE, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the
SEC.





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 and Nominating and Governance 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.




-14-


ITEM1A.
            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 16.0% within the allergy/redness eye drop
segment, its top competitor,Visine®, has a market share of 34.7% 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 32.9% and its top competitor,Dr. Scholl’s, has
a market position of 42.5% in the same category.  Also, whileCutex is the number one
brand name nail polish remover with a market share of 24.2%, non-branded,
private label nail polish removers account, in the aggregate, for 58.7% of the
market.  Finally, while ourNew-Skin liquid bandage
product has a number one market position of 54.4%, the size of the liquid
bandage market is relatively small, particularly when compared to the much
larger bandage category.  See “Part I, Item 1. Business” section on
page 1 of this Annual Report on Form 10-K 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 affect 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 have a material adverse effect
on our business, financial condition and results of operations.





For 2010,
our top five and ten customers accounted for approximately 45.7% and 58.4%,
respectively, of our sales, compared with approximately 48.2% and 60.1% and
46.2% and 57.2% during 2009 and 2008, respectively.  Wal-Mart, which
itself accounted for approximately 24.6%, 25.9% and 23.1% of our sales in 2010,
2009 and 2008, 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 have a material adverse effect on our
business, financial condition and results from operations.





-15-


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 has been and could continue to be adversely affected by a prolonged
recession in the United States.





The
economic uncertainty surrounding the current United States recession has
affected and could continue to materially affect our business because such
economic challenges could adversely affect 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, 2010, we had relationships with over 40 third-party
manufacturers.  Of those, we had long-term contracts with 20
manufacturers that produced items that accounted for approximately 68.7% of our
gross sales for 2010 compared to 18 manufacturers with long-term contracts that
produced approximately 64.0% of gross sales in 2009.  The fact that we
do not have long-term contracts with certain 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.




-16-


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





Increases
in commodity and energy costs in the markets for resins, package materials and
diesel fuel could have a significant impact on our 2011 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 find, a buyer on acceptable terms in a
timely manner.  This could cause a delay in our efforts to achieve our
strategic objectives.




-17-


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





During
2010, 2009 and 2008, approximately 4.2%, 3.6% and 4.1%, respectively, of our
total revenues were attributable to our international business.  We
generally rely on brokers and distributors for the sale of our products in
foreign countries.  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 United States 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, local 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,





·
            Initiate
      product recalls, or





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







-18-


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.  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.








-19-


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 charges in 2010 and 2009 for impairment of
those assets and in the event that the value of those assets become further
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 or protect 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 or cost effective
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, 2010, our total indebtedness, including current maturities, is approximately
$328.1 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.





-20-


The terms
of the indenture governing the 8.25% senior notes and the credit agreement
governing 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, 2010, we had $30.0 million of borrowing capacity available under the
Revolving Credit Facility to support our operating activities. We also have the
ability to borrow up to an additional $200.0 million for acquisitions pursuant
to our senior credit facility.





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





Our
senior credit facility and the indenture governing our senior 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
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 we anticipate, and could therefore, have a material
adverse effect on our business, financial condition and results from
operations.




-21-


In
addition, the senior credit facility requires us to maintain certain leverage
and interest coverage ratios and not to exceed annual capital expenditures of
$3.0 million.  Although we believe we can continue to meet and/or
maintain the financial covenants 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 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 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 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  notes, among other things, may lead to an event of default
under the senior credit facility.  Similarly, an event of default or
failure to make a required payment at maturity under the senior credit facility,
among other things, may lead to an event of default under the indenture
governing the senior notes.  If the debt under the senior credit
facility and indenture governing the senior notes were to both be accelerated,
the aggregate amount immediately due and payable as of March 31, 2010 would have
been approximately $328.1 million.  We presently do not have
sufficient liquidity to repay these borrowings in the event they were to be
accelerated, and we may not have sufficient liquidity in the future to do
so.  Additionally, we may not be able to borrow money from other
lenders to enable us to refinance the indebtedness.  At March 31,
2010, the book value of our current assets was $112.2
million.  Although the book value of our total assets was $791.4
million, approximately $670.7 million was in the form of intangible assets,
including goodwill of $111.5 million, a significant portion of which is illiquid
and may not be available to satisfy our creditors in the event our debt is
accelerated.





Any
failure to comply with the restrictions of the senior credit facility, the
indenture governing the senior 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 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, customers,
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 or enforce an agreement or contract that has been
breached.  These matters are extremely time consuming and expensive,
but absolutely necessary to maintain enterprise value, protect our assets and
realize the benefits of the agreements and contracts that we have negotiated 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 operating
results, (iii) our leveraged




-22-


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.





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,





·
            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.





Our
quarterly operating results and revenues may fluctuate as a result of any of
these or other factors. Accordingly, results for any one quarter are not
necessarily indicative of results to be expected for any other quarter or for
any year, and revenues for any particular future period may
decrease.  In the future, operating results may fall below the
expectations of securities analysts and investors.  In that event, the
market price of our outstanding securities could be adversely
impacted.




-23-


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, as amended, 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 rights that may adversely affect the voting power of the
holders of our common stock by increasing the number of outstanding shares
having voting rights, and by the creation of class or series voting
rights.





Our
amended and restated certificate of incorporation, as amended, 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.





-24-





ITEM1B.
            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, 2010; 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





DenTek
Oral Care, Inc. Litigation





Reference
is made to the DenTek Oral Care Inc. (“DenTek”) litigation disclosure contained
in (i) Part I, Item 3 of the Company’s Annual Report on Form 10-K for the fiscal
year ended March 31, 2009 filed with the Commission on June 15, 2009, and (ii)
Part II, Item 1 of the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 2009 and filed with the Commission on February 9,
2010, both of which are incorporated herein by this reference.





On March
25, 2010, Medtech Products Inc. (“Medtech”), a wholly-owned subsidiary of the
Company and plaintiff in the pending law suit against DenTek and others in the
U.S. District Court for the Southern District of New York, settled all of the
claims and counterclaims involving DenTek in the law suit on terms mutually
agreeable to Medtech and DenTek.  No payment by Medtech or the Company is
required as part of the settlement.





San Francisco Technology
Inc. Litigation





On April
5, 2010, Medtech was served with a Complaint filed by San Francisco Technology
Inc. (“SFT”) in the U.S. District Court for the Northern District of California,
San Jose Division.  In the Complaint, SFT asserted a qui tam action against
Medtech alleging false patent markings with the intent to deceive the
public regarding Medtech’s two Dermoplast®
products.  Medtech has filed a Motion to Dismiss or Stay and a Motion
to Sever and Transfer Venue to the Southern District of New York and is awaiting
decisions on the pending Motions.  Medtech intends to vigorously
defend against the Complaint.





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.








ITEM
      4.
            [REMOVED
      AND RESERVED]





-25-


Part II








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





Part III,
Item 12 of this Annual Report on Form 10-K is incorporated herein by this
reference.





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 9, 2010 are as follows:





High
            
            
            LowYear
      Ending March 31, 2011April
      1, 2010 - June 9, 2010
            
            $
            9.99
            
            
            $
            7.23Year
      Ended March 31, 2010Quarter
      Ended:June
      30, 2009
            
            $
            7.24
            
            
            $
            5.19September
      30, 2009
            
            
            8.19
            
            
            
            5.75December
      31, 2009
            
            
            8.03
            
            
            
            6.70March
      31, 2010
            
            
            9.06
            
            
            
            7.20Year
      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
            
            
            
            4.08








Unregistered
      Sales of Equity Securities and Use of
Proceeds





There
were no equity securities sold by the Company during the quarter ended March 31,
2010 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, 2010, 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, 2010, there were 34 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 8.25% senior notes, and any other
considerations our board of directors deems relevant.




-26-


PERFORMANCE
GRAPH





The
following graph (“Performance Graph”) compares our cumulative total stockholder
return since March 31, 2005, with the cumulative total stockholder return for
our Old Peer Group Index, New 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 March 31, 2005.  The Performance Graph was also prepared
based on the assumption that all dividends paid, if any, were
reinvested.  The Old Peer Group Index and the New Peer Group Index
were established by the Company in connection with its research and development
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.











March
31,2005
              
              
              
              2006
              
              
              
              2007
              
              
              
              2008
              
              
              
              2009
              
              
              
              2010Prestige
      Brands Holdings, Inc.
              
              $
              100.00
              
              
              $
              68.95
              
              
              $
              67.14
              
              
              $
              46.35
              
              
              $
              29.35
              
              
              $
              50.99Russell
      2000 Index
              
              
              100.00
              
              
              
              125.85
              
              
              
              133.28
              
              
              
              115.95
              
              
              
              72.47
              
              
              
              117.95Old
      Peer Group Index (1), (2)
              
              
              100.00
              
              
              
              100.90
              
              
              
              118.04
              
              
              
              110.16
              
              
              
              66.82
              
              
              
              120.09New
      Peer Group Index (1), (3)
              
              
              100.00
              
              
              
              104.49
              
              
              
              115.03
              
              
              
              102.50
              
              
              
              57.48
              
              
              
              102.01


(1)
            Each 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.  Each
      Peer Group Index was constructed in connection with the Company’s
      benchmark analysis of executive compensation.(2)
            The
      Old Peer Group Index is comprised of the following companies: (i) Chattem
      Inc., (ii) Elizabeth Arden, Inc., (iii) HainCelestial
      Group, Inc., (iv) Helen of Troy Limited, (v) Inter Parfums, Inc., (vi)
      Lifetime Brands, Inc., (vii) Maidenform Brands,Inc.
      and (viii) WD-40 Company.(3)
            The
      New Peer Group Index is comprised of: (i) Elizabeth Arden, Inc., (ii) Hain
      Celestial Group, Inc., (iii) Helen of Troy, Ltd., (iv)
      Inter Parfums, Inc., (v) Lifetime Brands, Inc., (vi) Maidenform Brands,
      Inc., (vii) Smart Balance, Inc., (viii) WD-40Company,
      and (ix) Zep, 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.





-27-


ITEM
      6.
            SELECTED
      FINANCIAL DATA





Prestige
Brands Holdings, Inc.
 (In
      thousands, except per share data)
            
            Year
      Ended March 31,2010
            
            
            2009
            
            
            2008
            
            
            2007
            
            
            2006Income
      Statement DataTotal
      revenues
            
            $
            302,023
            
            
            $
            303,147
            
            
            $
            315,107
            
            
            $
            306,127
            
            
            $
            282,577Cost of sales
      (1)
            
            
            144,587
            
            
            
            144,196
            
            
            
            151,811
            
            
            
            146,570
            
            
            
            132,218Gross
      profit
            
            
            157,436
            
            
            
            158,951
            
            
            
            163,296
            
            
            
            159,557
            
            
            
            150,359Advertising
      and promotion expenses
            
            
            31,236
            
            
            
            37,777
            
            
            
            34,243
            
            
            
            31,500
            
            
            
            31,278Depreciation
      and amortization
            
            
            10,552
            
            
            
            9,423
            
            
            
            9,219
            
            
            
            8,589
            
            
            
            8,053General
      and administrative
            
            
            34,195
            
            
            
            31,888
            
            
            
            31,414
            
            
            
            28,417
            
            
            
            21,137Impairment
      of goodwill and intangibles
            
            
            2,751
            
            
            
            249,285
            
            
            
            --
            
            
            
            --
            
            
            
            1,892Interest
      expense, net
            
            
            22,935
            
            
            
            28,436
            
            
            
            37,393
            
            
            
            39,536
            
            
            
            36,387Other
      (income) expense
            
            
            2,656
            
            
            
            --
            
            
            
            (187)
            
            
            
            (30)
            
            
            
            (41)Income
      (loss) from continuing operations before income taxes
            
            
            53,111
            
            
            
            (197,858)
            
            
            
            51,214
            
            
            
            51,545
            
            
            
            51,653Provision
      (benefit) for income taxes
            
            
            21,849
            
            
            
            (9,905)
            
            
            
            19,168
            
            
            
            17,841
            
            
            
            23,114Income
      (loss) from continuing operations
            
            
            31,262
            
            
            
            (187,953)
            
            
            
            32,046
            
            
            
            33,704
            
            
            
            28,539Discontinued
      OperationsIncome
      (loss) from discontinued operations, net of income tax
            
            
            696
            
            
            
            1,177
            
            
            
            1,873
            
            
            
            2,375
            
            
            
            (2,262)Gain
      on sale of discontinued operations, net of income tax
            
            
            157
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --Cumulative
      preferred dividends
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --Net
      income (loss) available to common stockholders
            
            $
            32,115
            
            
            $
            (186,776)
            
            
            $
            33,919
            
            
            $
            36,079
            
            
            $
            26,277Basic
      earnings per share:Income
      (loss) from continuing operations
            
            $
            0.63
            
            
            $
            (3.76)
            
            
            $
            0.64
            
            
            $
            0.68
            
            
            $
            0.58Net
      income (loss)
            
            $
            0.64
            
            
            $
            (3.74)
            
            
            $
            0.68
            
            
            $
            0.73
            
            
            $
            0.54Diluted
      earnings per share:Income
      (loss) from continuing operations
            
            $
            0.62
            
            
            $
            (3.76)
            
            
            $
            0.64
            
            
            $
            0.67
            
            
            $
            0.57Net
      income (loss)
            
            $
            0.64
            
            
            $
            (3.74)
            
            
            $
            0.68
            
            
            $
            0.72
            
            
            $
            0.53Weighted
      average shares outstanding:Basic
            
            
            50,013
            
            
            
            49,935
            
            
            
            49,751
            
            
            
            49,460
            
            
            
            48,908Diluted
            
            
            50,085
            
            
            
            49,935
            
            
            
            50,039
            
            
            
            50,020
            
            
            
            50,008  Year
      Ended March 31,Other
      Financial Data
            
            2010
            
            
            2009
            
            
            2008
            
            
            2007
            
            
            2006Capital
      expenditures
            
            $
            673
            
            
            $
            481
            
            
            $
            488
            
            
            $
            540
            
            
            $
            519Cash
      provided by (used in):Operating
      activities
            
            
            59,427
            
            
            
            66,679
            
            
            
            44,989
            
            
            
            71,899
            
            
            
            53,861Investing
      activities
            
            
            7,320
            
            
            
            (4,672
            )
            
            
            (537
            )
            
            
            (31,051
            )
            
            
            (54,163
            )Financing
      activities
            
            
            (60,831
            )
            
            
            (32,904
            )
            
            
            (52,132
            )
            
            
            (35,290
            )
            
            
            3,168March
      31,Balance
      Sheet Data
            
            2010
            
            
            2009
            
            
            2008
            
            
            2007
            
            
            2006Cash
      and cash equivalents
            
            $
            41,097
            
            
            $
            35,181
            
            
            $
            6,078
            
            
            $
            13,758
            
            
            $
            8,200Total
      assets
            
            
            791,412
            
            
            
            801,381
            
            
            
            1,049,156
            
            
            
            1,063,416
            
            
            
            1,038,645Total
      long-term debt, including current maturities
            
            
            328,087
            
            
            
            378,337
            
            
            
            411,225
            
            
            
            463,350
            
            
            
            498,630Stockholders’
      equity
            
            
            329,059
            
            
            
            294,385
            
            
            
            479,073
            
            
            
            445,334
            
            
            
            409,407





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





-28-


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.





Discontinued Operations and
Sale of Certain Assets





In
October 2009, the Company sold certain assets related to the shampoo brands
previously included in its Personal Care products segment to an unrelated third
party.  In accordance with the Discontinued Operations Topic of the
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”), the Company reclassified the related assets as held for sale in the
consolidated balance sheets as of March 31, 2009 and reclassified the related
operating results as discontinued in the consolidated financial statements and
related notes for all periods presented.  The Company recognized a
gain of $253,000 on a pre-tax basis and $157,000 net of tax effects on the sale
in the quarter ended December 31, 2009.





The
following table presents the assets related to the discontinued operations as of
March 31, 2009 (in thousands):





Inventory
            
            $
            1,038Intangible
      assets
            
            
            8,472Total
      assets held for sale
            
            $
            9,510








The
following table summarizes the results of discontinued operations (in
thousands):





Year
      Ended March 31,2010
            
            
            2009
            
            
            2008Components
      of IncomeRevenues
            
            $
            5,053
            
            
            $
            9,568
            
            
            $
            11,496Income
      before income taxes
            
            
            1,121
            
            
            
            1,896
            
            
            
            2,994











The total
sale price for the assets was $9 million, subject to adjustments for inventory,
with $8 million received upon closing, and the remaining $1 million to be
received on the first anniversary of the closing.








-29-





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
recognize revenue 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 as 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 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.  Direct reimbursements of advertising costs are reflected
as a reduction of advertising costs in the periods in which the reimbursement
criteria are achieved.  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.  Our related
promotional expense for the year ended March 31, 2010 was $18.3 million. We
participated in 5,570 promotional campaigns, resulting in an average cost of
$3,300 per campaign.  Of such amount, only 738 payments were in excess
of $5,000.  We believe that the estimation methodologies employed,
combined with the nature of the promotional campaigns, make 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, 2010, our sales and
operating income would have been adversely affected by approximately $1.8
million.  Net income would have been adversely affected by
approximately $1.1 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 2010, we had 25 coupon events.  The amount
recorded against revenues and accrued for these events during the year was $1.3
million. Cash settlement of coupon redemptions during the year was $1.3
million.





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, 2010, 2009 and
2008, returns represented 3.9%, 3.8% and 4.4%, respectively, of gross
sales.  The 2008 rate of 4.4% included costs associated with the
voluntary withdrawal from the marketplace of Little Remedies medicated
pediatric cough and cold products in October 2007. Had the voluntary withdrawal
not occurred, the actual returns rate would have been 3.9%.  At March
31, 2010 and 2009, the allowance for sales returns was $5.9 million and $2.2
million, respectively. The 2010 increase in the allowance for sales returns was
primarily due to slow moving retail inventory of our Allergen Block
product.





-30-


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 theLittle 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 3.8% to 4.4% 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, 2010 by approximately
$358,000.  Net income would have been adversely affected by
approximately $222,000.








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 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, 2010 and 2009, the allowance for
obsolete and slow moving inventory was $2.0 million and $1.4 million,
respectively, representing 6.4% and 5.1%, respectively, of total
inventory.  The year-over-year percentage increase was the result of
an increase of $598,000 in slow moving inventory at March 31, 2010 compared to
March 31, 2009.  Inventory obsolescence costs charged to operations
for 2010, 2009, and 2008 were $1.7 million, $2.2 million and $1.4 million,
respectively, or 0.6%, 0.7% and 0.4%, respectively, of net sales.  A
1.0% increase in our allowance for obsolescence at March 31, 2010 would have
adversely affected our reported operating income and net income for the year
ended March 31, 2010 by approximately $312,000 and $194,000,
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
0.7% and 0.3% of accounts receivable at March 31, 2010 and 2009,
respectively.  Bad debt expense for 2010, 2009 and 2008 was $200,000,
$130,000, and $124,000, respectively, representing 0.1% of net sales for 2010
and 0.0% of net sales for 2009 and 2008.





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 2010 would have resulted in a decrease in reported operating income of
approximately $302,000, and a decrease in our reported net income of
approximately $188,000.





-31-




Valuation
of Intangible Assets and Goodwill


Goodwill
and intangible assets amounted to $670.7 and $683.4 million at March 31, 2010
and 2009, respectively.  At March 31, 2010, 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
            
            
            $
            --
            
            
            $
            111,489Intangible
      assetsIndefinite
      lived
            
            
            334,750
            
            
            
            119,821
            
            
            
            --
            
            
            
            454,571Finite
      lived
            
            
            65,961
            
            
            
            33,143
            
            
            
            5,554
            
            
            
            104,658400,711
            
            
            
            152,964
            
            
            
            5,554
            
            
            
            559,229$
            504,811
            
            
            $
            160,353
            
            
            $
            5,554
            
            
            $
            670,718





-32-


OurClear Eyes, New-Skin,
Chloraseptic,Compound
W andWartner
brands comprise the majority of the value of the intangible assets within the
Over-the-Counter Healthcare segment.  TheComet, Spic and Span
andChore Boy brands
comprise substantially all of the intangible asset value within the Household
Cleaning segment.Cutex
comprises 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.  Under accounting guidelines goodwill is not 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, during the fourth fiscal quarter, or more frequently if conditions
indicate that the carrying value of the asset may not be recovered, management
performs a review of both the values and useful lives assigned to goodwill and
intangible assets and tests for impairment.





We report
Goodwill and Indefinite-Lived Intangible Assets in three operating segments;
Over-the-Counter Healthcare, Household Cleaning, and Personal
Care.  We identify our reporting units in accordance with the FASB
Accounting Standards Codification Subtopic 280-10, which is at the brand level,
and one level below the operating segment level. The carrying value and fair
value for intangible assets and goodwill for a reporting unit are calculated
based on key assumptions and valuation methodologies previously
discussed.  As a result, any material changes to these assumptions
could require us to record additional impairment in the future.





-33-




Goodwill





(In
thousands)


Operating
      Segment
            
            March
      31, 2010
            
            
            Percent
      by which
              Fair
      Value Exceeded
              Carrying
      Value in
              Annual
      TestOver-the-Counter
      Healthcare
            
            $
            104,100
            
            
            
            26.9Household
      Cleaning
            
            
            7,389
            
            
            
            8.6Personal
      Care
            
            
            --
            
            
            
            n/a$
            111,489





As of
March 31, 2010, the Over-the-Counter Healthcare segment had four reporting units
with goodwill and their aggregate fair value exceeded the carrying value by
26.9%.  No individual reporting unit’s fair value in the
Over-the-Counter Healthcare segment exceeded its carrying value by less than 5%.
The Household Cleaning segment had one operating unit and the fair value
exceeded its carrying value by 8.6%.





As part
of our 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, 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
thousands)





Operating
      Segment
            
            March
      31, 2010
            
            
            Percent
      by which
              Fair
      Value Exceeded Carrying Value in Annual TestOver-the-Counter
      Healthcare
            
            $
            334,750
            
            
            
            63.7Household
      Cleaning
            
            
            119,821
            
            
            
            20.2Personal
      Care
            
            
            --
            
            
            
            n/a$
            454,571








As of
March 31, 2010, the Over-the-Counter Healthcare segment had five reporting units
with indefinite-lived classification and their aggregate fair value exceeded the
carrying value by 63.7%.  No individual reporting unit’s fair value in
the Over-the-Counter Healthcare segment exceeded its carrying value by less than
9%.  The Household Cleaning segment had one reporting unit and the
fair value exceeded its carrying value by 20.2%.





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.





The
economic events experienced during the year ended March 31, 2009, as well as the
Company’s plans and projections for its brands, indicated that several of our
brands could no longer support indefinite useful lives.  Each of these
brands incurred an impairment charge during the three month period ended March
31, 2009 and has been adversely affected by increased
competition.  Consequently, at April 1, 2009, management reclassified
$45.6 million of previously indefinite-lived intangibles to intangibles with
definite lives.  Management estimates the useful lives of these
intangibles to be 20 years.





-34-





The fair
values and the annual amortization charges of the reclassified intangibles are
as follows (in thousands):





Fair
      Value
              as
      of
              March
      31,
              2009
            
            
            Annual
              AmortizationHousehold
      Trademarks
            
            $
            34,888
            
            
            $
            1,745Over-the-Counter
      Healthcare Trademark
            
            
            10,717
            
            
            
            536$
            45,605
            
            
            $
            2,281







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.








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.





-35-


Impairment
Analysis


We
estimate the fair value of our intangible assets and goodwill using a discounted
cash flow method.  This discounted cash flow methodology is a
widely-accepted valuation technique utilized by market participants in the
valuation process and has been applied consistently with prior
periods.  In addition, we considered our market capitalization at
March 31, 2010, 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, 2010, we recorded a $2.8 million non-cash
impairment charge of goodwill of a brand in the Personal Care segment. The
impairment was a result of distribution losses and increased competition from
private label store brands.





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 $249.3 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 for the year
ended March 31, 2009 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
            
            
            
            --
            
            
            
            1,391
            
            
            
            13,81141,023
            
            
            
            16,184
            
            
            
            1,391
            
            
            
            58,598$
            166,550
            
            
            $
            81,344
            
            
            $
            1,391
            
            
            $
            249,285





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


The Compensation and
Equity Topics of the FASB ASCrequires 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 our common stock on the date of
grant,


·
            Discount
      rates,


·
            Duration
      of the instrument, and


·
            Volatility
      of our 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.  We recorded net non-cash compensation expense of $2.1
million, $2.4 million and $1.1 million during 2010, 2009 and 2008,
respectively.  During 2010, performance goals related to certain
restricted stock grants were met and recorded accordingly.  However,
during the year ended March 31, 2009, management was required to reverse
previously recorded stock-based compensation costs of $193,000 and
$705,000





-36-


related
to the May 2008 and 2007 grants, respectively, as it was determined that we
would not meet the performance goals associated with such grants of restricted
stock.  During the year ended March 31, 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 $2.2
million during 2011.  We issued additional stock-based compensation
grants in April 2011, which will be accounted for in the first quarter of
2011.








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
2010, the FASB issued authoritative guidance to provide clarification regarding
the classification requirements of a share-based payment award with an exercise
price denominated in the currency of a market in which a substantial portion of
the entity’s equity securities trade. The guidance states that such an award
should not be considered to contain a market, performance, or service condition
and should not be classified as a liability if it otherwise qualifies as an
equity classification. This guidance is effective for fiscal years beginning
after December 15, 2010, and for interim periods within those fiscal
years.  The Company does not expect this guidance to have a material
impact on its consolidated financial statements.





In May
2009, the FASB issued guidance regarding subsequent events, which was
subsequently updated in February 2010. This guidance established general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.  In particular, this guidance set forth the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. This guidance
was effective for financial statements issued for fiscal years and interim
periods ending after June 15, 2009, and was therefore adopted by the Company for
the second quarter 2009 reporting.  The adoption did not have a significant
impact on the subsequent events that the Company reports, either through
recognition or disclosure, in the consolidated financial statements.  In
February 2010, the FASB amended its guidance on subsequent events to remove the
requirement to disclose the date through which an entity has evaluated
subsequent events, alleviating conflicts with current SEC guidance.  This
amendment was effective immediately and the Company therefore removed the
disclosure in this Annual Report.





In
January 2010, the FASB issued authoritative guidance requiring new disclosures
and clarifying some existing disclosure requirements about fair value
measurement.  Under the new guidance, a reporting entity should (a)
disclose separately the amounts of significant transfers in and out of Level 1
and Level 2 fair value measurements and describe the reasons for the transfers,
and (b) present separately information about purchases, sales, issuances, and
settlements in the reconciliation for fair value measurements using significant
unobservable inputs.  This guidance is effective for interim and
annual reporting periods beginning after December 15, 2009, except for the
disclosures about purchases, sales, issuances, and settlements in the roll
forward of activity in Level 3 fair value measurements.  Those
disclosures are effective for fiscal years beginning after December 15, 2010,
and for interim periods within those fiscal years.  The new guidance
requires only enhanced disclosures and the Company does not expect this guidance
to have a material impact on its consolidated financial statements.





In
August 2009, the FASB issued authoritative guidance to provide
clarification on measuring liabilities at fair value when a quoted price in an
active market is not available.  In these circumstances, a valuation
technique should be applied that uses either the quote of the liability when
traded as an asset, the quoted prices for similar liabilities or similar
liabilities when traded as assets, or another valuation technique consistent
with existing fair value measurement guidance, such as an income approach or a
market approach.  The new guidance also clarifies that when estimating the
fair value of a liability, a reporting entity is not required to include a
separate input or adjustment to other inputs relating to the existence of a
restriction that prevents the transfer of the liability.  This guidance
became effective beginning with the third quarter of the Company’s 2010 fiscal
year; however, the adoption of the new guidance did not have a material impact
on the Company’s financial position, results from operations or cash
flows.





-37-


In
June 2009, the FASB issued authoritative guidance to eliminate the
exception to consolidate a qualifying special-purpose entity, change the
approach to determining the primary beneficiary of a variable interest entity
and require companies to more frequently re-assess whether they must consolidate
variable interest entities.  Under the new guidance, the primary
beneficiary of a variable interest entity is identified qualitatively as the
enterprise that has both (a) the power to direct the activities of a
variable interest entity that most significantly impact the entity’s economic
performance, and (b) the obligation to absorb losses of the entity that
could potentially be significant to the variable interest entity or the right to
receive benefits from the entity that could potentially be significant to the
variable interest entity.  This guidance becomes effective for the
Company’s fiscal 2011 year-end and interim reporting periods.  The Company
does not expect this guidance to have a material impact on its consolidated
financial statements.





In June
2009, the FASB established the FASB ASC as the source of authoritative
accounting principles recognized by the FASB to be applied in the preparation of
financial statements in conformity with generally accepted accounting
principles.  The new guidance explicitly recognizes rules and
interpretive releases of the SEC under federal securities laws as authoritative
accounting principles generally accepted in the United States of America
(“GAAP”) for SEC registrants.  The new guidance became effective for
our financial statements issued for the three and six month periods ending on
September 30, 2009.





The
Derivatives and Hedging Topic of the FASB ASC was amended to require 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, the new guidance now 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.  The implementation of the new guidance at
January 1, 2009 required 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.





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.





-38-




Fiscal
2010 compared to Fiscal 2009





Revenues





2010
              Revenues
            
            
            %
            
            
            2009
              Revenues
            
            
            %
            
            
            Increase
              (Decrease)
            
            
            %OTC
      Healthcare
            
            $
            180,463
            
            
            
            59.8
            
            
            $
            176,975
            
            
            
            58.4
            
            
            $
            3,488
            
            
            
            2.0Household
      Cleaning
            
            
            110,696
            
            
            
            36.6
            
            
            
            116,015
            
            
            
            38.3
            
            
            
            (5,319
            )
            
            
            (4.6
            )Personal
      Care
            
            
            10,864
            
            
            
            3.6
            
            
            
            10,157
            
            
            
            3.3
            
            
            
            707
            
            
            
            7.0$
            302,023
            
            
            
            100.0
            
            
            $
            303,147
            
            
            
            100.0
            
            
            $
            (1,124
            )
            
            
            (0.4
            )





Revenues
for fiscal 2010 were $302.0 million, a decrease of $1.1 million, or 0.4%, versus
2009.  Revenues for both the Over-the-Counter Healthcare and Personal
Care segments increased versus the comparable period. Revenues for the Household
Cleaning segment declined during the period.  Revenues from customers
outside of North America, which represent 4.2% of total revenues, increased by
$1.9 million, or 17.5%, during 2010 versus 2009.








Over-the-Counter
Healthcare Segment


Revenues
for the Over-the-Counter Healthcare segment increased $3.5 million, or 2.0%,
during 2010 versus 2009. Revenue increases for Clear Eyes, Chloraseptic, Compound W, Dermoplast, Little Remedies, Murine Tearsand The Doctor's
were partially offset by revenue decreases on Allergen Block, Murine Ear, and Wartner.  Clear Eyes revenues increased
primarily due to the launch of a new line of Clear EyesTears products and
stronger shipments of the traditional and convenience size
items.  Chloraseptic revenues
increased as the result of a stronger spring flu season driving consumer
consumption. Compound W
revenues increased due to increased consumer consumption, particularly behind
the non-cryogenic products.  Dermoplast revenues increased
as a result of customers buying in advance of a scheduled price increase of our
institutional item. Little
Remedies revenues increased as the result of distribution gains and
increased consumer consumption of its non-medicated pediatric products. Murine Tears revenues
increased as the result of higher shipments to markets outside North America.
The Doctor's revenues
increased due to royalty revenue ($3.1 million) received as a result of a legal
settlement, and a favorable response due to an increase in advertising compared
to 2009. Allergen Block
revenues decreased as current year sales did not equal the pipeline orders that
existed in 2009 as a result of promotions during the introductory period for the
product and allowances for returns and markdowns for slow moving inventory at
retail. Murine
Ear's revenues decreased primarily as the result of slowing consumer
consumption, particularly on Earigate.  Wartner's revenues decreased
as the result of lost distribution and softness in the cryogenic segment of the
wart treatment category.





In early
February 2010, the Company was notified that its largest customer intended to
discontinue the sale of The
Doctor’s NightGuard and The Doctor’s Brushpicks due
to that customer’s initiative to reduce the number of vendors in the Oral Care
category.  Subsequent to that notification, the Company conducted a
formal review of the products’ performance with the customer in an effort to
reverse the customer’s decision. As a result of that review, the customer
decided to continue to sell The Doctor’s Nightguard in
approximately one-half of its stores. Both products are included in our
Over-the-Counter Healthcare Segment. Revenue and gross profit from The Doctor’s Nightguard
product during fiscal 2010 at this customer were approximately $3.7 million and
$2.7 million, respectively. Revenue and gross profit from The Doctor’s Brushpicks
product during fiscal 2010 were approximately $2.2 million and $1.4 million,
respectively.





Household
Cleaning Segment


Revenues
for the Household Cleaning segment decreased $5.3 million, or 4.6%, during 2010
versus 2009. Comet's
revenues decreased primarily due to softer consumer consumption of bathroom
spray. Chore Boy
revenues declined as a result of weaker consumer consumption and lost
distribution. Spic and
Span revenues were up slightly versus 2009 as a result of increased
shipments to the dollar store class of trade.





Personal
Care Segment


Revenues
for the Personal Care segment increased $707,000, or 7.0%, during 2010 versus
2009.  The revenue increase was driven by Cutex and was due to
improving consumption in the nail polish remover category.  Cutex, however, experienced
distribution losses late in 2010 due to increased pressure from private label
brands.





-39-




Gross
Profit


2010
              Gross
      Profit
            
            
            %
            
            
            2009
              Gross
      Profit
            
            
            %
            
            
            Increase
              (Decrease)
            
            
            %OTC
      Healthcare
            
            $
            114,414
            
            
            
            63.4
            
            
            $
            113,516
            
            
            
            64.1
            
            
            $
            898
            
            
            
            0.8Household
      Cleaning
            
            
            38,578
            
            
            
            34.9
            
            
            
            41,558
            
            
            
            35.8
            
            
            
            (2,980
            )
            
            
            (7.2
            )Personal
      Care
            
            
            4,444
            
            
            
            40.9
            
            
            
            3,877
            
            
            
            38.2
            
            
            
            567
            
            
            
            14.6$
            157,436
            
            
            
            52.1
            
            
            $
            158,951
            
            
            
            52.4
            
            
            $
            (1,515
            )
            
            
            (1.0
            )





Gross
profit during 2010 decreased $1.5 million, or 1.0%, versus 2009. As a percent of
total revenue, gross profit decreased from 52.4% in 2009 to 52.1% in 2010. The
decrease in gross profit as a percent of revenues was primarily due to higher
promotional allowances, unfavorable sales mix and supplier transitional costs,
partially offset by decreases in distribution costs.





Over-the-Counter
Healthcare Segment


Gross
profit for the Over-the-Counter Healthcare segment increased $898,000, or 0.8%,
during 2010 versus 2009.  As a percent of Over-the-Counter Healthcare
revenues, gross profit decreased from 64.1% during 2009 to 63.4% during 2010.
The decrease in gross profit percentage was primarily the result of higher
returns reserves, promotional allowances and product costs, partially offset by
increased royalty revenue and lower distribution costs. The increase in returns
reserves was for slow moving Allergen Block products. The
increase in promotional allowances was primarily the result of an increase in
trade promotion activity behind the Chloraseptic, Little Remedies and Allergen Block products. The
increase in product costs was primarily the result of a change in supplier for
certain Clear Eyes products. The increase
in royalty revenue was the result of royalties received as part of a legal
settlement related to our oral care business.





Household
Cleaning Segment


Gross
profit for the Household Cleaning segment decreased $3.0 million, or 7.2%,
during 2010 versus 2009.  As a percent of Household Cleaning revenues,
gross profit decreased from 35.8% during 2009 to 34.9% during 2010. The decrease
in gross profit percentage was the result of higher promotional allowancesacross the segment and
costs associated with the transition to a new Comet powder supplier,
partially offset by decreased product costs for Chore Boy and Comet.





Personal
Care Segment


Gross
profit for the Personal Care segment increased $567,000, or 14.6%, during 2010
versus 2009.  As a percent of Personal Care revenues, gross profit
increased from 38.2% during 2009 to 40.9% during 2010.  The increase
in gross profit percentage was due to lower promotional allowances and
obsolescence costs for Cutex.








Contribution
Margin


2010
              Contribution
              Margin
            
            
            %
            
            
            2009
              Contribution
              Margin
            
            
            %
            
            
            Increase
              (Decrease)
            
            
            %OTC
      Healthcare
            
            $
            90,194
            
            
            
            50.0
            
            
            $
            83,821
            
            
            
            47.4
            
            
            $
            6,373
            
            
            
            7.6Household
      Cleaning
            
            
            31,919
            
            
            
            28.8
            
            
            
            33,933
            
            
            
            29.2
            
            
            
            (2,014
            )
            
            
            (5.9
            )Personal
      Care
            
            
            4,087
            
            
            
            37.6
            
            
            
            3,420
            
            
            
            33.7
            
            
            
            667
            
            
            
            19.5$
            126,200
            
            
            
            41.8
            
            
            $
            121,174
            
            
            
            40.0
            
            
            $
            5,026
            
            
            
            4.1





Contribution
Margin, defined as gross profit less advertising and promotional expenses, for
2010 increased $5.0 million, or 4.1%, versus 2009. The contribution margin
increase was the result of a $6.5 million, or 17.3%, decrease in advertising and
promotional spending, partially offset by the decrease in gross profit as
previously discussed.  The decrease in advertising and promotional
spending was primarily attributable to decreases in media support for both the
Over-the-Counter Healthcare and Household Cleaning segments, and market research
for the Over-the-Counter Healthcare segment.





Over-the-Counter
Healthcare Segment


Contribution
margin for the Over-the-Counter Healthcare segment increased $6.4 million, or
7.6%, during 2010 versus 2009.  The contribution margin increase was
the result of the increase in gross margin as previously discussed and a $5.5
million, or 18.4%, decrease in advertising and promotional spending. The
decrease in advertising and promotional spending was primarily attributable to a
decrease in media support for the Allergen Block and Murine Earigate products,
partially offset by increased media support behind The Doctor’s
Nightguard.





-40-


Household
Cleaning Segment


Contribution
margin for the Household Cleaning segment decreased $2.0 million, or 5.9%, during 2010 versus
2009. The contribution margin decrease was the result of the decrease in gross
profit as previously discussed, partially offset by a decrease in media support
for Comet Mildew Spray
Gel.





Personal
Care Segment


Contribution
margin for the Personal Care segment increased $667,000, or 19.5%, during 2010
versus 2009.  The contribution margin increase was the result of the
increase in gross profit as previously discussed and a modest reduction in trade
promotion and broker commissions for Cutex.





General
and Administrative


General
and administrative expenses were $34.2 million for
2010 versus $31.9 million for
2009. The increase in expense was due to a $2.5 million net
charge associated with the reduction in workforce and the CEO transition, which
took place in our second fiscal quarter, and increased employee incentive
compensation expenses, partially offset by a reduction in legal expenses and
favorable currency translation costs.




Depreciation
and Amortization


Depreciation
and amortization expense was $10.5 million for 2010 versus $9.4 million for
2009.  Amortization was affected by the transfer of two trademarks in
the Household Cleaning segment and one trademark in the Over-the-Counter
Healthcare segment, aggregating $45.6 million, from indefinite-lived status to
intangibles with finite lives. Commencing April 1, 2009, these intangibles are
being amortized to operations over a 20 year estimated useful
life.  This increase in amortization expense was partially offset by a
reduction in amortization resulting from a trademark that became fully amortized
at March 31, 2009, resulting in a net increase in depreciation and amortization
expense of $1.1 million for the period.





Impairment
of Intangible Assets and Goodwill


During
the fourth quarter of 2010, an impairment analysis of intangible assets and
goodwill was performed. As a result, a non-cash charge of $2.8 million was
recorded in 2010 related to the impairment of goodwill for one of the brands in
the Personal Care segment. The impairment charge related to goodwill was the
result of the carrying value exceeding the fair market value as a result of
distribution losses to private label brands. During 2009, a similar impairment
analysis of intangible assets and goodwill was performed.  As a
result, non-cash charges were recorded in 2009 related to the impairment of
certain intangible assets and goodwill of $58.6 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 $1.4 million,
respectively.  No impairment charges were recorded in
2008.





Interest
Expense


Net
interest expense was $22.9 million during 2010 versus $28.4 million during
2009.  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 7.2% for 2009
to 6.5% for 2010 while the average indebtedness decreased from $394.8 million
during 2009 to $353.2 million during 2010.





Loss
on Extinguishment of Debt


During
2010, the Company refinanced its long-term debt with a new senior credit
facility and senior notes.  As a result of the refinancing, the
Company incurred $2.7 million of expense related to the extinguished
debt.  The expense consisted of a $2.2 million non-cash charge and a
$500,000 premium paid to tender bonds.





Income
Taxes


The
provision for income taxes during 2010 was $21.8 million versus a benefit for
income taxes of $9.9 million in 2009.  The effective tax rate was
41.1% during 2010 versus (5.0)% during 2009. The 2010 tax rate reflects the
impact of a non-deductible impairment charge to goodwill for one of the brands
in the Personal Care segment. In addition, the tax rate reflects the impact of a
$930,000 non-cash charge to deferred tax liability as a result of increasing the
Company’s future effective tax rate from 37.9% to 38.2%.  The increase
in the future effective tax rate is a result of the divestiture of the shampoo
business which increases the overall effective state tax rate on continuing
operations.  The new effective rate is applicable for tax years
starting after March 31, 2010.  The 2009 tax rate includes a tax
benefit of $29.4 million related to the impairment charges of intangible assets
and goodwill recorded during the period.





-41-




Fiscal
2009 compared to Fiscal 2008





Revenues





2009
              Revenues
            
            
            %
            
            
            2008
              Revenues
            
            
            %
            
            
            Increase
              (Decrease)
            
            
            %OTC
      Healthcare
            
            $
            176,975
            
            
            
            58.4
            
            
            $
            183,692
            
            
            
            58.3
            
            
            $
            (6,717
            )
            
            
            (3.7
            )Household
      Cleaning
            
            
            116,015
            
            
            
            38.3
            
            
            
            121,127
            
            
            
            38.4
            
            
            
            (5,112
            )
            
            
            (4.2
            )Personal
      Care
            
            
            10,157
            
            
            
            3.3
            
            
            
            10,288
            
            
            
            3.3
            
            
            
            (131
            )
            
            
            (1.3
            )$
            303,147
            
            
            
            100.0
            
            
            $
            315,107
            
            
            
            100
            
            
            $
            (11,960
            )
            
            
            (3.8
            )





Revenues
decreased across all reporting segments during fiscal 2009 by an aggregate $12.0
million, or 3.8% compared to 2008.  Revenues from customers outside of
North America, which represents 3.6% of total revenues, decreased 16.6% 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 forClear Eyes, Little Remedies
andNew-Skin were more
than offset by revenue decreases on our wart care brands, as well as theMurine Ear,The Doctor’s andDermoplast
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 ofThe Doctor’s
NightGuard Dental Protector whileDermoplast 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 ofComet Mildew
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 decreased $131,000, or 1.3%, during 2009 versus
2008.  Increased revenues forCutex were offset by
declines on all other brands in this segment.  The increase in revenue
forCutex 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.





-42-




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
            
            
            3,877
            
            
            
            38.2
            
            
            
            3,280
            
            
            
            31.9
            
            
            
            597
            
            
            
            18.2$
            158,951
            
            
            
            52.4
            
            
            $
            163,296
            
            
            
            51.8
            
            
            $
            (4,345
            )
            
            
            (2.7
            )





Gross
profit for 2009 decreased by $4.3 million, or 2.7%, versus 2008.  As a
percent of total revenue, gross profit increased from 51.8% in 2008 to 52.4% 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 increased $597,000, or 18.2%, during 2009
versus 2008.  As a percent of Personal Care revenue, gross profit
increased from 31.9% during 2008 to 38.2% during 2009.  The increase
in gross profit percentage was due to product cost savings and 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
            
            
            
            29.2
            
            
            
            38,185
            
            
            
            31.5
            
            
            
            (4,252
            )
            
            
            (11.1
            )Personal
      Care
            
            
            3,420
            
            
            
            33.7
            
            
            
            2,708
            
            
            
            26.3
            
            
            
            712
            
            
            
            26.3$
            121,174
            
            
            
            40.0
            
            
            $
            129,053
            
            
            
            41.0
            
            
            $
            (7,879
            )
            
            
            (6.1
            )





Contribution
margin, defined as gross profit less advertising and promotional expenses,
decreased by $7.9 million, or 6.1%, for 2009 versus 2008.  The
contribution margin decrease was the result of the decrease in gross profit as
previously discussed, and an increase of $3.5 million, or 10.3%, 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 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 forThe Doctor’s NightGuard
Dental Protector andChloraseptic
 sore throat products.





-43-
 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 $142,000 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 increased $712,000, or 26.3%, during 2009
versus 2008.  The contribution margin increase was primarily the
result of the gross profit increase previously discussed and a $115,000, or
20.1%, 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 was 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 $9.4 million for 2009 versus $9.2 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.  As a result, non-cash charges were recorded in 2009
related to the impairment of certain intangible assets and goodwill of $58.6
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 $1.4 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 $9.9 million versus a provision for
income taxes of $19.2 million in 2008.  The effective income tax rates
were (5.0%) and 37.4% for 2009 and 2008, respectively.  The 2009 tax
rate includes a tax benefit of $29.4 million related the impairment charges of
intangible assets and goodwill recorded during the period.





-44-




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.  During the year ended March 31, 2010, the
Company issued $150.0 million of 8.25% senior notes due 2018 and entered into a
senior secured term loan facility of $150.0 million maturing 2016. A portion of
the proceeds from the preceding transactions were used to purchase, redeem or
otherwise retire all of the previously issued senior subordinated notes and to
repay all amounts under our former credit facility and terminate the associated
credit agreement.





Year
      Ended March 31,(In
      thousands)
            
            2010
            
            
            2009
            
            2008Net
      cash provided by (used in):Operating
      activities
            
            $
            59,427
            
            
            $
            66,679
            
            
            $
            44,989Investing
      activities
            
            
            7,320
            
            
            
            (4,672
            )
            
            
            (537
            )Financing
      activities
            
            
            (60,831
            )
            
            
            (32,904
            )
            
            
            (52,132
            )





Fiscal
2010 compared to Fiscal 2009


Operating
Activities


Net cash
provided by operating activities was $59.4 million for 2010 compared to $66.7
million for 2009.  The $7.3 million decrease in net cash provided by
operating activities was primarily the result of the following:





·
            A
      net cash outflow of $3.8 million related to working capital in 2010
      compared to a net cash inflow of $7.9 million related to working capital
      in 2009 resulted in a $11.7 million decrease in working capital, partially
      offset by





·
            A
      net increase of $4.5 million in net income plus non-cash expenses in 2010
      compared to 2009.





The
increase in working capital in 2010 was primarily the result of an increase in
inventory, due to supplier transitions, and an increase in prepaid
taxes.





Consistent
with 2009, our 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, stock-based compensation costs, as well as the 2010 loss on
extinguishment of debt.





Investing
Activities


Net cash provided by
investing activities was $7.3 million for 2010 compared to net cash used for
investing activities of $4.7 million for 2009.The net cash
provided by investing activities during the year ended March 31, 2010 was
primarily due to the divestiture of the shampoo business partially offset by the
acquisition of property and equipment.  Net cash used for investing
activities during the year ended March 31, 2009 was primarily due to the $4.2 million
settlement of a purchase price adjustment associated with the Wartner USA BV
acquisition in 2006.  The remainder was for the acquisition of
property and equipment.





Financing
Activities


Net cash
used for financing activities was $60.8 million for 2010 compared to $32.9
million for 2009.  During the year ended March 31, 2010, we repaid
$60.8 million of indebtedness with cash generated from operations and the
proceeds from the sale of the shampoo business.  On March 24, 2010, we
used the proceeds from the issuance of new debt of $296.0 million less $6.6
million of deferred financing costs to retire all of the existing debt, with the
exception of $28.1 million which was subsequently retired in April,
2010.  We recorded a loss on the extinguishment of debt in the amount
of $2.7 million.  At March 31, 2010, our outstanding indebtedness was
$328.1 million compared to $378.3 million at March 31, 2009.





-45-




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, our 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 our prior revolving line
of credit, general economic conditions and the state of the credit markets, we
limited our debt repayments during the latter half of 2009 to only scheduled
maturities until we 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.








Capital
Resources





In March
and April 2010, the Company retired its Senior Secured Term Loan facility with a
maturity date of April 6, 2011 and Senior Subordinated Notes that bore interest
at 9.25% with a maturity date of April 15, 2012, and replaced them with Senior
Secured Credit Facility with a maturity of April 1, 2016, a Senior Revolving
Credit facility with a maturity of April 1, 2015 and Senior Notes that bear
interest at 8.25% with a maturity of April 15, 2018.  This debt
refinancing improved our liquidity position due to the ability to increase the
amount of the Senior Secured Credit Facility, obtaining a revolving line of
credit and extending the maturities of our indebtedness.  The new debt
also better positions the Company to pursue acquisitions as part of its growth
strategy.





We
entered into a $150.0 million Senior Secured Credit Facility with a discount to
the lenders of $1.8 million and net proceeds of $148.2 million.  The
Senior Notes were issued at a aggregate face value of $150.0 million with a
discount to bondholders of $2.2 million and net proceeds to us of $147.8
million.  The discount was offered to improve the yield to maturity to
lenders reflective of market conditions at the time of the
offering.  In addition to the discount, we incurred $7.3 million of
costs primarily related to bank arrangers fee and legal advisors of which $6.6
million was capitalized as deferred financing costs and $0.7 million
expensed.  The deferred financing costs are being amortized over the
term of the loan and notes.





As of
March 31, 2010, we had an aggregate of $328.1 million of outstanding
indebtedness, which consisted of the following:





·
            $150.0
      million of borrowings under the Senior Secured Credit
      Facility;




·
            $28.1
      million of 9.25% Senior Subordinated Notes due 2012, which were redeemed
      in full on April 15, 2010; and·
            $150.0
      million of 8.25% Senior Notes due
2018.





-46-




The
Company had $30.0 million of borrowing capacity under the revolving credit
facility at such time, as well as $200.0 million under the Senior Credit
Facility.





All loans
under the Senior Secured Credit Facility bear interest at floating rates, based
on either the prime rate, or at our option, the LIBOR rate, plus an applicable
margin.  The LIBOR rate option contains a floor rate of
1.5%.  At March 31, 2010, an aggregate of $150.0 million was
outstanding under the Senior Secured Credit Facility at an interest rate of
4.75%.





We use
derivative financial instruments to mitigate the impact of changing interest
rates associated with our long-term debt obligations.  Although we do
not enter into derivative financial instruments for trading purposes, all of our
derivatives are straightforward over-the-counter instruments with liquid
markets.  The notional, or contractual, amount of our derivative
financial instruments is used to measure the amount of interest to be paid or
received and does not represent an actual liability.  We account for
these financial instruments as cash flow hedges.





In March
2005, we 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, we 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.  Under that swap agreement, we agreed to pay a fixed rate of
2.88% while receiving a variable rate based on LIBOR.  The agreement
terminated and was settled in full 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, 2010, the
Company did not participate in an interest rate swap and at March 31, 2009 the
fair value of the interest rate swap was $2.2 million, which was included in
other current liabilities.





The
Senior Secured Credit Facility contains various financial covenants, including
provisions that require us to maintain certain leverage and interest coverage
ratios and not to exceed annual capital expenditures of $3.0
million.  The Senior Secured Credit Facility, as well as the Indenture
governing the Senior 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 our 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 4.30 to 1.0 for the quarter ended March 31,
      2010, decreasing over time to 3.50 to 1.0 for the quarter ending March 31,
      2014, and remaining level thereafter,
and





·
            Have
      an interest coverage ratio of greater than 2.75 to 1.0 for the quarter
      ended March 31, 2010, increasing over time to 3.25 to 1.0 for the quarter
      ending March 31, 2013, and remaining level
  thereafter.





At March
31, 2010, we were in compliance with the applicable financial and restrictive
covenants under the Senior Credit Facility and the Indenture governing the
Senior Notes. Additionally, management anticipates that in the normal course of
operations, the Company will be in compliance with the financial and restrictive
covenants during the ensuing year.





At March
31, 2010, we had $150.0 million outstanding under the Senior Secured Credit
Facility which matures in April 2016.  We are obligated to make
quarterly principal payments on the loan equal to $375,000, representing 0.25%
of the initial principal amount of the term loan.  We also have the
ability to borrow an additional $30.0 million under a revolving credit facility
and $200.0 million pursuant to the Senior Secured Credit Facility pursuant to an
“accordion” feature.





We made
repayments against outstanding indebtedness of $60.5 million in excess of
scheduled maturities through March 31, 2010 compared to $29.3 million during
2009.  During 2009, we built a cash reserve in excess of $30.0 million
to provide adequate liquidity given the expiration of our prior revolving credit
facility.





-47-





Commitments





As of
March 31, 2010, 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
            
            $
            328.1
            
            
            $
            29.6
            
            
            $
            3.0
            
            
            $
            3.0
            
            
            $
            292.5Interest on long-term debt
      (1)
            
            
            141.5
            
            
            
            19.7
            
            
            
            39.0
            
            
            
            38.8
            
            
            
            44.0Purchase
      obligations:Inventory costs (2)
            
            
            53.0
            
            
            
            38.2
            
            
            
            7.9
            
            
            
            2.2
            
            
            
            4.7Other costs (3)
            
            
            1.3
            
            
            
            1.3
            
            
            
            --
            
            
            
            --
            
            
            
            --Operating
      leases
            
            
            2.7
            
            
            
            0.7
            
            
            
            1.2
            
            
            
            0.8
            
            
            
            --Total
      contractual cash obligations
            
            $
            526.6
            
            
            $
            89.5
            
            
            $
            51.1
            
            
            $
            44.8
            
            
            $
            341.2








(1)
            Represents
      the estimated interest obligations on the outstanding balances of the Term
      Loan Facility and Senior Notes, together, assuming scheduled principal
      payments (based on the terms of the loan agreements) are made and assuming
      a weighted average interest rate of 6.5%.  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 $1.5 million, in the first
      year.








(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.





-48-





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 intend 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 (including, without
      limitation, vendor and SKU rationalization and expansion of private label
      of product offerings),





·
            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,
      dispositions 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 and transportation and fuel
  charges,





-49-




·
            Our
      ability to protect our intellectual property
  rights,





·
            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.








ITEM7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





We are
exposed to changes in interest rates because our Senior Secured Credit Facility
is variable rate debt.  Interest rate changes generally do not affect
the market value of the Senior Secured Credit Facility, but do affect the amount
of our interest payments and, therefore, our future earnings and cash flows,
assuming other factors are held constant.  At March 31, 2010, we had
variable rate debt of approximately $150.0 million under our Senior Secured
Credit Facility.





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, 2011 of
approximately $1.5 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.





-50-


ITEM9A.
            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 (the “Exchange Act”) as of March 31,
2010.  Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that, as of March 31, 2010, 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, 2010.  In making its assessment,
management has used the criteria established by the Committee of Sponsoring
Organizations of the Treadway Commission inInternal 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, 2010.





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 Part IV, 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, 2010 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.








ITEM9B.
            OTHER
      INFORMATION





None.





-51-





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 2010
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 2010
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 2010
Proxy Statement, which is incorporated herein by reference.








ITEM 13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE





Information
required to be disclosed by this Item will be contained in the Company’s 2010
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 2010
Proxy Statement, which is incorporated herein by reference.





-52-





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-33 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, 2010Consolidated
      Balance Sheets at March 31, 2010 and 2009Consolidated
      Statements of Stockholders’ Equity and Comprehensive
              Income
      for each of the three years in the period ended March 31,
    2010Consolidated
      Statements of Cash Flows for each of the three years
              in
      the period ended March 31, 2010Notes
      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.





-53-





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 11,
      2010








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/
      MATTHEW M. MANNELLY
            
            President
              and
      Chief Executive Officer
            
            June
      11,
      2010Matthew
      M. Mannelly
            
            (Principal
      Executive Officer)/s/
      PETER J. ANDERSON
            
            Chief
      Financial Officer
            
            June
      11,
      2010Peter
      J. Anderson
            
            (Principal
      Financial Officer andPrincipal
      Accounting Officer)/s/
      JOHN E. BYOM
            
            Director
            
            June
      11,
      2010John
      E. Byom/s/
      GARY E. COSTLEY
            
            Director
            
            June
      11,
      2010Gary
      E. Costley/s/
      CHARLES J. HINKATY
            
            Director
            
            June
      11,
      2010Charles J. Hinkaty/s/
      PATRICK M. LONERGAN
            
            Director
            
            June
      11,
      2010Patrick
      M. Lonergan





-54-





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS








Prestige
Brands Holdings, Inc.





Audited
Financial Statements





March
31, 2010








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, 2010
            
            F-2Consolidated
      Balance Sheets at March 31, 2010 and 2009
            
            F-3Consolidated
      Statements of Stockholders’ Equity and Comprehensive Income
      for
              each
      of the three years in the period ended March 31, 2010
            
            F-4Consolidated
      Statements of Cash Flows for each of the three years
              in
      the period ended March 31, 2010
            
            F-6Notes
      to Consolidated Financial Statements
            
            F-7Schedule
      II—Valuation and Qualifying Accounts
            
            F-33








-55-




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 subsidiaries at March 31,
2010 and 2009, and the results of their operations and their cash flows for each
of the three years in the period ended March 31, 2010 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
consolidated financial statements.  Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of March 31, 2010, 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
11,
2010





F-1




Prestige
Brands Holdings, Inc.


Consolidated
Statements of Operations








Year
      Ended March 31,(In
      thousands, except per share data)
            
            2010
            
            
            2009
            
            
            2008RevenuesNet
      sales
            
            $
            296,922
            
            
            $
            300,937
            
            
            $
            313,125Other
      revenues
            
            
            5,101
            
            
            
            2,210
            
            
            
            1,982Total
      revenues
            
            
            302,023
            
            
            
            303,147
            
            
            
            315,107Cost
      of SalesCost
      of sales (exclusive of depreciation shown below)
            
            
            144,587
            
            
            
            144,196
            
            
            
            151,811Gross
      profit
            
            
            157,436
            
            
            
            158,951
            
            
            
            163,296Operating
      ExpensesAdvertising
      and promotion
            
            
            31,236
            
            
            
            37,777
            
            
            
            34,243General
      and administrative
            
            
            34,195
            
            
            
            31,888
            
            
            
            31,414Depreciation
      and amortization
            
            
            10,552
            
            
            
            9,423
            
            
            
            9,219Impairment
      of goodwill and intangible assets
            
            
            2,751
            
            
            
            249,285
            
            
            
            --Total
      operating expenses
            
            
            78,734
            
            
            
            328,373
            
            
            
            74,876Operating
      income (loss)
            
            
            78,702
            
            
            
            (169,422)
            
            
            
            88,420Other
      (income) expenseInterest
      income
            
            
            (1
            )
            
            
            (143
            )
            
            
            (675
            )Interest
      expense
            
            
            22,936
            
            
            
            28,579
            
            
            
            38,068Loss
      on extinguishment of debt
            
            
            2,656
            
            
            
            --
            
            
            
            --Miscellaneous
            
            
            --
            
            
            
            --
            
            
            
            (187)Total
      other (income) expense
            
            
            25,591
            
            
            
            28,436
            
            
            
            37,206Income
      (loss) from continuing operations before income taxes
            
            
            53,111
            
            
            
            (197,858)
            
            
            
            51,214Provision
      (benefit) for income taxes
            
            
            21,849
            
            
            
            (9,905)
            
            
            
            19,168Income
      (loss) from continuing operations
            
            
            31,262
            
            
            
            (187,953)
            
            
            
            32,046Discontinued
      OperationsIncome
      from discontinued operations, net of income tax
            
            
            696
            
            
            
            1,177
            
            
            
            1,873Gain
      on sale of discontinued operations, net of income tax
            
            
            157
            
            
            
            --
            
            
            
            --Net
      income (loss)
            
            $
            32,115
            
            
            $
            (186,776)
            
            
            $
            33,919Basic
      earnings (loss) per shareIncome
      (loss) from continuing operations
            
            $
            0.63
            
            
            $
            (3.76
            )
            
            $
            0.64Net
      Income (Loss)
            
            $
            0.64
            
            
            $
            (3.74
            )
            
            $
            0.68Diluted
      earnings (loss) per shareIncome
      (loss) from continuing operations
            
            $
            0.62
            
            
            $
            (3.76
            )
            
            $
            0.64Net
      Income (Loss)
            
            $
            0.64
            
            
            $
            (3.74
            )
            
            $
            0.68Weighted
      average shares outstanding:Basic
            
            
            50,013
            
            
            
            49,935
            
            
            
            49,751Diluted
            
            
            50,085
            
            
            
            49,935
            
            
            
            50,039





See
accompanying notes.





F-2




Prestige
Brands Holdings, Inc.


Consolidated
Balance Sheets





(In
      thousands)
            
            March
      31,Assets
            
            2010
            
            
            2009Current
      assetsCash
      and cash equivalents
            
            $
            41,097
            
            
            $
            35,181Accounts
      receivable
            
            
            30,621
            
            
            
            36,025Inventories
            
            
            29,162
            
            
            
            25,939Deferred
      income tax assets
            
            
            6,353
            
            
            
            4,022Prepaid
      expenses and other current assets
            
            
            4,917
            
            
            
            1,358Current
      assets of discontinued operations
            
            
            --
            
            
            
            1,038Total
      current assets
            
            
            112,150
            
            
            
            103,563Property
      and equipment
            
            
            1,396
            
            
            
            1,367Goodwill
            
            
            111,489
            
            
            
            114,240Intangible
      assets
            
            
            559,229
            
            
            
            569,137Other
      long-term assets
            
            
            7,148
            
            
            
            4,602Long-term
      assets of discontinued operations
            
            
            --
            
            
            
            8,472Total
      Assets
            
            $
            791,412
            
            
            $
            801,381Liabilities
      and Stockholders’ EquityCurrent
      liabilitiesAccounts
      payable
            
            $
            12,771
            
            
            $
            15,898Accrued
      interest payable
            
            
            1,561
            
            
            
            5,371Other
      accrued liabilities
            
            
            11,733
            
            
            
            9,407Current
      portion of long-term debt
            
            
            29,587
            
            
            
            3,550Total
      current liabilities
            
            
            55,652
            
            
            
            34,226Long-term
      debtPrincipal
      amount
            
            
            298,500
            
            
            
            374,787Less
      unamortized discount
            
            
            (3,943)
            
            
            
            --Long-term
      debt, net of unamortized discount
            
            
            294,557
            
            
            
            374,787Deferred
      income tax liabilities
            
            
            112,144
            
            
            
            97,983Total
      Liabilities
            
            
            462,353
            
            
            
            506,996Commitments
      and Contingencies – Note 16Stockholders’
      EquityPreferred
      stock - $0.01 par valueAuthorized
      – 5,000 sharesIssued
      and outstanding – NoneCommon
      stock - $0.01 par valueAuthorized
      – 250,000 sharesIssued
      – 50,154 shares at March 31, 2010 and 50,060 at March 31,
    2009
            
            
            502
            
            
            
            501Additional
      paid-in capital
            
            
            384,027
            
            
            
            382,803Treasury
      stock, at cost – 124 shares at
              March
      31, 2010 and 2009, respectively
            
            
            (63)
            
            
            
            (63)Accumulated
      other comprehensive income (loss)
            
            
            --
            
            
            
            (1,334)Retained
      earnings (accumulated deficit)
            
            
            (55,407)
            
            
            
            (87,522)Total
      Stockholders’ Equity
            
            
            329,059
            
            
            
            294,385Total
      Liabilities and Stockholders’ Equity
            
            $
            791,412
            
            
            $
            801,381





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, 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
              
              
              $
              479,073Stock-based
      compensation
              
              
              --
              
              
              
              --
              
              
              
              2,439
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              2,439Purchase
      of common stock for treasury
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              65
              
              
              
              (16
              )
              
              
              --
              
              
              
              --
              
              
              
              (16
              )Components
      of comprehensive incomeNet
      income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (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 income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (187,111)Balances
      at March 31, 2009
              
              
              50,060
              
              
              $
              501
              
              
              $
              382,803
              
              
              
              124
              
              $
              
              (63)
              
              
              $
              (1,334
              )
              
              $
              (87,522
              )
              
              $
              294,385


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, 2009
            
            
            50,060
            
            
            $
            501
            
            
            $
            382,803
            
            
            
            124
            
            
            $
            (63
            )
            
            $
            (1,334
            )
            
            $
            (87,522
            )
            
            $
            294,385Stock-based
      compensation
            
            
            94
            
            
            
            1
            
            
            
            1,224
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            1,225Components
      of comprehensive incomeNet
      Income
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            32,115
            
            
            
            32,115Amortization
      of interest rate caps reclassified into earnings, net of income tax
      expense of $818
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            1,334
            
            
            
            --
            
            
            
            1,334Total
      comprehensive income
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            33,449Balances
      at March 31, 2010
            
            
            50,154
            
            
            $
            502
            
            
            $
            384,027
            
            
            
            124
            
            
            $
            (63
            )
            
            $
            --
            
            
            $
            (55,407
            )
            
            $
            329,059





See
accompanying notes.





F-5




Prestige
Brands Holdings, Inc.


Consolidated
Statements of Cash Flows








Year
      Ended March 31,2010
            
            
            2009
            
            
            2008(In
      thousands)Operating
      ActivitiesNet
      income (loss)
            
            $
            32,115
            
            
            $
            (186,776)
            
            
            $
            33,919Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
      and amortization
            
            
            11,450
            
            
            
            11,219
            
            
            
            11,014Gain
      on sale of discontinued operations
            
            
            (253
            )
            
            
            --
            
            
            
            --Deferred
      income taxes
            
            
            11,012
            
            
            
            (19,955
            )
            
            
            10,096Amortization
      of deferred financing costs
            
            
            1,926
            
            
            
            2,233
            
            
            
            3,007Impairment
      of goodwill and intangible assets
            
            
            2,751
            
            
            
            249,590
            
            
            
            --Stock-based
      compensation costs
            
            
            2,085
            
            
            
            2,439
            
            
            
            1,139Loss
      on extinguishment of debt
            
            
            2,166
            
            
            
            --
            
            
            
            --Changes
      in operating assets and liabilities, net of effects of purchases of
      businessesAccounts
      receivable
            
            
            6,404
            
            
            
            8,193
            
            
            
            (9,052
            )Inventories
            
            
            (3,351)
            
            
            
            2,719
            
            
            
            477Prepaid
      expenses and other current assets
            
            
            (3,559)
            
            
            
            458
            
            
            
            (381)Accounts
      payable
            
            
            (3,127)
            
            
            
            (2,265)
            
            
            
            (975)Accrued
      liabilities
            
            
            (192)
            
            
            
            (1,176)
            
            
            
            (4,255)Net
      cash provided by operating activities
            
            
            59,427
            
            
            
            66,679
            
            
            
            44,989Investing
      ActivitiesPurchases
      of equipment
            
            
            (673
            )
            
            
            (481
            )
            
            
            (488
            )Proceeds
      from sale of discontinued operations
            
            
            7,993
            
            
            
            --
            
            
            
            --Purchases
      of intangible assets
            
            
            --
            
            
            
            --
            
            
            
            (33)Business
      acquisition purchase price adjustments
            
            
            --
            
            
            
            (4,191)
            
            
            
            (16)Net
      cash provided by (used for) investing activities
            
            
            7,320
            
            
            
            (4,672)
            
            
            
            (537)Financing
      ActivitiesProceeds
      from issuance of debt
            
            
            296,046
            
            
            
            --
            
            
            
            --Payment
      of deferred financing costs
            
            
            (6,627
            )
            
            
            --
            
            
            
            --Repayment
      of long-term debt
            
            
            (350,250
            )
            
            
            (32,888)
            
            
            
            (52,125)Purchase
      of common stock for treasury
            
            
            --
            
            
            
            (16)
            
            
            
            (7)Net
      cash used for financing activities
            
            
            (60,831)
            
            
            
            (32,904)
            
            
            
            (52,132)Increase
      (decrease) in cash
            
            
            5,916
            
            
            
            29,103
            
            
            
            (7,680
            )Cash
      - beginning of year
            
            
            35,181
            
            
            
            6,078
            
            
            
            13,758Cash
      - end of year
            
            $
            41,097
            
            
            $
            35,181
            
            
            $
            6,078Interest
      paid
            
            $
            24,820
            
            
            $
            26,745
            
            
            $
            36,840Income
      taxes paid
            
            $
            15,494
            
            
            $
            9,844
            
            
            $
            9,490





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, club and
dollar 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 notes more fully described in Note 10 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., “2010”) mean 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 collectability 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.  The Company does not amortize goodwill, but performs
impairment tests of the carrying value at least annually in the fourth fiscal
quarter of each year.  The Company tests goodwill for impairment at
the reporting unit “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 3 to 30 years.





Indefinite-lived
intangible assets are tested for impairment at least annually in the fourth
fiscal quarter; 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 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 these criteria are met and
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 participates in 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.  These
promotional programs consist of direct-to-consumer incentives such as coupons
and 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.





F-8





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.





Cost
      of Sales


Cost of
sales includes product costs, warehousing costs, inbound and outbound shipping
costs, and handling and storage costs.  Shipping, warehousing and
handling costs were $21.4 million for 2010, $22.5 million for 2009 and $23.2 for
2008.





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.





Stock-based
      Compensation


The
Company recognizes stock-based compensation by measuring 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


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.





The Taxes
Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) prescribes 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.  The guidance 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
Company is subject to taxation in the United States and various state and
foreign jurisdictions.





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





Derivative
      Instruments


Companies
are required to recognize derivative instruments as either assets or liabilities
in the consolidated Balance Sheets 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 (principally interest expense) 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.





F-9




Reclassifications


Certain
prior period financial statement amounts have been reclassified to conform to
the current period presentation.








Recently
      Issued Accounting Standards


In April
2010, the FASB issued authoritative guidance to provide clarification regarding
the classification requirements of a share-based payment award with an exercise
price denominated in the currency of a market in which a substantial portion of
the entity’s equity securities trade. The guidance states that such an award
should not be considered to contain a market, performance, or service condition
and should not be classified as a liability if it otherwise qualifies as an
equity classification. This guidance is effective for fiscal years beginning
after December 15, 2010, and for interim periods within those fiscal
years.  The Company does not expect this guidance to have a material
impact on its consolidated financial statements.





In May
2009, the FASB issued guidance regarding subsequent events, which was
subsequently updated in February 2010. This guidance established general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.  In particular, this guidance set forth the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. This guidance
was effective for financial statements issued for fiscal years and interim
periods ending after June 15, 2009, and was therefore adopted by the Company for
the second quarter 2009 reporting.  The adoption did not have a significant
impact on the subsequent events that the Company reports, either through
recognition or disclosure, in the consolidated financial statements.  In
February 2010, the FASB amended its guidance on subsequent events to remove the
requirement to disclose the date through which an entity has evaluated
subsequent events, alleviating conflicts with current SEC guidance.  This
amendment was effective immediately and the Company therefore removed the
disclosure in this Annual Report.





In
January 2010, the FASB issued authoritative guidance requiring new disclosures
and clarifying some existing disclosure requirements about fair value
measurement.  Under the new guidance, a reporting entity should (a)
disclose separately the amounts of significant transfers in and out of Level 1
and Level 2 fair value measurements and describe the reasons for the transfers,
and (b) present separately information about purchases, sales, issuances, and
settlements in the reconciliation for fair value measurements using significant
unobservable inputs.  This guidance is effective for interim and
annual reporting periods beginning after December 15, 2009, except for the
disclosures about purchases, sales, issuances, and settlements in the roll
forward of activity in Level 3 fair value measurements.  Those
disclosures are effective for fiscal years beginning after December 15, 2010,
and for interim periods within those fiscal years.  The new guidance
requires only enhanced disclosures and the Company does not expect this guidance
to have a material impact on its consolidated financial statements.





In
August 2009, the FASB issued authoritative guidance to provide
clarification on measuring liabilities at fair value when a quoted price in an
active market is not available.  In these circumstances, a valuation
technique should be applied that uses either the quote of the liability when
traded as an asset, the quoted prices for similar liabilities or similar
liabilities when traded as assets, or another valuation technique consistent
with existing fair value measurement guidance, such as an income approach or a
market approach.  The new guidance also clarifies that when estimating the
fair value of a liability, a reporting entity is not required to include a
separate input or adjustment to other inputs relating to the existence of a
restriction that prevents the transfer of the liability.  This guidance
became effective beginning with the third quarter of the Company’s 2010 fiscal
year; however, the adoption of the new guidance did not have a material impact
on the Company’s financial position, results from operations or cash
flows.





In
June 2009, the FASB issued authoritative guidance to eliminate the
exception to consolidate a qualifying special-purpose entity, change the
approach to determining the primary beneficiary of a variable interest entity
and require companies to more frequently re-assess whether they must consolidate
variable interest entities.  Under the new guidance, the primary
beneficiary of a variable interest entity is identified qualitatively as the
enterprise that has both (a) the power to direct the activities of a
variable interest entity that most significantly impact the entity’s economic
performance, and (b) the obligation to absorb losses of the entity that
could potentially be significant to the variable interest entity or the right to
receive benefits from the entity that could potentially be significant to the
variable interest entity.  This guidance becomes effective for the
Company’s fiscal 2011 year-end and interim reporting periods.  The Company
does not expect this guidance to have a material impact on its consolidated
financial statements.





In June
2009, the FASB established the FASB ASC as the source of authoritative
accounting principles recognized by the FASB to be applied in the preparation of
financial statements in conformity with generally accepted accounting
principles.  The new guidance explicitly recognizes rules and
interpretive releases of the SEC under federal securities laws as authoritative
GAAP for SEC registrants.  The new guidance became effective for our
financial statements issued for the three and six month periods ending on
September 30, 2009.





F-10





The
Derivatives and Hedging Topic of the FASB ASC was amended to require 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, the Derivatives and Hedging Topic now 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.  The amendments to the Derivatives
and Hedging Topic were effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008.  The
implementation of the Derivatives and Hedging guidance required 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.





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.          
Discontinued Operations and Sale of Certain of Assets





In
October 2009, the Company sold certain assets related to the shampoo brands
previously included in its Personal Care products segment to an unrelated third
party.  In accordance with the Discontinued Operations Topic of the
ASC, the Company reclassified the related assets as held for sale in the
consolidated balance sheets as of March 31, 2009 and reclassified the related
operating results as discontinued in the consolidated financial statements and
related notes for all periods presented.  The Company recognized a
gain of $253,000 on a pre-tax basis and $157,000 net of tax effects on the sale
in the quarter ended December 31, 2009.





The
following table presents the assets related to the discontinued operations as of
March 31, 2009 (in thousands):





Inventory
            
            $
            1,038Intangible
      assets
            
            
            8,472Total
      assets held for sale
            
            $
            9,510











The
following table summarizes the results of discontinued operations (in
thousands):





Year
      Ended March 31,2010
            
            
            2009
            
            
            2008Components
      of IncomeRevenues
            
            $
            5,053
            
            
            $
            9,568
            
            
            $
            11,496Income
      before income taxes
            
            
            1,121
            
            
            
            1,896
            
            
            
            2,994








The total
sale price for the assets was $9 million, with $8 million received upon closing,
and the remaining $1 million to be received on the first anniversary of the
closing.





3.
            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 theWartner brand of
over-the-counter wart treatment products.  The Company expects that
theWartner 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 theWartner 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.





F-11




The
purchase price of the ownership interests was approximately $31.2 million,
including fees and expenses of the acquisition of $216,000 and the assumption of
approximately $5.0 million of contingent payments, with an originally estimated
fair value of $3.8 million, owed to the former owner ofWartner 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 theWartner
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.








4.
            Accounts
      Receivable





Accounts
receivable consist of the following (in thousands):


March
      31,2010
            
            
            2009Trade
      accounts receivable
            
            $
            35,527
            
            
            $
            37,521Other
      receivables
            
            
            1,588
            
            
            
            1,08137,115
            
            
            
            38,602Less
      allowances for discounts, returns and
              uncollectible accounts
            
            
            (6,494
            )
            
            
            (2,577
            )$
            30,621
            
            
            $
            36,025











5.
            Inventories





Inventories
consist of the following (in thousands):


March
      31,2010
            
            
            2009Packaging
      and raw materials
            
            $
            2,037
            
            
            $
            1,955Finished
      goods
            
            
            27,125
            
            
            
            23,984$
            29,162
            
            
            $
            25,939





Inventories
are shown net of allowances for obsolete and slow moving inventory of $2.0
million and $1.4 million at March 31, 2010 and 2009, respectively.





F-12





6.
            Property
      and Equipment





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


March
      31,2010
            
            
            2009Machinery
            
            $
            1,620
            
            
            $
            1,556Computer
      equipment
            
            
            1,570
            
            
            
            1,021Furniture
      and fixtures
            
            
            239
            
            
            
            239Leasehold
      improvements
            
            
            418
            
            
            
            3573,847
            
            
            
            3,173Accumulated
      depreciation
            
            
            (2,451
            )
            
            
            (1,806
            )$
            1,396
            
            
            $
            1,367





The
Company recorded depreciation expense of $645,000, $548,000, $507,000 for 2010,
2009 and 2008, respectively.








7.
            Goodwill





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




Over-the-
                Counter
              
              
              Household
              
              
              PersonalHealthcare
              
              
              Cleaning
              
              
              Care
              
              
              Consolidated


Balance
      – March 31, 2008


Goodwill
              
              $
              235,789
              
              
              $
              72,549
              
              
              $
              4,643
              
              
              $
              312,981Accumulated
      purchase price adjustments
              
              
              (2,174
              )
              
              
              --
              
              
              
              --
              
              
              
              (2,174)Accumulated
      impairment losses
              
              
              --
              
              
              
              --
              
              
              
              (1,892)
              
              
              
              (1,892)


233,615
              
              
              
              72,549
              
              
              
              2,751
              
              
              
              308,9152009
      purchase price adjustments
              
              
              (3,988)
              
              
              
              --
              
              
              
              --
              
              
              
              (3,988)2009
      impairments
              
              
              (125,527)
              
              
              
              (65,160)
              
              
              
              --
              
              
              
              (190,687)Balance
      – March 31, 2009Goodwill
              
              
              235,789
              
              
              
              72,549
              
              
              
              4,643
              
              
              
              312,981Accumulated
      purchase price adjustments
              
              
              (6,162)
              
              
              
              --
              
              
              
              --
              
              
              
              (6,162)Accumulated
      impairment losses
              
              
              (125,527)
              
              
              
              (65,160)
              
              
              
              (1,892)
              
              
              
              (192,579)104,100
              
              
              
              7,389
              
              
              
              2,751
              
              
              
              114,2402010
      impairments
              
              
              --
              
              
              
              --
              
              
              
              (2,751)
              
              
              
              (2,751)Balance
      – March 31, 2010Goodwill
              
              $
              235,789
              
              
              
              72,549
              
              
              
              4,643
              
              
              
              312,981Accumulated
      purchase price adjustments
              
              
              (6,162)
              
              
              
              --
              
              
              
              --
              
              
              
              (6,162)Accumulated
      impairment losses
              
              
              (125,527)
              
              
              
              (65,160)
              
              
              
              (4,643)
              
              
              
              (195,330)104,100
              
              
              
              7,389
              
              
              
              --
              
              
              
              111,489


At March
31, 2010, in conjunction with the annual test for goodwill impairment, the
Company recorded an impairment charge of $2.8 million to adjust the carrying
amounts of goodwill related to one reporting unit within the Personal Care
segment to its fair value, as determined by use of a discounted cash flow
methodology.  The impairment was a result of distribution losses and
increased competition from private label store brands.





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.  These
charges were a consequence of the challenging economic environment experienced
in 2009, the dislocation of the debt and equity markets, and contracting
consumer demand for the Company’s product offerings.





The
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, 2010 and 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.    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





8.
            Intangible
      Assets





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





Year
      Ended March 31, 2010Indefinite
              Lived
            
            
            Finite
              Lived
            
            
            Non
              CompeteTrademarks
            
            
            Trademarks
            
            
            Agreement
            
            
            TotalsCarrying
      AmountsBalance
      – March 31, 2009
            
            $
            500,176
            
            
            $
            106,159
            
            
            $
            158
            
            
            $
            606,493Reclassifications
            
            
            (45,605
            )
            
            
            45,605
            
            
            
            --
            
            
            
            --AdditionsDeletions
            
            
            --
            
            
            
            (500
            )
            
            
            --
            
            
            
            (500
            )Impairments
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --Balance
      – March 31, 2010
            
            $
            454,571
            
            
            $
            151,264
            
            
            $
            158
            
            
            $
            605,993Accumulated
      AmortizationBalance
      – March 31, 2009
            
            $
            --
            
            
            $
            37,214
            
            
            $
            142
            
            
            $
            37,356Additions
            
            
            --
            
            
            
            9,725
            
            
            
            16
            
            
            
            9,741Deletions
            
            
            --
            
            
            
            (333)
            
            
            
            --
            
            
            
            (333)Balance
      – March 31, 2010
            
            $
            --
            
            
            $
            46,606
            
            
            $
            158
            
            
            $
            46,764Intangibles,
      net – March 31, 2010
            
            $
            454,571
            
            
            $
            104,658
            
            
            $
            --
            
            
            $
            559,229











Year
      Ended March 31, 2009Indefinite
              Lived
            
            
            Finite
              Lived
            
            
            Non
              CompeteTrademarks
            
            
            Trademarks
            
            
            Agreement
            
            
            TotalsCarrying
      AmountsBalance
      – March 31, 2008
            
            $
            544,963
            
            
            $
            119,470
            
            
            $
            196
            
            
            $
            664,629Additions
            
            
            --
            
            
            
            500
            
            
            
            --
            
            
            
            500Deletions
            
            
            --
            
            
            
            --
            
            
            
            (38
            )
            
            
            (38)Impairments
            
            
            (44,787)
            
            
            
            (13,811)
            
            
            
            --
            
            
            
            (58,598)Balance
      – March 31, 2009
            
            $
            500,176
            
            
            $
            106,159
            
            
            $
            158
            
            
            $
            606,493Accumulated
      AmortizationBalance
      – March 31, 2008
            
            $
            --
            
            
            $
            28,377
            
            
            $
            141
            
            
            $
            28,518Additions
            
            
            
            
            
            
            8,837
            
            
            
            39
            
            
            
            8,876Deletions
            
            
            --
            
            
            
            --
            
            
            
            (38)
            
            
            
            (38)Balance
      – March 31, 2009
            
            $
            --
            
            
            $
            37,214
            
            
            $
            142
            
            
            $
            37,356Intangibles,
      net – March 31, 2009
            
            $
            500,176
            
            
            $
            68,945
            
            
            $
            16
            
            
            $
            569,137





In a
manner similar to goodwill, the Company completed a test for impairment of its
intangible assets during the fourth quarter of 2010.  Accordingly, the
Company recorded no impairment charge as facts and circumstances indicated that
the fair values of the intangible assets for such segments exceeded their
carrying values.





In a
manner similar to goodwill, the Company completed a test for impairment of its
intangible assets during the fourth quarter of 2009.  Accordingly, the
Company recorded an impairment charge aggregating $58.6 million to the
Over-the-Counter Healthcare and Household Cleaning segments as facts and
circumstances indicated that the carrying values of the intangible assets for
such segments exceeded their fair values and may not be
recoverable.





F-14




The
economic events experienced during the fiscal year ended March 31, 2009, as well
as the Company’s plans and projections for its brands indicated that several of
such brands can no longer support indefinite useful lives.  Each of
these brands incurred an impairment charge during the three month period ended
March 31, 2009 and has been adversely affected by increased competition and the
macroeconomic environment in the United States.  Consequently, at
April 1, 2009, management reclassified $45.6 million of previously
indefinite-lived intangibles to intangibles with definite
lives.  Management estimates the remaining useful lives of these
intangibles to be 20 years.





The fair
values and the annual amortization charges of the reclassified intangibles are
as follows (in thousands):





Intangible
            
            Fair
      Value
              as
      of
              March
      31, 2009
            
            
            Annual
              AmortizationHousehold
      Trademarks
            
            $
            34,888
            
            
            $
            1,745OTC
      Healthcare Trademark
            
            
            10,717
            
            
            
            536$
            45,605
            
            
            $
            2,281








At March
31, 2010, intangible assets are expected to be amortized over a period of 3 to
30 years as follows (in thousands):





Year
      Ending March 31,2011
            
            $
            9,5582012
            
            
            9,1602013
            
            
            8,6122014
            
            
            7,7972015
            
            
            6,147Thereafter
            
            
            63,386$
            104,660











9.
            Other
      Accrued Liabilities





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





March
      31,2010
            
            
            2009Accrued
      marketing costs
            
            $
            3,823
            
            
            $
            3,519Accrued
      payroll
            
            
            5,233
            
            
            
            750Accrued
      commissions
            
            
            285
            
            
            
            312Accrued
      income taxes
            
            
            372
            
            
            
            679Accrued
      professional fees
            
            
            1,089
            
            
            
            1,906Interest
      swap obligation
            
            
            --
            
            
            
            2,152Severance
            
            
            929
            
            
            
            --Other
            
            
            2
            
            
            
            89$
            11,733
            
            
            $
            9,407





During
the second quarter of fiscal 2010, the Company completed a staff reduction
program to eliminate approximately 10% of its workforce.  The accrued
severance balance as of March 31, 2010 is related to this reduction in workforce
and consists primarily of the remaining payments of salaries, bonuses and other
benefits for separated employees.





The
Company has reclassified the interest rate swap liability of $2.2 million as of
March 31, 2009 from accounts payable to accrued liabilities. The Company’s
interest rate swap liability of $2.2 million as of March 31, 2009 terminated
before March 26, 2010.





F-15





10.
            Long-Term
      Debt





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


March
      31,2010
            
            
            2009Senior
      secured term loan facility (“2010 Senior Term Loan”) that bears interest
      at the Company’s option at either the prime rate plus a margin of 2.25% or
      LIBOR plus 3.25% with a LIBOR floor of 1.5%.  At March 31, 2010,
      the average interest rate on the 2010 Senior Term Loan was
      4.75%.  Principal payments of $375,000 plus accrued interest are
      payable quarterly, with the remaining principal due on the 2010 Senior
      Term Loan maturity date.  The 2010 Senior Term Loan matures on
      March 24, 2016 and is collateralized by substantially all of the Company’s
      assets.
            
            $
            150,000
            
            
            $
            --Senior
      secured term loan facility (“Tranche B Term Loan Facility”) that bore
      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%.  The Tranche B Term Loan
      Facility was repaid in full during 2010.
            
            
            --
            
            
            
            252,337Senior
      unsecured notes (“2010 Senior Notes”) that bear interest at 8.25% which
      are payable on April 1st
      and October 1st
      of each year.  The 2010 Senior Notes mature on April 1, 2018;
      however the Company may redeem some or all of the 2010 Senior Notes at
      redemption prices set forth in the indenture governing the 2010 Senior
      Notes.  The 2010 Senior Notes are unconditionally guaranteed by
      Prestige Brands Holdings, Inc., and its domestic wholly-owned subsidiaries
      other than Prestige Brands, Inc., the issuer.  Each of these
      guarantees is joint and several.  There are no significant
      restrictions on the ability of any of the guarantors to obtain funds from
      their subsidiaries.
            
            
            150,000
            
            
            
            --Senior
      subordinated notes (“Senior Subordinated Notes”) that bore interest of
      9.25% which was payable on April 15th
      and October 15th
      of each year.  The balance outstanding on the Senior
      Subordinated Notes as of March 31, 2010 was repaid in full subsequent to
      year-end, on April 15th,
      2010.  The Senior Subordinated Notes were unconditionally
      guaranteed by Prestige Brands Holdings, Inc., and its domestic
      wholly-owned subsidiaries other than Prestige Brands, Inc., the
      issuer.
            
            
            28,087
            
            
            
            126,000328,087
            
            
            
            378,337Current
      portion of long-term debt
            
            
            (29,587)
            
            
            
            (3,550)298,500
            
            
            
            374,787Less:
      unamortized discount on the 2010 Senior Notes
            
            
            (3,943)
            
            
            
            --Long-term
      debt, net of unamortized discount
            
            $
            294,557
            
            
            $
            374,787





On March
24, 2010, Prestige Brands, Inc. issued the 2010 Senior Notes for $150 million,
with an interest rate of 8.25% and a maturity date of April 1, 2018; and entered
into a senior secured term loan facility for $150 million, with an interest rate
at LIBOR plus 3.25% with a LIBOR floor of 1.5% and a maturity date of March 24,
2016; and entered into a non-amortizing senior secured revolving credit facility
(“2010 Revolving Credit Facility”) in an aggregate principal amount of up to
$30.0 million.  The Company’s 2010 Revolving Credit Facility was
available for maximum borrowings of $30.0 million at March 31,
2010.





The $150
million 2010 Senior Term Loan was entered into with a discount to lenders of
$1.8 million and net proceeds to the Company of $148.2 million, yielding a 5.0%
effective interest rate.  The 2010 Senior Notes were issued at an
aggregate face value of $150 million with a discount to bondholders of $2.2
million and net proceeds to the Company of $147.8 million, yielding a 8.5%
effective interest rate.





In
connection with entering into the 2010 Senior Term Loan, the 2010 Revolving
Credit Facility and the 2010 Senior Notes, the Company incurred $7.3 million in
issuance costs, of which $6.6 million was capitalized as deferred financing
costs and $0.7 million expensed.  The deferred financing costs are
being amortized over the terms of the related loan and notes.





In March
and April 2010, the Company retired its Tranche B Term Loan facility with an
original maturity date of April 11, 2016 and Senior Subordinated Notes that bore
interest at 9.25% with a maturity date of April 15, 2012.  The Company
recognized a $2.7 million loss on the extinguishment of debt.





F-16





The 2010
Senior Notes are senior unsecured obligations of the Company and are guaranteed
on a senior unsecured basis.  The 2010 Senior Notes are effectively
junior in right of payment to all existing and future secured obligations of the
Company, equal in right of payment with all existing and future senior unsecured
indebtedness of the Company, and senior in right of payment to all future
subordinated debt of the Company.





At any
time prior to April 1, 2014, the Company may redeem the 2010 Senior Notes in
whole or in part at a redemption price equal to 100% of the principal amount of
the notes redeemed, plus a “make-whole premium” calculated as set forth in the
Indenture, together with accrued and unpaid interest, if any, to the date of
redemption.  The Company may redeem the 2010 Senior Notes in whole or
in part at any time on or after the 12-month period beginning April 1, 2014 at a
redemption price of 104.125% of the principal amount thereof, at a redemption
price of 102.063% of the principal amount thereof if the redemption occurs
during the 12-month period beginning on April 1, 2015, and at a redemption price
of 100% of the principal amount thereof on and after April 1, 2016, in each
case, plus accrued and unpaid interest, if any, to the redemption
date.  In addition, on or prior to April 1, 2013, with the net cash
proceeds from certain equity offerings, the Company may redeem up to 35% in
aggregate principal amount of the 2010 Senior Notes at a redemption price of
108.250% of the principal amount of the 2010 Senior Notes to be redeemed, plus
accrued and unpaid interest to the redemption date.





The 2010
Senior Term Loan contains various financial covenants, including provisions that
require the Company to maintain certain leverage and interest coverage ratios
and not to exceed annual capital expenditures of $3.0 million.  The
2010 Senior Term Loan and the 2010 Senior 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
2010 Senior Term Loan and the 2010 Senior Notes contain cross-default provisions
whereby a default pursuant to the terms and conditions of certain indebtedness
will cause a default on the remaining indebtedness under the 2010 Senior Term
Loan, the 2010 Senior Notes and the Senior Subordinated Notes.  At
March 31, 2010, the Company was in compliance with the applicable financial
covenants under its long-term indebtedness.





Future
principal payments required in accordance with the terms of the 2010 Senior Term
Loan, the 2010 Senior Notes and the Senior Subordinated Notes are as follows (in
thousands):








Year
      Ending March 312011
            
            $
            29,5872012
            
            
            1,5002013
            
            
            1,5002014
            
            
            1,5002015
            
            
            1,500Thereafter
            
            
            292,500$
            328,087





F-17





11.
            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, 2010, the Company had no open financial
derivative financial obligations. While the Company has not entered into
derivative financial instruments for trading purposes, all of the Company’s
derivatives were over-the-counter instruments with liquid
markets.  The notional, or contractual, amount of the Company’s
derivative financial instruments were used to measure the amount of interest to
be paid or received and did not represent an actual liability.  The
Company accounted 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 agreed to pay a fixed rate of 2.88%
while receiving a variable rate based on LIBOR.  The agreement
terminated on March 26, 2010, and was neither renewed nor replaced.





The Fair
Value Measurements and Disclosures Topic of the FASB ASC 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.  The Fair
Value Measurements and Disclosures Topic 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, 2010(In
      thousands)
              Description
            
            March
      31,
              2010
            
            
            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
            
            $
            --
            
            
            $
            --
            
            
            $
            --
            
            
            $
            --





F-18





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
            
            
            $
            --





Fair
      Value Measurements at March 31, 2008(In
      thousands)
              Description
            
            March
      31,
              2008
            
            
            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
            
            $
            1,527
            
            
            $
            --
            
            
            $
            1,527
            
            
            $
            --




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):





For
      the Year Ended March 31, 2010March
      31, 2010
            
            Income
              Statement
              Account
            
            Amount
              Income
            
            Amount
              GainsCash
      Flow Hedging
              Instruments
            
            Balance
              Sheet
              Location
            
            Notional
              Amount
            
            Fair
      Value
              Asset/
              (Liability)
            
            Gains/
              Losses
              Charged
            
            (Expense)
              Recognized
              In
      Income
            
            (Losses)
              Recognized
              In
      OCIInterest
      Rate Swap
            
            Other
              Accrued
              Liabilities
            
            $                             
      --
            
            $                        
       --
            
            Interest
              Expense
            
            $                    
      (2,866)
            
            $                    
      2,152





For
      the Year Ended March 31, 2009March
      31, 2009
            
            Income
              Statement
              Account
            
            Amount
              Income
            
            Amount
              GainsCash
      Flow Hedging
              Instruments
            
            Balance
              Sheet
              Location
            
            Notional
              Amount
            
            Fair
      Value
              Asset/
              (Liability)
            
            Gains/
              Losses
              Charged
            
            (Expense)
              Recognized
              In
      Income
            
            (Losses)
              Recognized
              In
      OCIInterest
      Rate Swap
            
            Other
              Accrued
              Liabilities
            
            $                         
      125
            
            $                
      (2,152)
            
            Interest
              Expense
            
            $                       
      (502)
            
            $                     
      (625)








For
      the Year Ended March 31, 2008March
      31, 2008
            
            Income
              Statement
              Account
            
            Amount
              Income
            
            Amount
              GainsCash
      Flow Hedging
              Instruments
            
            Balance
              Sheet
              Location
            
            Notional
              Amount
            
            Fair
      Value
              Asset/
              (Liability)
            
            Gains/
              Losses
              Charged
            
            (Expense)
              Recognized
              In
      Income
            
            (Losses)
              Recognized
              In
      OCIInterest
      Rate Swap
            
            Other
              Accrued
              Liabilities
            
            $                         
      175
            
            $               
       (1,527)
            
            Interest
              Expense
            
            $                          
        --
            
            $                  
      (1,527)





F-19





The
Company recorded a charge to interest expense of $2.9 million during 2010 in
connection with this interest rate swap agreement.  At March 31, 2010,
the Company did not participate in an interest rate swap agreement.





At March
31, 2009, the fair value of the interest rate swap was $2.2
million.  Such amount was 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
were 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, 2010, the carrying value of the 2010 Senior Term Loan was $150.0 million.
 The terms of the 2010 Senior Term Loan 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 2.25% or LIBOR, with a floor of 1.5%, plus a
margin of 3.25%. At March 31, 2010, the market value of the Company’s 2010
Senior Term Loan was approximately $150.8 million.





At March
31, 2010, the carrying value of the Company’s 8.25% 2010 Senior Notes was $150.0
million. The market value of these notes was approximately $152.3 million at
March 31, 2010.   The market values have been determined from
market transactions in the Company’s debt securities.  Also at March
31, 2010, the Company maintained a residual balance of $28.1 million relating to
the Senior Subordinated Notes that remained outstanding at fiscal year end. The
$28.1 million balance was redeemed in full on April 15, 2010 at par
value.





12.
            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, 2010.





During
2009 and 2008, the Company repurchased 65,000 and 4,000 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 purchases were at an
average purchase price of $1.70 per share.   All of such shares have
been recorded as treasury stock. There were no share repurchases during
2010.





F-20





13.
            Earnings
      Per Share





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





Year
      Ended March 31,2010
            
            
            2009
            
            
            2008NumeratorIncome
      (loss) from continuing operations
            
            $
            31,262
            
            
            $
            (187,953)
            
            
            $
            32,046Income
      from discontinued operations and gain on sale
              of
      discontinued operations
            
            
            853
            
            
            
            1,177
            
            
            
            1,873Net
      income (loss)
            
            $
            32,115
            
            
            $
            (186,776)
            
            
            $
            33,919DenominatorDenominator
      for basic earnings per share- weighted average shares
            
            
            50,013
            
            
            
            49,935
            
            
            
            49,751Dilutive
      effect of unvested restricted common stock (including restricted stock
      units), options and stock appreciationrights
      issued to employees and directors
            
            
            72
            
            
            
            --
            
            
            
            288Denominator
      for diluted earnings per share
            
            
            50,085
            
            
            
            49,935
            
            
            
            50,039Earnings
      per Common Share:Basic
      earnings (loss) per share from continuing operations
            
            $
            0.63
            
            
            $
            (3.76)
            
            
            $
            0.64Basic
      earnings per share from discontinued operations and gain on sale of
      discontinued operations
            
            
            0.01
            
            
            
            0.02
            
            
            
            0.04Basic
      net earnings (loss) per share
            
            $
            0.64
            
            
            $
            (3.74)
            
            
            $
            0.68Diluted
      earnings (loss) per share from continuing operations
            
            $
            0.62
            
            
            $
            (3.76)
            
            
            $
            0.64Diluted
      earnings per share from discontinued operations and gain on sale of
      discontinued operations
            
            
            0.02
            
            
            
            0.02
            
            
            
            0.04Diluted
      net earnings (loss) per share
            
            $
            0.64
            
            
            $
            (3.74)
            
            
            $
            0.68








At March
31, 2010, 204,892 shares of restricted stock granted to employees and restricted
stock units granted to Board members, 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, 82,202 shares of restricted stock granted to
employees have been excluded from the calculation of both basic and diluted
earnings per share because vesting of such shares is subject to contingencies
that were not met as of March 31, 2010.  Lastly, at March 31, 2010,
there were options to purchase 1,330,337 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, 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.





F-21




14.
            Share-Based
      Compensation





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





During
2010, net compensation costs charged against income and the related income tax
benefit recognized were $2.1 million and $790,000,
respectively.  During the year management determined that performance
goals associated with the grants of stock to management and employees in May
2008 were met and recorded stock compensation costs accordingly.  No
prior compensation costs were required to be reversed.





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.  Therefore, 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
earnings before income taxes, depreciation and amortization targets, or the
attainment of certain time vesting thresholds.  The restricted share
awards provide for accelerated vesting if there is a change of control, as
defined in the plan or document pursuant to which the awards were
made.  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 2010, 2009
and 2008 were $7.09, $10.85 and $12.52, respectively.





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


Nonvested
      Shares
            
            Shares
              (in
      thousands)
            
            
            Weighted-Average
              Grant-Date
              Fair
      ValueNonvested
      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
            
            
            
            11.31Granted
            
            
            171.6
            
            
            
            7.09Vested
            
            
            (47.8
            )
            
            
            10.97Forfeited
            
            
            (179.1
            )
            
            
            11.28Nonvested
      at March 31, 2010
            
            
            287.1
            
            
            $
            8.86





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.  The option awards
provide for accelerated vesting if there is a change in control.





F-22





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 2010, 2009 and 2008 were $3.64, $5.04
and $5.30, respectively.





Year
      Ended March 31,2010
            
            
            2009Expected
      volatility
            
            
            45.6
            %
            
            
            43.3
            %Expected
      dividends
            
            
            --
            
            
            
            --Expected
      term in years
            
            
            7.0
            
            
            
            6.0Risk-free
      rate
            
            
            2.8
            %
            
            
            3.2
            %





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





Options
            
            Shares
              (in
      thousands)
            
            
            Weighted-Average
              Exercise
              Price
            
            
            Weighted-
              Average
              Remaining
              Contractual
      Term
            
            
            Aggregate
              Intrinsic
              Value
              (in
      thousands)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
            
            
            
            --Granted
            
            
            1,125.0
            
            
            
            7.16
            
            
            
            9.4
            
            
            
            2,070.0Exercised
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --Forfeited
      or expired
            
            
            (203.4
            )
            
            
            11.34
            
            
            
            7.9
            
            
            
            --Outstanding
      at March 31, 2010
            
            
            1,584.2
            
            
            
            8.50
            
            
            
            8.9
            
            
            
            2,070.0Exercisable
      at March 31, 2010
            
            
            297.9
            
            
            $
            11.96
            
            
            
            7.6
            
            
            $
            2,070.0





Since the
Company’s closing stock price of $9.00 at March 31, 2010 exceeded the exercise
price for the options granted in 2010, the aggregate intrinsic value of
outstanding options was $2.1 million.  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 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, 2009 or 2010.  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-23





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
            %





The SARs
expired on March 31, 2009; and no compensation was paid because the grant-date
market price of the Company’s common stock exceeded the market value of the
Company’s common stock on the measurement date.





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





SARS
            
            Shares
              (in
      thousands)
            
            
            Grant
              Date
              Stock
              Price
            
            
            Weighted-
              Average
              Remaining
              Contractual
      Term
            
            
            Aggregate
              Intrinsic
              Value
              (in
      thousands)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, 2010, there were $4.5 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 a weighted average period of 1.5
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 2010, 2009 and 2008, was $525,000, $325,000, and $277,000,
respectively.  There were no options exercised during 2010, 2009 or
2008; hence there were no tax benefits realized during these
periods.  At March 31, 2010, there were 3.0 million shares available
for issuance under the Plan.





F-24


f


15.
            Income
      Taxes





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





Year
      Ended March 31,2010
            
            
            2009
            
            
            2008CurrentFederal
            
            $
            9,628
            
            
            $
            9,284
            
            
            $
            8,599State
            
            
            1,313
            
            
            
            1,266
            
            
            
            1,208Foreign
            
            
            415
            
            
            
            218
            
            
            
            386DeferredFederal
            
            
            9,113
            
            
            
            (17,606
            )
            
            
            8,851State
            
            
            1,901
            
            
            
            (2,348
            )
            
            
            1,245$
            22,370
            
            
            $
            (9,186
            )
            
            $
            20,289





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





March
      31,2010
            
            
            2009Deferred
      Tax AssetsAllowance
      for doubtful accounts and sales returns
            
            $
            2,670
            
            
            $
            1,152Inventory
      capitalization
            
            
            644
            
            
            
            574Inventory
      reserves
            
            
            806
            
            
            
            553Net
      operating loss carryforwards
            
            
            663
            
            
            
            747Property
      and equipment
            
            
            20
            
            
            
            8State
      income taxes
            
            
            4,964
            
            
            
            4,125Accrued
      liabilities
            
            
            502
            
            
            
            315Interest
      rate derivative instruments
            
            
            --
            
            
            
            818Other
            
            
            1,938
            
            
            
            1,511Deferred
      Tax LiabilitiesIntangible
      assets
            
            
            (117,999
            )
            
            
            (103,764
            )$
            (105,792
            )
            
            $
            (93,961
            )





At March
31, 2010, Medtech Products Inc., a wholly-owned subsidiary of the Company, had a
net operating loss carryforward of approximately $1.9 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-25





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)
            
            2010
            
            
            2009
            
            
            2008%
            
            
            
            
            
            %
            
            
            
            
            
            %Income
      tax provision at statutory rate
            
            $
            19,069
            
            
            
            35.0
            
            
            $
            (68,586
            )
            
            
            (35.0
            )
            
            $
            18,973
            
            
            
            35.0Foreign
      tax provision
            
            
            (36
            )
            
            
            (0.1
            )
            
            
            83
            
            
            
            --
            
            
            
            16
            
            
            
            --State
      income taxes, net of federal income tax benefit
            
            
            1,662
            
            
            
            3.1
            
            
            
            (5,467
            )
            
            
            (2.8
            )
            
            
            1,284
            
            
            
            2.4Increase
      (decrease) in net deferred tax liability resulting from an increase
      (decrease) in the effective state tax rate
            
            
            597
            
            
            
            1.1
            
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            --Goodwill
            
            
            1,039
            
            
            
            1.9
            
            
            
            64,770
            
            
            
            33.1
            
            
            
            --
            
            
            
            --Other
            
            
            39
            
            
            
            0.1
            
            
            
            14
            
            
            
            --
            
            
            
            16
            
            
            
            --Provision
      for income taxes
            
            $
            22,370
            
            
            
            41.1
            
            
            $
            (9,186
            )
            
            
            (4.7
            )
            
            $
            20,289
            
            
            
            37.4





Uncertain
tax liability activity is as follows:





2010
            
            
            2009(In
      thousands)Balance
      – beginning of year
            
            $
            225
            
            
            $
            --Additions
      based on tax positions related to the
              current year
            
            
            90
            
            
            
            225Balance
      – end of year
            
            $
            315
            
            
            $
            225





The
Company recognizes interest and penalties related to uncertain tax positions as
a component of income tax expense.  For 2010, 2009, and 2008, the
Company did not incur any interest or penalties related to income
taxes.  The Company does not anticipate any significant events or
circumstances that would cause a change to these uncertainties during the
ensuing year.  The Company is subject to taxation in the United States
and various state and foreign jurisdictions and is generally open to examination
from the year ended March 31, 2007 forward.








16.
            Commitments
      and Contingencies





DenTek Oral Care, Inc.
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’sNightGuarddental
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 (“Kaplan”), Raymond Duane (“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 is 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.





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 NightGuard Classicdental 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. (“Medtech”), plaintiff in the
DenTek litigation and a wholly-owned subsidiary of Prestige Brands Holdings,
Inc.  CDS’s counterclaim alleges a breach of the consulting agreement
between CDS and Dental Concepts.





F-26




On March
24, 2009, Duane submitted a petition for a Chapter 7 bankruptcy with the United
States Bankruptcy Court for the District of Nevada.  The New York
Court retains jurisdiction over Duane for injunctive relief arising out of the
New York action while the Nevada Court retains exclusive jurisdiction over the
dischargeability of Medtech’s damage claims against Duane and other issues
affecting the bankruptcy.





On March
25, 2010, Medtech settled all of the claims and counterclaims involving DenTek
in the law suit on terms mutually agreeable to Medtech and DenTek.  No
payment by Medtech or the Company is required as part of the
settlement.





The
Company’s management believes that the counterclaims asserted by Duane and CDS
are legally deficient and that it has meritorious defenses to the
counterclaims.  The Company intends to vigorously defend against the
counterclaims, which, if adversely determined against the Company, would not, in
the opinion of management, have a material adverse effect on the
Company.





San Francisco Technology
Inc. Litigation





On April
5, 2010, Medtech was served with a Complaint filed by San Francisco Technology
Inc. (“SFT”) in the U.S. District Court for the Northern District of California,
San Jose Division.  In the Complaint, SFT asserted a qui tam action against
Medtech alleging false patent markings with the intent to deceive the
public regarding Medtech’s two Dermoplast®
products.  Medtech has filed a Motion to Dismiss or Stay and a Motion
to Sever and Transfer Venue to the Southern District of New York and is awaiting
decisions on the pending Motions.  Medtech intends to vigorously
defend against the Complaint.





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 31,2011
            
            $
            559
            
            
            $
            74
            
            
            $
            6332012
            
            
            577
            
            
            
            40
            
            
            
            6172013
            
            
            596
            
            
            
            17
            
            
            
            6132014
            
            
            50
            
            
            
            --
            
            
            
            50$
            1,782
            
            
            $
            131
            
            
            $
            1,913





Rent
expense for 2010, 2009 and 2008 was $753,000, $612,000 and $597,000,
respectively.





F-27




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 total
commitment is less than 10 percent of the estimated purchases that are expected
to be made during the course of the supply agreement.





(In
      thousands)Year
      Ending March 31,2011
            
            $
            10,7032012
            
            
            6,7242013
            
            
            1,1662014
            
            
            1,1362015
            
            
            1,105Thereafter
            
            
            4,673$
            25,507











17.
            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 2010, 2009 and 2008, approximately 62.3%, 60.8% and
60.3%, respectively, of the Company’s total sales were derived from its four
major brands.  During 2010, 2009 and 2008, approximately 24.6%, 25.9%
and 23.1%, respectively, of the Company’s sales were made to one
customer.  At March 31, 2010, approximately 22.3% 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.





At March
31, 2010, we had relationships with over 40 third-party
manufacturers.  Of those, we had long-term contracts with 20
manufacturers that produced items that accounted for approximately 68.7% of our
gross sales for 2010 compared to 18 manufacturers with long-term contracts that
produced approximately 64.0% of gross sales in 2009.  The fact that we
do not have long-term contracts with certain 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.





F-28




18.
            Business
      Segments





Segment
information has been prepared in accordance with Segment Topic of the FASB ASC.
The Company’s operating and reportable segments consist of (i) Over-the-Counter
Healthcare, (ii) Household Cleaning and (iii) Personal Care.





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, 2010Over-the-
              Counter
            
            
            Household
            
            
            PersonalHealthcare
            
            
            Cleaning
            
            
            Care
            
            
            Consolidated(In
      thousands)Net
      sales
            
            $
            177,313
            
            
            $
            108,797
            
            
            $
            10,812
            
            
            $
            296,922Other
      revenues
            
            
            3,150
            
            
            
            1,899
            
            
            
            52
            
            
            
            5,101Total
      revenues
            
            
            180,463
            
            
            
            110,696
            
            
            
            10,864
            
            
            
            302,023Cost
      of sales
            
            
            66,049
            
            
            
            72,118
            
            
            
            6,420
            
            
            
            144,587Gross
      profit
            
            
            114,414
            
            
            
            38,578
            
            
            
            4,444
            
            
            
            157,436Advertising
      and promotion
            
            
            24,220
            
            
            
            6,659
            
            
            
            357
            
            
            
            31,236Contribution
      margin
            
            $
            90,194
            
            
            $
            31,919
            
            
            $
            4,087
            
            
            
            126,200Other
      operating expenses
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            44,747Impairment
      of goodwill
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,751Operating
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            78,702Other
      expenses
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            25,591Provision
      for income taxes
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            21,849Income
      from continuing operations
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            31,262Income
      from discontinued operations,
              net
      of income tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            696Gain
      on sale of discontinued operations,
              net
      of income tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            157Net
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            32,115





Year
      Ended March 31, 2009Over-the-
              Counter
            
            
            Household
            
            
            PersonalHealthcare
            
            
            Cleaning
            
            
            Care
            
            
            Consolidated(In
      thousands)Net
      sales
            
            $
            176,878
            
            
            $
            113,923
            
            
            $
            10,136
            
            
            $
            300,937Other
      revenues
            
            
            97
            
            
            
            2,092
            
            
            
            21
            
            
            
            2,210Total
      revenues
            
            
            176,975
            
            
            
            116,015
            
            
            
            10,157
            
            
            
            303,147Cost
      of sales
            
            
            63,459
            
            
            
            74,457
            
            
            
            6,280
            
            
            
            144,196Gross
      profit
            
            
            113,516
            
            
            
            41,558
            
            
            
            3,877
            
            
            
            158,951Advertising
      and promotion
            
            
            29,695
            
            
            
            7,625
            
            
            
            457
            
            
            
            37,777Contribution
      margin
            
            $
            83,821
            
            
            $
            33,933
            
            
            $
            3,420
            
            
            
            121,174Other
      operating expenses
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            41,311Impairment
      of goodwill and intangibles
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            249,285Operating
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (169,422)Other
      expenses
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            28,436Income
      tax benefit
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (9,905)Loss
      from continuing operations
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (187,953)Income
      from discontinued operations, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,177Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            (186,776)





F-29




Year
      Ended March 31, 2008Over-the-
              Counter
            
            
            Household
            
            
            PersonalHealthcare
            
            
            Cleaning
            
            
            Care
            
            
            Consolidated(In
      thousands)Net
      sales
            
            $
            183,641
            
            
            $
            119,224
            
            
            $
            10,260
            
            
            $
            313,125Other
      revenues
            
            
            51
            
            
            
            1,903
            
            
            
            28
            
            
            
            1,982Total
      revenues
            
            
            183,692
            
            
            
            121,127
            
            
            
            10,288
            
            
            
            315,107Cost
      of sales
            
            
            69,344
            
            
            
            75,459
            
            
            
            7,008
            
            
            
            151,811Gross
      profit
            
            
            114,348
            
            
            
            45,668
            
            
            
            3,280
            
            
            
            163,296Advertising
      and promotion
            
            
            26,188
            
            
            
            7,483
            
            
            
            572
            
            
            
            34,243Contribution
      margin
            
            $
            88,160
            
            
            $
            38,185
            
            
            $
            2,708
            
            
            
            129,053Other
      operating expenses
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            40,633Operating
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            88,420Other
      expenses
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            37,206Provision
      for income taxes
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            19,168Income
      from continuing operations
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            32,046Income
      from discontinued operations,
              net
      of income tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,873Net
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            33,919








During
2010, 2009 and 2008, approximately 95.8%, 96.4% and 95.9% of the Company’s sales
were made to customers in the United States and Canada,
respectively.  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, 2010, 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
            
            
            $
            --
            
            
            $
            111,489Intangible
      assetsIndefinite
      lived
            
            
            334,750
            
            
            
            119,821
            
            
            
            --
            
            
            
            454,571Finite
      lived
            
            
            65,961
            
            
            
            33,143
            
            
            
            5,554
            
            
            
            104,658400,711
            
            
            
            152,964
            
            
            
            5,554
            
            
            
            559,229$
            504,811
            
            
            $
            160,353
            
            
            $
            5,554
            
            
            $
            670,718





F-30





19.
            Unaudited
      Quarterly Financial Information





Unaudited
quarterly financial information for 2010 and 2009 is as follows:





Year
Ended March 31, 2010


Quarterly
      Period Ended(In
      thousands, except for
              per
      share data)
            
            June
      30,
              2009
            
            
            September
      30,
              2009
            
            
            December
      31,
              2009
            
            
            March
      31,
              2010Total
      revenues
            
            $
            71,012
            
            
            $
            84,181
            
            
            $
            75,448
            
            
            $
            71,382Cost
      of sales
            
            
            33,181
            
            
            
            39,847
            
            
            
            35,641
            
            
            
            35,918Gross
      profit
            
            
            37,831
            
            
            
            44,334
            
            
            
            39,807
            
            
            
            35,464Operating
      expensesAdvertising
      and promotion
            
            
            8,765
            
            
            
            9,782
            
            
            
            6,099
            
            
            
            6,590General
      and administrative
            
            
            8,195
            
            
            
            10,481
            
            
            
            7,411
            
            
            
            8,108Depreciation
      and amortization
            
            
            2,345
            
            
            
            2,841
            
            
            
            2,596
            
            
            
            2,770Impairment
      of goodwill
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            2,75119,305
            
            
            
            23,104
            
            
            
            16,106
            
            
            
            20,219Operating
      income
            
            
            18,526
            
            
            
            21,230
            
            
            
            23,701
            
            
            
            15,245Net
      interest expense
            
            
            5,653
            
            
            
            5,642
            
            
            
            5,558
            
            
            
            6,082Loss
      on extinguishment of debt
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            2,656Income
      from continuing operations
              before
      income taxes
            
            
            12,873
            
            
            
            15,588
            
            
            
            18,143
            
            
            
            6,507Provision
      for income taxes
            
            
            4,879
            
            
            
            5,908
            
            
            
            7,807
            
            
            
            3,255Income
      from continuing operations
            
            
            7,994
            
            
            
            9,680
            
            
            
            10,336
            
            
            
            3,252Discontinued
      OperationsIncome
      from discontinued operations,
              net
      of income tax
            
            
            331
            
            
            
            243
            
            
            
            87
            
            
            
            35Gain
      on sale of discontinued operations,
              net
      of income tax
            
            
            --
            
            
            
            --
            
            
            
            157
            
            
            
            --Net
      income
            
            $
            8,325
            
            
            $
            9,923
            
            
            $
            10,580
            
            
            $
            3,287Basic
      earnings per share:Income
      from continuing operations
            
            $
            0.16
            
            
            $
            0.19
            
            
            $
            0.21
            
            
            $
            0.07Net
      income
            
            $
            0.17
            
            
            $
            0.20
            
            
            $
            0.21
            
            
            $
            0.07Diluted
      earnings per share:Income
      from continuing operations
            
            $
            0.16
            
            
            $
            0.19
            
            
            $
            0.21
            
            
            $
            0.06Net
      income
            
            $
            0.17
            
            
            $
            0.20
            
            
            $
            0.21
            
            
            $
            0.07Weighted
      average shares outstanding:Basic
            
            
            49,982
            
            
            
            50,012
            
            
            
            50,030
            
            
            
            50,030Diluted
            
            
            50,095
            
            
            
            50,055
            
            
            
            50,074
            
            
            
            50,105





F-31




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
            
            $
            70,997
            
            
            $
            85,540
            
            
            $
            77,966
            
            
            $
            68,644Cost
      of sales
            
            
            32,907
            
            
            
            40,402
            
            
            
            36,480
            
            
            
            34,407Gross
      profit
            
            
            38,090
            
            
            
            45,138
            
            
            
            41,486
            
            
            
            34,237Operating
      expensesAdvertising
      and promotion
            
            
            7,236
            
            
            
            13,543
            
            
            
            11,349
            
            
            
            5,649General
      and administrative
            
            
            7,973
            
            
            
            9,363
            
            
            
            8,311
            
            
            
            6,241Depreciation
      and amortization
            
            
            2,308
            
            
            
            2,308
            
            
            
            2,311
            
            
            
            2,496Impairment
      of goodwill and intangible assets
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            249,28517,517
            
            
            
            25,214
            
            
            
            21,971
            
            
            
            263,671Operating
      income (loss)
            
            
            20,573
            
            
            
            19,924
            
            
            
            19,515
            
            
            
            (229,434)Net
      interest expense
            
            
            8,683
            
            
            
            6,779
            
            
            
            7,051
            
            
            
            5,923Income
      (loss) from continuing operations before income taxes
            
            
            11,890
            
            
            
            13,145
            
            
            
            12,464
            
            
            
            (235,357)Provision
      (benefit) for income taxes
            
            
            4,506
            
            
            
            4,982
            
            
            
            4,724
            
            
            
            (24,117)Income
      (loss) from continuing operations
            
            
            7,384
            
            
            
            8,163
            
            
            
            7,740
            
            
            
            (211,240)Discontinued
      OperationsIncome
      from discontinued operations, net of income tax
            
            
            397
            
            
            
            359
            
            
            
            278
            
            
            
            143Net
      income (loss)
            
            
            7,781
            
            
            
            8,522
            
            
            
            8,018
            
            
            
            (211,097)Basic
      earnings (loss) per share:Income
      (loss) from continuing operations
            
            $
            0.15
            
            
            $
            0.16
            
            
            $
            0.15
            
            
            $
            (4.23)Net
      income (loss)
            
            $
            0.16
            
            
            $
            0.17
            
            
            $
            0.16
            
            
            $
            (4.22)Diluted
      earnings (loss) per share:Income
      (loss) from continuing operations
            
            $
            0.15
            
            
            $
            0.16
            
            
            $
            0.15
            
            
            $
            (4.23)Net
      income (loss)
            
            $
            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-32




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, 2010Reserves
      for sales returns and allowance
            
            $
            2,457
            
            
            $
            20,042
            
            
            
            
            
            $
            (16,278
            )
            
            $
            --
            
            
            
            $
            6,221Reserves
      for trade promotions
            
            
            2,440
            
            
            
            20,362
            
            
            
            
            
            
            (20,751
            )
            
            
            --
            
            
            
            
            2,051Reserves
      for consumer coupon redemptions
            
            
            297
            
            
            
            1,281
            
            
            
            
            
            
            (1,315
            )
            
            
            --
            
            
            
            
            263Allowance
      for doubtful accounts
            
            
            120
            
            
            
            200
            
            
            
            
            
            
            (47
            )
            
            
            --
            
            
            
            
            273Allowance
      for inventory obsolescence
            
            
            1,392
            
            
            
            1,743
            
            
            
            
            
            
            (1,125
            )
            
            
            --
            
            
            
            
            2,010Year
      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
            )
            
            
            --
            
            
            
            
            1,445





(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 theLittle
      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.





F-33




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 3.2 to Prestige Brands Holdings,
      Inc.’s Form 10-Q filed on November 6, 2009).+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 as of March 24, 2010, by and among Prestige Brands, Inc., each
      Guarantor listed on the signature pages thereto, and U.S. Bank National
      Association, as trustee.*4.3
            
            Form
      of 81⁄4% Senior Note due 2018 (contained in Exhibit 4.2 to this Annual
      Report on Form 10-K).*4.4
            
            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).+4.5
            
            Form
      of 91⁄4% Senior Subordinated Note due 2012 (contained in Exhibit 4.4 to this
      Annual Report on Form 10-K).+4.6
            
            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).+4.7
            
            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).+4.8
            
            Third
      Supplemental Indenture, dated as of February 22, 2008, by and among
      Prestige Brands, Inc., U.S. Bank, National Association and Prestige
      Services Corp.*4.9
            
            Fourth
      Supplemental Indenture, dated as of March 24, 2010, by and among Prestige
      Brands, Inc., the Guarantors party thereto and U.S. Bank, National
      Association.*10.1
            
            Credit
      Agreement, dated as of March 24, 2010, among Prestige Brands, Inc.,
      PrestigeBrands
      Holdings, Inc., the Lenders
      and Issuers parties thereto, Bank of America,N.A., as
      administrative agent for the Lenders and the Issuers and collateral agent
      for the Secured Parties, and Deutsche Bank Securities Inc.,as syndication
      agent.*10.2
            
            Pledge
      and Security Agreement,dated
      as of March 24, 2010, by PrestigeBrands,
      Inc. and
      each of the other entities listed on the signature pages thereof in favor
      of Bank of America, N.A., as
      administrative agent for the Lenders and the Issuers and collateral agent
      for the Secured Parties.*10.3
            
            Guaranty,dated as of
      March 24, 2010, by Prestige Brands Holdings,
      Inc.,and each of
      the other entities listed on the signature pages thereof in favor of the
      Administrative Agent, and each other Agent, Lender, Issuer and each other
      holder of an Obligation.*10.4
            
            Purchase
      Agreement, dated as of March 10, 2010, by and among Prestige Brands, Inc.,
      each Guarantor listed on the signature pages thereto, Banc of America
      Securities LLC and Deutsche Bank Securities Inc.*10.5
            
            Registration
      Rights Agreement, dated as of March 24, 2010, by and among Prestige
      Brands, Inc., each of the other entities listed on the signature pages
      thereof, Banc of America Securities LLC and Deutsche Bank Securities
      Inc.*10.6
            
            Executive
      Employment Agreement, dated as of September 2, 2009, by and between
      Prestige Brands Holdings, Inc. and Matthew M. Mannelly (filed as Exhibit
      10.1 to Prestige Brands Holdings, Inc.’s Form 10-Q filed on November 6,
      2009).+@  
 10.7
            
            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) (filed as Exhibit 10.13 to
      Prestige Brands Holdings, Inc.’s Form 10-K filed on June 15,
      2009).+@10.8
            
            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).+@


10.9
            
            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).+@10.10
            
            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).+@10.11
            
            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).+@10.12
            
            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).+@10.13
            
            Executive
      Employment Agreement, dated as of October 1, 2007, between Prestige Brands
      Holdings, Inc. and David Talbert.*@10.14
            
            Executive
      Employment Agreement, dated as of October 1, 2007, between Prestige Brands
      Holdings, Inc. and Lieven Nuyttens.*@10.15
            
            Executive
      Employment Agreement, dated as of March 31, 2010, between Prestige Brands
      Holdings, Inc. and Eric S. Klee.*@10.16
            
            Executive
      Employment Agreement, dated as of April 19, 2010, between Prestige Brands
      Holdings, Inc. and Timothy Connors.*@10.17
            
            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).+#10.18
            
            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).+#10.19
            
            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).+#10.20
            
            Form
      of Award Agreement for Restricted Stock Units (filed as Exhibit 10.24 to
      Prestige Brands Holdings, Inc.’s Form 10-K filed on June 15,
      2009).+#10.21
            
            Form
      of Director Indemnification Agreement (filed as Exhibit 10.25 to Prestige
      Brands Holdings, Inc.’s Form 10-K filed on June 15, 2009).+@10.22
            
            Form
      of Officer Indemnification Agreement (filed as Exhibit 10.26 to Prestige
      Brands Holdings, Inc.’s Form 10-K filed on June 15, 2009).+@10.23
            
            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).+ †10.24
            
            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).+ †10.25
            
            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).+
      †  
 10.26
            
            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).+10.27
            
            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).+10.28
            
            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).+


10.29
            
            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).+10.30
            
            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).+10.31
            
            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.