**U.
      S. SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-Q**


**(Amendment
      No. 1)**





**ý**  **QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**


**for
      the quarterly period ended December 31, 2004**





**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:**





**PRESTIGE
      BRANDS INTERNATIONAL, LLC**


(Exact
      name of registrant as specified in its charter)





**DELAWARE**
            
            **20-0941337**(State
                of incorporation)
            
            (I.R.S.
                Employer Identification No.)**90
                NORTH BROADWAY**
              **IRVINGTON,
                NEW YORK 10533**
            
            **(914)
                524-6810**(Address
                of Principal Executive Offices, including Zip Code)
            
            (Registrant’s
                Telephone Number, Including Area
                Code)





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 (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.  Yes o No ý





As
      of
      December 31, 2004, the registrant had no of shares of common stock
      outstanding.





Indicate
      by check mark whether the registrant is an accelerated filer (as defined by
      rule
      12b-2 of the Exchange Act).  Yes o No ý











**EXPLANATORY
      NOTE**





Prestige
      Brands International, LLC (“Prestige Brands International” or “Company”) is
      filing this Amendment No. 1 on Form 10-Q/A to the Quarterly Report on Form
      10-Q
      for the period ended December 31, 2004, as filed on January 26, 2005 (“Original
      Filing”), to restate the Company’s consolidated financial statements for the
      three and nine month periods ended December 31, 2004 and 2003, and the
      disclosures related thereto.





Subsequent
      to the Original Filing, the Company commenced a review of certain accounting
      practices in conjunction with the Company's assessment of internal controls
      over
      financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. As
      more
      fully described in Note 2 of the financial statements, the Company has
      determined that it erroneously applied generally accepted accounting principles
      as they relate to the recognition of revenue and the classification of certain
      trade promotion allowances.





Except
      as
      required to reflect the effects of the restatement for the items enumerated
      above, no additional modifications or updates in this Amendment have been made
      to the Original Filing on Form 10-Q. Information not affected by the restatement
      remains unchanged and reflects the disclosures made at the time of the Original
      Filing on Form 10-Q. This Amendment does not describe other events occurring
      after the Original Filing, including exhibits, or modify or update those
      disclosures affected by subsequent events. This Amendment should be read in
      conjunction with the Company’s filings made with the SEC subsequent to the
      filing of the Original Filing, as information in such reports and documents
      may
      update or supersede certain information contained in this Amendment.
      Accordingly, this Amendment only amends and restates Items 1, 2 and 4 of Part
      I
      of the Original Filing, in each case, solely as a result of, and to reflect,
      the
      restatement, and no other information in the Original Filing is amended hereby.
      Additionally, pursuant to the rules of the SEC, Item 6 of Part II of the
      Original Filing has been amended to contain currently dated certifications
      of
      the Company’s Chief Executive Officer and Chief Financial Officer. As required
      by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, the certifications
      of
      our Chief Executive Officer and Chief Financial Officer are attached to this
      Amendment as Exhibits 31.1, 31.2, 32.1 and 32.2.





Concurrent
      with the filing of this Amendment, the Company is filing Amendment No. 2 on
      Form
      10-K/A to its Annual Report on Form 10-K for the fiscal year ended March 31,
      2005, as filed on June 15, 2005, to reflect the effects of the restatement
      for
      the items enumerated above on the financial statements and related financial
      data as of and for the periods included in Amendment No. 2 to the Annual Report
      on Form 10-K/A, as well as Amendment No. 1 on Form 10-Q/A to the Quarterly
      Report on Form 10-Q for the period ended June 30, 2005, as filed on August
      9,
      2005.








**Prestige
      Brands International, LLC**


**Quarterly
      Report for the Three and Nine Months Ended December 31,
      2004**


**Table
      of Contents**




**PART
                I. - FINANCIAL INFORMATION**Item
                1.
            Unaudited
                Consolidated Financial Statements (Restated)Consolidated
                Balance Sheets as of December 31, 2004 and March 31, 2004
            2Consolidated
                Statements of Operations for the three and nine monthsended
                December 31, 2004 and 2003
            3Consolidated
                Statement of Members’ Equity for the nine monthsended
                December 31, 2004
            4Consolidated
                Statements of Cash Flows for the nine monthsended
                December 31, 2004 and 2003
            5Notes
                to Unaudited Consolidated Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis of FinancialCondition
                and Results of Operations
            21Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            28Item
                4.
            Controls
                and Procedures
            29**PART
                II. - OTHER INFORMATION**Item
                1.
            Legal
                Proceedings
            30Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            30Item
                3.
            Defaults
                Upon Senior Securities
            30Item
                4.
            Submission
                of Matters to a vote of Security Holders
            31Item
                5.
            Other
                Information
            31Item
                6.
            Exhibits
            31Signatures
            32





**Item
      I. Unaudited Consolidated Financial Statements**





**Prestige
      Brands International, LLC**


**Unaudited
      Consolidated Balance Sheet****s**


**(in
      thousands)**





**December
                31,**
              **2004**
            
            **March
                31,**
              **2004****(successor
                basis)**
            
            **(successor
                basis)*****(Restated)***
            
            ***(Restated)*****ASSETS**Current
                assets:Cash
            
            $
            6,754
            
            $
            3,393Accounts
                receivable, net
            
            
            27,388
            
            
            13,028Other
                receivables
            
            
            718
            
            
            341Inventories,
                net
            
            
            23,371
            
            
            10,660Deferred
                income tax asset
            
            
            6,574
            
            
            1,647Prepaid
                expenses and other current assets
            
            
            2,576
            
            
            234Total
                current assets
            
            
            67,381
            
            
            29,303Property
                and equipment, net
            
            
            2,670
            
            
            880Goodwill
            
            
            294,847
            
            
            55,781Other
                long-term assets, net
            
            
            633,067
            
            
            239,394Total
                assets
            
            $
            997,965
            
            $
            325,358**LIABILITIES
                AND MEMBERS’ EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            17,806
            
            $
            5,281Accounts
                payable - related parties
            
            
            1,000
            
            
            —Accrued
                expenses
            
            
            17,097
            
            
            6,561Current
                portion of long-term debt
            
            
            3,730
            
            
            2,000Total
                current liabilities
            
            
            39,633
            
            
            13,842Long-term
                debt
            
            
            676,563
            
            
            146,694Deferred
                income tax liability
            
            
            85,070
            
            
            38,874Total
                liabilities
            
            
            801,266
            
            
            199,410Commitments
                and contingencies (Note 8)Members’
                equity:Contributed
                capital
            
            
            183,533
            
            
            124,719Retained
                earnings
            
            
            13,166
            
            
            1,229Total
                members’ equity
            
            
            196,699
            
            
            125,948Total
                liabilities and members’ equity
            
            $
            997,965
            
            $
            325,358





*The
      accompanying notes are an integral part of these financial
      statements.*


2





**Prestige
      Brands International, LLC**


**Unaudited
      Consolidated Statements of Operations**


**(in
      thousands)**








**Three
                months ended December 31,**
            
            **Nine
                months ended December 31,****2004**
            
            **2003**
            
            **2004**
            
            **2003****(successor**
              **basis)**
            
            **(predecessor**
              **basis)**
            
            **(successor**
              **basis)**
            
            **(predecessor**
              **basis)*****(Restated)***
            
            ***(Restated)***
            
            ***(Restated)***
            
            ***(Restated)*****REVENUES**Net
                sales
            
            $
            73,018
            
            $
            18,834
            
            $
            211,630
            
            $
            61,132Other
                revenues
            
            
            25
            
            
            —
            
            
            126
            
            
            —Other
                revenues - related parties
            
            
            —
            
            
            97
            
            
            —
            
            
            292Total
                revenues
            
            
            73,043
            
            
            18,931
            
            
            211,756
            
            
            61,424**COST
                OF SALES**Cost
                of sales
            
            
            33,241
            
            
            7,567
            
            
            104,320
            
            
            24,018Gross
                profit
            
            
            39,802
            
            
            11,364
            
            
            107,436
            
            
            37,406**OPERATING
                EXPENSES**Advertising
                and promotion
            
            
            5,168
            
            
            2,286
            
            
            24,402
            
            
            9,590General
                and administrative
            
            
            5,690
            
            
            2,879
            
            
            15,113
            
            
            7,813Depreciation
            
            
            457
            
            
            73
            
            
            1,395
            
            
            217Amortization
                of intangible assets
            
            
            2,148
            
            
            1,246
            
            
            5,753
            
            
            3,732Total
                operating expenses
            
            
            13,463
            
            
            6,484
            
            
            46,663
            
            
            21,352Operating
                income
            
            
            26,339
            
            
            4,880
            
            
            60,773
            
            
            16,054**OTHER
                INCOME (EXPENSE)**Interest
                income
            
            
            48
            
            
            14
            
            
            135
            
            
            212Interest
                expense
            
            
            (12,042
            )
            
            (2,162
            )
            
            (34,012
            )
            
            (6,748
            )Loss
                on extinguishment of debt
            
            
            —
            
            
            —
            
            
            (7,567
            )
            
            —Total
                other income (expense)
            
            
            (11,994
            )
            
            (2,148
            )
            
            (41,444
            )
            
            (6,536
            )Income
                before income taxes
            
            
            14,345
            
            
            2,732
            
            
            19,329
            
            
            9,518Provision
                for income taxes
            
            
            (5,218
            )
            
            (1,084
            )
            
            (7,392
            )
            
            (3,723
            )Net
                income
            
            $
            9,127
            
            $
            1,648
            
            $
            11,937
            
            $
            5,795





*The
      accompanying notes are an integral part of these financial
      statements.*


3





**Prestige
      Brands International, LLC**


**Unaudited
      Consolidated Statement of Members’ Equity**


**(in
      thousands)**








**Contributed**
              **Capital**
            
            **Retained**
              **Earnings**
            
            **Total**Balance
                at March 31, 2004***(Restated)***
            
            $
            124,719
            
            $
            1,229
            
            $
            125,948Cash
                contribution of capital related to Bonita Bay Acquisition, net of
                offering
                costs
            
            
            58,487
            
            
            —
            
            
            58,487Issuance
                of Prestige Holdings units in conjunction with Bonita Bay
                Acquisition
            
            
            92
            
            
            —
            
            
            92Issuance
                of Prestige Holdings units
            
            
            235
            
            
            
            
            
            235Net
                income***(Restated)***
            
            
            —
            
            
            11,937
            
            
            11,937Balance
                at December 31, 2004***(Restated)***
            
            $
            183,533
            
            $
            13,166
            
            $
            196,699





*The
      accompanying notes are an integral part of these financial
      statements.*





4


**Prestige
      Brands International, LLC**


**Unaudited
      Consolidated Statements of Cash Flows**


**(in
      thousands)**








**Nine
                months ended December 31****2004**
            
            **2003****(successor**
              **basis)**
            
            **(predecessor**
              **basis)*****(Restated)***
            
            ***(Restated)*****Cash
                flows from operating activities:**Net
                income
            
            $
            11,937
            
            $
            5,795Adjustments
                to reconcile net income to net cash provided by operating
                activities:Loss
                on extinguishment of debt
            
            
            7,567
            
            
            —Depreciation
            
            
            1,395
            
            
            217Amortization
                of intangible assets
            
            
            5,753
            
            
            3,732Amortization
                of deferred financing costs
            
            
            2,290
            
            
            222Amortization
                of debt discount
            
            
            —
            
            
            924Amortization
                of deferred compensation
            
            
            —
            
            
            60Increase
                in long-term debt due to accrued interest
            
            
            —
            
            
            333Deferred
                income taxes
            
            
            12,749
            
            
            3,113Changes
                in operating assets and liabilities, net of effects of purchase of
                businesses:Accounts
                receivable
            
            
            897
            
            
            1,209Accounts
                receivable - related parties
            
            
            —
            
            
            (1,085
            )Other
                receivables
            
            
            (377
            )
            
            (1,150
            )Inventories
            
            
            4,470
            
            
            (1,013
            )Prepaid
                expenses and other current assets
            
            
            (914
            )
            
            271Accounts
                payable
            
            
            1,160
            
            
            (995
            )Accounts
                payable - related parties
            
            
            1,000
            
            
            (1,114
            )Accrued
                expenses
            
            
            (7,989
            )
            
            (1,615
            )Net
                cash provided by operating activities
            
            
            39,938
            
            
            8,904**Cash
                flows from investing activities:**Purchase
                of property and equipment
            
            
            (198
            )
            
            (64
            )Purchase
                of intangibles
            
            
            —
            
            
            (479
            )Purchase
                of businesses, net of cash acquired
            
            
            (425,479
            )
            
            —Net
                cash used in investing activities
            
            
            (425,677
            )
            
            (543
            )**Cash
                flows from financing activities:**Proceeds
                from borrowings
            
            
            698,512
            
            
            13,539Repayment
                of borrowings
            
            
            (344,605
            )
            
            (24,647
            )Payment
                of deferred financing costs
            
            
            (23,529
            )
            
            (115
            )Proceeds
                from capital contributions
            
            
            58,722
            
            
            —Net
                cash provided by (used in) financing activities
            
            
            389,100
            
            
            (11,223
            )Net
                increase (decrease) in cash
            
            
            3,361
            
            
            (2,862
            )Cash
                at beginning of period
            
            
            3,393
            
            
            3,530Cash
                at end of period
            
            $
            6,754
            
            $
            668**Supplemental
                disclosure of non-cash****investing
                and financing activities:**Fair
                value of assets acquired, net of cash acquired
            
            $
            655,537
            
            $
            —Fair
                value of liabilities assumed
            
            
            (229,966
            )
            
            —Purchase
                price funded with non-cash capital contribution
            
            
            (92
            )
            
            —Cash
                paid to purchase businesses
            
            $
            425,479
            
            $
            —





*The
      accompanying notes are an integral part of these financial
      statements.*


5


**Prestige
      Brands International, LLC**


**Notes
      to Unaudited Consolidated Financial Statements**


**(in
      thousands)**





**1.**  **BUSINESS
      AND BASIS OF PRESENTATION**





**Nature
      of Business**





On
      February 6, 2004, Prestige International Holdings, LLC (“Prestige Holdings” or
      the “Company”), through two indirect, wholly owned subsidiaries, acquired all of
      the outstanding capital stock of Medtech Holdings, Inc. (“Medtech”) and The
      Denorex Company (“Denorex”) (collectively the “Predecessor Company”) (the
“Medtech Acquisition”). Prestige Holdings is controlled by affiliates of GTCR
      Golder Rauner II, LLC. On March 5, 2004, the Company, through an indirect,
      wholly-owned subsidiary, acquired all of the outstanding capital stock of The
      Spic and Span Company (“Spic and Span”) (the “Spic and Span Acquisition”). On
      April 6, 2004, the Company, through an indirect, wholly owned subsidiary,
      acquired all of the outstanding capital stock of Bonita Bay Holdings, Inc.
      (“Bonita Bay”) (the “Bonita Bay Acquisition”). On October 6, 2004, the Company
      acquired all of the outstanding capital stock of Vetco Inc. (“Vetco”) (the
“Vetco Acquisition”).





The
      Company is engaged in the marketing, sales and distribution of over-the-counter,
      personal care and household cleaning brands to mass merchandisers, drug stores,
      supermarkets and club stores primarily in the United States.





**Basis
      of Presentation**





The
      unaudited consolidated financial statements presented herein have been prepared
      in accordance with generally accepted accounting principles for interim
      financial reporting and with the instructions to Form 10-Q and Article 10 of
      Regulation S-X. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. In the opinion of management, the financial statements
      include all adjustments, consisting of normal recurring adjustments that are
      considered necessary for a fair presentation of the Company’s financial
      position, results of operations and cash flows for the interim periods.
      Operating results for the three and nine months ended December 31, 2004 are
      not
      necessarily indicative of results that may be expected for the entire year
      ending March 31, 2005.





The
      Medtech Acquisition was accounted for as a purchase transaction. As a result,
      the combined Medtech and Denorex assets and liabilities were adjusted to fair
      value as of February 6, 2004, in accordance with SFAS No. 141, “Business
      Combinations.” For financial reporting purposes, Medtech and Denorex, which were
      under common control and management, are considered the predecessor entities.
      Accordingly, the results of operations for the three and nine months ended
      December 31, 2003 and cash flows for the nine months ended December 31, 2003
      represent the combined historical financial statements of Medtech and its
      subsidiaries and Denorex (“predecessor basis”). The balance sheets of the
      Company at December 31, 2004 and March 31, 2004, and the results of operations
      for the three and nine months ended December 31, 2004, and cash flows for the
      nine months ended December 31, 2004 reflect those purchase accounting
      adjustments resulting from the Medtech Acquisition (“successor basis”). The Spic
      and Span, Bonita Bay and Vetco Acquisitions were also accounted for as purchase
      transactions. The results of operations and cash flows for Spic and Span, Bonita
      Bay and Vetco have been reflected in the Company’s consolidated statements of
      operations and cash flows beginning on their respective acquisition dates.
      All
      significant intercompany transactions and balances have been
      eliminated.





As
      more
      fully described in Note 2, the Company determined that the financial statements
      and the disclosures in the notes thereto for the three and nine month periods
      ended December 31, 2004 and 2003 contained in the Quarterly Report on Form
      10-Q
      filed on January 26, 2005, required restatement. All amounts disclosed in the
      footnotes to the financial statements have been appropriately
      restated.





***Use
      of Estimates***


The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America 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




6


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.




***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 one bank located in Wyoming. 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. To minimize credit risk, ongoing evaluations of
      customers’ financial condition are performed; however, collateral is not
      required. The Company maintains an allowance for doubtful accounts based on
      its
      historical collections experience, as well as its evaluation of current and
      expected conditions and trends affecting its customers.





***Sales
      Returns***


The
      Company must make estimates of potential future product returns related to
      current period sales. In order to do this, the Company analyzes historical
      returns, current economic trends, changes in customer demand and acceptance
      of
      the Company’s products when evaluating the adequacy of the Company’s allowance
      for returns in any accounting period. If actual returns are greater than those
      estimated by management, the Company’s financial statements in future periods
      may be adversely affected.





***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.





***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:





**Years**Machinery
            
            5Computer
                equipment
            
            3Furniture
                and fixtures
            
            7





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 acquisition transactions is classified as goodwill.
      In
      accordance with Financial Accounting Standards Board (“FASB”) Statement of
      Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible
      Assets,” the Company does not amortize goodwill, but performs impairment tests
      of the carrying value at least annually.





***Intangible
      Assets***


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





Indefinite
      lived intangible assets are tested for impairment at least annually, while
      intangible assets with finite lives 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.


7


***Deferred
      Financing Costs***


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





***Revenue
      Recognition***


Revenues
      are recognized when the following revenue recognition criteria are met: (1)
      persuasive evidence of an arrangement exists; (2) there is a fixed or
      determinable price; (3) the product has been shipped and the customer takes
      ownership and assumes risk of loss; and (4) collectibility of the resulting
      receivable is reasonably assured. The Company has determined that the risk
      of
      loss generally occurs when the product is received by the customer and,
      accordingly, recognizes revenue at that time. Provision is made for estimated
      customer discounts and returns at the time of sale based on the Company’s
      historical experience.





The
      Company frequently participates in the promotional programs of its customers,
      as
      is customary in this industry. The ultimate cost of these promotional programs
      varies based on the actual number of units sold during a finite period of time.
      These programs may include coupons, scan downs, temporary price reductions
      or
      other price guarantee vehicles. The Company estimates the cost of such
      promotional programs at their inception based on historical experience and
      current market conditions and reduces sales by such estimates. At the completion
      of the promotional program, the estimated amounts are adjusted to actual
      results.





***Costs
      of Sales***


Costs
      of
      sales include product costs, warehousing costs, inbound and outbound shipping
      costs, and handling and storage costs.





***Advertising
      and Promotion Costs***


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





***Stock-based
      Compensation***


The
      Company accounts for employee stock-based compensation in accordance with the
      provisions of APB 25 and complies with the disclosure provisions of Statement
      No. 123 and Statement No. 148. Under APB 25, compensation expense is based
      on
      the difference, if any, on the date of grant, between the fair value of the
      Company’s common stock and the exercise price of the equity
      instrument.





***Income
      Taxes***


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





***Derivative
      Instruments***


FASB
      Statement No. 133, “Accounting for Derivative Instruments and Hedging
      Activities” (“Statement No. 133”), requires companies to recognize derivative
      instruments as either assets or liabilities in the balance sheet at fair value.
      The accounting for changes in the fair value of a derivative instrument depends
      on whether it has been designated and qualifies as part of a hedging
      relationship and further, on the type of hedging relationship. For those
      derivative instruments that are designated and qualify as hedging instruments,
      a
      company must designate the hedging instrument, based upon the exposure being
      hedged, as a fair value hedge, a cash flow hedge or a hedge of a net investment
      in an international 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
      is
      attributable to interest rate risk. For these hedges, the effective portion
      of
      the gain or loss on the derivative instrument is reported as a component of
      other comprehensive income (loss) and reclassified into earnings in the same
      line item associated with the forecasted transaction in the same period or
      periods during which the hedged transaction affects earnings. Any ineffective
      portion of the gain or loss on the derivative instruments is recorded in results
      of operations immediately.


8




***Recently
      Issued Accounting Standards***


In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standard (“SFAS”) No. 123R (“Share-Based Payment”). SFAS
      123R requires the Company to recognize compensation expense for equity
      instruments awarded to employees. SFAS 123R is effective for the Company as
      of
      the beginning of the first interim period that begins after June 15, 2005.
      The
      Company does not expect the adoption of this standard to have a significant
      impact on its financial statements.


**2.**  **Restatement
      of Financial Statements**





As
      a
      result of a review of certain accounting practices performed in conjunction
      with
      the Company's assessment of internal controls over financial reporting under
      Section 404 of the Sarbanes-Oxley Act of 2002, the Company determined it
      erroneously applied generally accepted accounting principles as they relate
      to
      the recognition of revenue and the classification of certain trade promotion
      allowances.





With
      respect to revenue recognition, Staff Accounting Bulletin No. 104 sets forth
      the
      criteria for revenue recognition, one of which is that risk of loss has passed
      to the customer. The Company, consistent with its published pricing and shipping
      terms, has historically recognized revenue upon shipment of product to the
      customer. Upon closer examination of its shipping practices and terms, the
      Company determined that it often was unclear when, from a legal standpoint,
      risk
      of loss of its products passed to its customers. Accordingly, the Company has
      concluded that revenue should not be recognized until product is received by
      its
      customers (referred to as “FOB destination point”), unless the risk of loss
      transfers to the customer at the point of shipment. These adjustments had no
      effect on net cash flows provided by or used in operating
      activities.





With
      respect to the classification of trade promotions and allowances, Emerging
      Issues Task Force Issue 01-09 sets forth the criteria for classifying such
      promotions and allowances as an expense or a reduction of revenue. Upon review,
      the Company determined that it had incorrectly classified certain promotion
      and
      allowance amounts as selling, general and administrative expenses rather than
      as
      a reduction of revenues. These adjustments do not affect the balance sheet,
      net
      income, operating income or cash flows from operations.





The
      effects of the adjustments enumerated above for each fiscal period are reflected
      in the schedules that follow.





9


**Consolidated
      Statements of Operations**


**Nine
                Months Ended December 31, 2004*****(In
                thousands)***
            
            **Previously
                Reported**
            
            **Revenue**
              **Recognition**
            
            **Cooperative**
              **Advertising**
            
            **As
                Restated****Revenues**Net
                sales
            
            $
            224,831
            
            $
            (6,373
            )
            $
            (6,828
            )
            $
            211,630Other
                revenues
            
            
            126
            
            
            
            
            
            
            
            
            126Total
                revenues
            
            
            224,957
            
            
            (6,373
            )
            
            (6,828
            )
            
            211,756**Cost
                of Sales**Costs
                of sales
            
            
            107,889
            
            
            (3,569
            )
            
            
            
            
            104,320Gross
                profit
            
            
            117,068
            
            
            (2,804
            )
            
            (6,828
            )
            
            107,436**Operating
                Expenses**Advertising
                and promotion
            
            
            31,340
            
            
            (110
            )
            
            (6,828
            )
            
            24,402General
                and administrative
            
            
            15,113
            
            
            
            
            
            
            
            
            15,113Depreciation
            
            
            1,395
            
            
            
            
            
            
            
            
            1,395Amortization
                of intangible assets
            
            
            5,753
            
            
            
            
            
            
            
            
            5,753Total
                operating expenses
            
            
            53,601
            
            
            (110
            )
            
            (6,828
            )
            
            46,663Operating
                income
            
            
            63,467
            
            
            (2,694
            )
            
            --
            
            
            60,773**Other
                income (expense)**Interest
                income
            
            
            135
            
            
            
            
            
            
            
            
            135Interest
                expense
            
            
            (34,012
            )
            
            
            
            
            
            
            
            (34,012
            )Loss
                on extinguishment of debt
            
            
            (7,567
            )
            
            
            
            
            
            
            
            (7,567
            )Total
                other income (expense)
            
            
            (41,444
            )
            
            --
            
            
            --
            
            
            (41,444
            )Income
                before provision for
              income
                taxes
            
            
            22,023
            
            
            (2,694
            )
            
            
            
            
            19,329Provision
                for income taxes
            
            
            (8,340
            )
            
            948
            
            
            
            
            
            (7,392
            )Net
                income
            
            $
            13,683
            
            $
            (1,746
            )
            $
            --
            
            $
            11,937


10


**Consolidated
      Statements of Operations**


**Nine
                Months Ended December 31, 2003*****(In
                thousands)***
            
            **Previously
                Reported**
            
            **Revenue**
              **Recognition**
            
            **Cooperative**
              **Advertising**
            
            **As
                Restated****Revenues**Net
                sales
            
            $
            62,085
            
            $
            1,482
            
            $
            (2,435
            )
            $
            61,132Other
                revenues
            
            
            292
            
            
            
            
            
            
            
            
            292Total
                revenues
            
            
            62,377
            
            
            1,482
            
            
            (2,435
            )
            
            61,424**Cost
                of Sales**Costs
                of sales
            
            
            23,572
            
            
            446
            
            
            
            
            
            24,018Gross
                profit
            
            
            38,805
            
            
            1,036
            
            
            (2,435
            )
            
            37,406**Operating
                Expenses**Advertising
                and promotion
            
            
            11,990
            
            
            35
            
            
            (2,435
            )
            
            9,590General
                and administrative
            
            
            7,813
            
            
            
            
            
            
            
            
            7,813Depreciation
            
            
            217
            
            
            
            
            
            
            
            
            217Amortization
                of intangible assets
            
            
            3,732
            
            
            
            
            
            
            
            
            3,732Total
                operating expenses
            
            
            23,752
            
            
            35
            
            
            (2,435
            )
            
            21,352Operating
                income
            
            
            15,053
            
            
            1,001
            
            
            --
            
            
            16,054**Other
                income (expense)**Interest
                income
            
            
            212
            
            
            
            
            
            
            
            
            212Interest
                expense
            
            
            (6,748
            )
            
            
            
            
            
            
            
            (6,748
            )Total
                other income (expense)
            
            
            (6,536
            )
            
            --
            
            
            --
            
            
            (6,536
            )Income
                before provision for
              income
                taxes
            
            
            8,517
            
            
            1,001
            
            
            --
            
            
            9,518Provision
                for income taxes
            
            
            (3,364
            )
            
            (359
            )
            
            
            
            
            (3,723
            )Net
                income
            
            $
            5,153
            
            $
            642
            
            $
            --
            
            $
            5,795





11


**Consolidated
      Statements of Operations**


**Three
                Months Ended December 31, 2004*****(In
                thousands)***
            
            **Previously
                Reported**
            
            **Revenue**
              **Recognition**
            
            **Cooperative**
              **Advertising**
            
            **As
                Restated****Revenues**Net
                sales
            
            $
            75,829
            
            $
            (732
            )
            $
            (2,079
            )
            $
            73,018Other
                revenues
            
            
            25
            
            
            
            
            
            
            
            
            25Total
                revenues
            
            
            75,854
            
            
            (732
            )
            
            (2,079
            )
            
            73,043**Cost
                of Sales**Costs
                of sales
            
            
            33,923
            
            
            (682
            )
            
            
            
            
            33,241Gross
                profit
            
            
            41,931
            
            
            (50
            )
            
            (2,079
            )
            
            39,802**Operating
                Expenses**Advertising
                and promotion
            
            
            7,265
            
            
            (18
            )
            
            (2,079
            )
            
            5,168General
                and administrative
            
            
            5,690
            
            
            
            
            
            
            
            
            5,690Depreciation
            
            
            457
            
            
            
            
            
            
            
            
            457Amortization
                of intangible assets
            
            
            2,148
            
            
            
            
            
            
            
            
            2,148Total
                operating expenses
            
            
            15,560
            
            
            (18
            )
            
            (2,079
            )
            
            13,463Operating
                income
            
            
            26,371
            
            
            (32
            )
            
            --
            
            
            26,339**Other
                income (expense)**Interest
                income
            
            
            48
            
            
            
            
            
            
            
            
            48Interest
                expense
            
            
            (12,042
            )
            
            
            
            
            
            
            
            (12,042
            )Total
                other income (expense)
            
            
            (11,994
            )
            
            --
            
            
            --
            
            
            (11,994
            )Income
                before provision for
              income
                taxes
            
            
            14,377
            
            
            (32
            )
            
            
            
            
            14,345Provision
                for income taxes
            
            
            (5,230
            )
            
            12
            
            
            
            
            
            (5,218
            )Net
                income
            
            $
            9,147
            
            $
            (20
            )
            $
            --
            
            $
            9,127





12


**Consolidated
      Statements of Operations**


**Three
                Months Ended December 31, 2003*****(In
                thousands)***
            
            **Previously
                Reported**
            
            **Revenue**
              **Recognition**
            
            **Cooperative**
              **Advertising**
            
            **As
                Restated****Revenues**Net
                sales
            
            $
            19,122
            
            $
            168
            
            $
            (456
            )
            $
            18,834Other
                revenues - related parties
            
            
            97
            
            
            
            
            
            
            
            
            97Total
                revenues
            
            
            19,219
            
            
            168
            
            
            (456
            )
            
            18,931**Cost
                of Sales**Costs
                of sales
            
            
            7,485
            
            
            82
            
            
            
            
            
            7,567Gross
                profit
            
            
            11,734
            
            
            86
            
            
            (456
            )
            
            11,364**Operating
                Expenses**Advertising
                and promotion
            
            
            2,736
            
            
            6
            
            
            (456
            )
            
            2,286General
                and administrative
            
            
            2,879
            
            
            
            
            
            
            
            
            2,879Depreciation
            
            
            73
            
            
            
            
            
            
            
            
            73Amortization
                of intangible assets
            
            
            1,246
            
            
            
            
            
            
            
            
            1,246Total
                operating expenses
            
            
            6,934
            
            
            6
            
            
            (456
            )
            
            6,484Operating
                income
            
            
            4,800
            
            
            80
            
            
            --
            
            
            4,880**Other
                income (expense)**Interest
                income
            
            
            14
            
            
            
            
            
            
            
            
            14Interest
                expense
            
            
            (2,162
            )
            
            
            
            
            
            
            
            (2,162
            )Total
                other income (expense)
            
            
            (2,148
            )
            
            --
            
            
            --
            
            
            (2,148
            )Income
                before provision for
              income
                taxes
            
            
            2,652
            
            
            80
            
            
            
            
            
            2,732Provision
                for income taxes
            
            
            (1,052
            )
            
            (32
            )
            
            
            
            
            (1,084
            )Net
                income
            
            $
            1,600
            
            $
            48
            
            $
            --
            
            $
            1,648





13


**Consolidated
      Balance Sheet**


***(In
                thousands)***
            
            **December
                31, 2004****Assets**
            
            **As
                Previously Reported**
            
            **As
                Restated**Current
                assetsCash
            
            $
            6,754
            
            $
            6,754Accounts
                receivable
            
            
            36,125
            
            
            27,388Other
                receivable
            
            
            718
            
            
            718Inventories
            
            
            18,888
            
            
            23,371Deferred
                income tax assets
            
            
            6,574
            
            
            6,574Prepaid
                expenses and other current assets
            
            
            2,576
            
            
            2,576Total
                current assets
            
            
            71,635
            
            
            67,381Property
                and equipment
            
            
            2,670
            
            
            2,670Goodwill
            
            
            294,660
            
            
            294,847Intangible
                assets
            
            
            610,761
            
            
            610,761Other
                long-term assets
            
            
            22,306
            
            
            22,306Total
                Assets
            
            $
            1,002,032
            
            $
            997,965**Liabilities
                and Members’ Equity**Current
                liabilitiesAccounts
                payable
            
            $
            17,806
            
            $
            17,806Accounts
                payable - related parties
            
            
            1,000
            
            
            1,000Accrued
                liabilities
            
            
            18,857
            
            
            17,097Current
                portion of long-term debt
            
            
            3,730
            
            
            3,730Total
                current liabilities
            
            
            41,393
            
            
            39,633Long-term
                debt
            
            
            676,563
            
            
            676,563Deferred
                income tax liabilities
            
            
            85,070
            
            
            85,070Total
                liabilities
            
            
            803,026
            
            
            801,266**Members’
                Equity**Contributed
                capital - Prestige Holdings
            
            
            183,533
            
            
            183,533Retained
                earnings
            
            
            15,473
            
            
            13,166Total
                members’ equity
            
            
            199,006
            
            
            196,699Total
                liabilities and members’ equity
            
            $
            1,002,032
            
            $
            997,965





14


**Consolidated
      Balance Sheet**


***(In
                thousands)***
            
            **March
                31, 2004****Assets**
            
            **As
                Previously Reported**
            
            **As
                Restated**Current
                assetsCash
            
            $
            3,393
            
            $
            3,393Accounts
                receivable
            
            
            15,391
            
            
            13,028Other
                receivables
            
            
            341
            
            
            341Inventories
            
            
            9,748
            
            
            10,660Deferred
                income tax assets
            
            
            1,647
            
            
            1,647Prepaid
                expenses and other current assets
            
            
            234
            
            
            234Total
                current assets
            
            
            30,754
            
            
            29,303Property
                and equipment
            
            
            880
            
            
            880Goodwill
            
            
            55,594
            
            
            55,781Intangible
                assets
            
            
            236,611
            
            
            236,611Other
                long-term assets
            
            
            2,783
            
            
            2,783Total
                Assets
            
            $
            326,622
            
            $
            325,358**Liabilities
                and Members’ Equity**Current
                liabilitiesAccounts
                payable
            
            $
            5,281
            
            $
            5,281Accrued
                liabilities
            
            
            7,264
            
            
            6,561Current
                portion of long-term debt
            
            
            2,000
            
            
            2,000Total
                current liabilities
            
            
            14,545
            
            
            13,842Long-term
                debt
            
            
            146,694
            
            
            146,694Deferred
                income tax liabilities
            
            
            38,874
            
            
            38,874Total
                liabilities
            
            
            200,113
            
            
            199,410**Members’
                Equity**Contributed
                capital - Prestige Holdings
            
            
            124,719
            
            
            124,719Retained
                earnings
            
            
            1,790
            
            
            1,229Total
                members’ equity
            
            
            126,509
            
            
            125,948Total
                liabilities and members’ equity
            
            $
            326,622
            
            $
            325,358





The
      restatements did not affect previously reported net cash flows from operating,
      investing or financing activities.





15


**3.**  **ACQUISITIONS
      OF BUSINESS**





On
      April
      6, 2004, the Company acquired all of the outstanding capital stock of Bonita
      Bay
      for a purchase price of approximately $562,858 (including working capital
      adjustments totaling $1,091). In accordance with SFAS No. 141, the Company
      was
      determined to be the accounting acquirer.





The
      Bonita Bay Acquisition, including fees and expenses related to the new financing
      of $22,651 and funds used to pay off $154,422 of debt and accrued interest
      incurred to finance the Medtech Acquisition, was financed through the following
      sources:





Revolving
                Credit Facility
            
            $
            3,512Tranche
                B Term Loan
            
            
            355,000Tranche
                C Term Loan Facility
            
            
            100,0009.25%
                Senior Subordinated Notes
            
            
            210,000Capital
                contributions from Prestige Holdings
            
            
            58,579Total
                sources of funds
            
            $
            727,091





The
      total
      purchase price of the Bonita Bay Acquisition (which included cash paid to the
      selling shareholders of $382,269, 94 Prestige Holdings Class B Preferred Units
      valued at an aggregate of $91 and 18,842 Prestige Holdings Common Units valued
      at an aggregate of $1, assumed debt and accrued interest which was retired
      of
      $176,918 and acquisition costs of $3,579) was allocated to the acquired assets
      and liabilities as set forth in the following table:





**Bonita
                Bay**Cash
            
            $
            4,304Accounts
                receivable
            
            
            13,121Inventories
            
            
            16,271Prepaid
                expenses and other current assets
            
            
            1,391Property,
                plant and equipment
            
            
            2,982Goodwill
            
            
            217,860Intangible
                assets
            
            
            352,460Accounts
                payable and accrued liabilities
            
            
            (27,745
            )Long-term
                debt
            
            
            (172,898
            )Deferred
                income taxes
            
            
            (28,520
            )$
            379,226





As
      a
      result of the Bonita Bay Acquisition, the Company recorded indefinite lived
      trademarks of $340,700 and $11,760 of trademarks with an estimated weighted
      average useful life of 7 years.





On
      October 6, 2004, the Company acquired all of the outstanding stock of Vetco,
      Inc. for a purchase price of approximately $50,649. To finance the acquisition,
      the Company used cash on hand of approximately $20,649 and borrowed an
      additional $12,000 from its revolving credit facility and $18,000 on its Tranche
      B term loan facility.





The
      total
      purchase price of the Vetco Acquisition was allocated to the acquired assets
      and
      liabilities as set forth in the following table:





**Vetco**Accounts
                receivable
            
            $
            2,136Inventories
            
            
            910Prepaid
                expenses and other current assets
            
            
            37Property,
                plant and equipment
            
            
            5Goodwill
            
            
            21,206Intangible
                assets
            
            
            27,158Accounts
                payable and accrued liabilities
            
            
            (803
            )$
            50,649





As
      a
      result of the Vetco acquisition, the Company recorded $27,000 of trademarks
      with
      an estimated useful life of 20 years and $158 related to a 5 year non-compete
      agreement with the former owner of Vetco.





The
      following table reflects the unaudited results of the Company’s operations on a
      pro forma basis as if the


16


Medtech,
      Spic and Span, Bonita Bay and Vetco Acquisitions had been completed on April
      1,
      2003. The pro forma financial information is not necessarily indicative of
      the
      operating results that would have occurred had the acquisitions been consummated
      as of April 1, 2003, nor is it necessarily indicative of future operating
      results.





**Unaudited****Pro
                Forma**
              **Three
                months ended**
              **December
                31, 2003*****(Restated*****)**Net
                sales
            
            $
            76,838Income
                before income taxes
            
            $
            17,222Net
                income
            
            $
            10,147





**Unaudited****Pro
                Forma**
              **Nine
                months ended December 31****2004**
            
            **2003*****(Restated)***
            
            ***(Restated)***Net
                sales
            
            $
            217,934
            
            $
            215,865Income
                before income taxes
            
            $
            29,830
            
            $
            33,207Net
                income
            
            $
            18,068
            
            $
            20,110








The
      results of operations of Vetco for the period October 1, 2004 to October 5
      2004
      were not material. Accordingly, pro forma information for the three months
      ended
      December 31, 2004 has not been presented.





**4.**  **INVENTORIES**





Inventories,
      net consist of the following:





**December
                31,**
              **2004**
            
            **March
                31,**
              **2004****(successor
                basis)*****(Restated)***
            
            ***(Restated)***Packaging
                and raw materials
            
            $
            4,110
            
            $
            1,562Finished
                goods
            
            
            19,261
            
            
            9,098Total
            
            $
            23,371
            
            $
            10,660





Inventories
      are shown net of reserves for obsolete and slow moving inventory of $1,791
      and
      $125 at December 31, 2004 and March 31, 2004, respectively.





**5.**  **OTHER
      LONG-TERM ASSETS**





Other
      long-term assets consist of the following at December 31, 2004:





**Carrying**
              **Amount**
            
            **Accumulated**
              **Amortization**
            
            **Net**
              **Carrying**
              **Amount****(successor
                basis)**Intangible
                assets:Indefinite
                lived trademarks
            
            $
            522,346
            
            $
            —
            
            $
            522,346Amortizable
                intangible assets:Trademarks
            
            
            94,900
            
            
            (6,635
            )
            
            88,265Non-compete
                agreement
            
            
            158
            
            
            (8
            )
            
            150617,404
            
            
            (6,643
            )
            
            610,761Deferred
                financing costs, net
            
            
            21,248
            
            
            —
            
            
            21,248Deferred
                offering costs
            
            
            1,058
            
            
            —
            
            
            1,058Total
            
            $
            639,710
            
            $
            (6,643
            )
            $
            633,067





17





Other
      long-term assets consist of the following at March 31, 2004:


**Carrying**
              **Amount**
            
            **Accumulated**
              **Amortization**
            
            **Net**
              **Carrying**
              **Amount****(successor
                basis)**Intangible
                assets:Indefinite
                lived trademarks
            
            $
            181,361
            
            $
            —
            
            $
            181,361Amortizable
                intangible assets:Trademarks
            
            
            56,140
            
            
            (890
            )
            
            55,250237,501
            
            
            (890
            )
            
            236,611Deferred
                financing costs, net
            
            
            2,783
            
            
            —
            
            
            2,783Total
            
            $
            240,284
            
            $
            (890
            )
            $
            239,394





As
      of
      December 31, 2004, the Company’s future amortization of intangible assets is
      expected to be as follows:





**Year
                ending March 31,**2005
            
            $
            2,1482006
            
            
            8,5922007
            
            
            8,5922008
            
            
            8,5922009
            
            
            8,592Thereafter
            
            
            51,899Total
            
            $
            88,415





**6.**  **LONG-TERM
      DEBT**





Long-term
      debt consists of the following:


**December
                31,**
              **2004**
            
            **March
                31,**
              **2004****(successor
                basis)**Revolving
                Credit Facility
            
            $
            —
            
            $
            —Tranche
                B Term Loan Facility
            
            
            370,293
            
            
            —Tranche
                C Term Loan Facility
            
            
            100,000
            
            
            —Senior
                Subordinated Notes
            
            
            210,000
            
            
            —Medtech
                Revolving Credit Facility
            
            
            —
            
            
            10,548Medtech
                Term Loan Facility
            
            
            —
            
            
            100,000Medtech
                Subordinated Notes
            
            
            —
            
            
            38,146680,293
            
            
            148,694Less:
                current portion
            
            
            (3,730
            )
            
            (2,000
            )Long-term
                debt
            
            $
            676,563
            
            $
            146,694





**Interest
      Rate Protection Agreement**





On
      June
      30, 2004, the Company purchased a 5% interest rate cap covering $20,000 of
      its
      debt. The interest rate cap terminates in June 2006.








**7.**  **BUSINESS
      SEGMENTS**





Segment
      information has been prepared in accordance with SFAS No. 131, “Disclosures
      about Segments of an Enterprise and Related Information.” Operating segments are
      determined based on product lines. Within each reportable segment are operating
      segments which have similar economic characteristics, including the nature
      of
      the products, production process, type of customer and method of
      distribution.





There
      were no inter-segment sales or transfers during the three or nine months ended
      December 31, 2004 and 2003. The Company evaluates the performance of its product
      lines and allocates resources to them based primarily on contribution margin
      (gross profit less advertising and promotion expenses). The tables below
      summarize information about reportable segments. The Company did not operate
      in
      the household cleaning segment during the three and nine months ended December
      31, 2003.


18




**Three
                  months ended December 31, 2004*****(Restated)***
              
              **Over-the-Counter**
                **Drug**
              
              **Personal**
                **Care**
              
              **Household
                  Cleaning**
              
              **Consolidated****(successor
                  basis)**Net
                  sales
              
              $
              40,964
              
              $
              7,612
              
              $
              24,442
              
              $
              73,018Other
                  revenues
              
              
              —
              
              
              —
              
              
              25
              
              
              25Total
                  revenues
              
              
              40,964
              
              
              7,612
              
              
              24,467
              
              
              73,043Cost
                  of sales
              
              
              14,545
              
              
              3,681
              
              
              15,015
              
              
              33,241Gross
                  profit
              
              
              26,419
              
              
              3,931
              
              
              9,452
              
              
              39,802Advertising
                  and promotion
              
              
              3,357
              
              
              797
              
              
              1,014
              
              
              5,168Contribution
                  margin
              
              $
              23,062
              
              $
              3,134
              
              $
              8,438
              
              
              34,634Other
                  operating expenses
              
              
              
              
              
              
              
              
              
              
              
              8,295Operating
                  income
              
              
              
              
              
              
              
              
              
              
              
              26,339Other
                  income (expense)
              
              
              
              
              
              
              
              
              
              
              
              (11,994
              )Provision
                  for income taxes
              
              
              
              
              
              
              
              
              
              
              
              (5,218
              )Net
                  income
              
              
              
              
              
              
              
              
              
              
              $
              9,127





**Three
                months ended December 31, 2003*****(Restated)***
            
            **Over-the-Counter**
              **Drug**
            
            **Personal**
              **Care**
            
            **Other**
            
            **Consolidated****(predecessor
                basis)**Net
                sales
            
            $
            12,486
            
            $
            6,348
            
            $
            —
            
            $
            18,834Other
                revenues - related party
            
            
            —
            
            
            —
            
            
            97
            
            
            97Total
                revenues
            
            
            12,486
            
            
            6,348
            
            
            97
            
            
            18,931Cost
                of sales
            
            
            4,575
            
            
            2,992
            
            
            —
            
            
            7,567Gross
                profit
            
            
            7,911
            
            
            3,356
            
            
            97
            
            
            11,364Advertising
                and promotion
            
            
            822
            
            
            1,464
            
            
            —
            
            
            2,286Contribution
                margin
            
            $
            7,089
            
            $
            1,892
            
            $
            97
            
            
            9,078Other
                operating expenses
            
            
            
            
            
            
            
            
            
            
            
            4,198Operating
                income
            
            
            
            
            
            
            
            
            
            
            
            4,880Other
                income (expense)
            
            
            
            
            
            
            
            
            
            
            
            (2,148
            )Provision
                for income taxes
            
            
            
            
            
            
            
            
            
            
            
            (1,084
            )Net
                income
            
            
            
            
            
            
            
            
            
            
            $
            1,648





**Nine
                months ended December 31, 2004*****(Restated)***
            
            **Over-the-Counter**
              **Drug**
            
            **Personal**
              **Care**
            
            **Household**
              **Cleaning**
            
            **Consolidated****(successor
                basis)**Net
                sales
            
            $
            113,067
            
            $
            24,593
            
            $
            73,970
            
            $
            211,630Other
                revenues
            
            
            —
            
            
            —
            
            
            126
            
            
            126Total
                revenues
            
            
            113,067
            
            
            24,593
            
            
            74,096
            
            
            211,756Cost
                of sales
            
            
            44,075
            
            
            12,800
            
            
            47,445
            
            
            104,320Gross
                profit
            
            
            68,992
            
            
            11,793
            
            
            26,651
            
            
            107,436Advertising
                and promotion
            
            
            15,709
            
            
            4,213
            
            
            4,480
            
            
            24,402Contribution
                margin
            
            $
            53,283
            
            $
            7,580
            
            $
            22,171
            
            
            83,034Other
                operating expenses
            
            
            
            
            
            
            
            
            
            
            
            22,261Operating
                income
            
            
            
            
            
            
            
            
            
            
            
            60,773Other
                income (expense)
            
            
            
            
            
            
            
            
            
            
            
            (41,444
            )Provision
                from income taxes
            
            
            
            
            
            
            
            
            
            
            
            (7,392
            )Net
                income
            
            
            
            
            
            
            
            
            
            
            $
            11,937








19





**Nine
                months ended December 31, 2003*****(Restated)***
            
            **Over-the-Counter**
              **Drug**
            
            **Personal**
              **Care**
            
            **Other**
            
            **Consolidated****(predecessor
                basis)**Net
                sales
            
            $
            39,536
            
            $
            21,596
            
            $
            —
            
            $
            61,132Other
                revenues - related party
            
            
            —
            
            
            —
            
            
            292
            
            
            292Total
                revenues
            
            
            39,536
            
            
            21,596
            
            
            292
            
            
            61,424Cost
                of sales
            
            
            13,529
            
            
            10,489
            
            
            —
            
            
            24,018Gross
                profit
            
            
            26,007
            
            
            11,107
            
            
            292
            
            
            37,406Advertising
                and promotion
            
            
            5,078
            
            
            4,512
            
            
            —
            
            
            9,590Contribution
                margin
            
            $
            20,929
            
            $
            6,595
            
            $
            292
            
            
            27,816Other
                operating expenses
            
            
            
            
            
            
            
            
            
            
            
            11,762Operating
                income
            
            
            
            
            
            
            
            
            
            
            
            16,054Other
                income (expense)
            
            
            
            
            
            
            
            
            
            
            
            (6,536
            )Provision
                for income taxes
            
            
            
            
            
            
            
            
            
            
            
            (3,723
            )Net
                income
            
            
            
            
            
            
            
            
            
            
            $
            5,795





During
      the nine months ended December 31, 2004, virtually all sales were made to
      customers in the United States and Canada.





No
      individual geographical area accounted for more than 10% of net sales in any
      of
      the periods presented. At December 31, 2004, all of the Company’s long-term
      assets were located in the United States.





**8.**  **Commitments
      and Contingencies**





In
      June
      2003, a lawsuit, Theodosakis v. Walgreens, et al, was filed in Federal District
      Court in Arizona, in which the plaintiff alleged that Medtech Products, a
      wholly-owned subsidiary of Medtech, and others infringed the dress trade of
      a
      book titled “The Arthritis Cure” in connection with the sale of dietary
      supplement products under the core trademark ARTHx. In addition, the complaint
      alleged that Medtech Products and others made false endorsements, engaged in
      unfair competition, made false designations of origin and invaded the privacy
      rights of the plaintiff. The ARTHx trademarks, goodwill and inventory were
      sold
      by Medtech Products to a third party, Contract Pharmacal Corporation, in March
      2003. On January 12, 2005, our motions for summary judgment on the basis of
      Laches and Statute of Limitations were granted by the court. The plaintiff
      has a
      right to a perfect appeal within 30 days.





The
      Company is also involved from time to time in routine legal matters and other
      claims incidental to its business. When it appears probable in management’s
      judgment that the Company will incur monetary damages or other costs in
      connection with such claims and proceedings, and such costs can be reasonably
      estimated, liabilities are recorded in the financial statements and charges
      are
      recorded against earnings. The Company believes the resolution of such routine
      matters and other incidental claims, taking into account reserves and insurance,
      will not have a material adverse effect on the Company’s financial condition or
      results of operations.





**9.**  **Subsequent
      Events**





In
      January 2005, the Prestige Brands Holdings, Inc., the ultimate parent of the
      company, filed an amended registration statement on Form S-1 to offer 23.3
      million shares of its common stock to the public.





20


**Item
      2.****Management’s
      Discussion and Analysis of** **Financial
      Condition and
      Results of Operations** **.**





*The
      following discussion should be read together with the unaudited consolidated
      financial statements and the related notes included elsewhere in this
      document.*





**GENERAL**





*Overview.* We
      are a
      branded consumer products company with a diversified portfolio of
      well-recognized brands in the over-the-counter drug, household cleaning and
      personal care categories. Our products are sold by mass merchandisers, and
      in
      drug, grocery, dollar and club stores. Our senior management team and dedicated
      sales force maintain long-standing relationships with our top 50 customers,
      which accounted for approximately 81% of our gross sales, on a pro forma basis
      excluding the Vetco acquisition, for the year ended March 31, 2004. Our
      principal customer relationships include Wal-Mart, Walgreens, Target, CVS and
      Kroger.





We
      conduct our operations through three principal business segments:
      Over-the-Counter Drug, Household Cleaning and Personal Care.





**RESTATEMENT**





As
      discussed in Note 2 to the financial statements, the financial statements and
      related notes thereto contained in the Company’s Quarterly Report on Form 10-Q
      for the three and nine month periods ended December 31, 2004 and 2003 have
      been
      restated. All amounts in Management’s Discussion and Analysis of Financial
      Condition and Results of Operations have been adjusted, as appropriate, for
      the
      effects of this restatement.





**Results
      of Operations**





**Three
      months ended December 31, 2004 compared to the three months ended December
      31,
      2003**





The
      following includes a discussion of the results for the quarterly periods ended
      December 31, 2004 and 2003, as well as, a discussion of the pro forma quarter
      ended December 31, 2003 compared to actual results for the quarter ended
      December 31, 2004. Use of the term “pro forma” throughout the following
      discussion reflects the unaudited results of our operations as if the Spic
      and
      Span acquisition and the Bonita Bay acquisition had both been completed on
      April
      1, 2003, without giving effect to the Vetco acquisition, which is not considered
      material to the pro forma results.





The
      following table sets forth the net sales, gross profit and contribution margin
      (i.e., gross profit less advertising and promotion, or A&P by segment). The
      unaudited pro forma segment data is provided for informational purposes only
      and
      is not necessarily indicative of the operating results that would have occurred
      had the transactions been consummated on the date indicated above, nor are
      they
      necessarily indicative of our future results of operations.





21





**Three
                months ended December 31****2004**
            
            **2003**
            
            **2003****(Unaudited)**
            
            **(successor**
              **basis)**
            
            **(predecessor**
              **basis)**
            
            **(pro
                forma**
              **basis)*****(Restated)***
            
            ***(Restated)***
            
            ***(Restated)***Net
                SalesOver-the-counter
                drug
            
            $
            40,964
            
            $
            12,486
            
            $
            39,457Personal
                care
            
            
            7,612
            
            
            6,348
            
            
            8,016Household
                cleaning
            
            
            24,467
            
            
            —
            
            
            25,455Other
            
            
            —
            
            
            97
            
            
            97Total
                net sales
            
            $
            73,043
            
            $
            18,931
            
            $
            73,025Gross
                ProfitOver-the-counter
                drug
            
            $
            26,419
            
            $
            7,911
            
            $
            25,747Personal
                care
            
            
            3,931
            
            
            3,356
            
            
            4,206Household
                cleaning
            
            
            9,452
            
            
            —
            
            
            9,813Other
            
            
            —
            
            
            97
            
            
            97Total
                gross profit
            
            $
            39,802
            
            $
            11,364
            
            $
            39,863Contribution
                MarginOver-the-counter
                drug
            
            $
            23,062
            
            $
            7,089
            
            $
            22,269Personal
                care
            
            
            3,134
            
            
            1,892
            
            
            2,590Household
                cleaning
            
            
            8,438
            
            
            —
            
            
            7,150Other
            
            
            —
            
            
            97
            
            
            97Total
                contribution margin
            
            $
            34,634
            
            $
            9,078
            
            $
            32,106








*Net
      Sales* .
      Net
      sales increased by $54.1 million, or 285.8%, from $18.9 million for the quarter
      ended December 31, 2003 to $73.0 million for the quarter ended December 31,
      2004. The sales increase is driven by the acquisitions of Bonita Bay, Spic
      and
      Span, and Vetco in April 2004, March 2004 and October 2004, respectively. The
      Over-the-Counter Drug (“OTC Drug”) segment had net sales of $41.0 million for
      the quarter ended December 31, 2004, an increase of $28.5 million over the
      quarter ended December 31, 2003, primarily as a result of the Bonita Bay
      Acquisition. The Personal Care segment had net sales of $7.6 million for the
      quarter ended December 31, 2004, an increase of $1.3 million over the quarter
      ended December 31, 2003, primarily as a result of the Bonita Bay Acquisition.
      The Household Cleaning segment, which was acquired through the Spic and Span
      and
      Bonita Bay acquisitions, had sales of $24.5 million for the quarter ended
      December 31, 2004 compared to no sales for the quarter ended December 31, 2003.
      On a pro forma basis, net sales were flat at $73.0 million for the quarterly
      periods ended December 31, 2004 and 2003. The decreases in sales in the
      Household Cleaning and Personal Care segments were offset by an increase in
      the
      OTC Drug segment.





Over-the-Counter
      Drug Segment .
      Net
      sales for the OTC Drug segment were $41.0 million for the quarter ended December
      31, 2004 compared to pro forma net sales of $39.5 million for the quarter ended
      December 31, 2003, an increase of $1.5 million or 3.8%. The sales increase
      was
      driven by increases in Clear Eyes and the Little Remedies brand, acquired in
      the
      Vetco Acquisition in October 2004. Partially offsetting the sales increases
      discussed above were decreases for the Chloraseptic and Murine brands. The
      Chloraseptic decline is related to the timing of the flu season in the FY 2003
      quarter. A severe flu season in November and December 2003 led to an extremely
      strong sales performance in December 2003. The flu season in the quarter ended
      December 31, 2004 was comparatively mild.





Personal
      Care Segment .
      On a
      pro forma basis, net sales for the Personal Care segment declined by $0.4
      million or, 5.0%, from $8.0 million for the quarter ended December 31, 2003
      to
      $7.6 million for the quarter ended December 31, 2004.





Household
      Cleaning Segment .
      On a
      pro forma basis, the Household Cleaning segment net sales decreased by $1.0
      million, or 3.9% from $25.5 million for the quarter ended December 31, 2003
      to
      $24.5 million for the quarter ended December 31, 2004. The decrease was
      primarily attributable to Comet. Sales in the 2003 quarter were bolstered by
      $2.7 million of volume for two new products launches - a disposable toilet
      bowl
      brush (Comet Clean and Flush) and toilet bowl tablets - which were discontinued
      in FY 2005.





22


*Gross
      Profit* .
      Gross
      profit increased by $28.4 million, or 250.2%, from $11.4 million for the quarter
      ended December 31, 2003 to $39.8 million for the quarter ended December 31,
      2004. The increase in gross profit is driven by the sales increase in the
      current year. As a percentage of sales, gross profit declined from 60.0% for
      the
      quarter ended December 31, 2003 to 54.5% for the quarter ended December 31,
      2004. The margin decline is due to the addition of the Household Cleaning
      segment in the current year. Gross margins in the Household Cleaning segment
      are
      significantly lower than gross margins in the OTC Drug and Personal Care
      segments.





On
      a pro
      forma basis, gross profit decreased by $0.1 million, or 0.2%, from $39.9 million
      for the quarter ended December 31, 2003 to $39.8 million for the quarter ended
      December 31, 2004. As a percentage of sales, gross profit declined slightly
      from
      54.6% for the quarter ended December 31, 2003 to 54.5% for the quarter ended
      December 31, 2004.





Over-the-Counter
      Drug Segment. On a pro
      forma basis, the OTC Drug segment’s gross profit increased by $0.7 million, or
      2.6%, from $25.7 million for the quarter ended December 31, 2003 to $26.4
      million for the quarter ended December 31, 2004. The increase was due to the
      sales increase in the current year. Gross profit as a percentage of sales
      declined from 65.3% for the quarter ended December 31, 2003 to 64.5% for the
      quarter ended December 31, 2004. The decline in margin as a percentage of sales
      was driven by a change in sales mix.





Personal
      Care Segment. On a pro
      forma basis, the Personal Care segment’s gross profit decreased by $0.3 million,
      or 6.5%, from $4.2 million for the quarter ended December 31, 2003 to $3.9
      million for the quarter ended December 31, 2004. The decrease in gross profit
      was due to the sales decline.





Household
      Cleaning Segment. On a pro
      forma basis, the Household Cleaning segment’s gross profit decreased by $0.3
      million, or 3.7%, from $9.8 million for the quarter ended December 31, 2003
      to
      $9.5 million for the quarter ended December 31, 2004. The decline in gross
      profit was due to the sales decline.





*Contribution
      Margin* .
      Contribution margin, defined as gross profit less advertising and promotion
      expenses, increased by $25.5 million, or 281.5%, from $9.1 million for the
      quarter ended December 31, 2003 to $34.6 million for the quarter ended December
      31, 2004. The increase in contribution margin was due to the sales increase
      discussed above.





On
      a pro
      forma basis, contribution margin increased by $2.5 million, or 7.9%, from $32.1
      million for the quarter ended December 31, 2003 to $34.6 million for the quarter
      ended December 31, 2004. The increase was due to a reduction of $2.6 million
      in
      advertising and selling expenses, from $7.8 million for the quarter ended
      December 31, 2003 to $5.2 million for the quarter ended December 31, 2004,
      offset by the gross profit decline discussed above. The decrease in advertising
      and selling expenses was due to the following: (i) approximately $2.0 million
      in
      advertising and selling expenses related to the Comet disposable toilet bowl
      brush in the December 2003 quarter (which were not incurred in the December
      2004
      quarter); (ii) synergy savings (as a result of the Acquisitions) related to
      agency fees, media buying and broker commissions amounted to approximately
      $0.7
      million in the quarter.





Over-the-Counter
      Drug Segment. Pro
      forma contribution margin for the OTC Drug segment increased by $0.8 million,
      or
      3.6%, from $22.3 million for the quarter ended December 31, 2003 to $23.1
      million for the quarter ended December 31, 2004. The increase in contribution
      margin was due to the sales increase.





Personal
      Care Segment. Pro
      forma contribution margin for the Personal Care segment increased by $0.5
      million, or 21.0%, from $2.6 million for the quarter ended December 31, 2003
      to
      $3.1 million for the quarter ended December 31, 2004. The increase in
      contribution margin was driven by reductions in sales promotion and broker
      commissions in the current quarter.





Household
      Cleaning Segment. Pro
      forma contribution margin for the Household Cleaning segment increased by $1.3
      million, or 18.0%, from $7.1 million for the quarter ended December 31, 2003
      to
      $8.4 million for the quarter ended December 31, 2004. The increase in
      contribution margin was due to the reductions in advertising and sales promotion
      expenditures for Comet in the current quarter primarily due to the
      discontinuance of advertising related to the disposable toilet bowl
      brush.





*General
      and Administrative Expenses.* General
      and administrative expenses increased by $2.8 million, or 97.6%, from $2.9
      million for the quarter ended December 31, 2003 to $5.7 million for the quarter
      ended December 31, 2004. The increase in expenses was due to the additional
      expenses associated with adding the brands acquired in the Bonita Bay, Spic
      and
      Span and Vetco Acquisitions to the portfolio. The acquisitions


23


resulted
      in increases to most general and administrative line items including
      compensation, office space, insurance costs, and legal and accounting expenses.
      In addition, the decision to abandon our proposed IDS offering during the
      quarter resulted in recognition of $0.5 million of IDS related legal and
      accounting expenses in the period ending December 31, 2004.





*Depreciation
      and Amortization Expense.* Depreciation and amortization expense increased by $1.3 million, or 97.5%,
      from
      $1.3 million for the quarter ended December 31, 2003 to $2.6 million for the
      quarter ended December 31, 2004. The increase is due primarily to amortization
      of intangible assets related to the acquisitions and an increase in depreciation
      related to the Bonita Bay Acquisition.





*Interest
      Expense, net.* Net
      interest expense increased by $9.8 million, or 458.4%, from $2.2 million for
      the
      quarter ended December 31, 2003 to $12.0 million for the quarter ended December
      31, 2004. The increase in interest expense is due primarily to the increased
      levels of indebtedness outstanding after the acquisitions and related financing
      transactions.





*Income
      Taxes.* The
      income tax provision for the quarter ended December 31, 2004 was $5.2 million,
      with an effective rate of 36.4%, compared to a provision of $1.1 million for
      the
      quarter ended December 31, 2003, with an effective rate of 39.7%. The difference
      between the U.S. federal statutory rate of 34% and the effective rates is
      primarily due to state tax considerations.





**Nine
      months ended December 31, 2004 compared to the nine months ended December 31,
      2003**





The
      following includes a discussion of the actual year-to-date results for the
      nine
      months ended December 31, 2004 and 2003, as well as a discussion of the pro
      forma results for the year-to-date period ended December 31, 2003, compared
      to
      actual results for the year-to-date period ended December 31, 2004. Use of
      the
      term “pro forma” throughout the following discussion reflects the unaudited
      results of our operations as if the Spic and Span acquisition and the Bonita
      Bay
      acquisition had both been completed on April 1, 2003, without giving effect
      to
      the Vetco acquisition, which is not considered material to the pro forma
      results.





The
      following tables set forth the net sales, gross profit and contribution margin
      (i.e., gross profit less advertising and promotion, or A&P by segment). The
      unaudited pro forma segment data is provided for informational purposes only
      and
      is not necessarily indicative of the operating results that would have occurred
      had the transactions been consummated on the date indicated above, nor are
      they
      necessarily indicative of our future results of operations.








**Nine
                months ended December 31****2004**
            
            **2003**
            
            **2003****(Unaudited)**
            
            **(successor**
              **basis)**
            
            **(predecessor**
              **basis)**
            
            **(pro
                forma**
              **basis)*****(Restated)***
            
            ***(Restated)***
            
            ***(Restated)***Net
                SalesOver-the-counter
                drug
            
            $
            113,067
            
            $
            39,536
            
            $
            105,419Personal
                care
            
            
            24,593
            
            
            21,596
            
            
            26,459Household
                cleaning
            
            
            74,096
            
            
            —
            
            
            74,472Other
            
            
            —
            
            
            292
            
            
            292Total
                net sales
            
            $
            211,756
            
            $
            61,424
            
            $
            206,642Gross
                ProfitOver-the-counter
                drug
            
            $
            68,992
            
            $
            26,007
            
            $
            67,632Personal
                care
            
            
            11,793
            
            
            11,107
            
            
            13,143Household
                cleaning
            
            
            26,651
            
            
            —
            
            
            29,765Other
            
            
            —
            
            
            292
            
            
            292Total
                gross profit
            
            $
            107,436
            
            $
            37,406
            
            $
            110,832Contribution
                MarginOver-the-counter
                drug
            
            $
            53,283
            
            $
            20,929
            
            $
            53,746Personal
                care
            
            
            7,580
            
            
            6,595
            
            
            7,621Household
                cleaning
            
            
            22,171
            
            
            —
            
            
            22,746Other
            
            
            —
            
            
            292
            
            
            292Total
                contribution margin
            
            $
            83,034
            
            $
            27,816
            
            $
            84,405








*Net
      Sales* .
      Net
      sales increased by $150.4 million, or 244.7%, from $61.4 million for the nine
      months


24


ended
      December 31, 2003 to $211.8 million for the nine months ended December 31,
      2004.
      The sales increase was driven by the acquisitions of Spic and Span, Bonita
      Bay
      and Vetco in March 2004, April 2004 and October 2004, respectively. The
      Over-the-Counter Drug segment had net sales of $113.1 million for the nine
      months ended December 31, 2004, an increase of $73.6 million over net sales
      of
      $39.5 million for the nine months ended December 31, 2003. The Personal Care
      segment has net sales of $24.6 million for the nine months ended December 31,
      2004 compared to net sales of $21.6 million for the nine months ended December
      31, 2003. The Household Cleaning segment, which was acquired as part of the
      Spic
      and Span and Bonita Bay Acquisitions, had sales of $74.1 million for the nine
      months ended December 31, 2004 compared to no sales during the same period
      of
      the prior year.





On
      a pro
      forma basis, net sales increased by $5.1 million, or 2.5%, from $206.6 million
      for the nine months ended December 31, 2003 to $211.8 million for the nine
      months ended December 31, 2004. The increase in overall proforma net sales
      was
      driven by the Over-the-Counter Drug segment.





Over-the-Counter
      Drug Segment *.* ** On
      a pro
      forma basis, net sales of $113.1 million were $7.7 million or 7.3% greater
      than
      sales of $105.4 million for the nine months ended December 31, 2003.
      The *Compound W* and *Clear
      eyes* brands
      exhibited strong sales growth for the nine months ended December 31, 2004.
      Partially offsetting the strong sales performance for those two brands were
      declines in sales for the *Chloraseptic* and *Murine* brands.
      The *Little
      Remedies* brands,
      acquired in the Vetco acquisition contributed $4.4 million to the nine month
      over-the-counter sales.





Personal
      Care Segment .
      On a
      pro forma basis, the Personal Care segment showed a sales decline of $1.9
      million, or 7.1%, from $26.5 million for the nine months ended December 31,
      2003
      to $24.6 million for the nine months ended December 31, 2004. The decrease
      in
      sales was driven by declines for *Cutex* and *Denorex* .
      The *Cutex* decline
      reflects a decline for the entire nail polish category in 2004 versus the prior
      year. The decline in *Denorex* sales
      reflects market share losses from 2003.





Household
      Cleaning Segment .
      On a
      pro forma basis, the Household Cleaning segment had a sales decline of $0.4
      million, or 0.5%, from $74.5 million for the nine months ended December 31,
      2003
      to $74.1 million for the nine months ended December 31, 2004. The decline in
      sales was due to a decline in *Comet,* partially offset by an increase for *Spic
      and Span* .
      The
      decline in Comet is primarily due to the discontinuance of the Comet Clean
      and
      Flush toilet bowl brush and toilet bowl tablets.





*Gross
      Profit* .
      Gross
      profit increased by $70.0 million, or 187.2% from $37.4 million for the nine
      months ended December 31, 2003 to $107.4 million for the nine months ended
      December 31, 2004. This increase is driven primarily by the sales increase.
      As a
      percentage of sales, gross profit declined from 60.9% for the nine months ended
      December 31, 2003 to 50.7% for the nine months ended December 31, 2004. This
      decrease is gross margin as a percentage of sales is driven by two factors.
      The
      nine months ended December 31, 2004 included $5.3 million of charges due to
      step-ups in inventory related to purchase accounting. The second reason for
      the
      deterioration in gross margin percentage is the addition to the Household
      Cleaning segment in the current year. Gross margins in the Household Cleaning
      segment are significantly lower than gross margins for the Over-the-Counter
      Drug
      segment and Personal Care segment.





On
      a pro
      forma basis, gross profit decreased by $3.4 million, or $3.1%, from $110.8
      million for the nine months ended December 31, 2003 to $107.4 million for the
      nine months ended December 31, 2004. The decrease in gross profit on a pro
      forma
      basis is primarily due to charges related to an inventory step-up of $5.3
      million for the nine months ended December 31, 2004 compared to an inventory
      step-up of $1.2 million in the nine months ended December 31, 2003. Excluding
      the inventory step-up, gross profit would have been $112.0 million for the
      nine
      months ended December 31, 2003 and $112.7 million for the nine months ended
      December 31, 2004.





Over-the-Counter
      Drug Segment .
      On a
      pro forma basis, the Over-the-Counter Drug segment’s gross profit increased by
      $1.4 million, or 2.0%, from $67.6 million for the nine months ended December
      31,
      2003 to $69.0 million for the nine months ended December 31, 2004. The increase
      in gross profit was due to the sales increase. Excluding the inventory step-up
      of $1.2 million for the nine months ended December 31, 2003 and $2.7
      million for the nine months ended December 31, 2004, gross profit would have
      increased by $2.9 million, or 4.1% from $68.8 million for the nine months ended
      December 31, 2003 to $71.7 million for the nine months ended December 31, 2004.
      The increase (excluding inventory step-up) was due to the sales
      increase.





Personal
      Care Segment .
      On a
      pro forma basis, the Personal Care segment’s gross profit declined by $1.3
      million, or 10.3%, from $13.1 million for the nine months ended December 31,
      2003 to $11.8 million for


25


the
      nine
      months ended December 31, 2004. Excluding charges related to the inventory
      step-up of $0.2 million during the current year, gross profit decline by $1.1
      million, or 8.7%, for the nine months ended December 31, 2004 versus the same
      period last year. The decline in gross profit was primarily due to the sales
      decline for the segment.





Household
      Cleaning Segment .
      On a
      pro forma basis, the Household Cleaning segment’s gross profit decreased by $3.1
      million, or 10.5%, from $ 29.8 million
      for the nine months ended December 31, 2003 to $26.7 million for the nine months
      ended December 31, 2004. Excluding the charges related to the inventory step-up
      of $2.4 million during the current year, gross profit decline by $0.7 million,
      or 2.4%, from $29.8 million for the nine months ended December 31, 2003 to
      $29.1
      million for the nine months ended December 31, 2004. The decline in gross profit
      is due to lower sales, close-out sales related to *Comet* Clean
& Flush and increased shipments to lower margin dollar stores.





*Contribution
      Margin.* Contribution margin increased by $55.2 million, or 198.5%, from $27.8 million
      for the nine months ended December 31, 2003 to $83.0 million for the nine months
      ended December 31, 2004. The increase in contribution margin was due to the
      increased gross profit discussed above, partially offset by increased
      advertising and selling expenses associated with the acquisition of the Spic
      and
      Span and Bonita Bay brands.





On
      a pro
      forma basis, contribution margin increased by $2.7 million, or 3.2%, from $85.6
      million for the nine months ended December 31, 2003 to $88.3 million for the
      nine months ended December 31, 2004, exclusive of the inventory step-up of
      $5.3
      million and $1.2 million for the nine months ended December 31, 2004 and 2003,
      respectively. The increase in contribution margin was the result of the net
      sales increase combined with the decrease in overall advertising and selling
      expenses. The decrease in advertising and selling expenses in the current year
      is due to a synergy savings related to advertising agency fees, media buying
      and
      broker commissions. In addition, $2.0 million of advertising and selling
      expenses related to the *Comet* disposable toilet bowl brush in fiscal year 2004 were not repeated in fiscal
      year 2005.





Over-the-Counter
      Drug Segment. Pro
      forma contribution margin for the Over-the-Counter Drug segment, excluding
      the
      inventory step-up of $2.7 million and $1.2 million for the nine months ended
      December 31, 2004 and 2003, respectively, increased by $1.1 million, or 1.9%,
      from $54.9 million for the nine months ended December 31, 2003 to $56.0 million
      for the nine months ended December 31, 2004. The increase in pro forma
      contribution margin was driven by the sales increase partially offset by an
      increase in advertising and promotion spending.





Personal
      Care Segment .
      Pro
      forma contribution margin for the Personal Care segment, excluding the inventory
      step-up of $0.2 million mentioned above, increased by $0.2 million, or 2.1%,
      from $7.6 million for the nine months ended December 31, 2003 to $7.8 million
      for the nine months ended December 31, 2004.





Household
      Cleaning Segment .
      Excluding the inventory step-up of $2.4 million mentioned above, pro forma
      contribution margin for the Household Cleaning segment increased by $1.9
      million, or 8.0%, from $22.7 million for the nine months ended December 31,
      2003
      to $24.6 million for the nine months ended December 31, 2004. The increase
      was
      driven by the reduction in advertising and promotional support on the *Comet* disposable toilet bowl brush in fiscal year 2004 compared to fiscal year
      2003.





*General
      and Administrative Expenses* .
      General
      and administrative expenses increased by $7.3 million, or 93.4%, from $7.8
      million for the nine months ended December 31, 2003 to $15.1 million for the
      nine months ended December 31, 2004. The increase was primarily due to the
      additional expenses associated with adding the brands acquired in the Bonita
      Bay, Spic and Span and Vetco Acquisitions to the portfolio. The acquisitions
      resulted in increases to most general and administrative line items including
      compensation, office space, insurance costs, and legal and accounting expenses.
      In addition, the decision to abandon our proposed IDS offering resulted in
      recognition of $0.6 million of IDS related legal and accounting expenses in
      the
      period ending December 31, 2004.





*Depreciation
      and Amortization Expense* .
      Depreciation and amortization expense increased by $3.2 million, or 81.0%,
      from
      $3.9 million for the nine months ended December 31, 2003 to $7.1 million for
      the
      nine months ended December 31, 2004. The increase is primarily due to
      amortization of intangible assets related to the acquisitions and an increase
      in
      depreciation related to the Bonita Bay Acquisition.





*Interest
      Expense, net.* Net
      interest expense increased by $27.4 million, or 418.3%, from $6.5 million for
      the nine months ended December 31, 2003 to $33.9 million for the nine months
      ended December 31, 2004. The increase in interest expense is primarily due
      to
      the increased levels of indebtedness outstanding after the
      acquisition.


26





*Other
      Expense* .
      Other
      expense of $7.6 million for the nine months ended December 31, 2004 was
      comprised of a loss on extinguishment of debt related to the write-off of
      deferred financing costs and discount on debt associated with the borrowing
      incurred to finance the Medtech acquisition.





*Income
      Taxes.* The
      income tax provision for the nine months ended December 31, 2004 was $7.4
      million, with an effective rate of 38.2% compared to a provision of $3.7 million
      for the nine months ended December 31, 2003, with an effective rate of 39.1%.
      The difference between U.S. federal statutory rate of 34% and the effective
      rates is primarily due to state income taxes.





**Liquidity
      and Capital Resources**





The
      Company has historically financed operations with a combination of internally
      generated funds and borrowings. Principal uses of cash are for operating
      expenses, servicing long term debt, acquisitions, working capital, payment
      of
      income taxes and capital expenditures.





Operating
      Activities





*Nine
      months ended December 31, 2004 compared to the nine months ended December 31,
      2003.* Net cash
      provided by operating activities was $39.9 million for the nine months ended
      December 31, 2004 compared to $8.9 million for the nine months ended December
      31, 2003. The increase in net cash provided by operating activities for the
      nine
      months ended December 31, 2004 was primarily due to net income of $11.9 million,
      adjusted for non-cash items of $29.8 million in 2004, compared to net income
      of
      $5.8 million, adjusted for non-cash items of $8.6 million in 2003. Exclusive
      of
      the impact of the Bonita Bay acquisition, working capital increased by $1.8
      million for the nine month period ended December 31, 2004, as a result of a
      decrease in accounts receivable and inventories of $5.0 million, offset by
      a
      decrease in accounts payable and accrued expenses of $6.8 million.





Investing
      Activities





*Nine
      months ended December 31, 2004 compared to the nine months ended December 31,
      2003.* Net cash
      used in investing activities was $425.7 million for the nine months ended
      December 31, 2004, compared to net cash used of $0.5 million for the six months
      ended December 31, 2003. The net cash used in the nine months ended December
      31,
      2004 was primarily for the acquisition of Bonita Bay on April 6, 2004 and Vetco
      on October 6, 2004.





Financing
      Activities





*Nine
      months ended December 31, 2004 compared to the nine months ended December 31,
      2003.* Net
      cash
      provided by financing activities was $389.1 million for the nine months ended
      December 31, 2004 compared to $11.2 million of cash used in financing activities
      for the nine months ended December 31, 2003. Net cash provided by financing
      activities for the nine months ended December 31, 2004 was primarily a result
      of
      proceeds of borrowings $698.5 million and the issuance of preferred units and
      common units of $58.7 million primarily related to the Bonita Bay and Vetco
      acquisitions. This was partially offset by repayment of debt incurred in
      February 2004 at the time of the Medtech acquisition, pay down of revolving
      credit facility and schedule payments on current debt of $344.6 million. In
      addition, deferred financing costs of $23.5 million offset proceeds from
      borrowings. Net cash used in financing activities in the nine months ended
      December 31, 2003 was primarily related to a payment on a note payable for
      Denorex.





27


**Contractual
      Obligations**





We
      had
      ongoing commitments under various contractual and commercial obligations as
      of
      December 31, 2004, as follows:





**Payments
                Due by Period****Less
                than**
            
            **1
                to 3**
            
            **4
                to 5**
            
            **After
                5****Contractual
                Obligations**
            
            **Total**
            
            **1
                Year**
            
            **Years**
            
            **Years**
            
            **Years****(in
                millions)**Long-term
                debt
            
            $
            680.3
            
            $
            3.7
            
            $
            7.5
            
            $
            7.5
            
            $
            661.6Interest
                on long-term debt (1)
            
            
            298.6
            
            
            44.5
            
            
            88.4
            
            
            87.5
            
            
            78.2Operating
                leases (2)
            
            
            1.3
            
            
            0.5
            
            
            0.6
            
            
            0.2
            
            
            —Total
                contractual cash obligations
            
            $
            980.2
            
            $
            48.7
            
            $
            96.5
            
            $
            95.2
            
            $
            739.8








(1)  Represents
      the estimated interest obligations on the outstanding revolving credit facility,
      the outstanding balance on the Tranche B term loan, the outstanding balance
      on
      the Tranche C term loan, and the outstanding balance on the senior subordinated
      notes, together, assuming scheduled principal payments (based on the terms
      of
      the loan agreements) were made and assuming a weighted average interest rate
      of
      6.7%. 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 1/8%, interest
      expense would be increased approximately $0.9 million, in the first
      year.





(2)  Includes
      lease obligations related to the acquisition of Bonita Bay.





**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 had a material impact on our financial
      position or results of operations for the periods referred to above, there
      can
      be no assurance that a high rate of inflation in the future would not have
      an
      adverse effect on us and our operating results.





**Recently
      Issued Accounting Standards**





In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standard (“SFAS”) No. 123R (“Share-Based Payment”). SFAS
      123R requires the Company to recognize compensation expense for equity
      instruments awarded to employees. SFAS 123R is effective for the Company as
      of
      the beginning of the first interim period that begins after June 15, 2005.
      The
      Company does not expect the adoption of this standard to have a significant
      impact on its financial statements.





**Item
      3****.
      Quantitative and Qualitative Disclosures About Market
      Risk.**





As
      of
      December 31, 2004, we had approximately $470 million of debt outstanding under
      our Senior Credit Facility. Our Senior Credit Facility is subject to variable
      interest rates. Accordingly, our earnings and cash flows are affected by changes
      in interest rates. Assuming the December 31, 2004 level of borrowings, and
      further considering the interest rate protection agreement currently in place
      (see following paragraph), we estimate that a one percentage point increase
      in
      interest on our variable rate debt agreements would have increased interest
      expense for the nine months ended December 31, 2004 by approximately $3.4
      million.





In
      June
      2004, we entered into an interest rate protection agreement by purchasing a
      5.0%
      interest rate cap with a notional principal amount of $20.0 million. The
      interest rate cap terminates in June 2006.








28


**Item
      4. Controls and Procedures****.**





**Evaluation
      of Disclosure Controls and Procedures**





**Disclosure
      Controls and Procedures**





As
      of the
      end of the period covered by this report, December 31, 2004, an evaluation
      was
      carried out by our management, with the participation of the Company's Chief
      Executive Officer and Chief Financial Officer of the effectiveness of our
      disclosure controls and procedures (as such term is defined in Rules 13a-15(e)
      and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act"). The Company’s disclosure controls and procedures are designed
      to ensure that information required to be disclosed in reports filed or
      submitted 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 management, including the Chief
      Executive Officer and Chief Financial Officer, to allow timely discussions
      regarding required disclosure. Based on this evaluation, the Company’s Chief
      Executive Officer and Chief Financial Officer have concluded that certain
      deficiencies in the Company’s internal control over financial reporting that are
      described below and in Note 2 to the consolidated condensed financial statements
      contained in Part I, Item 1 of this Amendment constituted material weaknesses
      that existed at December 31, 2004, and that the Company’s disclosure controls
      and procedures were not effective as of December 31, 2004. The Company’s
      management nevertheless has concluded that the consolidated financial statements
      included in this Amendment present fairly, in all material respects, the
      Company’s financial position, and results of operation and cash flows for the
      periods presented in conformity with accounting principles generally accepted
      in
      the United States of America.





Internal
      Control Over Financial Reporting





Management,
      with the oversight of the Audit Committee of the Company’s Board of Directors,
      recently conducted an internal review of the Company’s books and records. As a
      result of the findings of that review (including with respect to effects of
      the
      above referenced control deficiencies), as noted above, the Company has restated
      its audited consolidated financial statements for the years ended March 31,
      2005, 2004 and 2003 and the quarterly data for the years ended March 31, 2005
      and 2004 included in the Company's Annual Report on Form 10-K and Amendment
      No.
      1 to the Company’s Annual Report on Form 10-K/A for the year ended March 31,
      2005, the financial statements for the quarterly periods ended June 30, 2005
      and
      2004 included in the Amendment No. 1 to the Company’s Quarterly Report on Form
      10-Q/A for the quarterly period ended June 30, 2005, and the financial
      statements for the quarterly periods ended December 31, 2004 and 2003 included
      in this Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q/A for the
      quarterly period ended December 31, 2004. According to PCAOB Accounting Standard
      No. 2, *An
      Audit Of Internal Control Over Financial Reporting Performed in Conjunction
      With
      an Audit of Financial Statements* ,
      a
      restatement of previously-issued financial statements is at least a significant
      deficiency and a strong indicator that a material weakness exists with respect
      to internal control over financial reporting. As noted above, management
      concluded that the control deficiencies listed below constituted material
      weaknesses as of December 31, 2004. Material weaknesses are control
      deficiencies, or a combination of control deficiencies, that result in more
      than
      a remote likelihood that a material misstatement of the annual or interim
      financial statements will not be prevented or detected. The control deficiencies
      that the Company identified were as follows:





a)
            The
                Company did not maintain effective controls over the completeness
                and
                accuracy of revenue in accordance with the requirements of SAB No.
                104.
                Specifically, the Company’s controls failed to ensure that risk of loss
                had passed to the customer before revenue was
                recognized.





b)
            The
                Company did not maintain effective controls over the classification
                of
                promotions and allowances in accordance with the requirements of
                EITF
                01-09. Specifically, the Company’s controls failed to prevent or detect
                the incorrect classification of promotions and allowances as an operating
                expense instead of as a reduction of
                revenue.





Management,
      with the oversight of the Audit Committee of the Board of Directors, is devoting
      and intends to continue to devote considerable effort to making improvements
      in
      the Company’s internal control over financial reporting. These improvements have
      included appointing a new Corporate Controller in June 2005 who reports to
      the
      Company’s Chief Financial Officer. Specifically related to the control
      deficiencies referenced above, the Company’s remediation plan includes the
      following:


29





·
            The
                Company is enhancing its guidelines and implementing controls in
                connection with the issuance of trade promotional allowances.
                Additionally, the Company will provide training to employees on the
                proper
                accounting and documentation policies related to trade promotional
                allowances and implement new policies to ensure compliance throughout
                the
                year.





·
            The
                Company is taking measures to enhance the controls over the selection,
                application and monitoring of its accounting policies to ensure consistent
                application of accounting policies that are generally accepted in
                the
                United States of America. The Company is also integrating reporting
                lines,
                increasing communication and supervision across operating and accounting
                organizations, and increasing the review of existing accounting policies.
                Specifically as it relates to the accounting for revenue recognition,
                the
                Company is changing its controls and accounting policies surrounding
                the
                review, analysis and recording of shipments and shipping terms with
                customers, including the selection and monitoring of appropriate
                assumptions and guidelines to be applied during the review and analysis
                of
                all customer terms. Specifically, the Company is implementing controls
                over the accounting, monitoring, and analysis of all customer shipping
                terms and conditions to ensure transactions are recorded consistent
                with
                generally accepted accounting
                principles.





The
      above-described remedial efforts all began following the completion of the
      Company’s quarter ended September 30, 2005. There were no changes in the
      Company’s internal controls over financial reporting during the quarter ended
      December 31, 2004 that materially affected or are reasonably likely to
      materially affect internal control over financial reporting.





Management
      is not required to report on the assessment of its internal control over
      financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002
      until it files its Annual Report on Form 10-K for the fiscal year ended March
      31, 2006. Although it expects its internal control over financial reporting
      to
      be effective at that time, if it fails to remediate any condition constituting
      a
      material weakness on or before March 31, 2006, the presence of a material
      weakness at that time would cause management to conclude that its internal
      controls over financial reporting are ineffective and would cause its external
      auditors to issue an adverse opinion on the effectiveness of such internal
      controls.





**PART
      II - OTHER INFORMATION**





**ITEM
      1. Legal Proceedings****.**





In
      June
      2003, a lawsuit, Theodosakis v. Walgreens, et al, was filed in Federal District
      Court in Arizona, in which the plaintiff alleged that Medtech Products, a
      wholly-owned subsidiary of Medtech, and others infringed the dress trade of
      a
      book titled “The Arthritis Cure” in connection with the sale of dietary
      supplement products under the core trademark ARTHx. In addition, the complaint
      alleged that Medtech Products and others made false endorsements, engaged in
      unfair competition, made false designations of origin and invaded the privacy
      rights of the plaintiff. The ARTHx trademarks, goodwill and inventory were
      sold
      by Medtech Products to a third party, Contract Pharmacal Corporation, in March
      2003. On January 12, 2005, our motions for summary judgment were granted by
      the
      court. The plaintiff has a right to appeal within 30 days.





We
      are
      also involved from time to time in routine legal matters and other claims
      incidental to our business. When it appears probable in management’s judgment
      that we will incur monetary damages or other costs in connection with such
      claims and proceedings, and such costs can be reasonable estimated, liabilities
      are recorded in the financial statements and charges are recorded against
      earnings. We believe the resolution of such routine matters and other incidental
      claims, taking into account reserves and insurance will not have a material
      adverse effect on our financial condition or results of operation.





**Item
      2.****Unregistered
      Sales of Equity Securities and Use of Proceeds.**


None.





**Item
      3. Defaults Upon Senior Securities****.**


None.


30
  **Item
      4. Submission of Matters to a Vote of Security Holders****.**


None.





**Item
      5. Other Information****.**


None.





**Item
      6. Exhibits****.**





**Exhibit****No.**
            
            **Description**31.1
            
            Certification
                Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of
                2002.





32.1
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                9.06 of
                the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601 (b)
                (32) of
                Regulation S-K).32.2
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                9.06 of
                the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)
                (32) of
                Regulation S-K).


31


**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





PRESTIGE
                BRANDS INTERNATIONAL, LLCDated:
                January 12, 2006
            /s/
                Peter C. MannBy:
                Peter C. MannIts:
                Chairmanand Chief Executive OfficerDated:
                January 12, 2006
            /s/
                Peter J. AndersonBy:
                Peter J. AndersonIts:
                ChiefFinancial Officer







32