**UNITED STATES SECURITIES ANDEXCHANGE COMMISSION**

**Washington, DC 20549**

 

**FORM 10-Q**

 

**ý**    **QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934for the quarterly period ended December 31, 2004**

 

**OR**

 

**o**    **TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934for the transition period from**        **to**        **.**

 

**COMMISSION FILE NUMBER:**

 

**PRESTIGE BRANDS INTERNATIONAL,LLC**

(Exact name of registrantas 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 markwhether the Registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.  Yes o  No ý

 

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

 

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

 

 

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**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.                                | Financial Statements  (Unaudited)                                                                     |   |
|                                   |                                                                                                  |   |
|                                   | Consolidated  Balance Sheet as of December 31, 2004 and March 31, 2004                                |   |
|                                   | Consolidated  Statement of Operations for the three and nine months ended December 31, 2004  and 2003 |   |
|                                   | Consolidated  Statement of Members’ Equity for the nine months ended December 31, 2004           |   |
|                                   | Consolidated  Statement of Cash Flows for the nine months ended December 31, 2004 and 2003            |   |
|                                   | Notes  to Unaudited Consolidated Financial Statements                                                 |   |
|                                   |                                                                                                  |   |
| Item  2.                               | Management’s  Discussion and Analysis of Financial Condition and Results of Operations.          |   |
|                                   |                                                                                                  |   |
| Item 3.                                | Quantitative and Qualitative Disclosures About  Market Risk.                                          |   |
|                                   |                                                                                                  |   |
| Item 4.                                | Controls and  Procedures.                                                                             |   |
|                                   |                                                                                                  |   |
| **PART II. – OTHER  INFORMATION** |                                                                                                  |
|                                   |                                                                                                  |   |
| Item 1.                                | Legal Proceedings.                                                                                    |   |
|                                   |                                                                                                  |   |
| Item  2.                               | Unregistered Sales of Equity Securities and  Use of Proceeds.                                         |   |
|                                   |                                                                                                  |   |
| Item 3.                                | Defaults Upon  Senior Securities.                                                                     |   |
|                                   |                                                                                                  |   |
| Item  4.                               | Submission  of Matters to a vote of Security Holders.                                                 |   |
|                                   |                                                                                                  |   |
| Item 5.                                | Other Information.                                                                                    |   |
|                                   |                                                                                                  |   |
| Item 6.                                | Exhibits.                                                                                             |   |
|                                        |                                                                                                       |  |  |  |

 

----

 

**Item I. Financial Statements**

** **

**Prestige Brands International,LLC**

**Consolidated Balance Sheet(unaudited)**

**(in thousands)**

 
| ** **                                  | ** ** | **December 31  2004**  | ** ** | **March 31,  2004**    | ** ** |
|---------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                  | ** ** | **(successor  basis)** | ** ** | **(successor  basis)** | ** ** |
| **ASSETS**                                  | ** ** | ** **             | ** ** | ** **             | ** ** |
| Current assets:                             |       |                   |       |                   |       |
| Cash                                        |       | $                      | 6,754      |                   | $          | 3,393 |   |
| Accounts  receivable, net                   |       | 36,125                 |       | 15,391                 |       |
| Other  receivables                          |       | 718                    |       | 341                    |       |
| Inventories, net                            |       | 18,888                 |       | 9,748                  |       |
| Deferred income  tax asset                  |       | 6,574                  |       | 1,647                  |       |
| Prepaid expenses  and other current assets  |       | 2,576                  |       | 234                    |       |
| Total current  assets                       |       | 71,635                 |       | 30,754                 |       |
| Property and  equipment, net                |       | 2,670                  |       | 880                    |       |
| Goodwill                                    |       | 294,660                |       | 55,594                 |       |
| Other long-term  assets, net                |       | 633,067                |       | 239,394                |       |
| Total assets                                |       | $                      | 1,002,032  |                   | $          | 326,622 |   |
| **LIABILITIES  AND MEMBERS’ EQUITY**   |       |                   |       |                   |       |
| Current  liabilities:                       |       |                   |       |                   |       |
| Accounts payable                            |       | $                      | 17,806     |                   | $          | 5,281 |   |
| Accounts payable  - related parties         |       | 1,000                  |       | —                 |       |
| Accrued expenses                            |       | 18,857                 |       | 7,264                  |       |
| Current portion  of long-term debt          |       | 3,730                  |       | 2,000                  |       |
| Total current  liabilities                  |       | 41,393                 |       | 14,545                 |       |
| Long-term debt                              |       | 676,563                |       | 146,694                |       |
| Deferred income  tax liability              |       | 85,070                 |       | 38,874                 |       |
| Total  liabilities                          |       | 803,026                |       | 200,113                |       |
| Commitments and  contingencies (Note 7)     |       |                   |       |                   |       |
| Members’ equity:                       |       |                   |       |                   |       |
| Contributed  capital                        |       | 183,533                |       | 124,719                |       |
| Retained  earnings                          |       | 15,473                 |       | 1,790                  |       |
| Total members’  equity                 |       | 199,006                |       | 126,509                |       |
| Total  liabilities and members’ equity |       | $                      | 1,002,032  |                   | $          | 326,622 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

2

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**Prestige Brands International,LLC**

**Consolidated Statement ofOperations (unaudited)**

**(in thousands)**

 
| ** **                         | ** ** | **Three months ended December 31,** | ** ** | **Nine months ended December 31,** | ** ** |
|------------------------------------|------------|-------------------------------------|------------|------------------------------------|------------|
| ** **                         | ** ** | **2004**                            | ** ** | **2003**                           | ** ** | **2004** | ** ** | **2003** | ** ** |
| ** **                         | ** ** | **(successor basis)**               | ** ** | **(predecessor basis)**            | ** ** | **(successor basis)** | ** ** | **(predecessor basis)** | ** ** |
|                               |       |                                |       |                               |       |   |   |   |   |
| **REVENUES:**                      |       |                                |       |                               |       |   |   |   |   |
| Net sales                          |       | $                                   | 75,829     |                               | $          | 19,122 |   | $ | 224,831 |   | $ | 62,085 |   |
| Other revenues                     |       | 25                                  |       | —                             |       | 126 |   | — |   |
| Other revenues -  related parties  |       | —                              |       | 97                                 |       | — |   | 292 |   |
|                               |       |                                |       |                               |       |   |   |   |   |
| Total revenues                     |       | 75,854                              |       | 19,219                             |       | 224,957 |   | 62,377 |   |
|                               |       |                                |       |                               |       |   |   |   |   |
| **COST OF  SALES:**                |       |                                |       |                               |       |   |   |   |   |
| Cost of sales                      |       | 33,923                              |       | 7,485                              |       | 107,889 |   | 23,572 |   |
|                               |       |                                |       |                               |       |   |   |   |   |
| Gross profit                       |       | 41,931                              |       | 11,734                             |       | 117,068 |   | 38,805 |   |
|                               |       |                                |       |                               |       |   |   |   |   |
| **OPERATING  EXPENSES:**           |       |                                |       |                               |       |   |   |   |   |
| Advertising and  promotion         |       | 7,265                               |       | 2,736                              |       | 31,340 |   | 11,990 |   |
| General and  administrative        |       | 5,690                               |       | 2,879                              |       | 15,113 |   | 7,813 |   |
| Depreciation                       |       | 457                                 |       | 73                                 |       | 1,395 |   | 217 |   |
| Amortization of  intangible assets |       | 2,148                               |       | 1,246                              |       | 5,753 |   | 3,732 |   |
|                               |       |                                |       |                               |       |   |   |   |   |
| Total operating  expenses          |       | 15,560                              |       | 6,934                              |       | 53,601 |   | 23,752 |   |
|                               |       |                                |       |                               |       |   |   |   |   |
| Operating income                   |       | 26,371                              |       | 4,800                              |       | 63,467 |   | 15,053 |   |
|                               |       |                                |       |                               |       |   |   |   |   |
| **OTHER  INCOME (EXPENSE):**       |       |                                |       |                               |       |   |   |   |   |
| Interest income                    |       | 48                                  |       | 14                                 |       | 135 |   | 212 |   |
| Interest 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        |       | 14,377                              |       | 2,652                              |       | 22,023 |   | 8,517 |   |
|                               |       |                                |       |                               |       |   |   |   |   |
| **Provision  for income taxes**    |       | (5,230                              | )          | (1,052                             | )          | (8,340 | ) | (3,364 | ) |
|                               |       |                                |       |                               |       |   |   |   |   |
| Net income                         |       | $                                   | 9,147      |                               | $          | 1,600 |   | $ | 13,683 |   | $ | 5,153 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

3

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** **

**Prestige Brands International,LLC**

**Consolidated Statement ofMembers’ Equity (unaudited)**

**(in thousands)**

 
| ** **                                                                              | ** ** | **Contributed  Capital** | ** ** | **Retained  Earnings** | ** ** | **Total** | ** ** |
|-----------------------------------------------------------------------------------------|------------|--------------------------|------------|------------------------|------------|-----------|------------|
|                                                                                    |       |                     |       |                   |       |      |       |
| Balance at March  31, 2004                                                              |       | $                        | 124,719    |                   | $          | 1,790     |       | $ | 126,509 |   |
|                                                                                    |       |                     |       |                   |       |      |       |
| Cash  contribution of capital related to Bonita Bay Acquisition, net of offering  costs |       | 58,487                   |       | —                 |       | 58,487    |       |
| Issuance of  Prestige Holdings units in conjunction with Bonita Bay Acquisition         |       | 92                       |       | —                 |       | 92        |       |
| Issuance of  Prestige Holdings units                                                    |       | 235                      |       |                   |       | 235       |       |
| Net income                                                                              |       | —                   |       | 13,683                 |       | 13,683    |       |
|                                                                                    |       |                     |       |                   |       |      |       |
| Balance at  December 31, 2004                                                           |       | $                        | 183,533    |                   | $          | 15,473    |       | $ | 199,006 |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

4

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**Prestige Brands International,LLC**

**Consolidated Statement of CashFlows (unaudited)**

**(in thousands)**

 
| ** **                                                                              | ** ** | **Nine months ended** | ** ** |
|-----------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                              | ** ** | **December 31, 2004** | ** ** | **December 31, 2003** | ** ** |
| ** **                                                                              | ** ** | **(successor basis)** | ** ** | **(predecessor basis)** | ** ** |
| **Cash  flows from operating activities:**                                              |       |                  |       |   |   |
| Net income                                                                              |       | $                     | 13,683     |   | $ | 5,153 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities:      |       |                  |       |   |   |
| Loss on  extinguishment of debt                                                         |       | 7,567                 |       | — |   |
| Depreciation                                                                            |       | 1,395                 |       | 217 |   |
| Amortization of  intangible assets                                                      |       | 5,753                 |       | 3,732 |   |
| Amortization of  deferred financing costs                                               |       | 2,290                 |       | 222 |   |
| Amortization of  debt discount                                                          |       | —                |       | 924 |   |
| Amortization of  deferred compensation                                                  |       | —                |       | 60 |   |
| Increase in  long-term debt due to accrued interest                                     |       | —                |       | 333 |   |
| Deferred income  taxes                                                                  |       | 12,749                |       | 3,113 |   |
| Changes in  operating assets and liabilities, net of effects of purchase of businesses: |       |                  |       |   |   |
| Accounts  receivable                                                                    |       | (5,477                | )          | 2,691 |   |
| Accounts  receivable - related parties                                                  |       | —                |       | (1,085 | ) |
| Other  receivables                                                                      |       | (377                  | )          | (1,150 | ) |
| Inventories                                                                             |       | 8,041                 |       | (1,459 | ) |
| Prepaid expenses  and other current assets                                              |       | (914                  | )          | 271 |   |
| Accounts payable                                                                        |       | 1,160                 |       | (995 | ) |
| Accounts payable  - related parties                                                     |       | 1,000                 |       | (1,114 | ) |
| Accrued expenses                                                                        |       | (6,932                | )          | (2,009 | ) |
| 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               |       | 13,539 |   |
| Repayment 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 in  cash                                                                   |       | 3,361                 |       | (2,862 | ) |
| Cash at  beginning of period                                                            |       | 3,393                 |       | 3,530 |   |
| Cash 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    |   | $ | — |   |

 

Theaccompanying notes are an integral part of these financial statements.

 

5

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**Prestige Brands International,LLC**

**Notes to Unaudited ConsolidatedFinancial 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 theoutstanding capital stock of Medtech Holdings, Inc. (“Medtech”) and The DenorexCompany (“Denorex”) (collectively the “Predecessor Company”) (the “MedtechAcquisition”).  Prestige Holdings iscontrolled by affiliates of GTCR Golder Rauner II, LLC.  On March 5, 2004, the Company, through anindirect, wholly-owned subsidiary, acquired all of the outstanding capitalstock of The Spic and Span Company (“Spic and Span”) (the “Spic and SpanAcquisition”).  On April 6, 2004, theCompany, through an indirect, wholly owned subsidiary, acquired all of theoutstanding capital stock of Bonita Bay Holdings, Inc. (“Bonita Bay”) (the “BonitaBay 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 inthe marketing, sales and distribution of over-the-counter, personal care andhousehold cleaning brands to mass merchandisers, drug stores, supermarkets andclub stores primarily in the United States.

 

# **Basis of Presentation ofUnaudited Interim Financial Information**

# ** **

Theunaudited consolidated financial information herein has been prepared inaccordance with accounting principles generally accepted in the United Statesof America.  In the opinion ofmanagement, the financial statements include all adjustments, consisting onlyof normal recurring adjustments that are considered necessary for a fairpresentation of the Company’s financial position, results of operations andcash flows for the interim periods. Operating results for the three and nine months ended December 31, 2004are not necessarily indicative of results that may be expected for the entireyear.  This financial information shouldbe read in conjunction with the audited financial statements and notes theretofor the year ended March 31, 2004 of the Company, which are included in theamended Registration Statement on Form S-4 filed with the Securities andExchange Commission on October 25, 2004.

 

TheMedtech Acquisition was accounted for as a purchase transaction.  As a result, the combined Medtech and Denorexassets and liabilities were adjusted to fair value as of February 6, 2004, inaccordance with SFAS No. 141, “Business Combinations.”  For financial reporting purposes, Medtech andDenorex, which were under common control and management, are considered thepredecessor entities. Accordingly, the results of operations for the three and nine monthsended December 31, 2003 and cash flows for the nine months ended December 31,2003 represent the combined historical financial statements of Medtech and itssubsidiaries and Denorex (“predecessor basis”). The balance sheets of the Company as of December 31 and March 31, 2004and 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 thosepurchase accounting adjustments resulting from the Medtech Acquisition (“successorbasis”).  The Spic and Span, Bonita Bayand Vetco Acquisitions were also accounted for as purchase transactions.  The results of operations and cash flows forSpic and Span, Bonita Bay and Vetco have been reflected in the Company’sconsolidated statements of operations and cash flows beginning on theirrespective acquisition dates.  Allsignificant intercompany transactions and balances have been eliminated.

 

6

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**Recently Issued AccountingStandards**

 

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

 

**2.****       ACQUISITIONSOF BUSINESS**

 

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

 

TheBonita Bay Acquisition, including fees and expenses related to the new financingof $22,651 and funds used to pay off $154,422 of debt and accrued interestincurred to finance the Medtech Acquisition, was financed through the followingsources:

 
| Revolving Credit  Facility                    |   | $       | 3,512   |   |
|-----------------------------------------------|--------|---------|---------|--------|
| Tranche B Term  Loan                          |   | 355,000 |    |
| Tranche C Term  Loan Facility                 |   | 100,000 |    |
| 9.25% Senior  Subordinated Notes              |   | 210,000 |    |
| Capital  contributions from Prestige Holdings |   | 58,579  |    |
| Total sources of  funds                       |   | $       | 727,091 |   |

 

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

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

 

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

 

7

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

 

The total purchase priceof the Vetco Acquisition was allocated to the acquired assets and liabilitiesas set forth in the following table:

 

| ** **                                 | ** ** | **Vetco** | ** ** |
|--------------------------------------------|------------|-----------|------------|
| Cash                                       |       | $         | —     |   |
| Accounts  receivable                       |       | 2,136     |       |
| Inventories                                |       | 910       |       |
| Prepaid expenses  and other current assets |       | 37        |       |
| Property, plant  and equipment             |       | 5         |       |
| Goodwill                                   |       | 21,206    |       |
| Intangible  assets                         |       | 27,158    |       |
| Accounts payable  and accrued liabilities  |       | (803      | )          |
| Long-term debt                             |       | —    |       |
| Deferred income  taxes                     |       | —    |       |
|                                       |       | $         | 50,649     |   |

 

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

 

The following tablereflects the unaudited results of the Company’s operations on a pro forma basisas if the Medtech, Spic and Span, Bonita Bay and Vetco Acquisitions had beencompleted on April 1, 2003.  The proforma financial information is not necessarily indicative of the operating resultsthat would have occurred had the acquisitions been consummated as of April 1,2003, nor is it necessarily indicative of future operating results.

 
| ** **                  | ** ** | ** ** | ** ** | **Pro  Forma  Three months ended  December 31, 2003** | ** ** |
|-----------------------------|------------|------------|------------|-------------------------------------------------------|------------|
|                        |       |       |       | **(unaudited)**                                       |       |
| Net sales                   |       |       |       | $                                                     | 81,138     |   |
| Income before  income taxes |       |       |       | $                                                     | 16,387     |   |
| Net income                  |       |       |       | $                                                     | 9,842      |   |

 
| ** **                  | ** ** | **Pro  Forma  Nine months ended  December 31, 2004** | ** ** | **Pro  Forma  Nine months ended  December 31, 2003** | ** ** |
|-----------------------------|------------|------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                  | ** ** | **(unaudited)**                                      | ** ** | **(unaudited)**                                      | ** ** |
| Net sales                   |       | $                                                    | 231,173    |                                                 | $          | 219,035 |   |
| Income before  income taxes |       | $                                                    | 31,124     |                                                 | $          | 32,331 |   |
| Net income                  |       | $                                                    | 19,297     |                                                 | $          | 20,278 |   |

 

8

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The results of operationsof Vetco for the period October 1, 2004 to October 5 2004 were notmaterial.  Accordingly, pro formainformation for the three months ended December 31, 2004 has not beenpresented.

 

**3.****      INVENTORIES**

 

Inventories, net consist of the following:

 
| ** **                   | ** ** | **December 31,  2004** | ** ** | **March 31,  2004** | ** ** |
|------------------------------|------------|------------------------|------------|---------------------|------------|
| ** **                   | ** ** | **(successor basis)**  | ** ** |
|                         |       |                   |       |                |       |
| Packaging and  raw materials |       | $                      | 4,110      |                | $          | 1,562 |   |
| Finished goods               |       | 14,778                 |       | 8,186               |       |
| Total                        |       | $                      | 18,888     |                | $          | 9,748 |   |

 

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

 

**4.****      OTHERLONG-TERM ASSETS**

 

Otherlong-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    |                          | $          | —                    |       | $ | 522,346 |   |
| Amortizable  intangible assets: |       |                  |       |                          |       |                      |       |
| Trademarks                      |       | 94,900                |       | (6,635                        | )          | 88,265                    |       |
| Non-compete  agreement          |       | 158                   |       | (8                            | )          | 150                       |       |
|                            |       | 617,404               |       | (6,643                        | )          | 610,761                   |       |
|                            |       |                  |       |                          |       |                      |       |
| Deferred  financing costs, net  |       | 21,248                |       | —                        |       | 21,248                    |       |
| Deferred  offering costs        |       | 1,058                 |       | —                        |       | 1,058                     |       |
| Total                           |       | $                     | 639,710    |                          | $          | (6,643                    | )          | $ | 633,067 |   |

 

9

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Otherlong-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    |                          | $          | —                    |       | $ | 181,361 |   |
| Amortizable  intangible assets: |       |                  |       |                          |       |                      |       |
| Trademarks                      |       | 56,140                |       | (890                          | )          | 55,250                    |       |
|                            |       | 237,501               |       | (890                          | )          | 236,611                   |       |
|                            |       |                  |       |                          |       |                      |       |
| Deferred  financing costs, net  |       | 2,783                 |       | —                        |       | 2,783                     |       |
| Total                           |       | $                     | 240,284    |                          | $          | (890                      | )          | $ | 239,394 |   |

 

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

 
| **Year ending** | ** ** | ** ** | ** ** |
|-----------------|------------|------------|------------|
| **March 31,**   | ** ** | ** ** | ** ** |
| 2005            |       | $          | 2,148      |   |
| 2006            |       | 8,592      |       |
| 2007            |       | 8,592      |       |
| 2008            |       | 8,592      |       |
| 2009            |       | 8,592      |       |
| Thereafter      |       | 51,899     |       |
| Total           |       | $          | 88,415     |   |

 

**5.****      LONG-TERMDEBT**

 

Long-term debt consistsof 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 |       | —                 |       | 10,548              |       |
| Medtech Term  Loan Facility        |       | —                 |       | 100,000             |       |
| Medtech  Subordinated Notes        |       | —                 |       | 38,146              |       |
|                               |       | 680,293                |       | 148,694             |       |
| Less: 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% interestrate cap covering $20,000 of its debt. The interest rate cap terminates in June 2006.

 

10

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**6.****        BUSINESSSEGMENTS**

 

Segmentinformation has been prepared in accordance with SFAS No. 131, “Disclosures about Segments of an Enterpriseand Related Information.” Operating segments are determined based onproduct lines.  Within each reportablesegment are operating segments which have similar economic characteristics,including the nature of the products, production process, type of customer andmethod of distribution.

 

Therewere no inter-segment sales or transfers during the three or nine months endedDecember 31, 2004 and 2003. The Company evaluates the performance of itsproduct lines and allocates resources to them based primarily on contributionmargin.  The tables below summarizeinformation about reportable segments. The Company did not operate in the household cleaning segment during thethree and nine months ended December 31, 2003.

 
| **Three months ended  December 31, 2004** | ** ** | **Over-the-Counter  Drug** | ** ** | **Personal  Care** | ** ** | **Household  Cleaning** | ** ** | **Consolidated** | ** ** |
|-------------------------------------------|------------|----------------------------|------------|--------------------|------------|-------------------------|------------|------------------|------------|
| **(successor basis)**                     | ** ** | ** **                 | ** ** | ** **         | ** ** | ** **              | ** ** | ** **       | ** ** |
| Net sales                                 |       | $                          | 44,755     |               | $          | 7,517                   |       | $                | 23,557     |   | $ | 75,829 |   |
| Other revenues                            |       | —                     |       | —             |       | 25                      |       | 25               |       |
| Total revenues                            |       | 44,755                     |       | 7,517              |       | 23,582                  |       | 75,854           |       |
| Cost of sales                             |       | 16,376                     |       | 3,601              |       | 13,946                  |       | 33,923           |       |
| Gross profit                              |       | 28,379                     |       | 3,916              |       | 9,636                   |       | 41,931           |       |
| Advertising and  promotion                |       | 4,780                      |       | 864                |       | 1,621                   |       | 7,265            |       |
| Contribution  margin                      |       | 23,599                     |       | 3,052              |       | 8,015                   |       | 34,666           |       |
| Other operating  expenses                 |       |                       |       |               |       |                    |       | 8,295            |       |
| Operating income                          |       |                       |       |               |       |                    |       | 26,371           |       |
| Other income  (expense)                   |       |                       |       |               |       |                    |       | (11,994          | )          |
| Provision for  income taxes               |       |                       |       |               |       |                    |       | (5,230           | )          |
|                                      |       |                       |       |               |       |                    |       |             |       |
| Net Income                                |       |                       |       |               |       |                    |       | $                | 9,147      |   |
|                                           |            |                            |            |                    |            |                         |            |                  |            |  |  |  |  |

 
| **Three months ended  December 31, 2003** | ** ** | **Over-the-Counter  Drug** | ** ** | **Personal  Care** | ** ** | **Other**  | ** ** | **Consolidated** | ** ** |
|-------------------------------------------|------------|----------------------------|------------|--------------------|------------|------------|------------|------------------|------------|
| **(predecessor basis)**                   | ** ** | ** **                 | ** ** | ** **         | ** ** | ** ** | ** ** | ** **       | ** ** |
| Net sales                                 |       | $                          | 12,664     |               | $          | 6,458      |       | $                | —     |   | $ | 19,122 |   |
| Other revenues -  related party           |       | —                     |       | —             |       | 97         |       | 97               |       |
| Total revenues                            |       | 12,664                     |       | 6,458              |       | 97         |       | 19,219           |       |
| Cost of sales                             |       | 4,536                      |       | 2,949              |       | —     |       | 7,485            |       |
| Gross profit                              |       | 8,128                      |       | 3,509              |       | 97         |       | 11,734           |       |
| Advertising and  promotion                |       | 1,101                      |       | 1,635              |       | —     |       | 2,736            |       |
| Contribution  margin                      |       | 7,027                      |       | 1,874              |       | 97         |       | 8,998            |       |
| Other operating  expenses                 |       |                       |       |               |       |       |       | 4,198            |       |
| Operating income                          |       |                       |       |               |       |       |       | 4,800            |       |
| Other income  (expense)                   |       |                       |       |               |       |       |       | (2,148           | )          |
| Provision for  income taxes               |       |                       |       |               |       |       |       | (1,052           | )          |
|                                      |       |                       |       |               |       |       |       |             |       |
| Net income                                |       |                       |       |               |       |       |       | $                | 1,600      |   |
|                                           |            |                            |            |                    |            |            |            |                  |            |  |  |  |  |

 

11

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| **Nine months ended  December 31, 2004** | ** ** | **Over-the-Counter  Drug** | ** ** | **Personal  Care** | ** ** | **Household  Cleaning** | ** ** | **Consolidated** | ** ** |
|------------------------------------------|------------|----------------------------|------------|--------------------|------------|-------------------------|------------|------------------|------------|
| **(successor basis)**                    | ** ** | ** **                 | ** ** | ** **         | ** ** | ** **              | ** ** | ** **       | ** ** |
| Net sales                                |       | $                          | 121,910    |               | $          | 25,545                  |       | $                | 77,376     |   | $ | 224,831 |   |
| Other revenues                           |       | —                     |       | —             |       | 126                     |       | 126              |       |
| Total revenues                           |       | 121,910                    |       | 25,545             |       | 77,502                  |       | 224,957          |       |
| Cost of sales                            |       | 46,935                     |       | 12,745             |       | 48,209                  |       | 107,889          |       |
| Gross profit                             |       | 74,975                     |       | 12,800             |       | 29,293                  |       | 117,068          |       |
| Advertising and  promotion               |       | 19,430                     |       | 5,306              |       | 6,604                   |       | 31,340           |       |
| Contribution  margin                     |       | 55,545                     |       | 7,494              |       | 22,689                  |       | 85,728           |       |
| Other operating  expenses                |       |                       |       |               |       |                    |       | 22,261           |       |
| Operating income                         |       |                       |       |               |       |                    |       | 63,467           |       |
| Other income  (expense)                  |       |                       |       |               |       |                    |       | (41,444          | )          |
| Provision from  income taxes             |       |                       |       |               |       |                    |       | (8,340           | )          |
|                                     |       |                       |       |               |       |                    |       |             |       |
| Net income                               |       |                       |       |               |       |                    |       | $                | 13,683     |   |
|                                          |            |                            |            |                    |            |                         |            |                  |            |  |  |  |  |

 
| **Nine months ended  December 31, 2003** | ** ** | **Over-the-Counter  Drug** | ** ** | **Personal Care** | ** ** | **Other**  | ** ** | **Consolidated** | ** ** |
|------------------------------------------|------------|----------------------------|------------|-------------------|------------|------------|------------|------------------|------------|
| **(predecessor basis)**                  | ** ** | ** **                 | ** ** | ** **        | ** ** | ** ** | ** ** | ** **       | ** ** |
| Net sales                                |       | $                          | 39,441     |              | $          | 22,644     |       | $                | —     |   | $ | 62,085 |   |
| Other revenues -  related party          |       | —                     |       | —            |       | 292        |       | 292              |       |
| Total revenues                           |       | 39,441                     |       | 22,644            |       | 292        |       | 62,377           |       |
| Cost of sales                            |       | 13,166                     |       | 10,406            |       | —     |       | 23,572           |       |
| Gross profit                             |       | 26,275                     |       | 12,238            |       | 292        |       | 38,805           |       |
| Advertising and  promotion               |       | 6,239                      |       | 5,751             |       | —     |       | 11,990           |       |
| Contribution  margin                     |       | 20,036                     |       | 6,487             |       | 292        |       | 26,815           |       |
| Other operating  expenses                |       |                       |       |              |       |       |       | 11,762           |       |
| Operating income                         |       |                       |       |              |       |       |       | 15,053           |       |
| Other income  (expense)                  |       |                       |       |              |       |       |       | (6,536           | )          |
| Provision for  income taxes              |       |                       |       |              |       |       |       | (3,364           | )          |
|                                     |       |                       |       |              |       |       |       |             |       |
| Net income                               |       |                       |       |              |       |       |       | $                | 5,153      |   |
|                                          |            |                            |            |                   |            |            |            |                  |            |  |  |  |  |

 

Duringthe nine months ended December 31, 2004, virtually all sales were made tocustomers in the United States and Canada.

 

Noindividual geographical area accounted for more than 10% of net sales in any ofthe periods presented.  At December 31,2004, all of the Company’s long-term assets were located in the United States.

 

12

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**7.****       ****Commitments and Contingencies**

 

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

 

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

 

**8.****       ****Subsequent Events**

 

In January 2005, the Prestige BrandsHoldings, Inc., the ultimate parent of the company, filed an amendedregistration statement on Form S-1 to offer 23,333,333 shares of its commonstock to the public.

 

13

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**Item 2.****     ****Management’s Discussion andAnalysis ofFinancial Condition and Results of Operations****.**

 

*The following discussionshould be read together with the unaudited consolidated financial statementsand the related notes included elsewhere in this document.*

 

**GENERAL**

 

*Overview.* We are a branded consumerproducts company with a diversified portfolio of well-recognized brands in theover-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 maintainlong-standing relationships with our top 50 customers, which accounted for approximately81% of our gross sales, on a pro forma basis excluding the Vetco acquisition,for the year ended March 31, 2004.  Ourprincipal customer relationships include Wal-Mart, Walgreens, Target, CVS andKroger.

 

We conduct our operations through threeprincipal business segments: Over-the-Counter Drug, Household Cleaning andPersonal Care.

 

**Results of Operations**

 

The following tables setforth the net sales, gross profit and contribution margin (i.e., gross profitless advertising and promotion, or A&P by segment).

 

The summary unaudited proforma segment data are provided for informational purposes only and are notnecessarily indicative of the operating results that would have occurred hadthe transactions been consummated on the date indicated above, nor are theynecessarily indicative of our future results of operations.

 

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| ** **                 | ** ** | **Three months ended (unaudited)** | ** ** |
|----------------------------|------------|------------------------------------|------------|
| ** **                 | ** ** | **December 31, 2004**              | ** ** | **December 31, 2003** | ** ** | **December 31, 2003** | ** ** |
| ** **                 | ** ** | **(successor basis)**              | ** ** | **(predecessor basis)** | ** ** | **(pro forma basis)** | ** ** |
|                       |       |                               |       |   |   |   |   |
| Net Sales                  |       |                               |       |   |   |   |   |
| Over-the-counter  drug     |       | $                                  | 44,755     |   | $ | 12,664 |   | $ | 41,020 |   |
| Personal care              |       | 7,517                              |       | 6,458 |   | 8,190 |   |
| Household  cleaning        |       | 23,582                             |       | — |   | 27,588 |   |
| Other                      |       | —                             |       | 97 |   | 97 |   |
| Total net sales            |       | 75,854                             |       | 19,219 |   | 76,895 |   |
|                       |       |                               |       |   |   |   |   |
| Gross Profit               |       |                               |       |   |   |   |   |
| Over-the-counter  drug     |       | 28,379                             |       | 8,128 |   | 27,356 |   |
| Personal care              |       | 3,916                              |       | 3,509 |   | 4,423 |   |
| Household  cleaning        |       | 9,636                              |       | — |   | 11,902 |   |
| Other                      |       | —                             |       | 97 |   | 97 |   |
| Total gross  profit        |       | 41,931                             |       | 11,734 |   | 43,778 |   |
|                       |       |                               |       |   |   |   |   |
| Contribution  Margin       |       |                               |       |   |   |   |   |
| Over-the-counter  drug     |       | 23,599                             |       | 7,027 |   | 22,250 |   |
| Personal care              |       | 3,052                              |       | 1,874 |   | 2,572 |   |
| Household  cleaning        |       | 8,015                              |       | — |   | 7,107 |   |
| Other                      |       | —                             |       | 97 |   | 97 |   |
| Total  contribution margin |       | 34,666                             |       | 8,998 |   | 32,026 |   |
|                            |            |                                    |            |  |  |  |  |  |  |  |

 

**Three months ended December 31, 2004 compared tothe three months ended December 31, 2003**

 

The following includes adiscussion of the results for the historical quarters ended December 31, 2004and 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 thefollowing discussion reflects the unaudited results of our operations as if theSpic and Span acquisition and the Bonita Bay acquisition had both beencompleted on April 1, 2003, without giving effect to the Vetco acquisition,which is not considered material to the pro forma results.

 

*Net Sales*.  Net sales increased by $56.6 million, or294.7%, from $19.2 million for the quarter ended December 31, 2003 to $75.9million for the quarter ended December 31, 2004.  The sales increase is driven by theacquisitions of Bonita Bay, Spic and Span, and Vetco in April 2004, March 2004and October 2004, respectively.  Theover-the-counter (“OTC”) segment had net sales of $44.8 million for the quarterended December 31, 2004, an increase of $32.1 million over the quarter endedDecember 31, 2003, primarily as a result of the Bonita Bay Acquisition.  The personal care segment had net sales of$7.5 million for the quarter ended December 31, 2004, an increase of $1.1million over the quarter ended December 31, 2003, primarily as a result of theBonita Bay Acquisition.  The householdcleaning segment, which was acquired through the Spic and Span and Bonita Bayacquisitions, had sales of $23.6 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 decreased by$1.0 million, or 1.4%, from $76.9 million for the quarter ended December 31,2003 to $75.9 million for the quarter ended December 31, 2004.  The decrease in sales resulted from declinesin the household cleaning and personal care categories, partially offset by anincrease in the OTC drug category.

 

Over-the-CounterDrug Category.  Proforma net sales for the OTC drug category were

 

15

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$44.8 million for thequarter ended December 31, 2004 compared to pro forma net sales of $41.0million for the quarter ended December 31, 2003.  The strong sales increase was driven byincreases in the Clear Eyes (+$2.1 million) and Compound W (+$1.7 million)brands.  In addition, the Little Remediesbrand, acquired in the Vetco Acquisition in October 2004, contributed $4.4million of net sales in the quarter. Partially offsetting the sales increases discussed above were decreasesfor the Chloraseptic (-$3.2 million) and Murine (-$1.3 million) brands.

 

TheChloraseptic decline is related to the timing of the flu season in the FY 2003quarter.  A severe flu season in Novemberand December 2003 led to an extremely strong sales performance in December2003.  The flu season in the quarterended December 31, 2004 was comparatively mild.

 

PersonalCare Category.  On apro forma basis, net sales for the personal care category declined by $0.7million or, 8.2%, from $8.2 million for the quarter ended December 31, 2003 to$7.5 million for the quarter ended December 31, 2004.

 

HouseholdCleaning Category.  Ona pro forma basis, the household cleaning category net sales decreased by $4.0million, or 14.5% from $27.6 million for the quarter ended December 31, 2003 to$23.6 million for the quarter ended December 31, 2004.  The decrease was attributable to Comet, whichdeclined from net sales of $22.5 million in the quarter ended December 31, 2003to $18.4 million in the quarter ended December 31, 2004.  Sales in the 2003 quarter were bolstered by$2.7 million of volume for two new products launches - a disposable toilet bowlbrush (Comet Clean and Flush) and toilet bowl tablets - which were discontinuedin FY 2005.

 

*GrossProfit*.  Gross profitincreased by $30.2 million, or 257.3%, from $11.7 million for the quarter endedDecember 31, 2003 to $41.9 million for the quarter ended December 31,2004.  The increase in gross profit isdriven by the sales increase in the current year.  As a percentage of sales, gross profitdeclined from 61.1% for the quarter ended December 31, 2003 to 55.3% for thequarter ended December 31, 2004.  Themargin decline is due to the addition of the household cleaning segment in thecurrent year.  Gross margins in thehousehold cleaning segment are significantly lower than gross margins in theOTC and personal care categories.

 

On apro forma basis, gross profit decreased by $1.8 million, or 4.2%, from $43.8million for the quarter ended December 31, 2003 to $41.9 million for thequarter ended December 31, 2004.  Thedecrease in gross profit is a result of the sales decrease in the current year.  As a percentage of sales, gross profit declinedfrom 56.9% for the quarter ended December 31, 2003 to 55.3% for the quarterended December 31, 2004.

 

Over-the-CounterDrug Category. On a pro forma basis, OTC gross profitincreased by $1.0 million, or 3.7%, from $27.4 million for the quarter endedDecember 31, 2003 to $28.4 million for the quarter ended December 31,2004.  The increase was due to the salesincrease in the current year.  Grossprofit as a percentage of sales declined from 66.7% for the quarter endedDecember 31, 2003 to 63.4% for the quarter ended December 31, 2004.  The decline in margin as a percentage ofsales was driven by a change in sales mix.

 

PersonalCare Category.  On apro forma basis, the personal care segment’s gross profit decreased by $0.5million, or 11.5%, from $4.4 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 thesales decline.

 

HouseholdCleaning Category.  Ona pro forma basis, the household cleaning segment’s gross profit decreased by$2.3 million, or 19.0%, from $11.9 million for the quarter ended December 31,2003 to $9.6 million for the quarter ended December 31, 2004.  The decline in gross profit was due to thesales decline.

 

16

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*ContributionMargin*.  Contributionmargin increased by $25.7 million, or 285.3%, from $9.0 million for the quarterended December 31, 2003 to $34.7 million for the quarter ended December 31,2004.  The increase in contributionmargin was due to the sales increase discussed above.

 

On apro forma basis, contribution margin increased by $2.6 million, or 8.2%, from$32.0 million for the quarter ended December 31, 2003 to $34.7 million for thequarter ended December 31, 2004.  Theincrease was due to a reduction of $4.5 million in advertising and sellingexpenses, from $11.8 million for the quarter ended December 31, 2003 to $7.3million for the quarter ended December 31, 2004, offset by the gross profitdecline discussed above.  The decrease inadvertising and selling expenses was due to the following: (i) approximately$2.0 million in advertising and selling expenses related to the Cometdisposable toilet bowl brush in the December 2003 quarter (which were notincurred in the December 2004 quarter); (ii) synergies savings (as a result ofthe Acquisitions) related to agency fees, media buying and broker commissionsamounted to approximately $0.7 million in the quarter; and (iii) other salespromotion and trade promotion expenses were $1.7 million lower than the quarterended December 31, 2003.  This decreasewas offset by an increase in price allowances of $1.2 million for the quarterended December 31, 2004.

 

Over-the-CounterDrug Category. Pro forma contribution margin for the OTCsegment increased by $1.4 million, or 6.1%, from $22.2 million for the quarterended December 31, 2003 to $23.6 million for the quarter ended December 31,2004.  The increase in contributionmargin was due to the sales increase.

 

PersonalCare Category.  Proforma contribution margin for the personal care segment increased by $0.5million, or 18.7%, 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 wasdriven by reductions in sales promotion, trade promotion and broker commissionsin the current quarter.

 

HouseholdCleaning Category.  Proforma contribution margin for the household cleaning segment increased by $0.9million, or 12.8%, from $7.1 million for the quarter ended December 31, 2003 to$8.0 million for the quarter ended December 31, 2004.  The increase in contribution margin was dueto the reductions in advertising and trade promotion expenditures for Comet inthe current quarter primarily due to the discontinuance of advertising relatedto the disposable toilet bowl brush.

 

*Generaland 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 forthe quarter ended December 31, 2004.  Theincrease in expenses was due to the additional expenses associated with addingthe brands acquired in the Bonita Bay, Spic and Span and Vetco Acquisitions tothe portfolio.  The acquisitions resultedin increases to most general and administrative line items includingcompensation, office space, insurance costs, and legal and accountingexpenses.  In addition, the decision toabandon our proposed IDS offering during the quarter resulted in recognition of$0.5 million of IDS related legal and accounting expenses in the period endingDecember 31, 2004.

 

*Depreciationand Amortization Expense.* Depreciation and amortization expense increased by $1.3 million, or97.5%, from $1.3 million for the quarter ended December 31, 2003 to $2.6million for the quarter ended September 30, 2004.  The increase is due primarily to amortizationof intangible assets related to the acquisitions and an increase indepreciation related to the Bonita Bay Acquisition

 

*InterestExpense, net.*  Net interestexpense increased by $9.8 million, or 458.8%, from $2.2 million for the quarterended December 31, 2003 to $12.0 million for the quarter ended December 31,2004.  The increase in interest expenseis due primarily to the increased levels of indebtedness

 

17

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outstanding after theacquisitions and related financing transactions.

 

*IncomeTaxes.*  The income taxprovision for the quarter ended December 31, 2004 was $5.2 million, with aneffective rate of 36.4%, compared to a provision of $1.1 million for thequarter ended December 31, 2003, with an effective rate of 39.7%.  The difference between the U.S. federalstatutory rate of 34% and the effective rates is primarily due to state taxconsiderations.

 
| ** **                 | ** ** | **Nine months ended (unaudited)** | ** ** |
|----------------------------|------------|-----------------------------------|------------|
| ** **                 | ** ** | **December 31, 2004**             | ** ** | **December 31, 2003** | ** ** | **December 31, 2003** | ** ** |
| ** **                 | ** ** | **(successor basis)**             | ** ** | **(predecessor basis)** | ** ** | **(pro forma basis)** | ** ** |
|                       |       |                              |       |   |   |   |   |
| Net Sales                  |       |                              |       |   |   |   |   |
| Over-the-counter  drug     |       | $                                 | 121,910    |   | $ | 39,441 |   | $ | 108,363 |   |
| Personal care              |       | 25,545                            |       | 22,644 |   | 28,170 |   |
| Household  cleaning        |       | 77,502                            |       | — |   | 78,579 |   |
| Other                      |       | —                            |       | 292 |   | 292 |   |
| Total net sales            |       | 224,957                           |       | 62,377 |   | 215,404 |   |
|                       |       |                              |       |   |   |   |   |
| Gross Profit               |       |                              |       |   |   |   |   |
| Over-the-counter  drug     |       | 74,975                            |       | 26,275 |   | 71,977 |   |
| Personal care              |       | 12,800                            |       | 12,238 |   | 14,905 |   |
| Household  cleaning        |       | 29,293                            |       | — |   | 34,093 |   |
| Other                      |       | —                            |       | 292 |   | 292 |   |
| Total gross  profit        |       | 117,068                           |       | 38,805 |   | 121,267 |   |
|                       |       |                              |       |   |   |   |   |
| Contribution  Margin       |       |                              |       |   |   |   |   |
| Over-the-counter  drug     |       | 55,545                            |       | 20,036 |   | 52,473 |   |
| Personal care              |       | 7,494                             |       | 6,487 |   | 7,530 |   |
| Household  cleaning        |       | 22,689                            |       | — |   | 22,963 |   |
| Other                      |       | —                            |       | 292 |   | 292 |   |
| Total  contribution margin |       | 85,728                            |       | 26,815 |   | 83,258 |   |
|                            |            |                                   |            |  |  |  |  |  |  |  |

 

**Nine months ended December 31, 2004 compared to thenine months ended December 31, 2003**

 

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

 

*Net Sales*.     Net sales increased by $162.6 million, or260.6%, from $62.4 million for the nine months ended December 31, 2003 to$225.0 million for the nine months ended December 31, 2004.  On a pro forma basis, net sales increased by$9.6 million, or 4.4%, from $215.4 million for the nine months ended December31, 2003 to $225.0 million for the nine months ended December 31, 2004.  The sales increase was driven by the acquisitionsof Spic and Span, Bonita Bay and Vetco in March 2004, April 2004 and October2004, respectively.  The Over-the-Counter Drug Category had net sales of $121.9 million for the nine months endedDecember 31, 2004, an increase of $82.5 million over net sales of $39.4 millionfor the nine months ended December 31, 2003. The Personal Care Category has net sales of $25.5 million for the ninemonths ended December 31, 2004 compared to net sales of $22.6 million for thenine months ended December 31, 2003.  TheHousehold Cleaning Category, which was acquired as part of the Spic and Spanand Bonita Bay

 

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Acquisitions, hadsales of $77.5 million for the nine months ended December 31, 2004 compare tono sales during the same period of the prior year.

 

Over-the-CounterDrug Category*.**    *On a pro formabasis, the increase in overall net sales was driven by the Over-the-CounterDrug Category which had net sales of $121.9 million for the nine months endedDecember 31, 2004 compared to net sales of $108.4 million in the prioryear.  The*Compound W*(+$11.5 million) and *Clear eyes*(+$6.4 million) brands exhibited strong sales growth for the nine months endedDecember 31, 2004.  Partially offsettingthe strong sales performance for those two brands were declines in sales forthe *Chloraseptic* (-$4.6 million) and *Murine* (-$3.6 million) brands.  The *Little Remedies*brands, acquired in the Vetco acquisition contributed $4.4 million to the ninemonth over-the-counter sales.

 

PersonalCare Category.     On apro forma basis, the Personal Care Category showed a sales decline of $2.6million, or 9.3%, from $28.2 million for the nine months ended December 31,2003 to $25.5 million for the nine months ended December 31, 2004.  The decrease in sales was driven by declinesfor *Cutex* and*Denorex*.  The *Cutex* declinereflects a decline for the entire nail polish category in 2004 versus the prioryear.  The decline in *Denorex* sales reflects market share losses from 2003.

 

HouseholdCleaning Category.    On a pro forma basis, the Household Cleaning Category had a salesdecline of $1.1 million, or 1.4%, from $78.6 million for the nine months endedDecember 31, 2003 to $77.5 million for the nine months ended December 31,2004.  The decline in sales was due to adecline in *Comet,* partially offset by an increasefor *Spic and Span*.  *Comet* salesdecreased by $2.5 million, or 3.9% from $63.4 million for the nine months endedDecember 31, 2003 to $60.9 million for the nine months ended December 31,2004.  *Spic and**Span* sales increased by $1.4 million, or9.2% from $15.1 million for the nine months ended December 31, 2003 to $16.5million for the nine months ended December 31, 2004.

 

*GrossProfit*.     Grossprofit increased by $78.3 million, or 201.7% from $38.8 million for the nine monthsended December 31, 2003 to $117.1 million for the nine months ended December31, 2004.  This increase is drivenprimarily by the sales increase.  As apercentage of sales, gross profit declined from 62.2% for the nine months endedDecember 31, 2003 to 52.0% for the nine months ended December 31, 2004.  This decrease is gross margin as a percentageof sales is driven by two factors.  Thenine months ended December 31, 2004 included $5.3 million of charges due tostep-ups in inventory related to purchase accounting.  The second reason for the deterioration ingross margin percentage is the addition to the Household Cleaning Category inthe current year.  Gross margins in theHousehold Cleaning Category are significantly lower than gross margins for theOver-the-Counter Drug Category and Personal Care Category.

 

On apro forma basis, gross profit decreased by $4.2 million, or $3.4%, from $121.3million for the nine months ended December 31, 2003 to $117.1 million for thenine months ended December 31, 2004.  Thedecrease in gross profit on a pro forma basis is primarily due to chargesrelated to an inventory step-up of $5.3 million for the nine months endedDecember 31, 2004 compared to an inventory step-up of $1.2 million in the ninemonths ended December 31, 2003. Excluding the inventory step-up, gross profit would be flat at $122.4million for the nine months ended December 31, 2003 and for the nine monthsended December 31, 2004.

 

Over-the-CounterDrug Category.     On apro forma basis, the Over-the-Counter Drug Category’s gross profit increased by$3.0 million, or 4.2%, from $72.0 million for the nine months ended December31, 2003 to $75.0 million for the nine months ended December 31, 2004.  The increase in gross profit was due to thesales increase.  Excluding the inventorystep-up of $1.2

 

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million for thenine months ended December 31, 2003 and $2.7 million for the nine months endedDecember 31, 2004, gross profit would have increased by $4.5 million, or 6.1%from $73.2 million for the nine months ended December 31, 2003 to $77.7 millionfor the nine months ended December 31, 2004. The increase (excluding inventory step-up) was due to the salesincrease.

 

PersonalCare Category.     On apro forma basis, the Personal Care Category’s gross profit decline by $2.1million, or 14.1%, from $14.9 million for the nine months ended December 31,2003 to $12.8 million for the nine months ended December 31, 2004.  Excluding charges related to the inventorystep-up of $0.2 million during the current year, gross profit decline by $1.9million, or 12.8%, for the nine months ended December 31, 2004 versus the sameperiod last year.  The decline in grossprofit was primarily due to the sales decline for the category.

 

HouseholdCleaning Category.    On a pro forma basis, the Household Cleaning Category’s gross profitdecreased by $4.8 million, or 14.1%, from $34.1 millionfor the nine months ended December 31, 2003 to $29.3 million for the ninemonths ended December 31, 2004. Excluding the charges related to the inventory step-up of $2.4 millionduring the current year, gross profit decline by $2.4 million, or 7.0%, from$34.1 million for the nine months ended December 31, 2003 to $31.7 million forthe nine months ended December 31, 2004. The decline in gross profit is due to lower sales, close-out salesrelated to *Comet* Clean & Flush and increasedshipments to lower margin dollar stores.

 

*ContributionMargin.*     Contribution margin increased by $58.9 million, or 219.7%, from $26.8million for the nine months ended December 31, 2003 to $85.7 million for thenine months ended December 31, 2004.  Theincrease in contribution margin was due to the increased gross profit discussedabove, partially offset by increased advertising and selling expensesassociated with the acquisition of the Spic and Span and Bonita Bay brands.

 

On apro forma basis, contribution margin increased by $2.4 million, or 3.0%, from$83.3 million for the nine months ended December 31, 2003 to $85.7 million forthe nine months ended December 31, 2004. The increase in contribution margin was the result of the net salesincrease combined with the decrease in overall advertising and sellingexpenses.  The decrease in advertisingand selling expenses in the current year is due to a synergy savings related toadvertising agency fees, media buying and broker commissions.  In addition, $2.0 million of advertising andselling expenses related to the *Comet*disposable toilet bowl brush in fiscal year 2003 were not repeated in fiscalyear 2004.

 

Over-the-CounterDrug Category.     Proforma contribution margin for the Over-the-Counter Drug Category, excluding theinventory step-up, increased by $4.5 million, or 8.3%, from $53.7 million forthe nine months ended December 31, 2003 to $58.2 million for the nine monthsended December 31, 2004.  The increase inpro forma contribution margin was driven by the sales increase.

 

PersonalCare Category.     Proforma contribution margin for the Personal Care Category, excluding theinventory step-up of $0.2 million mentioned above, increased by $0.2 million,or 2.2%, from $7.5 million for the nine months ended December 31, 2003 to $7.7million for the nine months ended December 31, 2004.

 

HouseholdCleaning Category.     Excludingthe inventory step-up of $2.4 million mentioned above, pro forma contributionmargin for the Household Cleaning Category increased by $2.1 million, or 9.3%,from $23.0 million for the nine months ended December 31, 2003 to $25.1 millionfor the nine months ended December 31, 2004. The increase was driven by the reduction in

 

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advertising andpromotional support on the *Comet*disposable toilet bowl brush in fiscal year 2004 compared to fiscal year 2003.

 

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

 

*Depreciationand Amortization Expense*.    Depreciation and amortization expense increased by $3.2 million, or81.0%, from $3.9 million for the nine months ended December 31, 2003 to $7.1million for the nine months ended December 31, 2004.  The increase is primarily due to amortizationof intangible assets related to the acquisitions and an increase indepreciation related to the Bonita Bay acquisition

 

*InterestExpense, net.*     Netinterest expense increased by $27.4 million, or 418.5%, from $6.5 million forthe nine months ended December 31, 2003 to $33.9 million for the nine monthsended December 31, 2004.  The increase ininterest expense is primarily due to the increased levels of indebtedness outstandingafter the acquisition.

 

*OtherExpense*.     Otherexpense of $7.6 million for the nine months ended December 31, 2004 wascomprised of a loss on extinguishment of debt related to the write-off ofdeferred financing costs and discount on debt associated with the borrowingincurred to finance the Medtech acquisition.

 

*IncomeTaxes.*     The incometax provision for the nine months ended December 31, 2004 was $8.3 million,with an effective rate of 37.9% compared to a provision of $3.4 million for thenine months ended December 31, 2003, with an effective rate of 39.5%.  The difference between U.S. federal statutoryrate of 34% and the effective rates is primarily due to state income taxes.

 

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**Liquidityand Capital Resources**

 

The Company hashistorically financed operations with a combination of internally generatedfunds and borrowings.  Principal uses ofcash are for operating expenses, servicing long term debt, acquisitions,working capital, payment of income taxes and capital expenditures.

 

OperatingActivities

 

*Ninemonths ended December 31, 2004 compared to the nine months ended December 31,2003.*  Net cashprovided by operating activities was $39.9 million for the nine months endedDecember 31, 2004 compared to $8.9 million for the nine months ended December31, 2003.  The increase in net cashprovided by operating activities for the nine months ended December 31, 2004was primarily due to net income of $13.7 million, adjusted for non-cash items of$29.8 million in 2004, compared to net income of $5.2 million, adjusted fornon-cash items of $8.6 million in 2003. Working capital increased by $2.3 million for the nine months endedDecember 31, 2004, primarily due to an increase in accounts receivable, relatedto the an increase in net sales during the period, of $5.5 million, a decreasein accrued expenses of $6.9 million offset by a reduction of inventories of$8.0 million.

 

InvestingActivities

 

*Ninemonths ended December 31, 2004 compared to the nine months ended December 31,2003.*  Net cash used ininvesting 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 endedDecember 31, 2003.  The net cash used inthe nine months ended December 31, 2004 was primarily for the acquisition ofBonita Bay on April 6, 2004 and Vetco on October 6, 2004

 

FinancingActivities

 

*Ninemonths ended December 31, 2004 compared to the nine months ended December 31,2003. *Net cashprovided by financing activities was $389.1 million for the nine months endedDecember 31, 2004 compared to $11.2 million of cash used in financingactivities for the nine months ended December 31, 2003.  Netcash provided by financing activities for the nine months ended December 31,2004 was primarily a result of proceeds of borrowings $698.5 million and theissuance of preferred units and common units of $58.7 million primarily relatedto the Bonita Bay and Vetco acquisitions. This was partially offset by repayment of debt incurred in February 2004at the time of the Medtech acquisition, pay down of revolving credit facilityand 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 endedDecember 31, 2003 was primarily related to a payment on a note payable forDenorex.

 

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**ContractualObligations**

 

We had ongoing commitments under variouscontractual and commercial obligations as of December 31, 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 |   | $ | 661.6 |   |
| Interest on  long-term debt(1)      |       | 298.6                      |       | 44.5 |   | 88.4 |   | 87.5 |   | 78.2 |   |
| Operating leases  (2)               |       | 1.3                        |       | 0.5 |   | 0.6 |   | 0.2 |   | — |   |
|                                |       |                       |       |   |   |   |   |   |   |   |   |
| Total  contractual cash obligations |       | $                          | 980.2      |   | $ | 48.7 |   | $ | 96.5 |   | $ | 95.2 |   | $ | 739.8 |   |

 

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(1)     Representsthe estimated interest obligations on the outstanding revolving creditfacility, the outstanding balance on the Tranche B term loan, the outstandingbalance on the Tranche C term loan, and the outstanding balance on the seniorsubordinated notes, together, assuming scheduled principal payments (based onthe terms of the loan agreements) were made and assuming a weighted averageinterest rate of 6.7%. Estimated interest obligations would be different underdifferent assumptions regarding interest rates or timing of principal payments.If interest rates on borrowings with variable rates increased by 1/8%, interestexpense would be increased approximately $0.9 million, in the first year.

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

 

**Off-Balance SheetArrangements**

 

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

 

**Inflation**

 

Inflationary factors such as increases inthe costs of raw materials, packaging materials, purchased product and overheadmay adversely affect our operating results. Although we do not believe that inflation had a material impact on ourfinancial 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 nothave an adverse effect on us and our operating results.

 

**Recently IssuedAccounting Standards**

 

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

 

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**Item 3****.  Quantitativeand 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 tovariable interest rates.  Accordingly,our earnings and cash flows are affected by changes in interest rates.  Assuming the December 31, 2004 level ofborrowings, and further considering the interest rate protection agreementcurrently in place (see following paragraph), we estimate that a one percentagepoint increase in interest on our variable rate debt agreements would haveincreased interest expense for the nine months ended December 31, 2004 byapproximately $3.4 million.

 

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

 

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

 

**Evaluationof Disclosure Controls and Procedures**

 

OurChief Executive Officer and Chief Financial Officer have evaluated theeffectiveness of our disclosure controls and procedures (as defined in theSecurities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end ofthe period covered by this Quarterly Report. Based on this evaluation, theCompany’s principal executive officer and principal financial officer concludedthat its disclosure controls and procedures are effective and providereasonable assurance that the material information required to be included inthe Company’s periodic SEC reports is recorded, processed, summarized andreported within the time periods specified in the relevant SEC rules and forms.

 

**Changesin Internal Controls**

 

Therewere no significant changes to our internal controls or, to our knowledge, inother factors that could significantly affect our internal controls, subsequentto the date of our Chief Executive Officer’s and Chief Financial Officer’s lastevaluation of our internal controls, including any corrective actions withregard to significant deficiencies and material weaknesses.

 

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**PART II – OTHERINFORMATION**

 

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

 

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

 

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

 

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

None.

 

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

None.

 

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

None.

 

**Item5.   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. |

 

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| 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).  |

 

 

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**SIGNATURES**

** **

Pursuantto the requirements of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
|   | PRESTIGE  BRANDS INTERNATIONAL,  LLC           |
|--------|------------------------------------------------|
|   |                                           |
|   | /s/  Peter C. Mann                             |   |
|   | By:  Peter C. Mann                             |
|   | Its: President                                 |
|   |                                           |
|   | /s/  Peter J. Anderson                         |   |
|   | By:  Peter J. Anderson                         |
|   | Its: Vice President, Secretary & Treasurer |
|   | Dated:  January 24, 2005                       |

 

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