EX-99.1 2 exhibit991fy14-q3earningsr.htm EXHIBIT Exhibit 99.1 FY14-Q3 Earnings Release Exhibit


Exhibit 99.1
                                       
Prestige Brands Holdings, Inc. Reports Fiscal Third Quarter & Nine Month Results;
Results Impacted by Retailer Inventory Reductions, Return of Competing Products & Soft Cough/Cold Season

Tarrytown, NY-(Business Wire)-February 6, 2014-Prestige Brands Holdings, Inc. (NYSE-PBH) today announced results for the third quarter and nine month periods of fiscal year 2014, which ended on December 31, 2013.

In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this release to aid investors in understanding the Company's performance. This includes free cash flow, a non-GAAP financial measure indicative of cash available for debt repayment and acquisitions. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section at the end of this earnings release.

The results include reported third fiscal quarter revenues of $146.2 million, a decrease of 8.7% over the prior year comparable period’s revenues of $160.2 million. Reported revenues for the nine month period totaled $457.6 million, a decrease of 2.5% over the prior year nine month period’s revenues of $469.1 million. The Company previously indicated that fiscal 2014 would be a transitional year; however, results for the third quarter were impacted by a combination of three factors: retailer inventory reductions as a result of soft foot traffic, the return of several competing brands to the marketplace, and a weak cough/cold season.

Reported net income for the third fiscal quarter was $3.1 million, or $0.06 per diluted share, 74.5% lower than the prior year comparable quarter’s net income of $12.3 million, or $0.24 per diluted share. Adjusted earnings per share for the quarter were $0.30 compared to the prior year’s adjusted earnings per share of $0.37, a decrease of 18.9%. The current quarter’s adjusted earnings per share excludes items related to the Company’s recent bond offering. The prior year quarter’s adjusted earnings per share excludes items related to the integration of the GSK brands and accelerated amortization of finance costs.

Reported net income for the first nine months of fiscal 2014 was $56.6 million, or $1.08 per diluted share, 22.7% higher than the prior year’s comparable period net income of $46.2 million, or $0.90 per diluted





share. Adjusted earnings per share for the nine month period of fiscal 2014 were $1.17, compared to adjusted earnings per share of $1.14 in the prior year’s comparable period, excluding items detailed in the schedules attached.

Reported revenues for the Over-The-Counter Healthcare segment (OTC) were $125.6 million for the third fiscal quarter, 9.6% lower than the prior year comparable period’s revenues of $139.0 million. For the nine month period of the current fiscal year, reported revenues for the OTC segment were $391.1 million, a decrease of 3.0% over the prior year comparable period’s revenues of $403.2 million. Reported revenues for the Household Cleaning segment were $20.6 million in the third fiscal quarter, a decrease of 2.8% over the prior year's third quarter results of $21.2 million. For the nine month period, reported revenues for this segment were slightly higher at $66.5 million compared to $65.9 million in the prior year’s comparable period.

Free Cash Flow and Debt
The Company's free cash flow (“FCF”) for the third fiscal quarter was $41.2 million, an increase of 11.8% over the prior year comparable period’s FCF of $36.8 million. For the nine month period, FCF was $94.5 million, an increase of approximately 2.8% over the prior year comparable period's FCF of $92.0 million. The increase in FCF for both the three month and nine month periods is a result of a reduction in fixed asset additions. On a per share basis, FCF for the three months ended December 31, 2013 translates to $0.78, compared to $0.72 in the prior year. For the nine month period, FCF per share translates to $1.81, compared to $1.79 for the nine month period ended December 31, 2012. This non-GAAP financial measure excludes items related to the December 2013 debt refinancing of approximately $16.3 million, as detailed in the schedules attached.

At December 31, 2013, the Company’s net debt was approximately $938.9 million and its covenant-defined leverage ratio was approximately 4.30.

Commentary & Outlook
According to Matthew M. Mannelly, President and CEO, “Recognizing the current environment, we continue to be focused on our long-term, three-prong value creation strategy which has been key to our success over the last five years. We are committed to innovating and driving growth in our core OTC brands, delivering strong and consistent free cash flow and aggressively pursuing M&A in the OTC space in a disciplined way. Our strong free cash flow of $41.2 million in the third quarter continues to provide flexibility for investing in brands for the long term,” he said.






Mr. Mannelly continued, “Moving forward, we will leverage the strength of our business model which revolves around strong and consistent free cash flow. We continue to expect free cash flow of approximately $125 million for the fiscal year ending March 31, 2014. Regarding earnings per share, given the three factors that impacted this quarter and their potential impact on full year results, the Company now expects earnings per share for fiscal 2014 to be in the range of $1.48 to $1.52,” he said.

Q3 Conference Call & Accompanying Slide Presentation
The Company will host a conference call to review its third quarter results on February 6, 2014 at 8:30 am EDT. The toll-free dial-in numbers are 877-546-5021 within North America and 857-244-7553 outside of North America. The conference pass code is "prestige". The Company will provide a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of the Company's website at http://prestigebrands.com. The slide presentation can be accessed just before the call from the Investor Relations page of the website by clicking on Webcasts and Presentations. Telephonic replays will be available for two weeks following the completion of the call and can be accessed at 888-286-8010 within North America and at 617-801-6888 from outside North America. The pass code is 14345309.

About Prestige Brands Holdings, Inc.
The Company markets and distributes brand name over-the-counter and household cleaning products throughout the U.S. and Canada, and in certain international markets. Core brands include Chloraseptic® sore throat treatments, Clear Eyes® eye care products, Compound W® wart treatments, The Doctor's® NightGuard® dental protector, the Little Remedies® and PediaCare® lines of pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, Dramamine® motion sickness treatment, BC® and Goody's® pain relievers, Beano® gas prevention, Debrox® earwax remover, and Gaviscon® antacid in Canada. Visit the Company's website at www.prestigebrands.com.

Note Regarding Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "will," "expect," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology. The "forward-looking statements" include, without limitation, statements regarding our expected future operating results including earnings per share and free cash flow, our strategy and focus, our intention to invest in our core brands, development of innovative





products, and aggressive and disciplined M&A. These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those expected as a result of a variety of factors, including the impact of our advertising and promotional initiatives, competition in our industry, the strength of the cough/cold season, and the success of our new product introductions and integration of newly acquired products. A discussion of other factors that could cause results to vary is included in the Company's Annual Report on Form 10-K for the year ended March 31, 2013, Quarterly Report on Form 10-Q for the quarter ended December 31, 2013, and other periodic reports filed with the Securities and Exchange Commission.
Contact: Dean Siegal
914-524-6819






Prestige Brands Holdings, Inc.
Consolidated Statements of Income and Comprehensive Income
(Unaudited)
 
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
(In thousands, except per share data)
 
2013
 
2012
 
2013
 
2012
Revenues
 
 
 
 
 
 
 
 
Net sales
 
$
145,054

 
$
159,492

 
$
454,159

 
$
466,735

Other revenues
 
1,158

 
740

 
3,466

 
2,349

Total revenues
 
146,212

 
160,232

 
457,625

 
469,084

 
 
 
 
 
 
 
 
 
Cost of Sales
 
 

 
 

 
 
 
 
Cost of sales (exclusive of depreciation shown below)
 
64,403

 
75,235

 
197,614

 
209,938

Gross profit
 
81,809

 
84,997

 
260,011

 
259,146

 
 
 
 
 
 
 
 
 
Operating Expenses
 
 

 
 

 
 
 
 
Advertising and promotion
 
25,570

 
23,538

 
70,754

 
67,371

General and administrative
 
12,137

 
11,378

 
35,390

 
40,114

Depreciation and amortization
 
3,644

 
3,359

 
10,206

 
9,950

Total operating expenses
 
41,351

 
38,275

 
116,350

 
117,435

Operating income
 
40,458

 
46,722

 
143,661

 
141,711

 
 
 
 
 
 
 
 
 
Other (income) expense
 
 

 
 

 
 
 
 
Interest income
 
(16
)
 
(4
)
 
(44
)
 
(9
)
Interest expense
 
21,276

 
26,665

 
53,648

 
66,178

Loss on extinguishment of debt
 
15,012

 

 
15,012

 

Total other expense
 
36,272

 
26,661

 
68,616

 
66,169

 
 
 
 
 
 
 
 
 
Income before income taxes
 
4,186

 
20,061

 
75,045

 
75,542

Provision for income taxes
 
1,056

 
7,804

 
18,431

 
29,386

Net income
 
$
3,130

 
$
12,257

 
$
56,614

 
$
46,156

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 

 
 

 
 
 
 
Basic
 
$
0.06

 
$
0.24

 
$
1.10

 
$
0.91

Diluted
 
$
0.06

 
$
0.24

 
$
1.08

 
$
0.90

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 

 
 

 
 
 
 
Basic
 
51,806

 
50,686

 
51,498

 
50,465

Diluted
 
52,445

 
51,523

 
52,236

 
51,285

 
 
 
 
 
 
 
 
 
Comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
 
Currency translation adjustments
 
(2,694
)
 
(1
)
 
(1,571
)
 
23

Total other comprehensive (loss) income
 
(2,694
)
 
(1
)
 
(1,571
)
 
23

Comprehensive income
 
$
436

 
$
12,256

 
$
55,043

 
$
46,179












Prestige Brands Holdings, Inc.
Consolidated Balance Sheets
(Unaudited)

(In thousands)
Assets
December 31,
2013
 
March 31,
2013
Current assets
 
 
 
Cash and cash equivalents
$
94,353

 
$
15,670

Accounts receivable, net
66,188

 
73,053

Inventories
64,798

 
60,201

Deferred income tax assets
6,836

 
6,349

Prepaid expenses and other current assets
12,326

 
8,900

Total current assets
244,501

 
164,173

 
 
 
 
Property and equipment, net
10,528

 
9,896

Goodwill
189,955

 
167,546

Intangible assets, net
1,395,755

 
1,373,240

Other long-term assets
24,107

 
24,944

Total Assets
$
1,864,846

 
$
1,739,799

 
 
 
 
Liabilities and Stockholders' Equity
 

 
 

Current liabilities
 

 
 

Current portion of long-term debt
$
48,290

 
$

Accounts payable
51,547

 
51,376

Accrued interest payable
10,781

 
13,894

Other accrued liabilities
23,445

 
31,398

Total current liabilities
134,063

 
96,668

 
 
 
 
Long-term debt
 
 
 
Principal amount
985,000

 
978,000

Less unamortized discount
(3,489
)
 
(7,100
)
Long-term debt, net of unamortized discount
981,511

 
970,900

 
 
 
 
Deferred income tax liabilities
205,036

 
194,288

Other long-term liabilities
302

 

Total Liabilities
1,320,912

 
1,261,856

 
 
 
 
 
 
 
 
Stockholders' Equity
 

 
 

Preferred stock - $0.01 par value
 

 
 

Authorized - 5,000 shares
 

 
 

Issued and outstanding - None

 

Preferred share rights
283

 
283

Common stock - $0.01 par value
 

 
 

Authorized - 250,000 shares
 
 
 
Issued - 51,961 shares at December 31, 2013 and 51,311 shares at March 31, 2013
520

 
513

Additional paid-in capital
412,910

 
401,691

Treasury stock, at cost - 194 shares at December 31, 2013 and 181 shares March 31, 2013
(965
)
 
(687
)
Accumulated other comprehensive loss, net of tax
(1,675
)
 
(104
)
Retained earnings
132,861

 
76,247

Total Stockholders' Equity
543,934

 
477,943

Total Liabilities and Stockholders' Equity
$
1,864,846

 
$
1,739,799












Prestige Brands Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended December 31,
(In thousands)
2013
 
2012
Operating Activities
 
 
 
Net income
$
56,614

 
$
46,156

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
10,209

 
9,950

Deferred income taxes
10,261

 
15,979

Amortization of deferred financing costs
6,023

 
8,220

Stock-based compensation costs
3,763

 
2,965

Loss on extinguishment of debt
15,012

 

Premium payment on 2010 Senior Notes
(12,768
)
 

Amortization of debt discount
3,115

 
3,892

Lease termination costs

 
975

(Gain) loss on sale or disposal of equipment
(3
)
 
51

Changes in operating assets and liabilities, net of effects of acquisitions
 
 
 
Accounts receivable
8,495

 
(13,518
)
Inventories
(2,262
)
 
(3,351
)
Prepaid expenses and other current assets
(2,783
)
 
5,801

Accounts payable
(1,285
)
 
14,125

Accrued liabilities
(13,531
)
 
9,631

Net cash provided by operating activities
80,860

 
100,876

 
 
 
 
Investing Activities
 

 
 

Purchases of property and equipment
(2,658
)
 
(8,922
)
Proceeds from sale of property and equipment
3

 
15

Proceeds from the sale of the Phazyme brand

 
21,700

Acquisition of brands from GSK purchase price adjustments

 
(226
)
Acquisition of Care Pharmaceuticals, less cash acquired
(55,215
)
 

Net cash (used in) provided by investing activities
(57,870
)
 
12,567

 
 
 
 
Financing Activities
 

 
 

Proceeds from issuance of 2013 Senior Notes
400,000

 

Repayment of 2010 Senior Notes
(201,710
)
 

Repayments of long-term debt
(147,500
)
 
(167,500
)
Repayments under revolving credit agreement
(45,500
)
 
(8,000
)
Borrowings under revolving credit agreement
50,000

 
48,000

Payment of deferred financing costs
(6,933
)
 

Proceeds from exercise of stock options
5,738

 
5,460

Excess tax benefits from share-based awards
1,725

 

Fair value of shares surrendered as payment of tax withholding
(278
)
 

Net cash provided by (used in) financing activities
55,542

 
(122,040
)
 
 
 
 
Effects of exchange rate changes on cash and cash equivalents
151

 
13

Increase (decrease) in cash and cash equivalents
78,683

 
(8,584
)
Cash and cash equivalents - beginning of year
15,670

 
19,015

Cash and cash equivalents - end of year
$
94,353

 
$
10,431

 
 
 
 
Interest paid
$
47,586

 
$
54,149

Income taxes paid
$
9,761

 
$
7,183






Prestige Brands Holdings, Inc.
Consolidated Statements of Income
Business Segments
(Unaudited)


 
Three Months Ended December 31, 2013
 
Nine Months Ended December 31, 2013
 (In thousands)
OTC
Healthcare
 
Household
Cleaning
 
Consolidated
 
OTC
Healthcare
 
Household
Cleaning
 
Consolidated
Net sales
$
125,448

 
$
19,606

 
$
145,054

 
$
390,670

 
$
63,489

 
$
454,159

Other revenues
150

 
1,008

 
1,158

 
462

 
3,004

 
3,466

Total revenues
125,598

 
20,614

 
146,212

 
391,132

 
66,493

 
457,625

Cost of sales
49,042

 
15,361

 
64,403

 
149,378

 
48,236

 
197,614

Gross profit
76,556

 
5,253

 
81,809

 
241,754

 
18,257

 
260,011

Advertising and promotion
24,830

 
740

 
25,570

 
68,375

 
2,379

 
70,754

Contribution margin
$
51,726

 
$
4,513

 
56,239

 
$
173,379

 
$
15,878

 
189,257

Other operating expenses
 

 
 

 
15,781

 
 
 
 
 
45,596

Operating income
 

 
 

 
40,458

 
 
 
 
 
143,661

Other expense
 

 
 

 
36,272

 
 
 
 
 
68,616

Income before income taxes
 
 
 
 
4,186

 
 
 
 
 
75,045

Provision for income taxes
 

 
 

 
1,056

 
 
 
 
 
18,431

Net income
 

 
 

 
$
3,130

 
 
 
 
 
$
56,614


 
Three Months Ended December 31, 2012
 
Nine Months Ended December 31, 2012
 (In thousands)
OTC
Healthcare
 
Household
Cleaning
 
Consolidated
 
OTC
Healthcare
 
Household
Cleaning
 
Consolidated
Net sales
$
138,858

 
$
20,634

 
$
159,492

 
$
402,633

 
$
64,102

 
$
466,735

Other revenues
175

 
565

 
740

 
520

 
1,829

 
2,349

Total revenues
139,033

 
21,199

 
160,232

 
403,153

 
65,931

 
469,084

Cost of sales
59,381

 
15,854

 
75,235

 
160,249

 
49,689

 
209,938

Gross profit
79,652

 
5,345

 
84,997

 
242,904

 
16,242

 
259,146

Advertising and promotion
22,410

 
1,128

 
23,538

 
62,309

 
5,062

 
67,371

Contribution margin
$
57,242

 
$
4,217

 
61,459

 
$
180,595

 
$
11,180

 
191,775

Other operating expenses
 

 
 

 
14,737

 
 
 
 
 
50,064

Operating income
 

 
 

 
46,722

 
 
 
 
 
141,711

Other expense
 

 
 

 
26,661

 
 
 
 
 
66,169

Income before income taxes
 
 
 
 
20,061

 
 
 
 
 
75,542

Provision for income taxes
 

 
 

 
7,804

 
 
 
 
 
29,386

Net income
 

 
 

 
$
12,257

 
 
 
 
 
$
46,156











About Non-GAAP Financial Measures
We define Non-GAAP Adjusted Total Revenues excluding additional transition sales costs associated with acquisitions. We define Non-GAAP Total Revenues excluding acquisitions and divestitures as Total Revenues excluding revenues associated with products acquired or divested in the periods presented. We define Non-GAAP Total Revenues excluding sales to mass channel customers Total Revenues excluding revenues for products sold to our mass channel customers. We define Non-GAAP EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations or the sale thereof and Non-GAAP Adjusted EBITDA as earnings before interest expense (income), income taxes, depreciation and amortization, income or loss from discontinued operations and the sale thereof, gain on settlement, loss on extinguishment of debt, certain other legal and professional fees, and acquisition-related costs. . We define Non-GAAP Adjusted Gross Margin as Gross Profit before certain acquisition and integration-related costs.We define Non-GAAP Adjusted Operating Income as Operating Income minus certain other legal and professional fees, acquisition and other integration costs. We define Non-GAAP Adjusted Net Income as Net Income before gain on settlement, loss on extinguishment of debt, accelerated amortization of debt discount and debt issue costs, certain other legal and professional fees, acquisition and integration-related costs, income or loss from discontinued operations and sale thereof, the applicable tax impacts associated with these items and the tax impacts of state tax rate adjustments and other non-deductible items. Non-GAAP Adjusted EPS is calculated based on Non-GAAP Adjusted Net Income, divided by the weighted average number of common and potential common shares outstanding during the period. We define Non-GAAP Operating Cash Flow as net cash provided by operating activities less premium payments to extinguish debt and accelerated interest payments due to debt refinancing. We define Non-GAAP Free Cash Flow as Net Cash provided by operating activities less premium payments to extinguish debt, accelerated interest payments due to debt refinancing and cash paid for capital expenditures. Non-GAAP Free Cash Flow per Share is calculated based on Non-GAAP Free Cash Flow, divided by the weighted average number of common and potential common shares outstanding during the period. Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Operating Cash Flow, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share may not be comparable to similarly titled measures reported by other companies.
We are presenting Non-GAAP Adjusted Total Revenues, Non-GAAP Total Revenues excluding acquisitions and divestitures, Non-GAAP Total Revenues excluding sales to mass channel customers, Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Operating Cash Flow, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share because they provide additional ways to view our operations, when considered with both our GAAP results and the reconciliation to net income and net cash provided by operating activities, respectively, which we believe provide a more complete understanding of our business than could be obtained absent this disclosure. Each of Non-GAAP Adjusted Total Revenues, Non-GAAP Total Revenues excluding acquisitions and divestitures, Non-GAAP Total Revenues excluding sales to mass channel customers, Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Operating Cash Flow, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share is presented solely as a supplemental disclosure because (i) we believe it is a useful tool for investors to assess the operating performance of the business without the effect of these items; (ii) we believe that investors will find this data useful in assessing shareholder value; and (iii) we use Non-GAAP Adjusted Total Revenues, Non-GAAP Total Revenues excluding acquisitions and divestitures, Non-GAAP Total Revenues excluding sales to mass channel customers, Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income and





Non-GAAP Adjusted EPS internally to evaluate the performance of our personnel and also as a benchmark to evaluate our operating performance or compare our performance to that of our competitors. The use of Non-GAAP Adjusted Total Revenues, Non-GAAP Total Revenues excluding acquisitions and divestitures, Non-GAAP Total Revenues excluding sales to mass channel customers, Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Operating Cash Flow, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share has limitations, and you should not consider these measures in isolation from or as an alternative to GAAP measures such as Operating income, Net income, and Net cash flow provided by operating activities, or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity.

The following tables set forth the reconciliation of Non-GAAP Adjusted Total Revenues, Non-GAAP Total Revenues excluding acquisitions and divestitures, Non-GAAP Total Revenues excluding sales to mass channel customers, Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Gross Margin, Non-GAAP Adjusted Operating Income, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted EPS, Non-GAAP Operating Cash Flow, Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share, all of which are non-GAAP financial measures, to GAAP Gross Profit, GAAP Operating Income, GAAP Net Income, GAAP Diluted EPS and GAAP Net cash provided by operating activities, our most directly comparable financial measures presented in accordance with GAAP.

Reconciliation of GAAP Total Revenues to Non-GAAP Total Revenues excluding acquisitions and divestitures:
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
 
2013
 
2012
 
2013
 
2012
(In thousands)
 
 
 
 
 
 
 
GAAP Total Revenues
$
146,212

 
$
160,232

 
$
457,625

 
$
469,084

Adjustments: (1)
 
 
 
 
 
 
 
Care revenues
(5,069
)
 

 
(10,498
)
 

Phazyme revenues

 
(524
)
 

 
(3,568
)
Total adjustments
(5,069
)
 
(524
)
 
(10,498
)
 
(3,568
)
Non-GAAP Total Revenues excluding acquisitions and divestitures
$
141,143

 
$
159,708

 
$
447,127

 
$
465,516

(1) Revenue adjustments relate to our OTC Healthcare segment






Reconciliation of GAAP Total Revenues to Non-GAAP Total Revenues excluding sales to mass channel customers:
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
% Change
 
Three Months Ended September 30,
 
% Change
 
2013
 
2012
 
 
 
2013
 
2012
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
GAAP Total Revenues
$
142,971

 
$
146,997

 
(2.7)
 
$
168,442

 
$
161,855

 
4.1
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Sales to mass channel customers
(38,081
)
 
(43,082
)
 
 
 
(43,430
)
 
(44,182
)
 
 
Total adjustments
(38,081
)
 
(43,082
)
 
 
 
(43,430
)
 
(44,182
)
 
 
Non-GAAP Total Revenues excluding sales to mass channel customers
$
104,890

 
$
103,915

 
0.9
 
$
125,012

 
$
117,673

 
6.2
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
December 31,
 
% Change
 
Nine Months Ended December 31,
 
% Change
 
2013
 
2012
 

 
2013
 
2012
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
GAAP Total Revenues
$
146,212

 
$
160,232

 
(8.7)
 
$
457,625

 
$
469,084

 
(2.4)
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Sales to mass channel customers
(36,627
)
 
(44,678
)
 

 
(118,138
)
 
(131,942
)
 
 
Total adjustments
(36,627
)
 
(44,678
)
 

 
(118,138
)
 
(131,942
)
 
 
Non-GAAP Total Revenues excluding sales to mass channel customers
$
109,586

 
$
115,554

 
(5.2)
 
$
339,488

 
$
337,142

 
0.7




Reconciliation of GAAP Total Revenues to Non-GAAP Adjusted Total Revenues and GAAP Gross Profit to Non-GAAP Adjusted Gross Margin:
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
 
2013
 
2012
 
2013
 
2012
(In thousands)
 
 
 
 
 
 
 
GAAP Total Revenues
$
146,212

 
$
160,232

 
$
457,625

 
$
469,084

Adjustments: (1)
 
 
 
 
 
 
 
Additional sales costs associated with GSK

 

 

 
411

Total adjustments

 

 

 
411

Non-GAAP Adjusted Total Revenues
$
146,212

 
$
160,232

 
$
457,625

 
$
469,495

 
 
 
 
 
 
 
 
GAAP Gross Profit
$
81,809

 
$
84,997

 
$
260,011

 
$
259,146

Adjustments:
 
 
 
 
 
 
 
Additional sales costs associated with GSK

 

 

 
411

Inventory step-up charge associated with acquisitions

 

 
577

 
23

Care acquisition related inventory costs

 

 
407

 

Additional product testing costs associated with GSK

 

 

 
220

Additional supplier transaction costs associated with GSK

 
3,765

 

 
5,426

Total adjustments

 
3,765

 
984

 
6,080

Non-GAAP Adjusted Gross Margin
$
81,809

 
$
88,762

 
$
260,995

 
$
265,226

Non-GAAP Adjusted Gross Margin %
56.0
%
 
55.4
%
 
57.0
%
 
56.5
%
(1) Revenue adjustments relate to our OTC Healthcare segment






Reconciliation of GAAP Operating Income to Non-GAAP Adjusted Operating Income:
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
 
2013
 
2012
 
2013
 
2012
(In thousands)
 
 
 
 
 
 
 
GAAP Operating Income
$
40,458

 
$
46,722

 
$
143,661

 
$
141,711

Adjustments:
 
 
 
 
 
 
 
Additional sales costs associated with GSK (1)

 

 

 
411

Inventory step-up charge associated with acquisitions (1)

 

 
577

 
23

Care acquisition related inventory costs (1)

 

 
407

 

Additional product testing costs associated with GSK (1)

 

 

 
220

Additional supplier transition costs associated with GSK (1)

 
3,765

 

 
5,426

Legal and professional fees associated with acquisitions (2)

 

 
668

 
98

Unsolicited proposal costs (2)

 

 

 
534

Transition and integration costs associated with GSK (2)

 

 

 
5,811

Total adjustments

 
3,765

 
1,652

 
12,523

Non-GAAP Adjusted Operating Income
$
40,458

 
$
50,487

 
$
145,313

 
$
154,234

(1) Adjustments relate to our OTC Healthcare segment
(2) Adjustments relate to G&A expenses

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA:
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
 
2013
 
2012
 
2013
 
2012
(In thousands)
 
 
 
 
 
 
 
GAAP Net Income
$
3,130

 
$
12,257

 
$
56,614

 
$
46,156

Interest expense, net
21,260

 
26,661

 
53,604

 
66,169

Income tax provision
1,056

 
7,804

 
18,431

 
29,386

Depreciation and amortization
3,644

 
3,359

 
10,206

 
9,950

Non-GAAP EBITDA:
29,090

 
50,081

 
138,855

 
151,661

Adjustments:
 
 
 
 
 
 
 
Additional sales costs associated with GSK (1)

 

 

 
411

Inventory step-up charge associated with acquisitions (1)

 

 
577

 
23

Care acquisition related inventory costs (1)

 

 
407

 

Additional product testing costs associated with GSK (1)

 

 

 
220

Additional supplier transaction costs associated with GSK (1)

 
3,765

 

 
5,426

Legal and professional fees associated with acquisitions (2)

 

 
668

 
98

Unsolicited proposal costs (2)

 

 

 
534

Transition and integration costs associated with GSK(2)

 

 

 
5,811

Loss on extinguishment of debt
15,012

 

 
15,012

 

Total adjustments
15,012

 
3,765

 
16,664

 
12,523

Non-GAAP Adjusted EBITDA
$
44,102

 
$
53,846

 
$
155,519

 
$
164,184

(1) Adjustments relate to our OTC Healthcare segment
(2) Adjustments relate to G&A expenses






Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and related Adjusted Earnings Per Share:
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
 
2013
2013 Adjusted EPS
 
2012
2012 Adjusted EPS
 
2013
2013 Adjusted EPS
 
2012
2012 Adjusted EPS
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
GAAP Net Income
$
3,130

$
0.06

 
$
12,257

$
0.24

 
$
56,614

$
1.08

 
$
46,156

$
0.90

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Additional sales costs associated with GSK (1)


 


 


 
411

0.01

Inventory step-up charge associated with acquisitions (1)


 


 
577

0.01

 
23


Care acquisition related inventory costs (1)


 


 
407

0.01

 


Additional product testing costs associated with GSK (1)


 


 


 
220


Additional supplier transition costs associated with GSK (1)


 
3,765

0.07

 


 
5,426

0.11

Legal and professional fees associated with acquisitions (2)


 


 
668

0.01

13,907

98


Unsolicited proposal costs (2)


 


 


 
534

0.01

Transition and integration costs associated with GSK (2)


 


 


 
5,811

0.11

Accelerated amortization of debt discount and debt issue costs
5,112

0.10

 
7,746

0.15

 
5,112

0.10

 
7,746

0.15

Loss on extinguishment of debt
15,012

0.29

 


 
15,012

0.29

 


Tax impact of adjustments
(7,285
)
(0.14
)
 
(4,513
)
(0.09
)
 
(7,641
)
(0.15
)
 
(7,920
)
(0.15
)
Impact of state tax adjustments
(380
)
(0.01
)
 


 
(9,465
)
(0.18
)
 


Total adjustments
12,459

0.24

 
6,998

0.13

 
4,670

0.09

 
12,349

0.24

Non-GAAP Adjusted Net Income and Adjusted EPS
$
15,589

$
0.30

 
$
19,255

$
0.37

 
$
61,284

$
1.17

 
$
58,505

$
1.14

(1) Adjustments relate to our OTC Healthcare segment
(2) Adjustments relate to G&A expenses






Reconciliation of GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow:
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
 
2013
 
2012
 
2013
 
2012
(In thousands)
 
 
 
 
 
 
 
GAAP Net cash provided by operating activities
$
25,262

 
$
40,502

 
$
80,860

 
$
100,876

Premium payment on 2010 Senior Notes
12,768

 

 
12,768

 

Accelerated interest payments due to debt refinancing
3,513

 

 
3,513

 

Non-GAAP Operating Cash Flow
41,543

 
40,502

 
97,141

 
100,876

Additions to property and equipment for cash
(339
)
 
(3,656
)
 
(2,658
)
 
(8,922
)
Non-GAAP Free Cash Flow
$
41,204

 
$
36,846

 
$
94,483

 
$
91,954

 
 
 
 
 
 
 
 
Non-GAAP Free Cash Flow per Share
$
0.78

 
$
0.72

 
$
1.81

 
$
1.79



Reconciliation of GAAP Net Income and EPS to Non-GAAP Free Cash Flow and Non-GAAP Free Cash Flow per Share:
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
 
2013
2013 Free Cash Flow per Share
 
2012
2012 Free Cash Flow per Share
 
2013
2013 Free Cash Flow per Share
 
2012
2012 Free Cash Flow per Share
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
GAAP Net Income
$
3,130

$
0.06

 
$
12,257

$
0.24

 
$
56,614

$
1.08

 
$
46,156

$
0.90

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows
19,438

0.37

 
17,179

0.33

 
35,612

0.68

 
42,032

0.82

Changes in operating assets and liabilities, net of effects from acquisitions as shown in the Statement of Cash Flows
2,694

0.05

 
11,066

0.22

 
(11,366
)
(0.22
)
 
12,688

0.25

Total adjustments
22,132

0.42

 
28,245

0.55

 
24,246

0.46

 
54,720

1.07

GAAP Net cash provided by operating activities
25,262

0.48

 
40,502

0.79

 
80,860

1.54

 
100,876

1.97

Premium payment on 2010 Senior Notes
12,768

0.24

 


 
12,768

0.25

 


Accelerated interest payments due to debt refinancing
3,513

0.07

 


 
3,513

0.07

 


Non-GAAP Operating Cash Flow
41,543

0.79

 
40,502

0.79

 
97,141

1.86

 
100,876

1.97

Additions to property and equipment for cash
(339
)
(0.01
)
 
(3,656
)
(0.07
)
 
(2,658
)
(0.05
)
 
(8,922
)
(0.18
)
Non-GAAP Free Cash Flow
$
41,204

$
0.78

 
$
36,846

$
0.72

 
$
94,483

$
1.81

 
$
91,954

$
1.79