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Prestige Brands Holdings Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 5, 2010 03:19PM
Prestige Brands Holdings Inc. (PBH) filed Quarterly Report for the period ended 2010-09-30.
Highlight of Business Operations:
reclassified the related operating results as discontinued in the consolidated financial statements and related notes for all periods presented. The Company recognized a gain of $253,000 on a pre-tax basis and $157,000 net of tax effects on the sale in the quarter ended December 31, 2009. The total sales price for the assets was $9 million, subject to adjustments for inventory, as defined, with $8 million received upon closing. The remaining $1 million was received by the Company in October 2010.
Net interest expense was $5.4 million during 2010 versus $5.6 million during 2009. The reduction in interest expense was primarily the result of a lower level of indebtedness combined with a reduction of variable interest rates on our senior debt offset by an increase in amortized debt issue costs included in interest expense in 2010 compared to 2009. The average cost of funds increased from 6.5% for 2009 to 7.2% for 2010 while the average indebtedness decreased from $349.8 million during 2009 to $297.6 million during 2010.
Net interest expense was $10.8 million during 2010 versus $11.3 million during 2009. The reduction in interest expense was primarily the result of a lower level of indebtedness combined with a reduction of variable interest rates on our senior debt offset by an increase in debt issue costs included in interest expense in 2010 compared to 2009. The average cost of funds increased from 6.3% for 2009 to 6.9% for 2010 while the average indebtedness decreased from $358.3 million during 2009 to $311.8 million during 2010.
Net cash used for financing activities was $32.8 million for the six month period ended September 30, 2010 compared to $40.0 million for the comparable period in 2009. During the six month period ended September 30, 2010, we redeemed the remaining $28.1 million of Senior Subordinated Notes that bore interest at 9.25%, and paid the required principal amount on the 2010 Senior Term Loan of $750,000 plus an additional principal amount of $3.8 million. This reduced our outstanding indebtedness to $295.5 million at September 30, 2010 from $328.1 million at March 31, 2010.
On March 24, 2010, we entered into a $150.0 million 2010 Senior Term Loan with a discount to the lenders of $1.8 million and net proceeds of $148.2 million. The Senior Notes were issued at an aggregate face value of $150.0 million with a discount to the initial purchasers of $2.2 million and net proceeds to us of $147.8 million. The discount was offered to improve the yield to maturity to lenders reflective of market conditions at the time of the offering. In addition to the discount, we incurred $7.3 million of costs primarily related to bank arrangers' fee and legal advisors, of which $6.6 million was capitalized as deferred financing costs and $0.7 million expensed. The deferred financing costs are being amortized over the term of the loan and notes.
In connection with the acquisition of Blacksmith, subsequent to the end of the current reporting period, on November 1, 2010, the Company amended its existing debt agreements and increased the amount borrowed and the amount available thereunder as follows. On November 1, 2010, we issued an additional $100 million in Senior Notes due 2018, which have the same terms and are part of the same series as the 2010 Notes, and will mature on April 1, 2018. On November 1, 2010, we executed an Increase Joinder to the Credit Agreement dated March 24, 2010, and borrowed an additional $115 million as an incremental term loan, which will mature on March 24, 2016 and has the same terms as the existing 2010 Senior Term Loan. Additionally, on November 1, 2010, we increased our borrowing capacity under the revolving credit facility by $10 million to $40 million.
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