Prestige Brands Holdings Inc. (PBH) filed Quarterly Report for the period ended 2009-06-30.
Prestige Brands Holdings is a marketer and distributor of brand name over- the-counter drug personal care and household cleaning products sold throughout the United States and Canada. Key brands include Compound W wart remover Chloraseptic sore-throat relief products New-Skin liquid bandage Clear eyes and Murine eye and ear care products Little Remedies pediatric over-the-counter healthcare products Cutex nail polish remover Comet and Spic & Span household cleaner and several other well-recognized brands. Prestige Brands Holdings Inc. has a market cap of $362.54 million; its shares were traded at around $7.26 with a P/E ratio of 10.68 and P/S ratio of 1.16.
Highlight of Business Operations:
Depreciation and amortization expense was $2.8 million for 2009 and essentially unchanged versus 2008. However, amortization was impacted by the transfer of two trademarks in the Household Cleaning segment and one trademark in the Over-the-Counter segment, aggregating $45.6 million, from indefinite lived status to intangibles with finite lives. Commencing April 1, 2009, these intangibles are being amortized to operations over a 20 year estimated useful life. The increase in amortization expense of approximately $571,000 was offset by a reduction in amortization resulting from a trademark that became fully amortized at March 31, 2009.
Net interest expense was $5.7 million during 2009 versus $8.7 million in 2008. The reduction in interest expense was primarily the result of a lower level of indebtedness combined with a reduction of interest rates on our senior debt. The average cost of funds decreased from 8.6% for 2008 to 6.1% for 2009, while the average indebtedness decreased from $403.7 million during 2008 to $370.3 million during 2009.
Net cash provided by operating activities was $18.1 million for the three month period ended June 30, 2009 compared to $15.4 million for the three month period ended June 30, 2008. The $2.7 million increase in net cash provided by operating activities was primarily the result of a decrease in the components of working capital.
Net cash used for financing activities was $17.0 million for the three month period ended June 30, 2009 compared to $15.0 million for the three month period ended June 30, 2008. During the three month period ended June 30, 2009, the Company repaid $16.1 million of indebtedness in excess of normal maturities with cash generated from operations. This reduced our outstanding indebtedness to $361.3 million at June 30, 2009 from $378.3 million at March 31, 2009.
In February 2008, the Company entered into an interest rate swap agreement in the notional amount of $175.0 million, decreasing to $125.0 million at March 26, 2009 to replace and supplement a $50.0 million interest rate cap agreement that expired on May 30, 2008. Under this swap, the Company agreed to pay a fixed rate of 2.88% while receiving a variable rate based on LIBOR. The agreement terminates on March 26, 2010. The fair value of the interest rate swap agreement is included in either other assets or accrued liabilities at the balance sheet date. At June 30, 2009 and March 31, 2009, the fair values of the interest rate swap were $2.0 million and $2.2 million, respectively. Such amounts were included in other accrued liabilities.
As a result of the expiration of certain credit facilities, the current economic environment and the state of the credit markets, the Company established and reached its goal of enhancing its liquidity position and used its strong cash flow generated from operations to build its cash reserves. Management estimates that cash reserves of approximately $30.0 million are sufficient to provide adequate liquidity, allowing the Company to meet its current and future obligations as they come due. Accordingly, management made repayments against outstanding indebtedness of $29.3 million in excess of scheduled maturities during the year ended March 31, 2009 and $16.1 million in excess of scheduled maturities during the three month period ended June 30, 2009. While management intends to replace these credit facilities during the ensuing year, the uncertainties of the credit markets could impede our ability to do so. As an example, the following factors could influence the amounts available to us and the interest rates associated with such an effort:Donald Yacktman of Yacktman Asset Management Co..