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Comet Products Corp, et al. – ‘S-4/A’ on 12/10/04

On:  Friday, 12/10/04, at 2:58pm ET   ·   Accession #:  1047469-4-36757   ·   File #s:  333-117152, -01, -02, -03, -04, -05, -06, -07, -08, -09, -10, -11, -12, -13, -14, -15, -16, -17, -18, -19

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

12/10/04  Comet Products Corp               S-4/A                  4:2.8M                                   Merrill Corp/New/FA
          Medtech Holdings, Inc.
          Medtech Products, Inc.
          Prestige Brands International, Inc.
          Prestige Household Brands, Inc.
          Prestige Brands International, LLC
          Prestige Products Holdings, Inc.
          Prestige Personal Care, Inc.
          Prestige Brands Financial Corp
          Pecos Pharmaceutical, Inc.
          Spic & Span Co
          Bonita Bay Holdings, Inc.
          Prestige Acquisition Holdings, LLC
          Vetco Inc/NY
          Cutex Co
          Prestige Personal Care Holdings, Inc.
          Denorex Co
          Prestige Brands, Inc.
          Prestige Brands Holdings, Inc.
          Prestige Household Holdings, Inc.

Document/Exhibit                   Description                      Pages   Size 

 1: S-4/A       Pre-Effective Amendment to Registration of          HTML   2.61M 
                          Securities Issued in a                                 
                          Business-Combination Transaction                       
 2: EX-23.1     Consent of Experts or Counsel                          1     10K 
 3: EX-23.2     Consent of Experts or Counsel                          1     10K 
 4: EX-23.3     Consent of Experts or Counsel                          1     10K 

As Filed with the Securities and Exchange Commission on December 10, 2004.

Registration No. 333-117152

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 7
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

PRESTIGE BRANDS, INC.*
(Exact name of registrant as specified in its charter)

90 North Broadway
Irvington, New York 10533
Telephone: (914) 524-6810
(Address, including zip code, and telephone number, including area code, of registrants' principal executive offices)

Peter C. Mann
President and Chief Executive Officer
90 North Broadway
Irvington, New York 10533
Telephone: (914) 524-6810
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
   
Dennis M. Myers, P.C.
Kirkland & Ellis LLP
200 E. Randolph Drive
Chicago, Illinois 60601
Telephone: (312) 861-2000

*    The Co-Registrants listed on the next page are also included in this Form S-4 Registration Statement as additional Registrants.

        Approximate date of commencement of proposed sale of the securities to the public:    The exchange will occur as soon as practicable after the effective date of this Registration Statement.

        If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

*

The address for each of the Additional Registrants is c/o Prestige Brands, Inc., 90 North Broadway, Irvington, New York 10533, telephone: (914) 524-6810. The name, address, including zip code of the agent for service for each Additional Registrant is Peter C. Mann, President and Chief Executive Officer of Prestige Brands, Inc., 90 North Broadway, Irvington, New York 10533, telephone: (914) 524-6810.

SUBJECT TO COMPLETION, DATED DECEMBER 10, 2004

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the SEC is effective. This prospectus is not an offer to sell nor is it an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS

Prestige Brands, Inc.

Exchange Offer for
$210,000,000
9¹/4% Senior Subordinated Notes due 2012

We are offering to exchange:

up to $210,000,000 of our new 9¹/4% Senior Subordinated Notes due 2012, series B

for

a like amount of our outstanding 9¹/4% Senior Subordinated Notes due 2012.

Material Terms of Exchange Offer

•

The terms of the exchange notes to be issued in the exchange offer are identical to the outstanding notes, except that the transfer restrictions and registration rights relating to the outstanding notes will not apply to the exchange notes.

•

The exchange notes will be guaranteed jointly and severally by Prestige Brands International, LLC, which is the intermediate parent of the issuer, and by all of Prestige Brands International, LLC's domestic subsidiaries other than the issuer of the notes.

•

There is no existing public market for the outstanding notes or the exchange notes. We do not intend to list the exchange notes on any securities exchange or seek approval for quotation through any automated trading system.

•

You may withdraw your tender of notes at any time before the expiration of the exchange offer. We will promptly exchange all of the outstanding notes that are validly tendered and not withdrawn following the expiration of the exchange offer.

•

The exchange offer expires at 5:00 p.m., New York City time, on                        , 2004, unless extended.

•

The exchange of notes will not be a taxable event for U.S. federal income tax purposes.

•

The exchange offer is not subject to any condition other than that it not violate applicable law or any applicable interpretation of the Staff of the Securities and Exchange Commission.

•

We will not receive any proceeds from the exchange offer.

        For a discussion of risk factors that you should consider before participating in this exchange offer, see "Risk Factors" beginning on page 23 of this prospectus.

        Neither the SEC nor any state securities commission has approved the notes to be distributed in the exchange offer, nor have any of these organizations determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

                        , 2004

TABLE OF CONTENTS

Trademarks and Trade Names

        Trademarks and tradenames used in this prospectus are the property of their respective owners. We have utilized the ® and ™ symbols the first time each brand appears in this prospectus.

i

SUMMARY

        The following is a summary of the principal features of this exchange offer and should be read together with the more detailed information and other financial data included elsewhere in this prospectus.

Our Business

        We sell well-recognized, brand name consumer products in the over-the-counter drug, household cleaning and personal care categories. Our core brands, set forth in the table below, have established high levels of consumer awareness and strong retail distribution across all major channels.

(1)

Year ended December 31, 2003 for Chloraseptic, Clear eyes, Murine, Little Remedies, Comet and Spic and Span and year ended March 31, 2004 for Compound W, New-Skin, Cutex and Denorex.

        We have grown our company by acquiring strong and well-recognized brands from larger consumer products and pharmaceutical companies. We believe that these brands were considered non-core under previous ownership and, in most cases, did not benefit from the focus of senior level management or strong marketing support.

        Our products are sold by mass merchandisers and in drug, grocery, dollar and club stores. Our senior management team and dedicated sales force maintain long-standing relationships with our top 50 customers, which accounted for approximately 81% of our gross sales on a pro forma basis, excluding the Vetco acquisition, for the year ended March 31, 2004.

Competitive Strengths

        Strong Operating Margins and Stable Cash Flows.    We believe our well recognized, diversified portfolio of brands and efficient operating model enable us to generate strong operating margins and stable cash flows. Our operating model focuses on marketing, sales, customer service and product development. We outsource manufacturing, warehousing, distribution and logistics to experienced, low-cost third-party providers. This operating model enables us to focus on maintaining and building the value associated with our brands, benefit from the economies of scale of our third-party providers, maintain a highly variable cost structure, minimal capital expenditures and low working capital needs

1

and use the product development and manufacturing expertise of our suppliers to meet customer and end consumer demand. Our operating model, however, requires us to depend on third-party providers for manufacturing and logistics services. In the event that our third-party providers are unable or unwilling to supply or ship our products, our inventory levels, sales, gross margins and, ultimately, our results of operations, could be adversely affected.

        Diversified Portfolio of Leading Brands.    We own and market brands that have high levels of consumer awareness and widespread retail distribution. On average, our major brands were established over 45 years ago and we believe they are widely recognized by consumers. The industry categories in which we sell our products, however, are highly competitive. These markets include numerous national manufacturers, distributors, marketers and retailers, many of which have greater resources than we do and may be able to spend more aggressively on advertising and marketing, which may have an adverse effect on our competitive position.

        Stable and Attractive Industry Segments.    We compete in the over-the-counter drug, household cleaning and personal care categories. We target brands in categories that generally receive less focus from large consumer products and pharmaceutical companies and we are highly responsive to product innovations, which facilitates category expansion. Although we believe these attributes enable us to maintain close and lasting relationships with our top customers, we depend on these large customers for a significant portion of our gross sales. For the year ended March 31, 2004, on a pro forma basis, excluding the Vetco acquisition, our top five and ten customers accounted for approximately 38.6% and 49.7% of our gross sales, respectively, and Wal-Mart itself accounted for approximately 22.5% of our gross sales. The loss of one or more of our top customers or any significant decrease in sales to these customers could have a material adverse effect on our business, financial condition and results of operation.

        Experienced Senior Management Team with Proven Ability to Acquire, Integrate and Grow Brands.    Led by chief executive officer, Peter Mann, we have an experienced senior management team averaging over 30 years of experience in marketing, sales, customer service and product development. Peter Mann and his management team have successfully managed the Medtech and Spic and Span businesses and have been responsible for integrating numerous brands into the portfolio. Unlike many large consumer products companies, which we believe often entrust their smaller brands to rotating junior employees, our experienced managers are dedicated to specific brands and remain with those brands as they grow and evolve.

Business Strategy

        Our business strategy is to focus on our marketing, sales, customer service and product development efforts in order to drive growth and to continue to enhance the value associated with our brands. We plan to execute this strategy through:

•

Maintaining and Growing the Significant Value Associated with Our Brands.  We will continue to reinvest in advertising and promotion to continue to drive the value of our brands. We will continue to support our brands through focused and creative marketing strategies. Our marketing programs include advertising, targeted couponing programs and in-store advertising. Given the high levels of competition in our industry, however, our marketing efforts may not result in increased sales and profitability.



•

Creating Successful Line Extensions and Innovative New Products.  We believe that our brands' high consumer awareness and our focus on marketing and product development, coupled with the difficulty of creating new competing brands, provides a unique opportunity for us to extend our brands through line extensions. Although line extensions and the introduction of new

2

products is critical to our continued growth, our efforts in this regard have in the past resulted in reduced sales of existing products.

•

Increasing Distribution in High-Growth Channels.  Our broad and diversified distribution capabilities enable us to participate in changing consumer retail trends. Recently, we have expanded our sales in dollar and club stores by introducing customized packaging and sizes of our brand name products for these higher growth channels. In the event dollar and club store sales growth is adversely affected by reduced consumer purchases, our focus on dollar and club store sales could hurt our sales and profitability.



•

Pursue Strategic Acquisitions.  We intend to pursue strategic add-on acquisitions that enhance our product portfolio. Our outsourced manufacturing business model allows us to add new brands that we believe can be easily integrated into our business while providing opportunities to realize significant cost savings. Our operating results could be adversely affected in the event we do not realize all of the anticipated operating synergies and cost savings from any future acquisitions. We intend to pursue highly complementary market leading brands that further diversify our category, customer and channel focus.

The Acquisitions

The Medtech Acquisition

        Our company was formed by GTCR Golder Rauner II, LLC, or GTCR, a Chicago-based private equity firm, to acquire Medtech Holdings, Inc., The Denorex Company and The Spic and Span Company. These acquisitions were completed in February and March 2004. After the acquisitions, Medtech, Denorex and Spic and Span continued to be managed by the same executive team, led by our chief executive officer, Peter Mann, that managed these businesses prior to the acquisition. In this prospectus, we refer to the acquisitions of Medtech, Denorex and Spic and Span collectively as the "Medtech acquisition." We acquired the following major brands in the Medtech acquisition: Compound W, New Skin, Spic and Span, Cutex and Denorex.

The Bonita Bay Acquisition

        In April 2004, we acquired Bonita Bay Holdings, Inc. Bonita Bay was the parent holding company of Prestige Brands International, Inc. and conducted its business under the "Prestige" name. After we completed this acquisition, we renamed our top-tier holding company Prestige International Holdings, LLC and began to conduct our business under the "Prestige" name. We acquired the following major brands in connection with this acquisition: Chloraseptic, Comet, Clear Eyes and Murine.

        In order to finance the Bonita Bay acquisition, repay existing indebtedness, including debt incurred in connection with the Medtech acquisition, and pay related fees and expenses, we (i) entered into a new $505.0 million senior secured credit facility, which we refer to as the "senior credit facility,"; (ii) issued the outstanding notes; and (iii) received a $58.5 million capital contribution from GTCR, its affiliates and co-investors and management. The financing transactions described above, along with the Bonita Bay acquisition, are referred to in this prospectus collectively as the "Bonita Bay acquisition."

Recent Developments

The Vetco Acquisition

        On October 6, 2004, we acquired the rights to the Little Remedies® umbrella brand through our purchase of Vetco, Inc. Vetco is engaged in the development, distribution and marketing of pediatric over-the-counter healthcare products, primarily marketed under the Little Remedies brand name. Vetco's products include Little Noses® nasal products, Little Tummys® digestive health products, Little Colds® cough/cold remedies and Little Remedies New Parents Survival Kits. The Little Remedies

3

products deliver safe, gentle and effective relief of common childhood ailments without unnecessary additives such as saccharin, alcohol, artificial flavors, coloring dyes or harmful preservatives. Vetco distributes its products to drug and food stores, mass merchandisers and specialty retailers throughout the United States. Under our purchase agreement, we acquired all of Vetco's outstanding capital stock for approximately $49 million, subject to decrease based on Vetco's outstanding working capital as of the closing date. We financed this acquisition with approximately $30 million of borrowings under our senior credit facility and $19 million of cash on hand.

Corporate Structure

        The following chart illustrates our organizational structure and also identifies the major brands owned by our subsidiaries.

        In this prospectus, unless the context requires otherwise, the terms:

•

"We," "us," "our," the "Company" and "Prestige Holdings" refers to Prestige International Holdings, LLC, together with its consolidated subsidiaries, unless the context otherwise requires; and



•

"Prestige International" refers to Prestige Brands International, LLC, our intermediate holding company and the parent of Prestige Brands, Inc., the issuer of the notes.

4

Common Stock Offering

        On November 12, 2004, Prestige Brands Holdings, Inc., which we refer to as "new parent," a newly created entity formed by affiliates of GTCR, filed an amendment to its registration statement initially filed on July 28, 2004, with the SEC. Pursuant to the amended offering terms, new parent proposes an initial public offering of its common stock in lieu of an initial public offering of income deposit securities, as contemplated by its initial registration statement.

        Prior to the completion of the common stock offering, we expect that GTCR and its co-investors, including management, will exchange with new parent all their common units of Prestige Holdings for a proportionate number of shares of new parent common stock. Immediately following this exchange, new parent will become our ultimate parent. We refer to this exchange as the "reorganization."

        New parent intends to use a portion of the net proceeds of the common stock offering to:

•

repay a portion of the borrowings under the senior credit facility;



•

redeem up to 40% of the notes; and



•

purchase all of Prestige Holdings' senior preferred units and class B preferred units.

        At this time, we are unable to determine when the reorganization and common stock offering will occur, if at all. For more information on the common stock offering, see new parent's registration statement on Form S-1 which is on file with the SEC.

5

Summary of the Exchange Offer

6

7

8

Summary of Terms of the Exchange Notes

        The form and terms of the exchange notes are the same as the form and terms of the outstanding notes, except that the exchange notes will be registered under the Securities Act. As a result, the exchange notes will not bear legends restricting their transfer and will not contain the registration rights and liquidated damage provisions contained in the outstanding notes. The exchange notes represent the same debt as the outstanding notes. Both the outstanding notes and the exchange notes are governed by the same indenture.

9

10

Risk Factors

        You should refer to the section entitled "Risk Factors" elsewhere in this prospectus for an explanation of specified risks of participating in the exchange offer.

11

Summary Unaudited Pro Forma Financial Data

        The following table sets forth our summary unaudited pro forma combined financial data for the fiscal year ended March 31, 2004 and as of and for the six months ended September 30, 2004.

        The summary unaudited pro forma income statement and other financial data for the fiscal year ended March 31, 2004 and the six months ended September 30, 2004 have been prepared to illustrate the effects of the Medtech acquisition, the Bonita Bay acquisition and the Vetco acquisition as if they had occurred on April 1, 2003. Bonita Bay, Spic and Span and Vetco historically utilized a December 31 fiscal year. For purposes of the year ended March 31, 2004 data presented herein, the historical December 31, 2003 period was used for these businesses. The summary unaudited pro forma balance sheet as of September 30, 2004 gives effect to the Vetco acquisition as if it had occurred on that date.

        The summary unaudited pro forma financial data and accompanying notes are provided for informational purposes only and are not necessarily indicative of the operating results that would have occurred had the Medtech acquisition, the Bonita Bay acquisition and the Vetco acquisition been consummated on the dates indicated above, nor are they necessarily indicative of our future results of operations.

        Management believes that the summary unaudited pro forma financial data is a meaningful presentation because the issuer's ability to satisfy debt and other obligations is dependent upon cash flow from the businesses acquired in the Medtech, Bonita Bay and Vetco acquisitions.

        The following information is qualified by reference to and should be read in conjunction with "Capitalization," "Unaudited Pro Forma Combined Financial Data," "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and notes thereto included elsewhere in this prospectus.

12

(1)

"EBITDA" represents net income before interest expense, income taxes and depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by generally accepted accounting principles, and our calculation thereof may not be comparable to that reported by other companies. We present EBITDA because we understand that it is used by some investors and lenders to determine a company's historical ability to service and/or incur indebtedness and to fund ongoing capital expenditures. This belief is based in part on our negotiations with our lenders, who have indicated that the amount of indebtedness we will be permitted to incur will be based, in part, on our EBITDA. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•

EBITDA does not reflect our capital expenditures or future requirements for capital expenditures or contractual commitments;



•

EBITDA does not reflect changes in, or cash requirements for, our working capital needs;



•

EBITDA does not reflect the significant interest expense, or the cash requirement necessary to service interest or principal payments, on our debts;



•

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and



•

Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, you should not consider EBITDA as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. See the Prestige International, Bonita Bay and Spic and Span statements of cash flows set forth in the financial statements included elsewhere in this prospectus. The following is a reconciliation of pro forma cash flows from operations to pro forma EBITDA.

13

(2)

In connection with the Medtech acquisition, the Bonita Bay acquisition and the Vetco acquisition, we identified significant historical expenses which management believes will not be incurred on a going forward basis. In addition, we identified cash cost reductions that we have realized as a result of our integration plans with respect to the Medtech acquisition, the Bonita Bay acquisition and the Vetco acquisition and that have resulted in a positive annualized effect on pro forma EBITDA when compared to recent operating history of the separate companies. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—General—Acquisition-Related Synergies." In addition, covenants in our senior credit facility and indenture provide for adjustments to EBITDA when calculating important ratios. Permitted adjustments include, but are not limited to, the purchase accounting impact of acquisitions, the exclusion of certain transaction costs, cost savings associated with acquisitions and other non-cash gains and losses. While we believe the expenses set forth below will not recur in future periods after implementation of such cost reduction measures, we may incur other expenses similar to the expenses described below in future periods. Therefore, the following items should not be viewed as indicative of future results.

(a)

In connection with the Medtech acquisition, Prestige acquisition and Vetco acquisition and Bonita Bay's acquisition of Clear eyes and Murine, inventory was written up to its estimated selling price, less cost of disposal and a reasonable profit allowance for the selling effort. These adjustments represent the amount by which the cost of goods sold recorded exceeded the original inventory costs.



(b)

Reflects the loss incurred, prior to the acquisition of Spic and Span, in connection with the forgiveness of a loan to Spic and Span.



(c)

In November 2003, we sold the exclusive right to use the Spic and Span brand name in Italy and recognized a one-time gain of $2.9 million.

14

(d)

During fiscal 2003, Bonita Bay completed its transition of the exclusive rights to sell Clear eyes and Murine products from Abbott Laboratories in the following countries:



•

Australia (Sept. 2003);



•

Canada (Sept. 2003);



•

Hong Kong (July 2003);



•

Venezuela (Nov. 2003);



•

United Kingdom (Oct. 2003);



•

Ireland (Dec. 2003); and



•

New Zealand (Sept. 2003).

Prior to this transition in 2003, under the terms of the original purchase agreement with Abbott Laboratories, we received a percentage of sales on the Clear eyes and Murine products in these international markets with an option to transition such rights in the future once we met applicable regulatory requirements. We continue to operate under this royalty arrangement for smaller countries for which the international rights have not yet been transitioned. This adjustment reflects the approximate net impact on the statement of operations had these seven countries' rights been fully transitioned on January 1, 2003.

(e)

Represents costs charged to us during the transition services period with Abbott Laboratories that were duplicative in nature. The domestic transition services agreement extended through March 2003 and the international transition services agreement extended through December 2003. During this same time period, we had hired internal resources to perform the same services.



(f)

We have undertaken a detailed review of the combined operations of Medtech, Denorex, Spic and Span, Bonita Bay and Vetco and identified areas of overlap and cost savings. Set forth below is a summary of these savings:



(i)

We have eliminated approximately 14 full-time equivalent positions as part of a permanent headcount reduction of our employees in connection with the Medtech acquisition and the Prestige acquisition. In addition, we have a formal plan in place to eliminate approximately 13 full-time equivalent positions at Vetco upon integrating Vetco's operations.



(ii)

We have contracted with one logistics services provider, which provides warehouse services such as receiving, storage, processing, tracking and shipping, that has allowed us to consolidate from the three logistics services providers, including three warehouses, that historically served the companies. This adjustment represents the cost savings of placing all of our warehouse and distribution needs with this service provider.



(iii)

We have contracted with one advertising agency, one brokerage structure and one media buying group that are handling the collective sales and marketing needs for the combined companies following the Medtech acquisition and the Bonita Bay acquisition. These service providers will also handle the Vetco operations once integration is complete. Additionally, we have eliminated certain corporate overhead costs, principally legal, banking and insurance, that upon completion of the Medtech acquisition and the Bonita Bay acquisition were no longer required for each of the separate companies. This adjustment represents the net impact of placing all of our advertising and media buying needs under Medtech's existing contracts, moving the existing brokerage arrangements for all of our other subsidiaries under Medtech's brokerage contract or in-house and the elimination of certain historical overhead costs.

15

(iv)

We have eliminated one leased location, and identified one additional leased location that will be eliminated, in connection with the Medtech acquisition and the Bonita Bay acquisition. This amount represents the direct and indirect costs associated with maintaining these two redundant facilities.



(g)

The cost savings set forth above specifically exclude any one-time costs expected in order to achieve the anticipated cost savings estimated at $2.4 million.

(3)

Cash interest expense represents total interest expense less amortization of deferred financing fees.

(4)

Capital expenditures for the year ended March 31, 2004 represents the sum of Prestige International of $108, Bonita Bay of $370, Spic and Span of $59 and Vetco of $75. Capital expenditures for the six months ended September 30, 2004 represents the sum of Prestige International of $143 and Vetco of $0.

(5)

Cash taxes paid for the year ended March 31, 2004 represents the sum of Prestige International of $128, Bonita Bay of $5,167, Spic and Span of $10 and Vetco of $22. Cash taxes paid for the six months ended September 30, 2004 represents the sum of Prestige International of $388 and Vetco of $0.

(6)

For the purposes of determining the ratio of earnings to fixed charges, earnings are defined as earnings before income taxes and extraordinary items, plus fixed charges. Fixed charges consist of interest expense, including amortization of debt issuance costs and a portion of operating lease rental expense deemed to be representative of the interest factor.

16

Summary Historical Financial Data of Prestige International and Predecessor

        Summary historical financial data for the fiscal years ended March 31, 2001, 2002, 2003, for the period from April 1, 2003 to February 5, 2004 and for the six months ended September 30, 2003 is referred to as the "predecessor" information. On February 6, 2004, an indirect subsidiary of Prestige International acquired Medtech Holdings, Inc. and the Denorex Company, which at the time were both under common control and management, in a transaction accounted for using the purchase method. On April 6, 2004, an indirect subsidiary of Prestige International acquired Bonita Bay Holdings, Inc. in a transaction accounted for using the purchase method. The summary financial data after such dates includes the financial statement impact of recording fair value adjustments arising from such acquisitions. The income statement and other financial data of Prestige International and its predecessor for the fiscal years ended March 31, 2002 and 2003, the period from April 1, 2003 to February 5, 2004 and the period from February 6, 2004 to March 31, 2004 and the balance sheet data at March 31, 2003 and 2004 are derived from audited consolidated financial statements included elsewhere in this prospectus. The income statement and other financial data of Prestige International and its predecessor for the six months ended September 30, 2003 and 2004 and the balance sheet data at September 30, 2003 and 2004 are derived from unaudited consolidated financial statements included elsewhere in this prospectus. The income statement and other financial data for predecessor for the fiscal year ended March 31, 2001 are derived from audited consolidated financial statements not included in this prospectus.

        The summary historical financial data set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with the discussion under the headings "Selected Financial Data—Prestige International and Predecessor" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical combined consolidated financial statements and accompanying notes included elsewhere in this prospectus.

17

18

(1)

For the period from February 6, 2004 to March 31, 2004 and the six months ended September 30, 2004, cost of sales includes $1,805 and $5,249, respectively, of charges related to the step-up of inventory.

(2)

"EBITDA" represents net income (loss) before loss (income) from discontinued operations, cumulative effect of change in accounting principle, interest expense, income taxes and depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by generally accepted accounting principles, and our calculation thereof may not be comparable to that reported by other companies. We present EBITDA because we understand that it is used by some investors and lenders to determine a company's historical ability to service and/or incur indebtedness and to fund ongoing capital expenditures. This belief is based, in part, on our negotiations with our lenders, who have indicated that the amount of indebtedness we will be permitted to incur will be based, in part, on our EBITDA. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•

EBITDA does not reflect our capital expenditures, or future requirements for capital expenditures or contractual commitments;



•

EBITDA does not reflect changes in, or cash requirements for, our working capital needs;



•

EBITDA does not reflect the significant interest expense, or the cash requirement necessary to service interest or principal payments, on our debts;



•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and



•

other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

19

Because of these limitations, you should not consider EBITDA as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. See the Combined Statements of Cash Flow of predecessor and Prestige International set forth in the financial statements included elsewhere herein. The following is a reconciliation of cash flows from operating activities to EBITDA:

(3)

For the purposes of determining the ratio of earnings to fixed charges, earnings are defined as earnings before income taxes and extraordinary items, plus fixed charges. Fixed charges consist of interest expense, including amortization of debt issuance costs and a portion of operating lease rental expense deemed to be representative of the interest factor.

20

Summary Historical Financial Data of Bonita Bay Holdings, Inc.

        The following table sets forth summary historical financial data of Bonita Bay Holdings, Inc., the parent of Prestige Brands International, Inc., which was acquired in the Bonita Bay acquisition. We have derived the summary historical consolidated financial data as of and for the fiscal years ended December 31, 2001, 2002 and 2003 from the audited financial statements of Bonita Bay which are included elsewhere in this prospectus. We have derived the selected historical financial data for the three month periods ended March 31, 2003 and 2004 from the unaudited financial statements and the related notes of Bonita Bay included elsewhere in this prospectus. In the opinion of management, the unaudited financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of financial position and operating results. The results of operations for the three month period ended March 31, 2004 are not necessarily indicative of the operating results to be expected for the full year. The summary historical financial data set forth below should be read in conjunction with the discussion under the headings "Selected Financial Data—Bonita Bay Holdings, Inc.," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical consolidated financial statements of Bonita Bay Holdings, Inc. and accompanying notes included elsewhere in this prospectus.