Welcome to the first quarter 2009 Prestige Brands Holdings earnings call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Dean Siegel, Director of Investor Relations.

Welcome to Prestige Brands’ fiscal 2009 first quarter conference call. During this call statements may be made by management of their beliefs and expectations as to the company’s future operating results. Statements of management’s expectations of what might occur with respect to future operating results are what are known as forward-looking statements. All forward-looking statements involve risks and uncertainties which in many cases are beyond the control of the company and may cause actual results to differ materially from management’s expectations. Additional information concerning the factors that might cause actual results to differ from management’s expectations is contained in the company’s annual and quarterly reports that are filed with the US Securities and Exchange Commission. Now I would like to introduce Mark Pettie, Chairman and CEO.

In addition to Dean, with me is Pete Anderson, Prestige’s Chief Financial Officer, and also joining us is Chuck Jolly, our General Counsel. I’ll begin today’s call with an overview of our first quarter results including specifics on our work care business. Pete will then review the full financials for the quarter in more detail. I’ll follow that with highlights of our segment performance, our progress against the four strategic growth thrusts guiding our efforts, and our outlook for the balance of this fiscal year. We’ll then open the call for questions. So let’s get started with our reported total revenues for the first quarter which were $73.5 million, a 6.5% decrease from last year. As indicated in our press release this decline is attributable in large part to unsettled pricing dynamics in the cryogenic segment of the work care category which led to a 44% decline in our work care revenues. As I discussed on last quarter’s call, in March and April we significantly reduced list pricing on Wartner and Compound W Freeze Off respectively in response to actions taken by our major branded competitor. At the same time we reduced the number of applications in our Freeze Off product, also in response to a similar move by the same competitor. While the new pricing for Wartner was reflected in a timely fashion at many retailers, Freeze Off did not fully achieve reduced retails across our major customers until late July. Consequently price gaps versus our largest competitor were wider than expected throughout Q1 negatively affecting unit sales of our cryogenic products and to a lesser extent our Compound W salicylic acid products. Effective with the end of July our new prices are in place with all our major customers and we are beginning to see improved Freeze Off…

As Mark mentioned net revenues for the quarter of $73.5 million were 6.5% less than prior year net revenues. Our operating income of $21.2 million was $1.9 million or 8.2% below last year’s operating income of $23.1 million and net income of $7.8 million was $500,000 or 6.6% below last year’s net income of $8.3 million. Cost of sales for the quarter of $34.3 million was $3 million or 8% below cost of sales in the prior year. As a percent of revenue cost of goods sold declined from 47.5% last fiscal year to 46.7% in the current year. During the quarter we benefited from a positive sales mix combined with the continuing positive effects of our systematic cost reduction program and the benefits of last year’s fourth quarter pricing increases taken on certain of our brands. Our advertising and promotion expense of $7.3 million was $500,000 less than spending of $7.8 million last year. Increased advertising and promotion spending against last year’s break-through innovation products, Murine Earigate and Comet Mildew SprayGel was offset by decreased spending of the Doctor’s Night Guard and Compound W brands. Spending behind Compound W was moved from Q1 to Q2 this year to coincide with the full reflection of the Freeze Off pricing transition Mark spoke about earlier. Our G&A expense of $8 million was $400,000 greater than prior year’s expense of $7.6 million. The increase was primarily due to higher stock-based compensation expense versus the previous year’s first quarter. Our legal expenses were flat with last year’s first quarter spending. As we mentioned on our last call the litigation to defend our Doctor’s NightGuard patents and trademarks is ongoing. As a result we anticipate legal expenses to continue to exceed what we would consider to be a normal run rate until this case…

Let’s get right into our OTC business where the work care dynamics I detailed earlier were the significant drivers of our 7.5% revenue decline. To a much lesser extent the absence of medicated cough/cold SKUs in our Little Remedies line and declines in the Doctor’s NightGuard business also negatively influenced Q1 OTC results. Spending a moment on Little Remedies, you’ll certainly recall us discussing our participation last fall in an industry-wide voluntary withdrawal of pediatric cough/cold items which we officially stopped shipping last October. Due to the inherently seasonal nature of these products the vast majority of their sales historically occurred in late Q2 through Q4 with Q1 being the lightest period. Nonetheless, the absence of these products in Q1 of this fiscal year contributed a little over 1 percentage point of the overall 7.5% OTC revenue decline. It is worthy to note that absent the impacts of work care and Little Remedies cough/cold items, the balance of the OTC portfolio grew over 5%. This performance was headlined by the continued strong momentum of our Clear Eyes eye care business where sales grew 13% and consumption was up 17%. The relaunch of our allergy SKU as Clear Eyes for Itchy Eyes coupled with the introduction of 1-ounce sizes on key SKUs and the impact of our Q4 pricing action were all contributing factors to this growth. Marketing support in the form of our inaugural radio campaign was also a significant growth driver. Our Murine ear business was again a bright spot within OTC with sales up 55% and consumption over 195% behind the continued success of last year’s Earigate launch. In particular the strong consumption reflects our commitment to fully supporting Earigate as it heads into its second year in market. While we began to lap last year’s Earigate pipeline…

(Operator Instructions) Our first question comes from William Chappell - SunTrust Robinson Humphrey.

Maybe just kind of help us understand a little more color around the cryogenic side for this quarter. I know you knew the price cut going into the quarter so that shouldn’t have been a huge surprise. Did you just see no pickup in volume with the lower price point? Is it not really spurring any growth for that category? How should we look at that?

Bill I think the important takeaway is on the cryogenic products in our portfolio and in particular the Freeze Off product. The reflection of those price reductions that I spoke of didn’t occur across our major customers until late July. Essentially it took longer to get those reflected in the market place than we originally anticipated so as I mentioned earlier for the quarter it was primarily a price gap issue versus our major competitor that caused the performance we experienced. As I also mentioned at the end of July the pricing is now fully reflected at our major customers and we’re starting to see the benefits of that in improved cryogenic unit off-take going forward.

I understand that. I guess I was more just trying to focus on is it having its intending effect? Is it boosting the overall category back now that we have a lower price point or is it too early to tell?

It’s a little too early to tell because the dynamics as I mentioned up until the end of July remain unsettled relative to what we expect the new norm equilibrium to be. For the first quarter the total category was basically flat to modestly down but we’re going to have to wait and see how this plays out now that the new paradigm is effectively in place. I’ll have a better read on that certainly when we talk t o you at the end of the second quarter.

With regards to the new Allergen Block products, can you give us any color on ACV at this point, what the retail reception would be, and are the price points and margins at or above your current company average?

The price points and margins are definitely above average for our company and our OTC portfolio so that’s one of the attractive features of the product. With respect to authorizations and distributions so far, all the accounts that we expected to pick the products up have picked it up and we’re very pleased with where the distribution progress is relative to our original expectations. We clearly feel like we’re tracking our original expectations in that regard.

Because I have to ask the same question always, I assume top line if you’re looking at operating income growth this year, it can be faster than sales growth?

I wouldn’t necessarily draw that from an operating income standpoint Bill because we will be investing behind certainly the Allergen Block launch as well as continuing to invest behind year two in the other breakthrough innovations, Earigate and SprayGel. But certainly as you go down to net income and EPS you can have that expectation.

And that’ll largely be driven by lower interest expense I guess?

Delevering is clearly a big boost there.

Our next question comes from Joseph Altobello - Oppenheimer & Co. Joseph Altobello - Oppenheimer & Co.: I just wanted to follow up on the top line here. If you kind of take the first quarter actual and basically project it out, you have to do basically mid-single-digit growth for the rest of this year to get to your guidance. How do we get comfortable with that given the fact that the cryogenic price adjustment will not be lapped until early next year and so you’re obviously going to have that weighing on results for the rest of this year, you’ve got other things like you’re comping the growth in Murine, you’ve got cost in inventory management on the part of retailers, and you’re also lapping the introduction of Comet Mildew SprayGel, so you’ve got all of this working against you in the back half of the year and yet you’re still looking for an acceleration of top line growth?

Yes, your statement is totally accurate Joe. Let me take it a point at a time if I could. I think your point on the cryogenic; you need to keep in mind that Q1 was a clear aberration for us relative to how we will expect performance to be in the work care segment ongoing. Clearly we expect cryogenic revenues in total to be down in the price decline but not nearly to the extent we experienced in the first quarter as we get our pricing right versus c competition in the market place. So the drag on our first quarter performance from cryogenics certainly won’t repeat itself as we move out in the proceeding quarters. With respect to the new product launches last year while certainly we’ll be coming up on lapping the introductions and the comps will get tougher, we do expect meaningful growth from both those items on a year-over-year basis as well, and I’m talking about Earigate and SprayGel, and that’s why we’re backing them with the strong year two spending that we are. And then as you look particularly to the back half of the year we clearly have strong expectations from the Allergen Block launch as well as the new items that I mentioned that are going in to cough/cold resets from Chloraseptic and Little Remedies, all of which will have the revenue benefits accruing to us principally in the back half of this year. The other thing not to lose sight of is that we have some very strong trends on some of our base focus brands. I talked to you about Clear Eyes which is a big piece of our OTC portfolio and where we continue to enjoy double-digit growth on a year-over-year basis on that item. That one is performing quite well for us. I talked about Canada and the double-digit growth we’re enjoying there and there are other parts of our portfolio which are experiencing strong single-digit growth as well. So there are a lot of fundamental kinds of baseline momentum in addition to the growth we’re projecting out of our new products that will compensate for some of the drags that you mentioned.

The other thing to mention Joe is the first quarter that we just went through was the last quarter that we’re going to be lapping on the non-Canada international business. That’s absence the diversion. So beginning in Q2 we’re going to be apples-to-apples on the international side where that had been for the last year a pretty big drag on growth. Joseph Altobello - Oppenheimer & Co.: So 2Q revenues should be up pretty strongly then it sounds like?

I wouldn’t necessarily draw that conclusion Joe. Again remember the majority of the new product benefits are going to accrue in the back half of this year. Joseph Altobello - Oppenheimer & Co.: It’ll be up though, right?

We don’t give specific quarterly guidance as you know but as I pointed out in the monologue the back half of the year is where we really expect to see the significant portion of our revenue growth. Joseph Altobello - Oppenheimer & Co.: In terms of a statement you made Mark regarding your focus brands, you said they grew 6% in the quarter?

That is correct. Joseph Altobello - Oppenheimer & Co.: Was that sell-in or sell-through?

That is factory sales. Consumption on the majority of those brands followed very closely with the factory sell-ins. Joseph Altobello - Oppenheimer & Co.: How is that possible given that OTC was down 7?

Well remember, OTC includes work care.

Our next question comes from Analyst for Reza Vahabzdeh - Lehman Brothers.

Could you talk about trends at retail? Any more color there? Are you seeing things change at all sequentially? Just any color there would be appreciated.

Are you talking about consumption in general or for our products specifically? Industry question?

Actually both would be helpful.

In both cases for the categories in which we compete we aren’t seeing any major change in consumer behavior. Given the businesses that we are in are principally staples and by and large not premium price staples, they are businesses that consumers tends to gravitate to at least as far as these economic times have gone so far on a consistent basis. The only one where we’re seeing some change is at the household businesses where we see and have seen and continue to see some channel migration from the food channels over to the deeper discounting channels, mass merch and dollar store. When you talk about our OTC portfolio and OTCs in general, we see consumption holding up pretty well and no major changes in consumer behavior.

Could I also get an update on the M&A environment or anything you’re seeing there?

As you know, from a company standpoint we are focused on driving our organic growth which means working our existing portfolio to the tune 2% to 4% top line growth we projected for the year. That as far as we see has not in any way, shape or form discouraged people from floating deal ideas past us on a very, very regular basis despite the fact that we’re on record as saying in the short run our focus is not on M&A. And if that’s a leading indicator, I would suggest that the M&A environment despite the current credit market at least for people trying to get deals on the table is as strong as it’s ever been for deals the size that we would ordinarily look at.

Your use for free cash flow would be primarily?

Pay down debt.

Yes, pay down debt. Our covenants don’t allow us to do anything other than either use it for acquisitions or to pay down debt until our debt to EBITDA ratio goes under 3.5 and currently we’re right around 4.

And your ability to buy back bonds at this point?

We could if we wanted to but given the current credit situation, it doesn’t make any sense to do so. The 9.25 bonds that we have are certainly well-priced for our credit rating at this point.

Our next question comes from Olivia Tong - Merrill Lynch.

I just want to talk first about receptivity to price increases. Are there some categories that were tougher and some that were easier than expected?

I would say universally, and I’m going to make this comment in the context of the increases we took in the late fourth quarter of our last fiscal year, universally we’ve found the environment to be more receptive than historically. It has been to these price increases. Certainly the retailers wanted us to go through the justification for them and show them the underlying input cost pressures that were compelling us to take the increases we did take, but their appreciation for what’s really happening in the market place has been heightened considerably versus where it had been say 18 or 24 months ago. So we didn’t get the historical level of push back on the pricing in the fourth quarter that we’ve gotten previously. And I think it fundamentally gets to what’s in the public domain. Everybody understands that there are stronger underlying inflationary currents today than there were 12, 18 or 24 months ago and the retailers themselves are experiencing that as we witness increases in retail pricing on even private label products. So I think it all converges on evidence that the retailers are much more sensitive and aware of the situation today than they historically have been and that has led to a more, I certainly won’t say permissive, but a more receptive pricing environment than the norm. And I would project that to be the case certainly for the next six to perhaps nine months.

Since you guys get your manufacturing done by a third party, are you shielded in any way from the commodities’ impact or did it eventually flow through basically by 100%?

Ultimately it does. Some of the arrangements call for price resets on a quarterly basis or semi-annual basis but the reality is that ultimately there’s a direct pass-through. There’s no mark up on it but certainly whatever the commodity prices are we definitely tag.

Now we do have as I mentioned in the monologue a systematic cost reduction program that we put in place last year which is a program in many ways where we partner with our suppliers on trying to identify cost reduction opportunities. And where we do that in conjunction with a third-party manufacturer we have a participation program in terms of how we share back a portion of those savings with them. So there’s incentive on our third party suppliers to work with us on cost reduction opportunities in addition to as Pete mentioned trying to work with us to manage the commodity aspects of it.

Can you talk about some of the things that you’re doing on cost reduction, whether it’s slopping inputs or besides the obvious of getting more efficient?

I won’t get specific with you but really what we do is we look at every product on a regular basis and challenge ourselves and challenge our suppliers as well on the aspects that are principally under our control, which are product formulation and packaging costs as well as conversion costs. Our bottom line is in absolutely no way will we compromise the quality or the efficacy of our products that we deliver to our consumer but to the extent that we can control costs or reduce costs without any compromise in that key aspect, we will do so across all three of those cost elements. We also work with our third party logistics provider because we outsource distribution as well to try and find opportunities to reduce costs in the way we deliver our products to our customers. We we’re really pushing four different cost buttons as we move through each and every one of our products and look for opportunities to drive costs down.

And I want to go back to a question earlier. You’re sticking with your 2% to 4% outlook despite the fact that Q1 is coming in a little bit lower than you had anticipated, so are you expecting either Compound W to recover a fair portion of that in Q2 through Q4 or are your expectations for some brands going up?

As I mentioned, while we continue to expect the cryogenic revenues to be down on a year-over-year basis because of the price declines that were taken at the end of last fiscal year, we do not expect the performance to be as dramatically negative as it was in the first quarter. We expect the trends to correct. You take that correction and you complement it with the revenues we’re expecting to get in the second half of the year out of our new item launches and the continuing forward momentum on several of our focus brands, and that’s how you get to our comfort level with the 2% to 4% on a full-year basis.

I understand that but in order to offset what’s happened in Q1, just normalizing on Q2 through Q4 I understand that Compound W might still be down but nowhere near Q1 levels. You’ve got to expect that something is providing the offset to get you to that mid-single-digit level for the remainder of the year.

Right. And as I mentioned in particular our new products which will be pure incremental revenue relative to a year ago will be a big player in that. And again the vast majority of the revenue from those new product introductions which are either our Allergen Block products or our new cough/cold items will occur in the second half of this year. We continue to expect on a year-over-year basis strong growth from the base items that we have in our focus brand portfolio. We’re also as I mentioned although this will not contribute majorly, we are also planning mid-year price increases on less than 10% of our revenue base which will help us in the back half as well.

I know Q2 ad spend will probably be up as a percentage of sales on a year-over-year basis, but what about for the fiscal year?

From a spending standpoint, yes that will be up.

Our next question comes from Mimi Noel - Sidoti & Company. Mimi Noel - Sidoti & Company: Why was it that the new pricing and new pricing for the cryogenic line weren’t picked up until late in the first quarter where as you had anticipated it would happen earlier? What was the surprise? Why’d that happen?

We were flowing in Mimi as you’ll recall not only new pricing on Compound W Freeze Off but also new packaging because we reduced the number of applications, and in large part it was the timing of the flow-in of those new items to retail. The planning and reset timing of some of our key customers and the inventory levels of the old product that had to be worked through out there that slowed down the progression of the new items and the intended new pricing to retail versus our original expectations. As I mentioned also, in the case of Wartner because we weren’t doing anything with the packaging it was a clear cutover and that’s why for many of our major retailers the Wartner pricing that we affected went in much closer to our original schedule. Freeze Off was a more complex situation. Mimi Noel - Sidoti & Company: Because of the new packaging?

Right. Mimi Noel - Sidoti & Company: And I’m going to ask a question that I think is now being asked for the third time, and maybe I’ll just strip it down a little bit. First quarter was a disappointment. You had a surprise with the packaging. It didn’t happen as quickly as you thought. So you had that detriment happen but it was really a missed revenue opportunity and you’re not necessarily just shifting into the second quarter. So what is the offset now that enables you, what is the positive surprise to maintain full-year revenue guidance unless you want to say that instead of hitting the high end of the 2% to 4% you’ll hit the low end?

I’m not going to talk to where things are going in between the 2% to 4% but we are pleased with the uptake on our new products. In fact in a couple of instances they are outperforming our original expectations and the other piece although it’s not going to be a major contributor as I mentioned, the other piece which is relative new news to our original expectations for the year is the mid-year pricing on that less than 10% of our revenue base. That will be a contributing factor as well. And we are seeing frankly stronger-than-expected momentum on some of our focus brands. So it’s a combination of those factors that give us comfort. Mimi Noel - Sidoti & Company: Thos products that are outperforming expectations, that first point that you mentioned, can you name them?

I won’t go into a lot of detail there but let me just say that they are primarily housed in that group of brands that we consider to be our focus brands, the ones that we have determined we’re going to drive harder as part of our new strategy. So we’re seeing some early payoffs in certain of those brands from the redirection of resources to those parts of our portfolio. Mimi Noel - Sidoti & Company: Along the lines of guidance, I’m just wondering at this point why you can’t make a more explicit commitment to EPS growth at this point in the year, especially now that you say that it’s largely going to be driven by a delevered balance sheet and that’s something on which your visibility should be pretty good, and yet you’re still staying pretty vague on EPS? Why is that?

It’s just something that from the standpoint of corporate policy we prefer to do and as you say the aspects of it, particularly the delevering aspects of it, are pretty straight forward. We’re going to stand pat with the approach we’re taking for the moment. Mimi Noel - Sidoti & Company: Is it subject to change down the road perhaps?

I’ll say perhaps. You never say never. But at this point I wouldn’t put any kind of a high expectation on that. Mimi Noel - Sidoti & Company: The increase in the stock-based compensation, is that due to increased staffing?

No. It is strictly due to last year when we initiated a current plan which is a three-year plan. What’s happening is this year we’re getting year two of three years worth of expense so you can expect that as we go through this year we’re going to continue to see a higher stock-based comp expense. And then next year is going to be the third year of the plan so that’ll be another step up. And after that we’ll be at a steady state. The size of the staff that gets stock-based comp is relatively the same. Mimi Noel - Sidoti & Company: And this compensation is not necessarily performance based it sounds like?

It is performance based. The large preponderance of the expense is restricted stock that is absolutely based on hitting both revenue as well as profit objectives. Mimi Noel - Sidoti & Company: Well you did lower guidance in fiscal 2008 and you pre-announced in the June quarter. So what performance would justify the increase in the compensation?

It is a matrix based on deviation around the budgeted revenue as well as EPS. We lowered our first quarter but as Mark indicated we certainly are reconfirming that for this year we’re going to maintain it.

Our next question comes from Jon Anderson - William Blair & Company, LLC. Jon Anderson - William Blair & Company, LLC: You mentioned this mid-year price increase on about 10% of the business based on volume. Any other color on that in terms of the level of the price increase?

I think it’s roughly similar to the level of the increases we took in Q4 which is around 5%. Jon Anderson - William Blair & Company, LLC: International diversion, which to your point earlier Mark, has been a drag during previous quarters. It sounds like you lapped that going forward. Is there a way to quantify what that drag has been for the past several quarters?

I don’t think Jon we want to get that specific other than to say it’s been significant. Jon Anderson - William Blair & Company, LLC: And beginning with Q2 that’s largely behind you at this point?

Yes. We’ll phase out of it in Q2 and it should be thoroughly behind us as we head into the back half. Jon Anderson - William Blair & Company, LLC: I was wondering also if you could talk a little bit about the progress that you’ve made and expect to make with the shift to the direct selling model and when you think that will begin to impact the quality and amount of shelf space for your product at retail?

You’ll probably recall that we’re talking about shifting a reasonable portion of our revenue from indirect to direct selling, roughly 30% of it, and it involves not a major headcount addition. We’re talking about three to four folks, one of which we’ve already brought on board, so we’re making steady progress toward that ultimate transition. From a timing standpoint as I mentioned earlier, my intent is to do it right rather than do it necessarily fast although I would certainly hope to accomplish this in the not-too-distant future. When that is fully completed, we’ll start to receive the benefits of that and in terms of the opportunities I mentioned earlier, better to rely on traits than faster speed to shelf on new items, just general closer communication with our customers on new product ideas, etc. We’re making steady progress on that and as I mentioned we’re also pleased with the quality of the folks we’re looking at to round out the balance of these positions. But we’re a ways away from completion at this point. Jon Anderson - William Blair & Company, LLC: Could you comment briefly on your inventory levels at retail versus the year ago period and are you comfortable with levels currently where they sit?

By and large we’re comfortable with levels. In particular we’re pleased with the way we seem to be coming into the new fiscal on Chloraseptic for the reasons I mentioned in the monologue. The retailers’ approach to inventory management has certainly been a benefit to both them and we think to us so ultimately to the entire supply chain on that key business going forward. The one that I mentioned earlier and that continues to have a bit of an overhang for us is Murine Earigate. But we’re experiencing as I detailed in the call very strong consumption behind the resumption of our advertising on that so we’re looking to get ourselves back to normalized levels of retail inventory on the Earigate products in the not-too-distant future.

There are no further questions at this time.

Thank you all for joining us today. We appreciate your time and attention, and we look forward to talking with you at the end of our second quarter.