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Castle Brands Announces Fourth Quarter And Fiscal 2010 Results

As of March 31, 2010, shareholders’ equity was $22.7 million.

Fourth Quarter 2010

In the fiscal 2010 fourth quarter, the Company had net sales of $6.4 million, an increase of 9.4% from net sales of $5.9 million in the prior year period. The Company had a net loss of $1.6 million, or $(0.01) per basic and diluted share, in the fiscal 2009 fourth quarter, compared to a net loss of $9.0 million, or $(0.11) per basic and diluted share, in the comparable 2009 period.

The Company's annual goodwill and intangible assets impairment testing resulted in no impairment charge in the fourth quarter of fiscal 2010 as compared to an impairment charge of $4.8 million in the fourth fiscal quarter of 2009. Fourth quarter 2009 results included a foreign exchange loss of $86,719 as compared to a loss of $1.3 million in fourth quarter 2009.

Fiscal 2010 Developments

U.S. Sales

Despite a volatile U.S. retail environment, 2010 U.S. case sales increased 6% reflecting the growth of Gosling’s rums and Jefferson's bourbons, among other brands. Boru vodka case sales decreased 8%, but price related spending decreased significantly, making the brand profitable.

International Sales

Performance in international markets reflected a change in strategy whereby unprofitable brands and markets were de-emphasized and distribution relationships were re-crafted to achieve positive returns. Gosling’s rums and Clontarf Irish Whiskey continue as the top priority brands for international development and the Company entered into a new distribution agreement for the Nordic Region.

Other key developments include:
  • The U.S. now accounts for 76% of total case sales as the Company focused on more profitable brands and markets;
  • Selling expense decreased 29% due to continued cost containment efforts;
  • Betts & Scholl wine assets were acquired and the fine wine division was established;
  • Divestiture of Sam Houston bourbon brand was completed; and
  • Gross profit increased 25% and gross margin increased to 36%.

"We continue to execute on our strategy to build our own premium brands, support our existing agency brands, pursue new agency relationships and make brand acquisitions," said Richard J. Lampen, President and Chief Executive Officer. "We also recognize that ongoing expense discipline is an essential part of achieving our goals. Our confidence in our future vision is underscored by our June 2010 repurchase of approximately 3.8 million shares of Castle Brands common stock and our new 2.5 million share stock repurchase program."

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