Castle Brands Announces Fiscal 2011 Second Quarter Results

Castle Brands Inc. (NYSE Amex: ROX), a developer and international marketer of premium and super-premium branded spirits and wine, today reported financial results for the three and six months ended September 30, 2010.

In the fiscal 2011 second quarter, the Company had net sales of $8.2 million, a decrease from net sales of $8.7 million in the prior year period. The Company's focus on its more profitable brands resulted in lower sales, but higher margins, in the fiscal 2011 second quarter as compared to the comparable prior-year period. The Company had a net loss attributable to common shareholders of $1.6 million, or $(0.02) per basic and diluted share, in the fiscal 2011 second quarter, compared to a net loss attributable to common shareholders of $0.5 million or $(0.00) per basic and diluted share, in the comparable fiscal 2010 period. The fiscal 2011 second quarter results included a foreign exchange loss of $0.1 million due to a weaker U.S. dollar as compared to a gain of $0.5 million in the prior-year period.

U.S. case sales were 65,825 nine liter cases in the fiscal 2011 second quarter as compared to 67,351 cases in the prior-year period. International case sales were 12,628 cases in the fiscal 2011 second quarter as compared to 18,944 cases in the prior-year period. Total case sales for the fiscal 2011 second quarter were 78,453 cases as compared to 86,295 cases in the prior-year period. Second quarter 2011 case sales included sales of Gosling's Rum Swizzle, Travis Hasse's Pie Liqueurs and A. de Fussigny cognacs, all of which were launched during the quarter.

Net sales for the six months ended September 30, 2010 were $14.3 million compared to net sales of $14.6 million in the comparable prior-year period. The Company had a net loss attributable to common shareholders of $3.4 million, or $(0.03) per basic and diluted share, in the six months ended September 30, 2010, compared to a net loss attributable to common shareholders of $1.0 million, or $(0.01) per basic and diluted share, in the comparable fiscal 2010 period. Results for the six months ended September 30, 2010 included a $0.05 million foreign exchange loss as compared to a foreign exchange gain of $1.6 million in the prior-year period. The six months ended September 30, 2009 also included a $0.3 million gain on the exchange of its remaining outstanding 3% note payable for common stock and a $0.5 million gain on the reversal of a reserve for obsolete inventory. Excluding the effects of the reversal of the reserve for obsolete inventory, both gross profit and loss from operations improved for the six months ended September 30, 2010 as compared to prior-year period.

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