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Central Garden & Pet Company Announces Fiscal 2012 Second Quarter Results

Net sales for the Pet Products segment decreased 1 percent, or $2.9 million, from the same period a year ago to $222.5 million, due primarily to a decline in wild bird feed sales. Delays in shipments to customers also impacted revenues during the quarter. The Pet Products segment’s branded product sales were $179.8 million and sales of other manufacturers’ products were $42.7 million. The Pet Product segment’s gross and operating margins declined from a year ago, in part as a result of short-term operational issues associated with the transformation. The Pet Products segment’s operating income was $21.0 million compared to operating income of $23.4 million in the prior-year period.

For the six months ending March 24, 2012, the Company reported net sales of $769.0 million, little changed from $767.4 million in the comparable 2011 period. Branded products sales equaled $638.0 million, down 2 percent over the comparable 2011 period. Sales of other manufacturers' products increased 9 percent to $131.0 million. Operating income for the period was $33.9 million compared to $53.1 million in the prior year. Net income for the six months ended March 24, 2012 was $8.5 million compared to $22.2 million in the comparable 2011 period. Earnings per fully diluted share were $0.18 compared to $0.37 per fully diluted share in the year ago period.

At March 24, 2012, the Company’s cash and short-term investments balance was $28.1 million. Net interest expense was $10.4 million for the quarter compared to $9.3 million in the prior-year period. Depreciation and amortization expense was $7.6 million in the second quarter of 2012, compared with $7.2 million in the prior-year period. The Company’s effective tax rate for the second quarter of 2012 was 37 percent, compared with 36 percent in the prior-year period.

On February 8, 2012, the Company issued an additional $50 million aggregate principal amount of its 2018 8.25% senior subordinated notes. The Company used the proceeds from the offering to pay a portion of the outstanding balance under its Credit Facility. Total debt at March 24, 2012 was $566.9 million compared to $517.2 million at March 25, 2011. The quarter-ending total leverage ratio, as defined in the Company’s senior credit facility, at its seasonally high point, was 5.5x. During the second quarter of 2012, the Company did not repurchase any of its common stock outstanding under its Board approved share repurchase program.

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