EX-99.1 2 form8k72406-ex99.txt EXHIBIT 99.1 PETMED EXPRESS D/B/A 1-800-PETMEDS ANNOUNCES FIRST QUARTER FINANCIAL RESULTS - NET INCOME INCREASES 34% TO RECORD $0.20 EPS Pompano Beach, Florida, July 24, 2006 - PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended June 30, 2006. Net income was $4.8 million, or $0.20 diluted per share, for the quarter ended June 30, 2006, compared to net income of $3.5 million, or $0.15 diluted per share, for the quarter ended June 30, 2005, an increase to net income of 34%. Net sales for the quarter ended June 30, 2006 were $50.7 million, compared to $43.6 million for the quarter ended June 30, 2005, an increase of 16%. Approximately 59% of all sales were placed on the Company's website for the first fiscal quarter, compared to 54% for the same quarter in the prior year. Menderes Akdag, CEO and President, commented: "We are pleased to report that our retail reorder sales increased by 32%, from $25.8 million to $33.9 million for the quarters ended June 30, 2005 and 2006, respectively. We will continue to focus on reorder sales in fiscal 2007 by initiating more relevant personalized communication and health education content to build value for our customers and assist them in choosing the right products for their pets. Earlier in the year we made a strategic business decision to focus more on retail customers, and to limit wholesale sales. Our retail sales, excluding wholesale sales, increased by 19%, compared to an increase of 21% for the same quarter in the prior year. We are also pleased to report that net cash provided by operating activities increased by $1.8 million, from $8.0 million for the quarter ended June 30, 2005 to $9.8 million for the quarter ended June 30, 2006." This morning at 8:30 A.M. Eastern Time, Mr. Akdag will host a conference call to review the quarter's financial results. To access the call which is open to the public, dial (888) 455-1758 (toll free) or (312) 470-7365. Callers will be required to supply PETMEDS as the passcode. For those unable to participate in the live event, the call will be available for replay from 10 A.M. on July 24, 2006 until August 8, 2006 at 11:59 P.M. To access the replay, call (866) 419-5472 (toll free) or (203) 369- 0770, and enter passcode 5500. Founded in 1996, PetMed Express is America's largest pet pharmacy, delivering prescription and non-prescription pet medications and other health products for dogs, cats and horses at competitive prices direct to the consumer through its 1-800- PetMeds toll free number and on the Internet through its website at www.1800petmeds.com. -------------------- This press release may contain "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission, that involve a number of risks and uncertainties, including the Company's ability to meet the objectives included in its business plan. Important factors that could cause results to differ materially from those indicated by such "forward-looking" statements are set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations in the PetMed Express Annual Report on Form 10-K for the year ended March 31, 2006. The Company's future results may also be impacted by other risk factors listed from time to time in its SEC filings, including, but not limited to, the Company's Form 10-Q and its Annual Report on Form 10-K. For investment relations contact PetMed Express, Inc., Bruce S. Rosenbloom, CFO, 954-979-5995. ### 99.1 page 1 - 4 PETMED EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, March 31, 2006 2006 ------------ ------------ (UNAUDITED) ASSETS ------ Current assets: Cash and cash equivalents $ 33,122,948 $ 23,216,907 Accounts receivable, less allowance for doubtful accounts of $28,000 and $23,000, respectively 1,385,615 1,155,781 Inventories - finished goods 13,738,142 14,997,675 Prepaid expenses and other current assets 689,589 583,038 ------------ ------------ Total current assets 48,936,294 39,953,401 Property and equipment, net 1,565,265 1,497,589 Deferred income taxes 828,198 794,002 Intangible asset 365,000 365,000 Other assets 14,167 14,167 ------------ ------------ Total assets $ 51,708,924 $ 42,624,159 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 4,931,812 $ 3,052,953 Income taxes payable 2,615,540 958,318 Accrued expenses and other current liabilities 1,167,061 973,359 ------------ ------------ Total liabilities 8,714,413 4,984,630 ------------ ------------ Commitments and contingencies Shareholders' equity: Preferred stock, $.001 par value, 5,000,000 shares authorized; 2,500 convertible shares issued and outstanding with a liquidation preference of $4 per share 8,898 8,898 Common stock, $.001 par value, 40,000,000 shares authorized; 24,043,208 and 23,967,390 shares issued and outstanding, respectively 24,043 23,967 Additional paid-in capital 14,037,702 13,433,054 Retained earnings 28,923,868 24,173,610 ------------ ------------ Total shareholders' equity 42,994,511 37,639,529 ------------ ------------ Total liabilities and shareholders' equity $ 51,708,924 $ 42,624,159 ============ ============

99.1 page 2 - 4 PETMED EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended June 30, 2006 2005 ------------ ------------ Sales $ 50,673,353 $ 43,631,758 Cost of sales 30,549,028 26,773,172 ------------ ------------ Gross profit 20,124,325 16,858,586 ------------ ------------ Operating expenses: General and administrative 4,448,622 3,852,894 Advertising 8,328,718 7,604,303 Depreciation and amortization 135,301 127,545 ------------ ------------ Total operating expenses 12,912,641 11,584,742 ------------ ------------ Income from operations 7,211,684 5,273,844 ------------ ------------ Other income (expense): Loss on disposal of property and equipment (1,250) - Interest income 251,167 99,437 Other, net 100,402 40,287 ------------ ------------ Total other income (expense) 350,319 139,724 ------------ ------------ Income before provision for income taxes 7,562,003 5,413,568 Provision for income taxes 2,811,745 1,871,982 ------------ ------------ Net income $ 4,750,258 $ 3,541,586 ============ ============ Net income per common share: Basic $ 0.20 $ 0.15 ============ ============ Dilutive $ 0.20 $ 0.15 ============ ============ Weighted average number of common shares outstanding: Basic 24,009,276 23,471,264 ============ ============ Dilutive 24,300,946 23,969,197 ============ ============

99.1 page 3 - 4 PETMED EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended June 30, 2006 2005 ------------ ------------ Cash flows from operating activities: Net income $ 4,750,258 $ 3,541,586 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 135,301 127,545 Compensation expense relating to stock option issuances 223,146 Tax benefit related to stock options exercised 79,719 38,110 Deferred income taxes (34,196) (13,090) Loss on disposal of property and equipment 1,250 - Bad debt expense (recovery) 25,129 2,362 (Increase) decrease in operating assets and increase (decrease) in liabilities: Accounts receivable (254,963) (118,064) Inventories - finished goods 1,259,533 1,084,163 Prepaid expenses and other current assets (106,551) 9,249 Accounts payable 1,878,859 1,446,109 Income taxes payable 1,657,222 1,204,830 Accrued expenses and other current liabilities 193,702 631,980 ------------ ------------ Net cash provided by operating activities 9,808,409 7,954,780 ------------ ------------ Cash flows from investing activities: Purchases of property and equipment (204,627) (12,104) Net proceeds from the sale of property and equipment 400 - ------------ ------------ Net cash used in investing activities (204,227) (12,104) ------------ ------------ Cash flows from financing activities: Proceeds from the exercise of stock options 301,859 84,099 ------------ ------------ Net cash provided by financing activities 301,859 84,099 ------------ ------------ Net increase in cash and cash equivalents 9,906,041 8,026,775 Cash and cash equivalents, at beginning of period 23,216,907 12,680,962 ------------ ------------ Cash and cash equivalents, at end of period $ 33,122,948 $ 20,707,737 ============ ============ Supplemental disclosure of cash flow information: Cash paid for income taxes $ 1,109,000 $ 642,132 ============ ============

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