EX-99.1 2 form8k1-ex991.txt EXHIBIT 99.1 Date: October 24, 2005 Contact: Bruce S. Rosenbloom, CFO Phone: (954) 979 5995 Fax: (954) 971 0544 PETMED EXPRESS D/B/A 1-800-PETMEDS ANNOUNCES RECORD SECOND QUARTER FINANCIAL RESULTS - SALES INCREASE 34%, NET INCOME INCREASES 50% Pompano Beach, Florida, October 24, 2005 - PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended September 30, 2005. Net sales for the quarter ended September 30, 2005 were $38.7 million, compared to $28.8 million for the quarter ended September 30, 2004, an increase of 34%. Net income was $2.7 million, or $0.11 diluted per share, for the quarter ended September 30, 2005, compared to net income of $1.8 million, or $0.08 diluted per share, for the quarter ended September 30, 2004, an increase to net income of 50%. Net sales for the six months ended September 30, 2005 were $82.3 million, compared to $64.0 million for the six months ended September 30, 2004, an increase of 28%. Net income for the six months ended September 30, 2005 was $6.3 million, or $0.26 diluted per share, compared to net income of $3.6 million, or $0.15 diluted per share, for the six months ended September 30, 2004, an increase to net income of 72%. The Company acquired approximately 208,000 new customers during the second fiscal quarter compared to 154,000 new customers for the same quarter in the prior year. Approximately 55% of all orders were placed on the Company's website for the second fiscal quarter, compared to 52% for the same quarter in the prior year. Menderes Akdag, CEO and President, commented: "We are pleased to report that our retail new order sales increased by 35% to $14.7 million for the second fiscal quarter compared to $10.9 million for the same quarter in the prior year. The advertising cost of acquiring a new customer for the second fiscal quarter was approximately $33 compared to $37 for the same quarter in the prior year. This improvement in the cost of customer acquisition can be attributed to increased advertising efficiency with more effective advertising. In addition, our retail reorder sales increased by 33%, from $17.2 million to $22.9 million for the quarters ended September 30, 2004 and 2005, respectively. We are also pleased to report that net cash provided by operating activities increased by $6.1 million, from $6.6 million for the six months ended September 30, 2004 to $12.7 million for the six months ended September 30, 2005." 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, call (888) 455-1758 (toll free) or (210) 234-0007. 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 October 24, 2005 until November 7, 2005 at 11:59 P.M. To access the replay, call (866) 422- 8142 (toll free) or (203) 369-0830, 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, 2005. 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

September 30, March 31, 2005 2005 ------------- ------------- (UNAUDITED) ASSETS ------ Current assets: Cash and cash equivalents $ 25,617,096 $ 12,680,962 Accounts receivable, less allowance for doubtful accounts of $20,000 and $37,000, respectively 995,273 1,796,756 Inventories - finished goods 8,367,724 11,180,333 Prepaid expenses and other current assets 511,721 213,152 ------------- ------------- Total current assets 35,491,814 25,871,203 Property and equipment, net 1,057,892 1,286,267 Deferred income taxes 601,199 582,846 Intangible asset 365,000 365,000 Other assets 14,167 14,167 ------------- ------------- Total assets $ 37,530,072 $ 28,119,483 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 2,482,004 $ 2,724,990 Income taxes payable 3,237,936 601,535 Accrued expenses and other current liabilities 1,016,584 575,894 ------------- ------------- Total liabilities 6,736,524 3,902,419 ------------- ------------- 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; 23,618,481 and 23,458,725 shares issued and outstanding, respectively 23,618 23,459 Additional paid-in capital 12,398,524 12,074,611 Retained earnings 18,362,508 12,110,096 ------------- ------------- Total shareholders' equity 30,793,548 24,217,064 ------------- ------------- Total liabilities and shareholders' equity $ 37,530,072 $ 28,119,483 ============= =============

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Three Months Ended Six Months Ended September 30, September 30, 2005 2004 2005 2004 ------------ ------------ ------------ ------------ Sales $ 38,652,674 $ 28,754,697 $ 82,284,432 $ 64,043,225 Cost of sales 23,801,822 17,141,556 50,574,994 38,568,275 ------------ ------------ ------------ ------------ Gross profit 14,850,852 11,613,141 31,709,438 25,474,950 ------------ ------------ ------------ ------------ Operating expenses: General and administrative 3,808,677 2,971,268 7,661,571 6,193,173 Advertising 6,922,832 5,629,991 14,527,135 13,384,820 Depreciation and amortization 131,745 155,294 259,290 314,353 ------------ ------------ ------------ ------------ Total operating expenses 10,863,254 8,756,553 22,447,996 19,892,346 ------------ ------------ ------------ ------------ Income from operations 3,987,598 2,856,588 9,261,442 5,582,604 ------------ ------------ ------------ ------------ Other income (expense) Interest expense - (138) - (880) Interest income 152,715 17,372 252,152 22,005 Other, net 81,821 1,821 122,108 1,411 ------------ ------------ ------------ ------------ Total other income (expense) 234,536 19,055 374,260 22,536 ------------ ------------ ------------ ------------ Income before provision for income taxes 4,222,134 2,875,643 9,635,702 5,605,140 Provision for income taxes 1,511,308 1,063,988 3,383,290 1,975,347 ------------ ------------ ------------ ------------ Net income 2,710,826 1,811,655 6,252,412 3,629,793 ============ ============ ============ ============ Net income per common share: Basic 0.12 0.08 0.27 0.16 ============ ============ ============ ============ Diluted 0.11 0.08 0.26 0.15 ============ ============ ============ ============ Weighted average number of common shares outstanding: Basic 23,564,051 22,719,266 23,517,911 22,370,162 ============ ============ ============ ============ Diluted 24,111,210 23,860,513 24,032,552 23,463,939 ============ ============ ============ ============

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

September 30, March 31, 2005 2005 ------------- ------------- (UNAUDITED) Cash flows from operating activities: Net income $ 6,252,412 $ 3,629,793 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 259,290 314,353 Tax benefit related to stock options exercised 38,110 690,512 Deferred income taxes (18,353) - Bad debt expense (15,616) 5,852 (Increase) decrease in operating assets and liabilities: Accounts receivable 817,099 365,588 Inventories - finished goods 2,812,609 1,767,015 Prepaid expenses and other current assets (298,569) (98,674) Other assets - 7,655 Accounts payable (242,986) 25,410 Income taxes payable 2,636,401 162,390 Accrued expenses and other current liabilities 440,690 (273,716) ------------- ------------- Net cash provided by operating activities 12,681,087 6,596,178 ------------- ------------- Cash flows from investing activities: Purchases of property and equipment (30,915) (110,583) ------------- ------------- Net cash used in investing activities (30,915) (110,583) ------------- ------------- Cash flows from financing activities: Proceeds from the exercise of stock options, warrants, and other transactions 285,962 1,093,835 Payments on the loan obligation - (68,442) ------------- ------------- Net cash provided by financing activities 285,962 1,025,393 ------------- ------------- Net increase in cash and cash equivalents 12,936,134 7,510,988 Cash and cash equivalents, at beginning of period 12,680,962 3,278,926 ------------- ------------- Cash and cash equivalents, at end of period $ 25,617,096 $ 10,789,914 ============= ============= Supplemental disclosure of cash flow information: Cash paid for interest $ - $ 802 ============= ============= Cash paid for income taxes $ 727,132 $ 1,122,445 ============= =============

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