EX-99.1 2 jan2306k-ex991.txt EXHIBIT 99.1 Date: January 23, 2006 Contact: Bruce S. Rosenbloom, CFO Phone: (954) 979 5995 Fax: (954) 971 0544 PETMED EXPRESS D/B/A 1-800-PETMEDS ANNOUNCES RECORD THIRD QUARTER FINANCIAL RESULTS - SALES INCREASE 25%, NET INCOME INCREASES 37% Pompano Beach, Florida, January 23, 2006 - PetMed Express, Inc. (NASDAQ: PETS) today announced its financial results for the quarter ended December 31, 2005. Net sales for the quarter ended December 31, 2005 were $25.9 million, compared to $20.8 million for the quarter ended December 31, 2004, an increase of 25%. Net income was $2.7 million, or $0.11 diluted per share, for the quarter ended December 31, 2005, compared to net income of $2.0 million, or $0.08 diluted per share, for the quarter ended December 31, 2004, an increase to net income of 37%. Net sales for the nine months ended December 31, 2005 were $108.2 million, compared to $84.8 million for the nine months ended December 31, 2004, an increase of 28%. Net income for the nine months ended December 31, 2005 was $8.9 million, or $0.37 diluted per share, compared to net income of $5.6 million, or $0.23 diluted per share, for the nine months ended December 31, 2004, an increase to net income of 60%. The Company acquired approximately 105,000 new customers during the third fiscal quarter compared to 85,000 new customers for the same quarter in the prior year. Approximately 57% of all orders were placed on the Company's website during the third fiscal quarter. Menderes Akdag, CEO and President, commented: "We are pleased to report that our retail new order sales increased by 26% to $7.3 million for the third fiscal quarter compared to $5.8 million for the same quarter in the prior year. The advertising cost of acquiring a new customer for the third fiscal quarter improved to approximately $30 compared to $31 for the same quarter in the prior year. In addition, our retail reorder sales increased by 25%, from $14.5 million to $18.1 million for the quarters ended December 31, 2004 and 2005, respectively. We are also pleased to report that net cash provided by operating activities increased by $10.0 million, from $3.5 million for the nine months ended December 31, 2004 to $13.5 million for the nine months ended December 31, 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) 234-0010. 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 January 23, 2006 until February 6, 2006 at 5:00 P.M. To access the replay, call (866) 487-7597 (toll free) or (203) 369- 1654, 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

December 31, March 31, 2005 2005 ----------- ----------- (UNAUDITED) ASSETS ------ Current assets: Cash and cash equivalents $ 26,640,511 $ 12,680,962 Accounts receivable, less allowance for doubtful accounts of $13,000 and $37,000, respectively 658,726 1,796,756 Inventories - finished goods 11,572,899 11,180,333 Prepaid expenses and other current assets 374,303 213,152 ----------- ----------- Total current assets 39,246,439 25,871,203 Property and equipment, net 1,141,641 1,286,267 Deferred income taxes 630,833 582,846 Intangible asset 365,000 365,000 Other assets 14,167 14,167 ----------- ----------- Total assets $ 41,398,080 $ 28,119,483 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 1,859,103 $ 2,724,990 Income taxes payable 4,576,531 601,535 Accrued expenses and other current liabilities 946,759 575,894 ----------- ----------- Total liabilities 7,382,393 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; 23,728,555 and 23,458,725 shares issued and outstanding, respectively 23,729 23,459 Additional paid-in capital 12,948,460 12,074,611 Retained earnings 21,034,600 12,110,096 ----------- ----------- Total shareholders' equity 34,015,687 24,217,064 ----------- ----------- Total liabilities and shareholders' equity $ 41,398,080 $ 28,119,483 =========== ===========

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

Three Months Ended Nine Months Ended December 31, December 31, 2005 2004 2005 2004 ------------ ------------ ------------ ------------ Sales $ 25,890,095 $ 20,782,837 $ 108,174,527 $ 84,826,062 Cost of sales 15,613,715 12,337,310 66,188,709 50,905,585 ------------ ------------ ------------ ------------ Gross profit 10,276,380 8,445,527 41,985,818 33,920,477 ------------ ------------ ------------ ------------ Operating expenses: General and administrative 3,060,580 2,541,197 10,722,151 8,734,370 Advertising 3,189,099 2,628,090 17,716,234 16,012,910 Depreciation and amortization 135,638 146,609 394,928 460,962 ------------ ------------ ------------ ------------ Total operating expenses 6,385,317 5,315,896 28,833,313 25,208,242 ------------ ------------ ------------ ------------ Income from operations 3,891,063 3,129,631 13,152,505 8,712,235 ------------ ------------ ------------ ------------ Other income (expense): Interest expense - - - (880) Interest income 215,590 33,409 467,742 55,414 Other, net 49,147 906 171,255 2,317 ------------ ------------ ------------ ------------ Total other income (expense) 264,737 34,315 638,997 56,851 ------------ ------------ ------------ ------------ Income before provision for income taxes 4,155,800 3,163,946 13,791,502 8,769,086 Provision for income taxes 1,483,708 1,206,835 4,866,998 3,182,182 ------------ ------------ ------------ ------------ Net income 2,672,092 1,957,111 8,924,504 5,586,904 ============ =========== ============ ============ Net income per common share: Basic $ 0.11 $ 0.08 $ 0.38 $ 0.25 ============ =========== ============ ============ Diluted $ 0.11 $ 0.08 $ 0.37 $ 0.23 ============ =========== ============ ============ Weighted average number of common shares outstanding: Basic 23,680,221 23,266,549 23,572,211 22,670,044 ============ =========== ============ ============ Diluted 24,255,705 23,903,297 24,105,124 23,867,698 ============ =========== ============ ============

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

Nine Months Ended December 31, 2005 2004 ----------- ----------- Cash flows from operating activities: Net income $ 8,924,504 $ 5,586,904 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 394,928 460,962 Tax benefit related to stock options exercised 212,856 826,476 Deferred income taxes (47,987) (77,455) Bad debt expense (recovery) (16,144) (14,530) (Increase) decrease in operating assets and liabilities: Accounts receivable 1,154,174 849,394 Inventories - finished goods (392,566) (2,276,359) Prepaid expenses and other current assets (161,151) (63,947) Other assets - 7,655 Accounts payable (865,887) (1,698,494) Income taxes payable 3,974,996 123,489 Accrued expenses and other current liabilities 370,865 (187,771) ----------- ----------- Net cash provided by operating activities 13,548,588 3,536,324 ----------- ----------- Cash flows from investing activities: Purchases of property and equipment (250,302) (146,623) ----------- ----------- Net cash used in investing activities (250,302) (146,623) ----------- ----------- Cash flows from financing activities: Proceeds from the exercise of stock options, warrants, and other transactions 661,263 1,225,835 Payments on the loan obligation - (68,442) ----------- ----------- Net cash provided by financing activities 661,263 1,157,393 ----------- ----------- Net increase in cash and cash equivalents 13,959,549 4,547,094 Cash and cash equivalents, at beginning of period 12,680,962 3,278,926 ----------- ----------- Cash and cash equivalents, at end of period $ 26,640,511 $ 7,826,020 =========== =========== Supplemental disclosure of cash flow information: Cash paid for interest $ - $ 802 =========== =========== Cash paid for income taxes $ 727,132 $ 2,309,672 =========== ===========

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