EX-99.1 2 exhibit99_1.htm EXHIBIT 99.1 exhibit99_1.htm
 
Company Contact:
Agency Contact:
Joseph W. Baty, Chief Financial Officer
Keith Lippert / Kirsten Chapman
(801) 975-5186
Lippert / Heilshorn & Associates
email: joeb@schiffnutrition.com
(212) 838-3777 / (415) 433-3777
www.schiffnutrition.com
email: KChapman@lhai.com
 
SCHIFF NUTRITION INTERNATIONAL, INC. ANNOUNCES FISCAL 2007
FOURTH QUARTER AND YEAR-END RESULTS AND DECLARES SPECIAL
CASH DIVIDEND OF $1.50 PER SHARE

Salt Lake City, Utah, July 19, 2007: Schiff Nutrition International, Inc., (NYSE: WNI), today announced results for the fiscal 2007 fourth quarter and year ended May 31, 2007.  The company also announced plans to return $1.50 per share to shareholders through a special cash dividend payable on August 13, 2007 to shareholders of record at the close of business on July 31, 2007.
 
Financial Results
Schiff Nutrition’s net sales were $43.2 million for the three months ended May 31, 2007, compared to $45.3 million for the same period in fiscal 2006.  For the fiscal 2007 fourth quarter, Schiff Nutrition reported net income of $3.7 million, or $0.13 per diluted share, compared to net income of $6.2 million, or $0.23 per diluted share, for the same period a year ago.  The company’s effective tax rate for the fiscal 2007 fourth quarter was 47.5 percent, compared to less than one percent for the prior year quarter.
 
For fiscal 2007, Schiff Nutrition’s net sales were $172.7 million, compared to fiscal 2006 net sales of $178.4 million.  For fiscal 2007, Schiff Nutrition reported net income of $12.4 million, or $0.45 per diluted share, compared to net income of $15.8 million, or $0.59 per diluted share, for fiscal 2006.  Fiscal 2006 financial results were favorably impacted by reimbursement of approximately $2.7 million in import related costs, recognition of $1.6 million in foreign currency gain related to liquidation of certain foreign entities subsequent to the Weider and Haleko business divestitures, and an approximate overall 13 percent effective tax rate.
 
Bruce Wood, President and Chief Executive Officer, stated, “We continued to experience intense competitive conditions in the fourth quarter, which contributed to a modest decline in both branded and private label net sales, versus the year ago quarter.  At the same time, we were encouraged by the improvement in both our gross and operating margins.  We remain confident in the long-term prospects for our Schiff® branded business, and plan to continue to invest in the Schiff business, particularly our flagship Move Free® joint care brand.”
 
Special Dividend
Schiff Nutrition’s Board of Directors approved a $1.50 per share special cash dividend, payable on August 13, 2007 to shareholders of record at the close of business on July 31, 2007.  Schiff’s Class A common stock will begin trading on an ex-dividend basis on August 14, 2007, the day after the payment date, in accordance with NYSE rules.  Shareholders who sell their shares on or before the August 13, 2007 payment date will also be selling their right to receive the $1.50 per share cash dividend.  Shareholders are advised to contact their financial advisor before selling their shares.
 
Wood commented, “We are pleased to make this special distribution to our shareholders.  The company has continued to generate positive cash flows from operations and as of May 31, 2007 has available approximately $80.3 million in cash and short-term investments.  The dividend payment also reflects our confidence the company will continue to generate positive cash flows from operations during fiscal 2008 while highlighting our commitment to our shareholders.  We believe our cash position after the dividend payment provides us with the financial flexibility to continue investing in our business and funding growth initiatives.”
 



 
In connection with the declaration of the special dividend, the Board of Directors approved certain dividend equivalent rights, allowing holders of other Schiff equity awards, including stock options and restricted stock units, to receive dividend equivalents in the form of cash on each share underlying the stock options and restricted stock units.  In aggregate, at July 31, 2007, the record date, the company expects approximately 29.9 million potential common shares to be outstanding, including approximately 26.6 million shares of outstanding Class A and Class B common stock, approximately 1.8 million shares of Class A common stock underlying outstanding stock options and approximately 1.5 million shares of Class A common stock underlying outstanding restricted stock units.  The aggregate amount of the special dividend is approximately $44.9 million, presuming 100 percent vesting of shares underlying equity awards.  To the extent outstanding stock options and restricted stock units are unvested at July 31, 2007, the $1.50 per share dividend will not be distributed until after such equity awards become vested.
 
In connection with the dividend equivalents paid or payable on stock options and certain restricted stock units, the company expects to recognize a compensation charge during its fiscal year 2008.  The pre-tax charge may amount to approximately $5.0 million, with approximately $3.0 million recognized during the fiscal first quarter.
 
For U.S. federal income tax purposes, shareholders will receive a Form 1099-DIV in early 2008 to notify them of the division, if any, between the dividend and return of capital portions of the special dividend.  The determination of these amounts, requiring a comprehensive review and analysis of the company’s history, is ongoing.  Shareholders are encouraged to consult with their own tax and financial advisors regarding the implications of the special dividend.
 
Conference Call Information
Schiff Nutrition International will hold a conference call today, July 19 at 11 a.m. ET.  The U.S. domestic access number is 866-314-5232.  International participants should dial 617-213-8052.  The participant pass code is 59809745.  Please call in approximately ten minutes in advance.  The conference call will be broadcast live over the Internet at http://www.schiffnutrition.com/press.asp.  A replay of the call will be available by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers; enter access code 70361620.  The telephone replay will be available through July 23, 2007.
 
About Schiff Nutrition
Schiff Nutrition International, Inc. develops, manufactures, markets and distributes branded and private label vitamins, nutritional supplements and nutrition bars in the United States and throughout the world.  To learn more about Schiff, please visit the web site www.schiffnutrition.com.
 
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based on management’s beliefs and assumptions, current expectations, estimates, and projections.  These statements are subject to risks and uncertainties, certain of which are beyond the company’s ability to control or predict, and, therefore, actual results may differ materially.  Schiff Nutrition disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
 
Important factors that may cause these forward-looking statements to be false include, but are not limited to: the level of customer and consumer acceptance of Move Free Advanced, the inability to successfully implement marketing and spending programs behind our Move Free brand and other new branded products, the impact of raw material pricing, availability and quality (particularly relating to joint care products and ingredients from suppliers outside the United States, including China), the mix between branded and private label products, the ability to grow and/or maintain branded and private label sales, the inability to enforce or protect our intellectual property rights against infringement, the inability to achieve cost savings and operational efficiencies, the inability to increase operating margins and increase revenues, dependence on individual products, dependence on individual customers, the impact of competitive products and pricing (including private label), market and



industry conditions (including pricing, demand for products and level of trade inventories), the impact of clinical studies regarding nutritional supplements, particularly relating to the joint care category, the success of product development, the inability to obtain customer acceptance of new product introductions, changes in laws and regulations, litigation and government regulatory action in the United States and internationally, the inability or increased cost to obtain product liability and general insurance, the uncertainty of market acceptance of new products, adverse publicity regarding the consumption of nutritional supplements, the inability to find strategic acquisitions or the inability to successfully consummate or integrate an acquisition, changes in accounting standards, and other factors indicated from time to time in the company’s SEC reports, copies of which are available upon request from the company’s investor relations department or may be obtained at the SEC's web site (www.sec.gov).  These risks and uncertainties should be carefully considered before making an investment decision with respect to shares of our common stock.

 

 

 
– Tables to Follow –
 




SCHIFF NUTRITION INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

   
Three Months Ended May 31,
   
Year Ended May 31,
 
   
2007
   
2006
   
2007
   
2006
 
   
(unaudited)
             
                   
Net sales
  $
43,188
    $
45,258
    $
172,656
    $
178,372
 
Cost of goods sold
   
24,213
     
27,040
     
103,959
     
119,303
 
                                 
Gross profit
   
18,975
     
18,218
     
68,697
     
59,069
 
Operating expenses:
                               
Selling and marketing
   
6,893
     
8,354
     
32,032
     
28,957
 
Other operating expenses, net
   
5,870
     
4,237
     
18,990
     
15,071
 
    Total operating expenses
   
12,763
     
12,591
     
51,022
     
44,028
 
                                 
Income from operations
   
6,212
     
5,627
     
17,675
     
15,041
 
Other income, net
   
806
     
562
     
2,935
     
3,318
 
Income from continuing operations before income taxes
   
7,018
     
6,189
     
20,610
     
18,359
 
Income tax expense
   
3,335
     
9
     
8,174
     
2,393
 
                                 
Income from continuing operations
   
3,683
     
6,180
     
12,436
     
15,966
 
Loss from discontinued operations, net of tax
   
     
     
      (127 )
                                 
Net income
  $
3,683
    $
6,180
    $
12,436
    $
15,839
 
                                 
Weighted average common shares outstanding – diluted
   
27,375
     
27,317
     
27,343
     
26,999
 
                                 
                                 
Net income per share - diluted:
                               
Income from continuing operations
  $
0.13
    $
0.23
    $
0.45
    $
0.59
 
Loss from discontinued operations
   
     
     
     
 
                                 
Net income
  $
0.13
    $
0.23
    $
0.45
    $
0.59
 







– More –



SCHIFF NUTRITION INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)

   
May 31,
 
   
2007
   
2006
 
             
Cash and cash equivalents
  $
34,463
    $
24,899
 
Available-for-sale securities
   
45,817
     
40,120
 
Receivables, net
   
17,732
     
20,431
 
Inventories
   
23,698
     
23,515
 
Other current assets
   
4,143
     
4,863
 
                 
Total current assets
   
125,853
     
113,828
 
                 
Property and equipment, net
   
14,438
     
13,287
 
                 
Other assets, net
   
4,788
     
4,500
 
                 
Total assets
  $
145,079
    $
131,615
 
                 
Current liabilities
  $
20,984
    $
23,312
 
                 
Deferred taxes
   
     
796
 
                 
Stockholders’ equity
   
124,095
     
107,507
 
                 
Total liabilities & stockholders’ equity
  $
145,079
    $
131,615
 















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