-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MFFfhJx2Htj0HwBHL6rrlC/XM/CSc0Iz4gNmm8ZqGTZhxyS4YG8i1dyCWXHiswyV ulRj/QVlV0ak8lvOZ1UCNw== 0000910647-96-000017.txt : 19960213 0000910647-96-000017.hdr.sgml : 19960213 ACCESSION NUMBER: 0000910647-96-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NBTY INC CENTRAL INDEX KEY: 0000070793 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 112228617 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10666 FILM NUMBER: 96515891 BUSINESS ADDRESS: STREET 1: 90 ORVILLE DR CITY: BOHEMIA STATE: NY ZIP: 11716 BUSINESS PHONE: 5165679500 MAIL ADDRESS: STREET 1: 90 ORVILLE DRIVE CITY: BOHEMIA STATE: NY ZIP: 11716 FORMER COMPANY: FORMER CONFORMED NAME: NATURES BOUNTY INC DATE OF NAME CHANGE: 19920703 10-Q 1 BODY OF 10-Q FOR 1T QUARTER UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the period ended December 31, 1995 ------------------- Commission File Number: 0-10666 ------------------- NBTY, Inc. ---------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 11-2228617 ------------------------------ ----------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 90 Orville Drive, Bohemia, NY 11716 ------------------------------ ----------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (516) 567-9500 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registration was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Shares of Common Stock as of December 31, 1995: 18,435,119 ---------- NBTY, INC. and SUBSIDIARIES INDEX PART I Financial Information Condensed Consolidated Balance Sheets -December 31, 1995 and September 30, 1995 1 - 2 Condensed Consolidated Statements of Income -Three Months Ended December 31, 1995 and 1994 3 Condensed Consolidated Statements of Cash Flows - Three Months Ended December 31, 1995 and 1994 4 - 5 Notes to Condensed Consolidated Financial Statements 6 - 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 10 PART II Other Information 11 Signature 12 NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
December 31, September 30, 1995 1995 ------------ ------------- (Unaudited) Current assets: Cash and cash equivalents $ 430,549 $ 10,378,476 Accounts receivable, less allowance for doubtful accounts of $608,004 at December 31, 1995 and $591,028 at September 30, 1995 12,704,998 12,354,545 Inventories 40,781,972 36,972,592 Deferred income taxes 1,846,875 1,846,875 Prepaid catalog costs and other current assets 8,147,140 6,170,243 ---------------------------- Total current assets 63,911,534 67,722,731 Property, plant and equipment 77,646,340 70,737,588 less accumulated depreciation and amortization 23,556,308 22,413,012 ---------------------------- 54,090,032 48,324,576 Intangible assets, net 4,455,507 5,813,031 Deferred income taxes 574,611 574,611 Other assets 1,065,773 1,668,309 ---------------------------- Total assets $124,097,457 $124,103,258 ============================
See notes to condensed consolidated financial statements. NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, September 30, 1995 1995 ------------ ------------- (Unaudited) Current liabilities: Current portion of long-term debt $ 550,333 $ 358,675 Accounts payable 17,075,607 16,411,562 Accrued expenses 7,549,011 10,287,989 ---------------------------- Total current liabilities 25,174,951 27,058,226 Long-term debt, less current portion 12,303,813 10,924,454 Deferred income taxes 2,736,148 2,736,148 Other liabilities 768,985 768,985 ---------------------------- Total liabilities 40,983,897 41,487,813 Commitments and contingencies Stockholders' equity: Common stock, $.008 par; authorized 25,000,000 shares; issued 19,907,676 shares at December 31, 1995 and 19,207,676 at September 30, 1995 and outstanding 18,435,119 shares at December 31, 1995 and 17,766,119 at September 30, 1995 159,262 153,662 Capital in excess of par 55,504,481 54,151,206 Retained earnings 30,405,444 30,656,586 ---------------------------- 86,069,187 84,961,454 Less 1,472,557 treasury shares at cost, at December 31, 1995 and 1,441,557 treasury shares at September 30, 1995 2,518,127 2,346,009 Stock subscriptions receivable 437,500 0 ---------------------------- Total stockholders' equity 83,113,560 82,615,445 ---------------------------- Total liabilities and stockholders' equity $124,097,457 $124,103,258 ============================
See notes to condensed consolidated financial statements. NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the three months ended December 31, --------------------------- 1995 1994 ----------- ----------- Net sales $38,589,126 $37,477,741 Costs and expenses: Cost of sales 20,810,228 19,097,506 Catalog printing, postage and promotion 4,564,180 4,075,142 Selling, general and administrative expenses 13,515,907 12,615,673 --------------------------- 38,890,315 35,788,321 --------------------------- Income (loss) from operations (301,189) 1,689,420 --------------------------- Other income (charges): Interest expense (304,898) (239,163) Miscellaneous, net 194,460 197,396 --------------------------- (110,438) (41,767) --------------------------- Income (loss) before income taxes (411,627) 1,647,653 Income taxes (benefit) (160,485) 709,112 --------------------------- Net income (loss) ($ 251,142) $ 938,541 =========================== Earnings (loss) per common share and common share equivalents: ($0.01) $0.05 =========================== Weighted average common shares and common share equivalents: 19,851,070 20,075,664 ===========================
See notes to condensed consolidated financial statements. NBTY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended December 31, ---------------------------- 1995 1994 ---------------------------- Net income (loss) ($ 251,142) $ 938,541 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and amortization 1,295,597 1,201,014 Provision (recovery) for allowance for doubtful accounts 16,976 (3,494) Increase in deferred taxes 0 50,000 Changes in assets and liabilities, net of acquistions: Increase in accounts receivable (367,429) (180,561) (Increase) decrease in inventories (3,809,380) 789,294 (Increase) decrease in income tax receivable 0 997,600 Increase in prepaid catalog costs and other current assets (1,976,897) (154,979) (Increase) decrease in other assets 1,516,403 (137,306) Increase in accounts payable 664,045 1,835,820 Decrease in accrued expenses (2,738,978) (2,574,806) --------------------------- Net cash provided by (used in) operating activities (5,650,805) 2,761,123 --------------------------- Cash flow from investing activities: (Increase) decrease in intangible assets 1,212,732 (936,285) Purchase of property, plant and equipment (6,908,752) (4,766,910) --------------------------- Net cash used in investing activities (5,696,021) (5,703,195) --------------------------- Cash flows from financing activities: Net payments under line of credit agreement 0 (2,500,000) Borrowings under long term debt agreement 1,657,612 2,400,000 Principal payments under long-term debt agreements (86,594) (625,196) Purchase of treasury stock (172,118) Proceeds from stock options exercised 0 24,000 --------------------------- Net cash provided by (used in) financing activities 1,398,899 (701,196) --------------------------- Net decrease in cash and cash equivalents (9,947,927) (3,643,268) Cash and cash equivalents at beginning of year 10,378,476 5,900,594 --------------------------- Cash and cash equivalents at end of quarter $ 430,549 $ 2,257,326 =========================== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ 295,023 $ 235,682 Cash paid during the period for taxes $ 53,444 $ 44,350 ===========================
See notes to condensed consolidated financial statements. NBTY, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended December 31, 1995 and 1994 Supplemental Schedule of Investing and Financing Activities: In November 1995, options were exercised with 700,000 shares of common stock issued to certain officers for an interest bearing note in the amount of $437,500. As a result of the exercise of these options, the Company is entitled to a compensation deduction for tax purposes of approximately $2,362,500 and it is estimated that such compensation deduction will ultimately result in a tax benefit of approximately $921,000 which has been recorded as an increase in capital in excess of par. In addition, the Company has adjusted its other current assets to recognize the effect of this tax benefit. In December 1994, options were exercised with 430,000 shares of common stock issued to certain officers and directors for $24,000 and an interest bearing note in the amount of $191,000. The promissory note, including interest, was paid by the surrender of 23,153 NBTY common shares to the Company at the prevailing market price. As a result of the exercise of these options, the Company is entitled to a compensation deduction for tax purposes of $1,827,500 and a tax benefit of $731,000 which has been recorded as an increase in capital in excess of par. In addition, the Company has adjusted its current liability to recognize the effect of this tax benefit. See notes to condensed consolidated financial statements. NBTY, INC. and SUBSIDIARIES NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly its financial position as of December 31, 1995 and results of operations for the three months ended December 31, 1995 and 1994 and statements of cash flows for the three months ended December 31, 1995 and 1994. The consolidated condensed balance sheet as of September 30, 1995 has been derived from the audited balance sheet as of that date. This report should be read in conjunction with the Company's annual report filed on Form 10-K for the fiscal year ended September 30, 1995. 2. The results of operations and cash flows for the three months ended December 31, 1995 are not necessarily indicative of the results to be expected for the full year. 3. On October 9, 1995, the Company sold certain assets of its direct- mail cosmetics business for approximately $2,495,000. The Company received $350,000 in cash and non-interest bearing notes aggregating approximately $2,145,000 for inventory, a customer list and other intangible assets. The notes will be paid over a three-year period based on a predetermined formula with guaranteed minimum payments. A final payment for the remaining outstanding balance will be made on September 30, 1998. Revenues applicable to this business were approximately $2,355,773 for the three months ended December 31, 1994. 4. Inventories have been estimated by using the gross profit method for the interim periods. The components of the inventories are as follows:
December 31, September 30, 1995 1995 ------------ ------------- (UNAUDITED) Raw materials and work-in-process $19,268,120 $17,746,844 Finished goods 21,513,852 19,225,748 --------------------------- $40,781,972 $36,972,592 ===========================
5. Intangible assets, at cost, acquired at various dates are as follows:
December 31, September 30, 1995 1995 ------------ ------------- (UNAUDITED) Goodwill $ 469,400 $ 469,400 Customer lists 8,783,475 10,540,017 Trademark and licenses 1,177,842 1,134,514 Covenants not to compete 1,304,538 1,304,538 --------------------------- 11,735,255 13,448,469 Less, accumulated amortization 7,279,748 7,635,438 --------------------------- $ 4,455,507 $ 5,813,031 ===========================
6. Accrued expenses:
December 31, September 30, 1995 1995 ------------ ------------- (UNAUDITED) Payroll and related payroll taxes $1,837,048 $ 2,166,355 Customer deposits 553,233 2,034,175 Accrued purchases 757,756 1,734,844 Income taxes payable 39,815 39,815 Other 4,361,159 4,312,800 --------------------------- $7,549,011 $10,287,989 ===========================
7. Treasury stock. The Company purchased 31,000 shares for $172,118 in open market transactions using working capital. 8. Earnings (loss) per share are based on the weighted average number of common shares and common equivalent shares outstanding during the three month periods ended December 31, 1995 and 1994. The calculation of earnings (loss) per share include common stock equivalent shares from stock options of 1,680,602 and 2,389,870 for the three month periods ended December 31, 1995 and 1994, respectively. 9. In November 1995, options were exercised with 700,000 shares of common stock issued to certain officers for an interest bearing note in the amount of $437,500. As a result of the exercise of these options, the Company is entitled to a compensation deduction for tax purposes of approximately $2,362,500 and it is estimated that such compensation deduction will ultimately result in a tax benefit of approximately $921,000 which has been recorded as an increase in capital in excess of par. In addition, the Company has adjusted its other current assets to recognize the effect of this tax benefit. In December 1994, options were exercised with 430,000 shares of common stock issued to certain officers and directors for $24,000 and an interest bearing note in the amount of $191,000. The promissory note, including interest, was paid by the surrender of 23,153 NBTY common shares to the Company at the prevailing market price. As a result of the exercise of these options, the Company is entitled to a compensation deduction for tax purposes of $1,827,500 and a compensation deduction will ultimately result in a tax benefit of $731,000 which has been recorded as an increase in capital in excess of par. In addition, the Company has adjusted its current liability to recognize the effect of this tax benefit. The following is a summary of changes in outstanding options for the Company's Stock Option Plans for the period ended December 31, 1995:
Exercise Price -------------- Shares under option, September 30, 1995 (fully exercisable) 2,395,000 $.63-$.92 Options exercised (700,000) $.63 --------- Shares exercisable, December 31, 1995 (fully exercisable) 1,695,000 $.63-$.92 =========
NBTY, INC. and SUBSIDIARIES MANAGEMENT'S DISCUSSION and ANALYSIS of FINANCIAL CONDITION and RESULTS of OPERATIONS Results of Operations: The following table sets forth income statement data of the Company as a percentage of net sales for the periods indicated:
Three months ended December 31, ------------------- 1995 1994 ------ ------ Net sales 100.0% 100.0% Costs and expenses: Cost of sales 53.9 51.0 Catalog printing, postage and promotion 11.8 10.9 Selling, general and administrative 35.1 33.6 ----------------- 100.8 95.5 ----------------- Income (loss) from operations (0.8) 4.5 Other income (expenses), net (0.3) (0.1) ----------------- Income (loss) before income taxes (1.1) 4.4 Income taxes (benefit) (0.4) 1.9 ----------------- Net income (loss) (0.7)% 2.5% =================
Results of Operations - --------------------- For the three months ended December 31, 1995 compared to three months ended December 31, 1994: Net sales. Net sales in the first quarter ended December 31, 1995 were $38,589,126 compared with $37,477,741 for the prior like period, an increase of $1,111,385 or 3.0%. Wholesale-retail sales increased $1.7 million or 6.9%; excluding sales of Beautiful Visions, mail order vitamin sales increased $1,643,211 or 15.2%. In 1994, sales of $2,355,773 was attributed to Beautiful Visions which was sold October 9, 1995 (see Note 3, sale of direct-mail cosmetics division). Costs and expenses. Cost of sales as a percentage of sales was 53.9% for 1995 and 51.0% for 1994. The increase was attributed to sales of lower margin products and pricing pressures. Catalog printing, postage,and promotion expenses increased to $4,564,180 in 1995 from $4,075,142 in 1994 an increase of $489,038. As a percentage of sales, expenses were 11.8% for the current quarter and 10.9% for the prior like quarter. Costs associated with television advertising and promotional programs increased $442,000 and $301,000, respectively compared to the prior like quarter. Selling, general and administrative expenses were $13,515,907 for the quarter, 35.0% as a percentage of sales compared with $12,615,673 or 33.7% of sales - an increase of $900,234. Increases were primarily in salaries and professional fees. Other income (charges). Included in miscellaneous is rental income. Loss before income taxes benefit was $411,627 for 1995 and income before income taxes was $1,647,653 for 1994. After income taxes (benefit), the Company had a net loss of $251,142 (loss per share of $0.01) for the quarter ended December 31, 1995, and net income of $938,541 (or earnings of $0.05 per share) for the three months ended December 31, 1994. Liquidity and Capital Resources - ------------------------------- The Company has adequate working capital to meet its obligations in the normal course of business. The Company has a three year $15 million Revolving Credit Agreement which expires March 31, 1996. At December 31, 1995, the entire amount remained available under the current Agreement. In February 1996, the Company received waivers relating to noncompliance of certain covenants which existed as of December 31, 1995. The Company has an $8.4 million equipment lease agreement expiring December 31, 1996. On October 9, 1995, the Company sold certain assets of its direct-mail cosmetics business for approximately $2,495,000. The Company received $350,000 in cash and non-interest bearing notes aggregating approximately $2,145,000 for inventory, a customer list and other intangible assets. The notes will be paid over a three-year period based on a predetermined formula with guaranteed minimum payments. A final payment for the remaining outstanding balance will be made on September 30, 1998. Revenues applicable to this business were approximately $2,355,773 for the three months ended December 31, 1994. In December 1995, the Company purchased approximately a 60 acre tract of land for $1,700,000 for cash. Management believes that inflation did not have a significant impact on operations. NBTY, INC. AND SUBSIDIARIES PART II OTHER INFORMATION Item 1. Legal Proceedings LITIGATION: There have been no material developments with respect to litigation that occurred during this reporting period. Reference is made to Item 3, Legal Proceedings in Form 10-K for the year ended September 30, 1995. Item 2. Changes in Securities Not applicable. Item 3. Defaults upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K There was no form 8-K filed during the first quarter of fiscal year ending September 30, 1996. NBTY, INC. and SUBSIDIARIES SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NBTY, INC. Date: February 8, 1996 /s/ HARVEY KAMIL Harvey Kamil, Executive Vice President, Secretary (Principal Financial and Accounting Officer) EX-27 2 ARTICLE 5 FDS FOR 1ST QUARTER 10-Q
5 3-MOS SEP-30-1996 OCT-01-1995 DEC-31-1995 430,549 0 13,313,002 608,004 40,781,972 63,911,534 77,646,340 23,556,308 124,097,457 25,174,951 12,854,146 0 0 159,262 82,954,298 124,097,457 38,589,126 38,589,126 20,810,228 20,810,228 0 0 304,898 (411,627) (160,485) (251,142) 0 0 0 (251,142) (0.01) (0.01)
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