-----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, Pre8NFFrILqjKttCHbv4aN2bVgjeB90ZmTD9QhBo9RSb+DplnArgf9FKk2s/Txum bjl5geKp7bZB5nRCD8JQDw== 0000910647-97-000029.txt : 19970225 0000910647-97-000029.hdr.sgml : 19970225 ACCESSION NUMBER: 0000910647-97-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970205 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: 97518286 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 10Q--FOR 1ST 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, 1996 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 [ ] NO [ ] Shares of Common Stock as of December 31, 1996: 18,592,119 ---------- NBTY, INC. and SUBSIDIARIES INDEX PART I Financial Information Condensed Consolidated Balance Sheets - December 31, 1996 and September 30, 1996 1 - 2 Condensed Consolidated Statements of Operations - Three Months Ended December 31, 1996 and 1995 3 Condensed Consolidated Statements of Cash Flows - Three Months Ended December 31, 1996 and 1995 4 - 5 Notes to Condensed Consolidated Financial Statements 6 - 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 9 PART II Other Information 10 Signature 11 NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
December 31, September 30, 1996 1996 ------------ ------------- (Unaudited) Current assets: Cash and cash equivalents $ 2,594,358 $ 9,292,374 Short-term investments 13,802,686 11,024,624 Accounts receivable, less allowance for doubtful accounts of $932,759 at December 31, 1996 and $793,669 at September 30, 1996 13,466,401 11,625,112 Inventories 42,022,144 38,070,071 Deferred income taxes 3,155,163 3,155,163 Prepaid catalog costs and other current assets 6,046,001 5,682,874 ---------------------------- Total current assets 81,086,753 78,850,218 Property, plant and equipment 92,259,932 89,082,883 less accumulated depreciation and amortization 28,718,291 27,351,258 ---------------------------- 63,541,641 61,731,625 Intangible assets, net 3,867,952 3,974,573 Other assets 837,492 993,785 ---------------------------- Total assets $149,333,838 $145,550,201 ============================
See notes to condensed consolidated financial statements. NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, September 30, 1996 1996 ------------ ------------- (Unaudited) Current liabilities: Current portion of long-term debt and capital lease obligations $ 954,575 $ 934,887 Accounts payable 13,678,466 10,943,228 Accrued expenses 12,727,656 14,704,507 ---------------------------- Total current liabilities 27,360,697 26,582,622 Long-term debt 15,049,134 15,178,412 Obligations under captial leases 3,063,769 3,219,127 Deferred income taxes 2,827,198 2,827,198 Other liabilities 792,985 792,985 ---------------------------- Total liabilities 49,093,783 48,600,344 Commitments and contingencies Stockholders' equity: Common stock, $.008 par; authorized 25,000,000 shares; issued 20,079,676 shares at December 31, 1996 and September 30, 1996 and outstanding 18,592,119 shares at December 31, 1996 and at September 30, 1996 160,638 160,638 Capital in excess of par 56,012,910 56,012,910 Retained earnings 47,298,663 44,008,465 ---------------------------- 103,472,211 100,182,013 Less 1,487,557 treasury shares at cost, at December 31, 1996 and at September 30, 1996, respectively 2,648,256 2,648,256 Stock subscriptions receivable 583,900 583,900 ---------------------------- Total stockholders' equity 100,240,055 96,949,857 ---------------------------- Total liabilities and stockholders' equity $149,333,838 $145,550,201 ============================
See notes to condensed consolidated financial statements. NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended December 31, ------------------------- 1996 1995 ----------- ----------- Net sales $47,327,714 $38,589,126 ------------------------- Costs and expenses: Cost of sales 22,570,861 20,810,228 Catalog printing, postage and promotion 4,050,158 4,564,180 Selling, general and administrative 14,971,935 13,515,907 ------------------------- 41,592,954 38,890,315 ------------------------- Income (loss) from operations 5,734,760 (301,189) ------------------------- Other income (charges): Interest expense (462,319) (304,898) Miscellaneous, net 211,222 194,460 ------------------------- (251,097) (110,438) ------------------------- Income (loss) before income taxes (benefit) 5,483,663 (411,627) Income taxes (benefit) 2,193,465 (160,485) ------------------------- Net income (loss) $ 3,290,198 ($251,142) ========================= Earnings (loss) per common share and common share equivalents $ 0.16 ($0.01) ========================= Weighted average common shares and common share equivalents 20,042,782 19,851,070 =========================
See notes to condensed consolidated financial statements. NBTY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended December 31, --------------------------- 1996 1995 ----------- ------------ Net income (loss) $ 3,290,198 ($ 251,142) Adjustments to reconcile net income to cash used in operating activities: Gain on sale of property, plant and equipment (150) Depreciation and amortization 1,499,155 1,296,618 Provision for allowance for doubtful accounts 139,090 16,976 Changes in assets and liabilities, net of acquistions: (Increase) decrease in accounts receivable (2,237,437) 1,477,035 Increase in inventories (3,952,073) (4,747,784) Increase in prepaid catalog costs and other current assets (363,127) (1,976,897) Decrease other assets 147,762 1,515,380 Increase in accounts payable 2,735,238 664,045 Decrease in accrued expenses (1,976,851) (2,738,978) --------------------------- Net cash used in operating activities (718,195) (4,744,747) --------------------------- Cash flow from investing activities: Increase in intangible assets (43,328) Purchase of property, plant and equipment (3,194,019) (6,908,752) Proceeds from sale of property, plant and equipment 150 Purchase of short-term investments (2,778,061) Proceeds from sale of direct-mail cosmetics business 350,000 Receipt of payments from direct-mail cosmetics business 257,058 --------------------------- Net cash used in investing activities (5,714,874) (6,602,080) --------------------------- Cash flows from financing activities: Borrowings under long term debt agreements 1,657,612 Principal payments under long-term debt agreements and capital leases (264,949) (86,594) Purchase of treasury stock (172,118) --------------------------- Net cash provided by (used in) financing activities (264,949) 1,398,900 --------------------------- Net decrease in cash and cash equivalents (6,698,016) (9,947,927) Cash and cash equivalents at beginning of year 9,292,374 10,378,476 --------------------------- Cash and cash equivalents at end of quarter $ 2,594,358 $ 430,549 =========================== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ 462,319 $ 295,023 Cash paid during the period for taxes $ 1,989,597 $ 53,444 ===========================
See notes to consolidated condensed financial statements. NBTY, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended December 31, 1996 and 1995 Supplemental non-cash investing and financing information: The Company entered into capital leases for machinery and equipment aggregating $668,186 for the three months ended December 31, 1995. In November 1995, options were exercised with 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 those options, the Company received a compensation deduction for tax purposes of approximately $2,362,500 and a tax benefit of approximately $920,000. On October 9, 1995, the Company sold certain assets of its directmail 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. 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, 1996 and results of operations for the three months ended December 31, 1996 and 1995 and statements of cash flows for the three months ended December 31, 1996 and 1995. The consolidated condensed balance sheet as of September 30, 1996 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, 1996. 2. The results of operations and cash flows for the three months ended December 31, 1996 are not necessarily indicative of the results to be expected for the full year. 3. Sale of Direct-Mail Cosmetic Business: 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. 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, 1996 1996 ------------ ------------ (UNAUDITED) Raw materials and work-in-process $ 21,908,719 $ 18,654,335 Finished goods 20,113,425 19,415,736 ---------------------------- $ 42,022,144 $ 38,070,071 ============================
5. Intangible assets, at cost, acquired at various dates are as follows:
December 31, September 30, 1996 1996 ------------ ------------- (UNAUDITED) Goodwill $ 469,400 $ 469,400 Customer lists 8,783,475 8,783,475 Trademark and licenses 1,201,205 1,201,205 Covenants not to compete 1,304,538 1,304,538 ---------------------------- 11,758,618 11,758,618 Less, accumulated amortization 7,890,666 7,784,045 ---------------------------- $ 3,867,952 $ 3,974,573 ============================
6. Accrued expenses:
December 31, September 30, 1996 1996 ------------ ------------- (UNAUDITED) Payroll and related payroll taxes $ 2,420,571 $ 2,730,453 Customer deposits 1,374,590 1,862,837 Accrued purchases 548,187 1,765,420 Income taxes payable 3,113,735 2,670,270 Other 5,270,573 5,675,527 ---------------------------- $ 12,727,656 $ 14,704,507 ============================
7. Treasury stock. The Company purchased 31,000 shares for $302,247 for the three months ended December 31, 1995 in open market transactions using working capital. The average price per share was $5.55. 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, 1996 and 1995. The calculation of primary earnings per share include 1,450,663 common stock equivalent shares for the three months ended December 31, 1996. Common stock equivalent shares are omitted from the earnings per share calculation for the period ended December 31, 1995 as its inclusion would have been anti-dilutive. 9. In November 1995, options were exercised with 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 those options, the Company received a compensation deduction for tax purposes of approximately $2,362,500 and a tax benefit of approximately $920,000. The following is a summary of changes in outstanding options for the Company's Stock Option Plans for the three month period ended December 31, 1996:
Exercise Price -------------- Shares under option, September 30, 1996 (fully exercisable) 1,523,000 $.63 - $.92 Options exercised. - --------- Shares exercisable, December 31, 1996 (fully exercisable) 1,523,000 $.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, -------------------- 1996 1995 -------- -------- Net sales . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% Cost and expenses: Cost of sales . . . . . . . . . . . . . . . . . 47.7 53.9 Catalog printing, postage and promotion . . . . 8.6 11.8 Selling, general and administrative . . . . . . 31.6 35.1 87.9 100.8 Income (loss) from operations . . . . . . . . . . 12.1 (0.8) Other income (expenses), net . . . . . . . . . . (0.5) (0.3) Income (loss) before income taxes (benefit) . . . 11.6 (1.1) Income taxes (benefit) . . . . . . . . . . . . . 4.6 (0.4) Net income (loss) . . . . . . . . . . . . . . . . 7.0% (0.7%)
Results of Operations - --------------------- For the three months ended December 31, 1996 compared to the three months ended December 31, 1995: Net sales. Net sales in the first quarter ended December 31, 1996 were $47,327,714 compared with $38,589,126 for the prior comparable period, an increase of $8,738,588 or 22.6%. Wholesale-retail sales increased $6.8 million or 26.1% due to an increase in the number of retail stores over the comparable period; mail order sales were $14.6 million, compared to $12.5 for the prior comparable period, an increase of $2.1 or 17.0% due to the introduction of new products and a successful space-ad promotion. Sales for the Company's new mail order operation in the United Kingdom were $0.6 million in 1996. This operation did not exist in 1995. Costs and expenses. Cost of sales as a percentage of sales was 47.7% for 1996 and 53.9% for 1995. The decrease was associated with lower raw material costs, manufacturing efficiencies and changes in product mix. Catalog printing, postage, and promotion expenses were $4,050,158 in 1996, a decrease of $514,022 (11.6% decrease), from $4,564,180 in 1995. As a percentage of sales, expenses were 8.6% for the current quarter and 11.8% for the prior comparable quarter. The decrease was attributable to a less active advertising schedule. Selling, general and administrative expenses were $14,971,935 for the quarter, or 31.6% as a percentage of sales, compared with $13,515,907, or 35.1% as a percentage of sales, an increase of $1,456,028. The largest segments are indirect salaries, fringe benefits, freight and building. Increases were primarily in indirect salaries, building and outside services. These expenses increased due to the retail store expansion and the opening of the international mail order operations. Other income includes rental income of $146,663. Income before income taxes was $5,483,663 for 1996 and a loss before income tax benefit of $411,627 for 1995. After income taxes, the Company had a net profit of $3,290,198 (or earnings per share of $0.16) for the quarter ended December 31, 1996, and a net loss of $251,142 (or loss per share of $0.01) for the three months ended December 31, 1995. Liquidity and Capital Resources - ------------------------------- The Company believes it has adequate working capital to meet its obligations in the normal course of business. On April 3, 1996, the Company renewed a revolving credit agreement with two banks that provides for unsecured borrowings up to $15,000,000 which expires March 31, 1999. At December 31, 1996, there were no borrowings under this agreement. In April 1996, the Company obtained a $6,000,000 first mortgage with a fixed interest rate of 7.375%, collateralized by the underlying real estate. The mortgage has monthly principal and interest payments of $55,196 for fifteen years through 2011. The Company renewed a $10,000,000 capital lease facility. Capital improvements The Company expects to build a new manufacturing facility. The estimated cost of land, building and equipment is approximately $25 million dollars and will be financed by internally generated funds and mortgage financing. The Company has committed to a $4 million automated picking and packing system for its mail-order distribution which will be funded by lease financing. Net cash used in operating activities was $718,195 and $4,744,747 in 1996 and 1995, respectively. Net cash used in investing activities was $5,714,874 and $6,602,080 in 1996 and 1995, respectively. Net cash used in financing activities was $264,949 in 1996 and provided by financing activities was $1,398,900 in 1995. 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. Management believes that inflation did not have a significant impact on operations. This filing contains certain forward-looking statements and information to the Company that are based on the beliefs of management, as well as assumptions made by and information currently available to the Company's management. When used in this document, the words "anticipate," "believe," "estimate," and "expect" and similar expressions, as they relate to the Company are intended to identify forwardlooking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. The Company does not intend to update these forward-looking statements. 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 10K for the year ended September 30, 1996. Item 2. Changes in Securities Not applicable. Item 3. Defaults upon Senior Securities Not applicable. 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 the fiscal year ending September 30, 1997. 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 there unto duly authorized. NBTY, INC. ---------------------------------------- Date February 5, 1997 /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-30-1997 OCT-01-1996 DEC-31-1996 16,397,044 0 14,399,160 932,759 42,022,144 81,086,753 92,259,932 28,718,291 149,333,838 27,360,697 16,003,709 0 0 160,638 100,079,417 149,333,838 47,327,714 47,327,714 22,570,861 22,570,861 0 0 462,319 5,483,663 2,193,465 3,290,198 0 0 0 3,290,198 0.16 0.16
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