EX-99.1 3 y88586exv99w1.txt PRESS RELEASE FOR IMMEDIATE RELEASE --------------------- Contact: Harvey Kamil Carl Hymans NBTY, Inc. G.S. Schwartz & Co. President and CFO 212-725-4500 631-244-2020 carlh@schwartz.com NBTY REPORTS STRONG THIRD QUARTER RESULTS BOHEMIA, N.Y. - JULY 22, 2003 - NBTY, Inc. (Nasdaq: NBTY) (www.NBTY.com), a leading manufacturer and marketer of nutritional supplements, today announced results for the fiscal third quarter and nine months ended June 30, 2003. For the fiscal third quarter ended June 30, 2003, net sales increased 22% to $308 million compared to net sales of $252 million for the fiscal third quarter last year. Net income for the fiscal third quarter was $29 million, or $0.43 per diluted share, compared to reported net income of $30 million, or $0.44 per diluted share for the fiscal third quarter of 2002. Included in the results for the current quarter is a $4 million after-tax benefit to record available foreign tax credits. Results for the fiscal third quarter of 2002 include a $15 million pre-tax settlement payment received from price fixing litigation in which the Company was a plaintiff. Excluding this one-time payment, net income would have been $20 million or $0.30 per diluted share for the fiscal third quarter last year. For the nine months ended June 30, 2003, net sales increased 15% to $828 million compared to $719 million for the same period last fiscal year. Net income for the nine-month period was $66 million, or $0.96 per diluted share, compared with reported net income of $66 million, or $0.98 per diluted share. Included in the results for the current nine-month period is a $4 million after-tax benefit to record available foreign tax credits. Results for the fiscal nine-month period of 2002 include a total of $21 million in pre-tax settlement payments in the aforementioned price fixing litigation. Excluding these one-time payments, net income for the nine months ended June 30, 2002 would have been $54 million, or $0.79 per diluted share for the comparable period last year. NBTY continues to enhance its financial strength. At June 30, 2003, total assets were $846 million and working capital was $218 million compared with total assets of $725 million and working capital of $153 million at June 30, 2002. OPERATIONS FOR THE FISCAL THIRD QUARTER ENDED JUNE 30, 2003 Sales for the Nature's Bounty wholesale division increased 17% to $94 million from $80 million for the comparable period of fiscal 2002. The increase reflects greater sales of core products and strong sales response to new product introductions and promotions. NBTY remains focused on increasing market share in the wholesale arena and expanding its presence in the nutritional supplement marketplace. The Nature's Bounty brand continues to be recognized for its ability to generate greater sales than competing brands. By utilizing consumer sales information received from its Vitamin World and direct-response/e-commerce operations, the Company has been able to provide its mass-market customers with tools to drive sales. The Company continues to respond to consumer preferences and to monitor the market for trends and ideas, and these efforts have translated into increased sales. Vitamin World third quarter sales were $54 million compared to $51 million a year ago, an increase of 6%. Same store sales increased 5% for the quarter. Vitamin World operations continued to generate profitability with pre-tax income of $902 thousand compared to a loss of $94 thousand for the comparable quarter last year. Vitamin World currently has 536 stores in operation nationwide. Total sales from NBTY's European retail operations increased 39% to $99 million from $71 million a year ago. Of this increase, $15 million is attributed to Health & Diet Group Ltd., with 56 GNC stores in the United Kingdom, and the De Tuinen chain of health food stores, with 63 stores in the Netherlands. The integration of these two strategic acquisitions is on schedule and profitability is anticipated within the next two quarters. Holland & Barrett continues to be a leader in the UK and Ireland. Same store sales for this operation increased 18% for the fiscal third quarter. The total European division currently operates 586 stores in the UK, Ireland, and the Netherlands. Revenues from Puritan's Pride direct response/e-commerce operations for the fiscal third quarter increased 23% to $61 million from $49 million for the comparable prior period. The increase in sales reflects the success of key investments made in the second quarter in additional advertising, sales promotions and faster product delivery to customers. ACQUISITION OF REXALL SUNDOWN As part of its strategic effort to expand the Company's wholesale operation, NBTY agreed to acquire Rexall Sundown, Inc. ("Rexall") from Royal Numico, N.V. for $250 million in cash. NBTY has obtained regulatory approval for this acquisition and expects to close the transaction on July 24, 2003. To finance this transaction the Company will enter into a new senior credit facility consisting of $275 million in term loans and $100 million in a revolving credit agreement. Rexall, a prominent nutritional supplement company, had sales for the last twelve months ended March 31, 2003 of $434 million with pro forma EBITDA of $39 million. Rexall's portfolio of nutritional supplement brands includes Rexall, Sundown, Osteo Bi-Flex, CarbSolutions, MET-Rx and WORLDWIDE Sports Nutrition. NBTY Chairman and CEO, Scott Rudolph, said: "Once again, we have recorded another strong quarter. The Rexall acquisition is indicative of our commitment to the wholesale segment. We anticipate this acquisition to provide substantial synergies and further solidify the Company's position as the dominant force in the worldwide nutritional supplement market. It will provide NBTY with an enhanced sales infrastructure, additional manufacturing capacity, and the opportunity to offer a greater number and variety of products to our growing customer base. We are confident in the long-term outlook for the Company and in NBTY's ability to further capitalize on market opportunities." ABOUT NBTY NBTY is a leading vertically integrated U.S. manufacturer and distributor of a broad line of high-quality, value-priced nutritional supplements in the United States and throughout the world. The Company markets more than 1,100 products under several brands, including Nature's Bounty(R), Vitamin World(R), Puritan's Pride(R), Holland & Barrett(R), Nutrition Headquarters(R), American Health(R), Nutrition Warehouse(R) and GNC (UK)(R). This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. All of these forward-looking statements, which can be identified by the use of terminology such as "subject to," "believe," "expects," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy which, although believed to be reasonable, are inherently uncertain. Factors which may materially affect such forward-looking statements include: (i) slow or negative growth in the nutritional supplement industry; (ii) interruption of business or negative impact on sales and earnings due to acts of war, terrorism, bio-terrorism, civil unrest or disruption of mail service; (iii) adverse publicity regarding the consumption of nutritional supplements; (iv) inability to retain customers of companies (or mailing lists) recently acquired; (v) increased competition; (vi) increased costs; (vii) loss or retirement of key members of management; (viii) increases in the cost of borrowings and unavailability of additional debt or equity capital; (ix) unavailability of, or inability to consummate, advantageous acquisitions in the future, including those that may be subject to bankruptcy approval or the inability of the Company (as defined below) to integrate acquisitions into the mainstream of its business; (x) changes in general worldwide economic and political conditions in the markets in which the Company may compete from time to time; (xi) the inability of the Company to gain and/or hold market share of its wholesale and retail customers; (xii) loss or reduction in ephedra sales; (xiii) unavailability of electricity in certain geographical areas; (xiv) exposure to and expense of defending and resolving, product liability claims and other litigation; (xv) the ability of the Company to successfully implement its business strategy; (xvi) the inability of the Company to manage its retail, wholesale, manufacturing and other operations efficiently; (xvii) consumer acceptance of the Company's products; (xviii) the inability of the Company to renew leases on its retail locations; (xix) inability of the Company's retail stores to attain or maintain profitability; (xx) the absence of clinical trials for many of the Company's products; (xxi) sales and earnings volatility and/or trends; (xxii) the effect on Company sales of the rapidly changing nature of the Internet and on-line commerce; (xxiii) fluctuations in foreign currencies, and more particularly the British Pound; (xxiv) import-export controls on sales to foreign countries; (xxv) the inability of the Company to secure favorable new sites for, and delays in opening, new retail locations; (xxvi) introduction of new federal, state, local or foreign legislation or regulation or adverse determinations by regulators, and more particularly the Food Supplements Directive and the Traditional Herbal Medicinal Products Directive in Europe; (xxvii) the mix of the Company's products and the profit margins thereon; (xxviii) the availability and pricing of raw materials; (xxix) risk factors discussed in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"); and (xxx) other factors beyond the Company's control. Readers are cautioned not to place undue reliance on forward-looking statements. The Company cannot guarantee future results, trends, events, levels of activity, performance or achievements. The Company does not undertake and specifically declines any obligation to update, republish or revise forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events. NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars and shares in thousands, except per share amounts) For the three months ended June 30, 2003 2002 --------- --------- Net sales $ 308,474 $ 251,987 Cost and expenses: Cost of sales 141,196 111,907 Catalog printing, postage and promotion 15,378 12,544 Selling, general and administrative 110,924 89,217 Litigation recovery of raw material costs (15,051) --------- --------- 267,498 198,617 --------- --------- Income from operations 40,976 53,370 --------- --------- Other income (Expense): Interest (3,890) (4,354) Miscellaneous, net 2,023 270 --------- --------- (1,867) (4,084) --------- --------- Income before income taxes 39,109 49,286 Provision for income taxes 9,641 19,579 --------- --------- Net income $ 29,468 $ 29,707 ========= ========= Net income per share: Basic $ 0.44 $ 0.45 ========= ========= Diluted $ 0.43 $ 0.44 ========= ========= Weighted average common shares outstanding: Basic 66,263 66,056 ========= ========= Diluted 68,287 68,017 ========= ========= NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars and Shares in Thousands, Except Per Share Amounts) For the nine months ended June 30, 2003 2002 --------- --------- Net sales $ 827,701 $ 718,621 Cost and expenses: Cost of sales 372,555 325,805 Discontinued product charge 6,000 Catalog printing, postage and promotion 46,015 34,285 Selling, general and administrative 303,470 257,765 Litigation recovery of raw material costs (20,518) --------- --------- 728,040 597,337 --------- --------- Income from operations 99,661 121,284 --------- --------- Other income (expense): Interest (11,709) (14,588) Miscellaneous, net 5,536 2,325 --------- --------- (6,173) (12,263) --------- --------- Income before income taxes 93,488 109,021 Provision for income taxes 27,786 42,577 --------- --------- Net income $ 65,702 $ 66,444 ========= ========= Net income per share: Basic $ 0.99 $ 1.01 ========= ========= Diluted $ 0.96 $ 0.98 ========= ========= Weighted average common shares outstanding: Basic 66,232 65,895 ========= ========= Diluted 68,233 67,723 ========= =========
SALES (THOUSANDS) (UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED JUNE 30, JUNE 30, % INCREASE % INCREASE 2003 2002 (% DECREASE) 2003 2002 (% DECREASE) ------------------------------------ ----------------------------------- Wholesale $ 93,939 $ 80,151 17% $252,906 $217,676 16% US Retail / Vitamin World 54,423 51,287 6% 158,242 146,347 8% European Retail / Holland & Barrett / GNC 99,202 71,165 39% 268,903 216,484 24% Direct Response / Puritan's Pride 60,910 49,384 23% 147,650 138,114 7% ------------------------------------ ----------------------------------- Total $308,474 $251,987 22% $827,701 $718,621 15% ------------------------------------ ----------------------------------- GROSS PROFIT PERCENTAGES (UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED JUNE 30, JUNE 30, % INCREASE % INCREASE 2003 2002 (% DECREASE) 2003 2002 (% DECREASE) ------------------------------------ ----------------------------------- Wholesale 41% 45% -4% 41% 40% 1% US Retail / Vitamin World 59% 59% 0% 59% 58% 1% European Retail / Holland & Barrett / GNC 60% 62% -2% 61% 62% -1% Direct Response / Puritan's Pride 62% 60% 2% 62% 62% 0% ------------------------------------ ----------------------------------- Total (without discontinued product charge) 54% 56% -2% 55% 55% 0% Discontinued product charge -1% -1% ------------------------------------ ----------------------------------- Total 54% 56% -2% 54% 55% -1% ------------------------------------ -----------------------------------
INCOME FROM OPERATIONS BY SEGMENT (Thousands) (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED JUNE 30, JUNE 30, 2003 2002 2003 2002 ------------------------- ------------------------- Wholesale $ 21,630 $ 20,559 $ 53,784 $ 44,211 US Retail / Vitamin World 902 (94) 340 (5,034) European Retail / Holland & Barrett / GNC 19,182 18,533 64,542 59,041 Direct Response / Puritan's Pride 19,771 17,711 44,744 51,940 ------------------------- ------------------------- Segment Results 61,485 56,709 163,410 150,158 Corporate Expenses (20,509) (18,390) (57,748) (49,392) Discontinued Product Charge (6,000) Litigation Recovery of Raw Material Costs 15,051 20,518 ------------------------- ------------------------- Income from Operations $ 40,976 $ 53,370 $ 99,662 $ 121,284 ========================= =========================
NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS (Dollars and shares in thousands) June 30, September 30, 2003 2002 --------- ------------ Current assets: Cash and cash equivalents $ 38,459 $ 26,229 Investments in bonds 6,191 8,194 Accounts receivable, less allowance for doubtful accounts of $4,237 at June 30, 2003 and $4,194 at September 30, 2002 56,067 41,362 Inventories 235,477 204,402 Deferred income taxes 12,206 11,206 Prepaid expenses and other current assets 45,838 24,691 --------- --------- Total current assets 394,238 316,084 Property, plant and equipment 421,570 392,033 less accumulated depreciation and amortization 198,507 175,788 --------- --------- 223,063 216,245 Goodwill 174,888 144,999 Intangible assets, net 44,864 48,413 Other assets 8,522 8,936 --------- --------- Total Assets $ 845,575 $ 734,677 ========= ========= NBTY, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY (Dollars and shares in thousands) June 30, September 30, 2003 2002 --------- ------------ Current liabilities: Current portion of long-term debt and capital lease obligations $ 15,079 $ 23,044 Accounts payable 73,884 48,616 Accrued expenses and other current liabilities 87,691 58,714 --------- --------- Total Current Liabilities 176,654 130,374 Long-term debt 154,422 163,874 Deferred income taxes 16,692 16,928 Other liabilities 3,927 4,244 --------- --------- Total liabilities 351,695 315,420 --------- --------- Commitments and contingencies Stockholders' equity: Common stock, $0.008 par; authorized 175,000 shares; issued and outstanding 66,263 shares at June 30, 2003 and 66,133 shares at September 30, 2002 530 529 Capital in excess of par 128,282 126,283 Retained earnings 353,571 287,868 --------- --------- 482,383 414,680 Accumulated other comprehensive income 11,497 4,577 --------- --------- Total stockholders' equity 493,880 419,257 --------- --------- Total liabilities and stockholders' equity $ 845,575 $ 734,677 ========= ========= NBTY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (DOLLARS IN THOUSANDS)
FOR THE NINE MONTHS ENDED JUNE 30, 2003 2002 ---------- ---------- Cash flows from operating activities: Net income $ 65,703 $ 66,444 Adjustments to reconcile net income to net cash provided by operating activities: Gain on disposal/sale of property, plant and equipment (843) (75) Depreciation and amortization 32,539 31,512 Foreign currency exchange rate (gain) loss (970) 463 Amortization of deferred financing costs 591 585 Amortization of bond discount 93 93 Allowance for doubtful accounts (43) 1,384 Deferred income tax (1,000) Compensation expense for ESOP 1,283 Tax benefit from exercise of stock options 113 1,385 Changes in assets and liabilities, net of acquisitions: Accounts receivable (12,912) (11,295) Inventories (13,323) 6,984 Prepaid expenses and other current assets (17,201) (8,206) Other assets (1,209) 1,074 Accounts payable 5,743 (2,571) Accrued expenses and other current liabilities 21,330 19,088 Other liabilities (318) 42 ---------- ---------- Net cash provided by operating activities 79,576 106,907 ---------- ---------- Cash flows from investing activities: Cash paid for acquisitions, net of cash acquired (32,049) (7,256) Purchase of property, plant and equipment (24,852) (16,427) Proceeds from sale of property, plant, and equipment 1,454 1,004 Proceeds from sale of intangibles 25 Purchase of investments (8,242) Release of cash held in escrow 2,403 4,600 ---------- ---------- Net cash used in investing activities (53,044) (26,296) ---------- ---------- Cash flows from financing activities: Principal payments under long-term debt agreements and capital leases (17,510) (79,477) Proceeds from stock options exercised 176 1,385 ---------- ---------- Net cash used in financing activities (17,334) (78,092) ---------- ---------- Effect of exchange rate changes on cash and cash equivalents 3,032 1,623 ---------- ---------- Net increase in cash and cash equivalents 12,230 4,142 Cash and cash equivalents at beginning of period 26,229 34,434 ---------- ---------- Cash and cash equivalents at end of period $ 38,459 $ 38,576 ========== ========== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ 8,656 $ 11,427 Cash paid during the period for taxes $ 21,035 $ 30,619