Condensed Consolidating Financial Statements of Guarantors of the Notes

12 Months Ended

Sep. 30, 2011

Condensed Consolidating Financial Statements of Guarantors of the Notes

Condensed Consolidating Financial Statements of Guarantors of the Notes

24. Condensed Consolidating Financial Statements of Guarantors of the Notes

        The 9% senior notes due 2018 were issued by NBTY and are guaranteed by each of its current and future direct and indirect subsidiaries, subject to certain exceptions. These guarantees are full, unconditional and joint and several. The following condensed consolidating financial information presents:

• (1)

  Condensed consolidating balance sheets as of September 30, 2011 and 2010, and statements of income and statements of cash flows for the fiscal years ended September 30, 2011, 2010 and 2009 of (a) NBTY, Inc., the parent and issuer, (b) the guarantor subsidiaries, (c) the non-guarantor subsidiaries, and (d) the Company on a consolidated basis, and
  
  

  (2)

  Elimination entries necessary to consolidate NBTY, Inc., the parent, with guarantor and non-guarantor subsidiaries.

        The condensed consolidating financial statements are presented using the equity method of accounting for investments in wholly-owned subsidiaries. Under this method, the investments in subsidiaries are recorded at cost and adjusted for our share of the subsidiaries' cumulative results of operations, capital contributions, distributions and other equity changes. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. This financial information should be read in conjunction with the consolidated financial statements and other notes related thereto.

Successor
Condensed Consolidating Balance Sheet
As of September 30, 2011

			Parent Company			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
	Cash and cash equivalents		$	261,098		$	3,288	$	130,020		$	—		$	394,406
	Accounts receivable, net			—			112,841		25,803			—			138,644
	Intercompany			1,454,068			—		111,471			(1,565,539	)		—
	Inventories			—			517,121		158,248			—			675,369
	Deferred income taxes			—			23,706		634			—			24,340
	Other current assets			—			31,615		27,877			—			59,492
		Total current assets		1,715,166			688,571		454,053			(1,565,539	)		1,292,251
Property, plant and equipment, net				46,507			287,356		145,410			—			479,273
Goodwill				—			813,315		398,884			—			1,212,199
Other intangible assets, net				—			1,645,970		359,183			—			2,005,153
Other assets				—			106,622		58			—			106,680
Intercompany loan receivable				325,985			40,734		—			(366,719	)		—
Investments in subsidiaries				2,609,651			—		—			(2,609,651	)		—
	Total assets		$	4,697,309		$	3,582,568	$	1,357,588		$	(4,541,909	)	$	5,095,556
Liabilities and Stockholders' Equity
Current liabilities:
	Current portion of long-term debt		$	17,500		$	—	$	—		$	—		$	17,500
	Accounts payable			—			131,307		55,204			—			186,511
	Intercompany			—			1,565,539					(1,565,539	)		—
	Accrued expenses and other current liabilities			11,262			123,242		54,038			—			188,542
		Total current liabilities		28,762			1,820,088		109,242			(1,565,539	)		392,553
Intercompany loan payable				—			—		366,718			(366,718	)		—
Long-term debt, net of current portion				2,369,375			—		—			—			2,369,375
Deferred income taxes				742,968			—		5,910			—			748,878
Other liabilities				19,309			12,936		15,610			—			47,855
		Total liabilities		3,160,414			1,833,024		497,480			(1,932,257	)		3,558,661
Commitments and contingencies
Stockholders' Equity:
	Common stock			—			—		—			—			—
	Capital in excess of par			1,552,188			352,020		301,271			(653,291	)		1,552,188
	Retained earnings			22,472			1,397,524		572,993			(1,970,517	)		22,472
	Accumulated other comprehensive income			(37,765	)		—		(14,156	)		14,156			(37,765	)
		Total stockholders' equity		1,536,895			1,749,544		860,108			(2,609,652	)		1,536,895
		Total liabilities and stockholders' equity	$	4,697,309		$	3,582,568	$	1,357,588		$	(4,541,909	)	$	5,095,556

Predecessor
Condensed Consolidating Balance Sheet
As of September 30, 2010

			Parent Company			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
	Cash and cash equivalents		$	281,457		$	—	$	65,026		$	—		$	346,483
	Accounts receivable, net			—			107,007		28,370			—			135,377
	Intercompany			—			459,164		777,375			(1,236,539	)		—
	Inventories			—			533,360		135,536			—			668,896
	Deferred income taxes			—			39,488		642			—			40,130
	Other current assets			—			19,162		47,828			—			66,990
		Total current assets		281,457			1,158,181		1,054,777			(1,236,539	)		1,257,876
Property, plant and equipment, net				34,850			231,865		125,184			—			391,899
Goodwill				—			197,701		137,458			—			335,159
Other intangible assets, net				—			171,164		23,357			—			194,521
Other assets				—			20,376		937			—			21,313
Intercompany loan receivable				336,310			40,733		—			(377,043	)		—
Investments in subsidiaries				2,388,648			—		—			(2,388,648	)		—
	Total assets		$	3,041,265		$	1,820,020	$	1,341,713		$	(4,002,230	)	$	2,200,768
Liabilities and Stockholders' Equity
Current liabilities:
	Current portion of long-term debt		$	62,658		$	—	$	15,500		$	—		$	78,158
	Accounts payable			—			105,073		53,276			—			158,349
	Intercompany			1,236,539			—		—			(1,236,539	)		—
	Accrued expenses and other current liabilities			—			130,965		41,066			—			172,031
		Total current liabilities		1,299,197			236,038		109,842			(1,236,539	)		408,538
Intercompany loan payable				—			—		377,043			(377,043	)		—
Long-term debt, net of current portion				317,252			—		23,876			—			341,128
Deferred income taxes				33,897			—		4,278			—			38,175
Other liabilities				10,966			3,010		18,998			—			32,974
		Total liabilities		1,661,312			239,048		534,037			(1,613,582	)		820,815
Commitments and contingencies
Stockholders' Equity:
	Common stock			508			—		—			—			508
	Capital in excess of par			186,248			352,016		301,271			(653,287	)		186,248
	Retained earnings			1,198,467			1,228,956		513,456			(1,742,412	)		1,198,467
	Accumulated other comprehensive income			(5,270	)		—		(7,051	)		7,051			(5,270	)
		Total stockholders' equity		1,379,953			1,580,972		807,676			(2,388,648	)		1,379,953
		Total liabilities and stockholders' equity	$	3,041,265		$	1,820,020	$	1,341,713		$	(4,002,230	)	$	2,200,768

Successor
Condensed Consolidating Statement of Income
Year Ended September 30, 2011

			Parent Company			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales			$	—		$	2,129,211	$	961,403		$	(132,123	)	$	2,958,491
Costs and expenses:
	Cost of sales			—			1,349,302		466,307			(132,123	)		1,683,486
	Advertising, promotion and catalog			—			120,882		32,033			—			152,915
	Selling, general and administrative			73,315			404,659		365,671			—			843,645
	Merger expenses			43,857			—		622			—			44,479
				117,172			1,874,843		864,633			(132,123	)		2,724,525
Income from operations				(117,172	)		254,368		96,770			—			233,966
Other income (expense):
		Equity in income of subsidiaries		228,110			—		—			(228,110	)		—
		Intercompany interest		10,579			—		(10,579	)		—			—
		Interest		(195,497	)		—		(40	)		—			(195,537	)
		Miscellaneous, net		(33	)		4,977		(3,464	)		—			1,480
				43,159			4,977		(14,083	)		(228,110	)		(194,057	)
Income before provision for income taxes				(74,013	)		259,345		82,687			(228,110	)		39,909
(Benefit) provision for income taxes				(103,932	)		90,769		23,153			—			9,990
Net income			$	29,919		$	168,576	$	59,534		$	(228,110	)	$	29,919

Predecessor
Condensed Consolidating Statement of Income
Year Ended September 30, 2010

			Parent Company			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales			$	—		$	2,067,065	$	833,395		$	(73,723	)	$	2,826,737
Costs and expenses:
	Cost of sales			—			1,225,826		369,452			(73,723	)		1,521,555
	Advertising, promotion and catalog			—			112,827		24,729			—			137,556
	Selling, general and administrative			74,129			355,011		338,806			—			767,946
	Merger expenses			45,903			—		—			—			45,903
				120,032			1,693,664		732,987			(73,723	)		2,472,960
Income from operations				(120,032	)		373,401		100,408			—			353,777
Other income (expense):
		Equity in income of subsidiaries		308,889			—		—			(308,889	)		—
		Intercompany interest		8,754			—		(8,754	)		—			—
		Interest		(29,388	)		—		(807	)		—			(30,195	)
		Miscellaneous, net		123			4,445		(435	)		—			4,133
				288,378			4,445		(9,996	)		(308,889	)		(26,062	)
Income before provision for income taxes				168,346			377,846		90,412			(308,889	)		327,715
(Benefit) provision for income taxes				(45,324	)		132,245		27,124			—			114,045
Net income			$	213,670		$	245,601	$	63,288		$	(308,889	)	$	213,670

Predecessor
Condensed Consolidating Statement of Income
Year Ended September 30, 2009

			Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales			$	—		$	1,902,258		$	757,672		$	(77,980	)	$	2,581,950
Costs and expenses:
	Cost of sales			—			1,197,482			338,935			(77,980	)		1,458,437
	Advertising, promotion and catalog			—			90,075			20,023			—			110,098
	Selling, general and administrative			77,600			342,341			317,845			—			737,786
	IT project termination costs			—			9,418			2,300			—			11,718
				77,600			1,639,316			679,103			(77,980	)		2,318,039
Income from operations				(77,600	)		262,942			78,569			—			263,911
Other income (expense):
		Equity in income of subsidiaries		211,791			—			—			(211,791	)		—
		Intercompany interest		18,805			—			(18,805	)		—			—
		Interest		(33,060	)		(2	)		(1,820	)		—			(34,882	)
		Miscellaneous, net		(480	)		(495	)		914			—			(61	)
				197,056			(497	)		(19,711	)		(211,791	)		(34,943	)
Income before provision for income taxes				119,456			262,445			58,858			(211,791	)		228,968
(Benefit) provision for income taxes				(26,273	)		91,855			17,657			—			83,239
Net income			$	145,729		$	170,590		$	41,201		$	(211,791	)	$	145,729

Successor
Condensed Consoldating Statement of Cash Flows
Fiscal Year Ended September 30, 2011

					Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
	Net income				$	29,919		$	168,576		$	59,534		$	(228,110	)	$	29,919
	Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
		Equity in earnings of subsidiaries				(228,110	)		—			—			228,110			—
		Impairments and disposals of assets, net				—			1,555			1,118			—			2,673
		Depreciation and amortization				4,840			76,616			21,879			—			103,335
		Foreign currency transaction loss				(331	)		—			394			—			63
		Stock-based compensation				1,506			179			103			—			1,788
		Amortization of deferred charges				15,076			—			—			—			15,076
		Write off of financing fees				20,824			—			—			—			20,824
		Allowance for doubtful accounts				—			5,468			—			—			5,468
		Amortization of incremental inventory fair value				—			83,952			38,152			—			122,104
		Inventory reserves				—			22,484			—			—			22,484
		Deferred income taxes				—			(30,934	)		—			—			(30,934	)
		Changes in operating assets and liabilities, net of acquisition:
			Accounts receivable			—			(10,132	)		1,997			—			(8,135	)
			Inventories			—			(11,007	)		(27,854	)		—			(38,861	)
			Other assets			—			4,303			5,033			—			9,336
			Accounts payable			—			25,261			2,090			—			27,351
			Accrued expenses and other liabilities			—			(14,936	)		17,082			—			2,146
			Intercompany accounts			322,327			(297,364	)		(24,963	)		—			—
				Net cash (used in) provided by operating activities		166,051			24,021			94,565			—			284,637
Cash flows from investing activities:
	Purchase of property, plant and equipment					(1,652	)		(17,443	)		(25,139	)		—			(44,234	)
	Cash paid for acquisitions					(3,983,806	)		(3,196	)		(807	)		—			(3,987,809	)
				Net cash used in investing activities		(3,985,458	)		(20,639	)		(25,946	)		—			(4,032,043	)
Cash flows from financing activities:
	Principal payments under long-term debt agreements and capital leases					(13,125	)		(429	)		(381	)		—			(13,935	)
	Payments for financing fees					(138,227	)		—			—			—			(138,227	)
	Proceeds from borrowings					2,400,000			—			—			—			2,400,000
	Capital contribution					1,550,400			—			—			—			1,550,400
				Net cash provided by (used in) financing activities		3,799,048			(429	)		(381	)		—			3,798,238
Effect of exchange rate changes on cash and cash equivalents						—			335			(3,244	)		—			(2,909	)
Net (decrease) increase in cash and cash equivalents						(20,359	)		3,288			64,994			—			47,923
Cash and cash equivalents at beginning of year						281,457			—			65,026			—			346,483
Cash and cash equivalents at end of year					$	261,098		$	3,288		$	130,020		$	—		$	394,406

Predecessor
Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended September 30, 2010

					Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
	Net income				$	213,670		$	245,601		$	63,288		$	(308,889	)	$	213,670
	Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
		Equity in earnings of subsidiaries				(308,889	)		—			—			308,889			—
		Impairments and disposals of assets, net				—			10,033			1,292			—			11,325
		Depreciation and amortization				4,909			44,872			17,023			—			66,804
		Foreign currency transaction loss				1,234			—			(109	)		—			1,125
		Stock-based compensation				21,865			617			627			—			23,109
		Amortization of deferred charges				1,412			—			—			—			1,412
		Allowance for doubtful accounts				—			1,256			—			—			1,256
		Inventory reserves				—			934			—			—			934
		Deferred income taxes				—			(17,751	)		4,751			—			(13,000	)
		Excess income tax benefit from exercise of stock options				(6,646	)		—			—			—			(6,646	)
		Changes in operating assets and liabilities, net of acquisition:
			Accounts receivable			—			21,759			(367	)		—			21,392
			Inventories			—			(5,106	)		(6,291	)		—			(11,397	)
			Other assets			—			2,890			(4,015	)		—			(1,125	)
			Accounts payable			—			(4,959	)		15,707			—			10,748
			Accrued expenses and other liabilities			—			39,131			13,014			—			52,145
				Net cash (used in) provided by operating activities		(72,445	)		339,277			104,920			—			371,752
Cash flows from investing activities:
	Intercompany accounts					353,896			(317,852	)		(36,044	)					—
	Purchase of property, plant and equipment					(1,829	)		(21,279	)		(46,795	)		—			(69,903	)
	Proceeds from sale of investments					2,000			—			—			—			2,000
	Cash paid for acquisitions, net of cash acquired					—			—			(14,200	)		—			(14,200	)
				Net cash provided by (used in) investing activities		354,067			(339,131	)		(97,039	)		—			(82,103	)
Cash flows from financing activities:
	Principal payments under long-term debt agreements and capital leases					(56,264	)		(146	)		(747	)		—			(57,157	)
	Termination of interest rate swaps					(5,813	)		—			—			—			(5,813	)
	Payments for financing fees					(1,523	)		—			—			—			(1,523	)
	Excess income tax benefit from exercise of stock options					6,646			—			—			—			6,646
	Proceeds from stock options exercised					10,620			—			—			—			10,620
				Net cash used in financing activities		(46,334	)		(146	)		(747	)		—			(47,227	)
Effect of exchange rate changes on cash and cash equivalents						—			—			(1,940	)		—			(1,940	)
Net increase in cash and cash equivalents						235,288			—			5,194			—			240,482
Cash and cash equivalents at beginning of year						46,169			—			59,832			—			106,001
Cash and cash equivalents at end of year					$	281,457		$	—		$	65,026		$	—		$	346,483

Predecessor
Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended September 30, 2009

					Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
	Net income				$	145,729		$	170,590		$	41,201		$	(211,791	)	$	145,729
	Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
		Equity in earnings of subsidiaries				(211,791	)		—			—			211,791			—
		Impairments and disposals of assets, net				122			13,411			496			—			14,029
		Depreciation and amortization				3,771			47,661			17,456			—			68,888
		Foreign currency transaction loss				2,698			821			1,033			—			4,552
		Stock-based compensation				2,988			142			266			—			3,396
		Amortization of deferred charges				1,270			—			—			—			1,270
		Allowance for doubtful accounts				—			(2,917	)		563			—			(2,354	)
		Inventory reserves				—			6,889			—			—			6,889
		Deferred income taxes				—			7,325			(330	)		—			6,995
		Excess income tax benefit from exercise of stock options				(55	)		—			—			—			(55	)
		Changes in operating assets and liabilities, net of acquisition:
			Accounts receivable			—			(28,415	)		(3,953	)		—			(32,368	)
			Inventories			—			(62,536	)		(25,812	)		—			(88,348	)
			Other assets			—			4,548			(3,293	)		—			1,255
			Accounts payable			—			14,756			2,996			—			17,752
			Accrued expenses and other liabilities			—			(9,621	)		(1,072	)		—			(10,693	)
				Net cash (used in) provided by operating activities		(55,268	)		162,654			29,551			—			136,937
Cash flows from investing activities:
	Intercompany accounts					134,115			(134,318	)		203						—
	Purchase of property, plant and equipment					(4,951	)		(28,503	)		(9,921	)					(43,375	)
	Escros refund, net of purchase price adjustments					11,904			—			1,479			—			13,383
	Proceeds from sale of assets					—			2,000			—			—			2,000
				Net cash provided by (used in) investing activities		141,068			(160,821	)		(8,239	)		—			(27,992	)
Cash flows from financing activities:
	Proceeds from borrowings under the Revolving Credit Facility					95,000			—			—			—			95,000
	Principal payments under the Revolving Credit Facility					(155,000	)		—			—			—			(155,000	)
	Principal payments under long-term debt agreements and capital leases					(30,794	)		(1,833	)		(590	)		—			(33,217	)
	Excess income tax benefit from exercise of stock options					55			—			—			—			55
	Proceeds from stock options exercised					1,446			—			—			—			1,446
				Net cash used in financing activities		(89,293	)		(1,833	)		(590	)		—			(91,716	)
Effect of exchange rate changes on cash and cash equivalents						—			—			(1,408	)		—			(1,408	)
Net (decrease) increase in cash and cash equivalents						(3,493	)		—			19,314			—			15,821
Cash and cash equivalents at beginning of year						49,662			—			40,518			—			90,180
Cash and cash equivalents at end of year					$	46,169		$	—		$	59,832		$	—		$	106,001