Sale of Nutritional Bar and Powder Product Assets

6 Months Ended

Mar. 31, 2015

Sale of Nutritional Bar and Powder Product Assets

Sale of Nutritional Bar and Powder Product Assets

2. Sale of Nutritional Bar and Powder Product Assets

        On March 3, 2015, NBTY and Nellson Nutraceutical, LLC ("Nellson") entered into (i) a bar asset purchase agreement,(the "Bar APA") and (ii) a powder asset purchase agreement (the "Powder APA" and, together with the Bar APA, the "APAs"), pursuant to which NBTY agreed to sell certain production assets, raw materials, packaging, labeling, in process products, component inventories and contracts (the "Transferred Assets") associated with NBTY's nutritional bar and powder manufacturing operations (the "Divested Manufacturing Operations").

        The aggregate sales price for the production assets and transferred contracts is approximately $17,000. The sales price for the raw materials, packaging, labels, work in process and component inventories to be transferred under each of the APAs will be equal to NBTY's cost for such assets, as estimated by NBTY prior to the closing of the transactions, and subject to post-closing adjustments.

        The closing of the sale pursuant to the Powder APA is expected to occur on or around the end of May 2015, and the closing of the sale pursuant to the Bar APA is expected to occur during the second half of calendar 2015, in each case subject to customary closing conditions.

        In connection with the APAs, NBTY has entered into supply agreements with Nellson, pursuant to which NBTY will purchase from Nellson the nutritional bar and powder products for a period of ten years. NBTY currently manufactures using the Transferred Assets.

        As a result of these arrangements, the Company will incur cumulative charges of approximately $15,000 before tax over the period in which these transactions are completed, of which charges will consist primarily of accelerated depreciation of approximately $11,500 (non-cash); costs related to workforce reductions will be approximately $2,200 and other costs will be approximately $1,300. All costs associated with the Divested Manufacturing Operations will be reflected in the Corporate / Manufacturing segment.

        Charges related to this divestiture of $4,418 for the three and six months ended March 31, 2015 were $2,171 for severance and employee related costs, $1,647 for accelerated depreciation and $600 of other costs.