EX-99.1 2 a06-24018_1ex99d1.htm EX-99

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact: Harvey Kamil

Carl Hymans

NBTY, Inc.

G.S. Schwartz & Co.

President and Chief Financial Officer

212-725-4500

631-200-2020

carlh@schwartz.com

NBTY REPORTS FOURTH QUARTER NET INCOME UP 230%

BOHEMIA, N.Y. — November 13, 2006 - NBTY, Inc. (NYSE: NTY) (www.NBTY.com), a leading global manufacturer and marketer of nutritional supplements, today announced results for the fiscal fourth quarter and fiscal year ended September 30, 2006 and preliminary unaudited net sales results for the month of October 2006.

For the fiscal fourth quarter ended September 30, 2006, net sales increased $33 million, or 8%, to $468 million compared to net sales of $435 million for the fiscal fourth quarter ended September 30, 2005.

Net income for the fiscal fourth quarter ended September 30, 2006 was $38 million, or $0.54 per diluted share, an increase of 230%, compared to $11 million, or $0.17 per diluted share, for the fiscal fourth quarter ended September 30, 2005.

The rise in net income for the fiscal fourth quarter resulted from the aforementioned sales increase of $33 million, an improvement in gross profit, greater manufacturing efficiencies, the continued profitability in the North American Retail operations and a decrease in interest expense.

For the year ended September 30, 2006, net sales increased $143 million, or 8%, to $1.9 billion, compared to net sales of $1.7 billion for the prior like period.  Net income for the year ended September 30, 2006 was $112 million, or $1.62 per diluted share, an increase of 43% as compared to $78 million, or $1.13 per diluted share, for the year ended September 30, 2005.  Included in the results for the year ended September 30, 2006 and 2005 were non-cash charges, primarily asset and goodwill impairment, of $0.15 and $0.14 per diluted share respectively.  Without these non-cash charges, earnings per

 




 

diluted share for the year ended September 30, 2006 and 2005 would have been $1.77 and $1.27 respectively.  In fiscal 2006, the Company also benefited from the Homeland Investment Act’s treatment of the repatriation of foreign earnings, which allowed the Company to lower its effective tax rate from 35% to 27%.

At September 30, 2006, NBTY had working capital of $392 million and total assets of $1.3 billion.  During fiscal 2006, the Company decreased inventory by $137 million while still providing uninterrupted product supply to customers.

The Company’s strong cash flow in fiscal 2006 allowed for the accelerated repayment of $236 million of long-term debt.  Effective November 3, 2006, the Company put into place a $325 million bank revolving credit agreement to provide funds, if needed, for future growth.  Presently, there are no borrowings under this agreement.

OPERATIONS FOR THE FISCAL FOURTH QUARTER ENDED SEPTEMBER 30, 2006

Sales for the Wholesale/US Nutrition division, which markets Nature’s Bounty, Sundown and Solgar brands, increased $21 million, or 10%, to $217 million, from $197 million for the prior like quarter.

Product returns for the fiscal fourth quarter were $8 million, compared with $11 million for the fiscal fourth quarter 2005.  Total product returns for the year ended September 30, 2006 were $28 million, a 36% decrease as compared to $44 million for the previous year.

Gross margin in the Wholesale operation increased to 35%, compared with 30% for the fiscal fourth quarter of 2005.  During 2005, gross margins were hampered by aggressive promotional incentives, competitive pricing for the joint care category and high prices paid for certain raw materials.  That year, the Company purchased raw materials that were in short supply.  Market prices for these raw materials decreased during fiscal 2006 as the supply shortage dissipated.

The US Nutrition/Wholesale division continues to utilize valuable consumer preference sales data generated by the Company’s Vitamin World retail stores and Puritan’s Pride Direct Response/E-Commerce operations to empower its wholesale customers with this latest information.  The Vitamin World stores are effectively used as a laboratory for new ideas and have become a significant tool for determining and monitoring consumer

 

2




 

preferences.  This information, as well as scanned sales data from the Vitamin World stores, is shared with NBTY’s wholesale customers.

The North American Retail operation continued to achieve profitability in the fiscal fourth quarter 2006.  The division’s sales remained constant at $56 million, even though there were 71 fewer stores.  Vitamin World closed a total of 75 underperforming stores and opened 9 new stores during fiscal 2006.  At the end of the fiscal fourth quarter, the North American Retail division operated a total of 572 stores with 476 stores in the United States and 96 in Canada.  It is anticipated that approximately 20 under-performing stores will be closed in fiscal 2007.

Same store sales for Vitamin World increased 7% from the prior like quarter.  These results reflect continued improvements in the retail environment.

European Retail sales for the fiscal fourth quarter ended September 30, 2006 increased $8 million or 6% to $142 million from $134 million for the fiscal fourth quarter ended September 30, 2005.  In local currency, same store sales increased 3% from the prior like period.

The European Retail business continues to leverage its premier status, high street locations and brand awareness.  The European Retail business is comprised of 498 Holland & Barrett and 32 GNC stores in the UK, 19 Nature’s Way stores in Ireland and 68 DeTuinen stores in the Netherlands.

During the fiscal fourth quarter ended September 30, 2006, the European Retail division opened 3 stores and closed 2 stores.  For the year ended September 30, 2006, the European Retail operation opened 11 stores and closed 6.  A total of 617 stores were in operation at September 30, 2006.

Revenues from Direct Response/Puritan’s Pride operations for the fiscal fourth quarter of 2006 increased $4 million or 9% from the comparable like period.  The average order size increased to $73 from $70.  Online sales constituted 34% of total Direct Response/E-Commerce sales.  NBTY remains the leader in the direct response and e-commerce sectors.

NBTY Chairman and CEO, Scott Rudolph, said:  “We are pleased with our results which lend further credence to our ability to drive sales, increase profitability and enhance our dominant market share position.  We remain confident in the long-term outlook for NBTY as we continue to strive to grow the business while controlling costs and increasing long-term shareholder value.”

 

3




 

ABOUT NBTY

NBTY is a global leading vertically integrated manufacturer, marketer and distributor of a broad line of high-quality, value-priced nutritional supplements in the United States and throughout the world.  Under a number of NBTY and third party brands, the Company offers over 22,000 products, including products marketed by the Company’s Nature’s Bountyâ, Vitamin Worldâ, Puritan’s Prideâ, Holland & Barrettâ, Rexallâ, Sundownâ, MET-Rx®, WORLDWIDE Sport Nutrition®, American Healthâ, GNC (UK)â, DeTuinen®, LeNaturisteä, SISU®, Solgar® and Ester-C® brands.

This release refers to non-GAAP financial measures, such as Adjusted EBITDA.  “ADJUSTED EBITDA” is defined as net income, excluding the aggregate amount of all non-cash losses reducing net income, plus interest, taxes, depreciation and amortization.  This non-GAAP financial measure is not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.  A reconciliation of the non-GAAP measure to the comparable GAAP measure is included in the attached financial tables.  Management believes the presentation of Adjusted EBITDA is relevant and useful because Adjusted EBITDA is a measurement industry analysts utilize when evaluating NBTY’s operating performance.  Management also believes Adjusted EBITDA enhances an investor’s understanding of NBTY’s results of operations because it measures NBTY’s operating performance exclusive of interest and non-cash charges for depreciation and amortization.  Management also provides this non-GAAP measurement as a way to help investors better understand its core operating performance, enhance comparisons of NBTY’s core operating performance from period to period and to allow better comparisons of NBTY’s operating performance to that of its competitors.

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.  These forward-looking statements can be identified by the use of terminology such as “subject to,” “believe,” “expects,” “plan,” “project,” “estimate,” “intend,” “may,” “will,” “should,” “can,” or “anticipates,” or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy.   Although all of these forward looking statements are believed to be reasonable, they 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 God, acts of war, terrorism, bio-terrorism, civil unrest or disruption of mail service; (iii) adverse publicity regarding 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/or 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 NBTY to integrate acquisitions into the mainstream of its business; (x) changes in general worldwide economic and political conditions in the markets in which NBTY may compete from time to time; (xi) the inability of NBTY to gain and/or hold market share of its wholesale and/or retail customers anywhere in the world; (xii) unavailability of electricity in certain geographical areas; (xiii) the inability of NBTY to obtain and/or renew insurance and/or the costs of the same; (xiv) exposure to and expense of defending and resolving product liability and intellectual property claims and other litigation; (xv) the ability of NBTY to successfully implement its business strategy; (xvi) the inability of NBTY to manage its retail, wholesale, manufacturing and other operations efficiently; (xvii) consumer acceptance of NBTY’s products; (xviii) the inability of NBTY to renew leases for its retail locations; (xix) the inability of NBTY’s retail stores to attain or maintain profitability; (xx) the absence of clinical trials for many of NBTY’s products; (xxi) sales and earnings volatility and/or trends for the Company and its market segments; (xxii) the efficacy of NBTY’s Internet and on-line sales and marketing strategies; (xxiii) fluctuations in foreign currencies, including the British Pound, the Euro and the Canadian dollar; (xxiv) import-export controls on sales to foreign countries; (xxv) the inability of NBTY to secure favorable new sites for, and delays in opening, new retail locations; (xxvi) introduction of and compliance with new federal, state, local or foreign legislation or regulation or adverse determinations by regulators anywhere in the world (including the banning of products) and more particularly proposed Good Manufacturing Practices in the United States, the Food Supplements Directive and Traditional Herbal Medicinal Products Directive in Europe and Section 404 requirements of the Sarbanes-Oxley Act of 2002; (xxvii) the mix of NBTY’s products and the profit margins thereon; (xxviii) the availability and pricing of raw materials; (xxix) risk factors discussed in NBTY’s filings with the U.S. Securities and Exchange Commission; (xxx) adverse effects on NBTY as a result of increased gasoline prices and

 

4




 

potentially reduced traffic flow to NBTY’s retail locations; (xxxi) adverse tax determinations; (xxxii) the loss of a significant customer of the Company; and (xxxiii) other factors beyond the Company’s control.

Readers are cautioned not to place undue reliance on forward-looking statements. NBTY cannot guarantee future results, trends, events, levels of activity, performance or achievements. NBTY 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.

Consequently, such forward-looking statements should be regarded solely as NBTY’s current plans, estimates and beliefs.

(TABLES FOLLOW)

 

5




 

NBTY, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Dollars and shares in thousands, except per share amounts)

 

 

For the three months

 

 

 

ended September 30,

 

 

 

2006

 

2005

 

 

 

 

 

 

 

Net sales

 

$

467,912

 

$

435,218

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

Cost of sales

 

238,523

 

236,650

 

Advertising, promotion and catalog

 

23,276

 

25,308

 

Selling, general and administrative

 

151,910

 

151,668

 

 

 

413,709

 

413,626

 

 

 

 

 

 

 

Income from operations

 

54,203

 

21,592

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

Interest

 

(4,516

)

(9,238

)

Miscellaneous, net

 

1,603

 

2,323

 

 

 

(2,913

)

(6,915

)

 

 

 

 

 

 

Income before provision for income taxes

 

51,290

 

14,677

 

 

 

 

 

 

 

Provision for income taxes

 

13,627

 

3,265

 

 

 

 

 

 

 

Net income

 

$

37,663

 

$

11,412

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

Basic

 

$

0.56

 

$

0.17

 

Diluted

 

$

0.54

 

$

0.17

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

67,206

 

67,189

 

Diluted

 

69,242

 

69,116

 

 

6




 

NBTY, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(Dollars and shares in thousands, except per share amounts)

 

 

For the fiscal years

 

 

 

ended September 30,

 

 

 

2006

 

2005

 

 

 

 

 

 

 

Net sales

 

$

1,880,222

 

$

1,737,187

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

Cost of sales

 

992,197

 

895,644

 

Advertising, promotion and catalog

 

103,614

 

108,005

 

Selling, general and administrative

 

598,742

 

588,166

 

Trademark / goodwill impairments

 

10,450

 

7,686

 

 

 

1,705,003

 

1,599,501

 

 

 

 

 

 

 

Income from operations

 

175,219

 

137,686

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

Interest

 

(25,924

)

(26,475

)

Miscellaneous, net

 

3,532

 

8,051

 

 

 

(22,392

)

(18,424

)

 

 

 

 

 

 

Income before provision for income taxes

 

152,827

 

119,262

 

 

 

 

 

 

 

Provision for income taxes

 

41,042

 

41,125

 

 

 

 

 

 

 

Net income

 

$

111,785

 

$

78,137

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

Basic

 

$

1.66

 

$

1.16

 

Diluted

 

$

1.62

 

$

1.13

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

67,199

 

67,162

 

Diluted

 

69,130

 

69,137

 

 

7




 

 

 

SALES
(Thousands)

 

 

 

THREE MONTHS ENDED
SEPTEMBER 30,

 

FISCAL YEARS ENDED
SEPTEMBER 30,

 

 

 

 

 

 

 

Percentage

 

 

 

 

 

Percentage

 

 

 

2006

 

2005

 

Change

 

2006

 

2005

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale / US Nutrition

 

$

217,484

 

$

196,832

 

10

%

$

885,146

 

$

747,234

 

18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North American Retail / Vitamin World

 

56,105

 

56,136

 

0

%

234,215

 

224,008

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

European Retail /

 

 

 

 

 

 

 

 

 

 

 

 

 

 Holland & Barrett / GNC (UK)

 

141,888

 

134,078

 

6

%

564,933

 

566,140

 

0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Response /

 

 

 

 

 

 

 

 

 

 

 

 

 

 Puritan’s Pride

 

52,435

 

48,172

 

9

%

195,928

 

199,805

 

-2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

467,912

 

$

435,218

 

8

%

$

1,880,222

 

$

1,737,187

 

8

%

 

 

 

GROSS PROFIT
PERCENTAGES

 

 

 

THREE MONTHS ENDED
SEPTEMBER 30,

 

FISCAL YEARS ENDED
SEPTEMBER 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

- % Decrease

 

 

 

2006

 

2005

 

% Increase

 

2006

 

2005

 

% Increase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale / US Nutrition

 

35

%

30

%

5

%

32

%

34

%

-2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North American Retail / Vitamin World

 

59

%

57

%

2

%

58

%

55

%

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

European Retail /

 

 

 

 

 

 

 

 

 

 

 

 

 

 Holland & Barrett / GNC (UK)

 

63

%

61

%

2

%

62

%

62

%

0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Response /

 

 

 

 

 

 

 

 

 

 

 

 

 

 Puritan’s Pride

 

58

%

52

%

6

%

59

%

57

%

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

49

%

46

%

3

%

47

%

48

%

-1

%

 

8




 

Reconciliation of GAAP Measures to Non-GAAP Measures

(Thousands)

(Unaudited)

 

 

THREE MONTHS ENDED
SEPTEMBER 30, 2006

 

 

 

Pretax Income
(Loss)

 

Depreciation and
amortization

 

Interest

 

Non-cash
charges

 

Adjusted
EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale / US Nutrition

 

$

27,661

 

$

2,550

 

$

 

$

(128

)

$

30,083

 

 

 

 

 

 

 

 

 

 

 

 

 

North American Retail / Vitamin World

 

199

 

1,188

 

 

 

736

 

2,123

 

 

 

 

 

 

 

 

 

 

 

 

 

European Retail /

 

 

 

 

 

 

 

 

 

 

 

 Holland & Barrett / GNC (UK)

 

34,283

 

2,843

 

 

 

 

 

37,126

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Response / Puritan’s Pride

 

14,202

 

1,261

 

 

 

 

 

15,463

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Results

 

76,345

 

7,842

 

 

608

 

84,795

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate / Manufacturing

 

(25,055

)

6,222

 

4,516

 

 

 

(14,317

)

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

51,290

 

$

14,064

 

$

4,516

 

$

608

 

$

70,478

 

 

 

 

THREE MONTHS ENDED
SEPTEMBER 30, 2005

 

 

 

Pretax Income
(Loss)

 

Depreciation and
amortization

 

Interest

 

Non-cash
charges

 

Adjusted
EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale / US Nutrition

 

$

10,564

 

$

2,482

 

$

 

$

 

$

13,046

 

 

 

 

 

 

 

 

 

 

 

 

 

North American Retail / Vitamin World

 

(3,881

)

1,507

 

 

 

215

 

(2,159

)

 

 

 

 

 

 

 

 

 

 

 

 

European Retail /

 

 

 

 

 

 

 

 

 

 

 

 Holland & Barrett / GNC (UK)

 

32,479

 

2,559

 

 

 

 

 

35,038

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Response / Puritan’s Pride

 

10,731

 

1,253

 

 

 

 

 

11,984

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Results

 

49,893

 

7,801

 

 

215

 

57,909

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate / Manufacturing

 

(35,216

)

6,206

 

9,238

 

 

(19,772

)

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

14,677

 

$

14,007

 

$

9,238

 

$

215

 

$

38,137

 

 

9




 

Reconciliation of GAAP Measures to Non-GAAP Measures

(Thousands)

(Unaudited)

 

 

FISCAL YEAR ENDED
SEPTEMBER 30, 2006

 

 

 

Pretax Income
(Loss)

 

Depreciation and
amortization

 

Interest

 

Non-cash
charges

 

Adjusted
EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale / US Nutrition

 

$

75,823

 

$

10,159

 

$

 

$

11,370

 

$

97,352

 

 

 

 

 

 

 

 

 

 

 

 

 

North American Retail / Vitamin World

 

332

 

4,884

 

 

3,141

 

8,357

 

 

 

 

 

 

 

 

 

 

 

 

 

European Retail /  Holland & Barrett / GNC (UK)

 

143,456

 

11,174

 

 

 

154,630

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Response / Puritan’s Pride

 

52,748

 

5,051

 

 

 

57,799

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Results

 

272,359

 

31,268

 

 

14,511

 

318,138

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate / Manufacturing

 

(119,532

)

24,780

 

25,924

 

 

(68,828

)

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

152,827

 

$

56,048

 

$

25,924

 

$

14,511

 

$

249,310

 

 

 

 

FISCAL YEAR ENDED
SEPTEMBER 30, 2005

 

 

 

Pretax Income
(Loss)

 

Depreciation and
amortization

 

Interest

 

Non-cash
charges

 

Adjusted
EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale / US Nutrition

 

$

67,873

 

$

9,923

 

$

 

$

 

$

77,796

 

 

 

 

 

 

 

 

 

 

 

 

 

North American Retail / Vitamin World

 

(26,216

)

6,756

 

 

 

11,204

 

(8,256

)

 

 

 

 

 

 

 

 

 

 

 

 

European Retail /

 

 

 

 

 

 

 

 

 

 

 

 Holland & Barrett / GNC (UK)

 

151,459

 

13,175

 

 

 

 

 

164,634

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Response / Puritan’s Pride

 

52,254

 

5,079

 

 

 

 

 

57,333

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Results

 

245,370

 

34,933

 

 

11,204

 

291,507

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate / Manufacturing

 

(126,108

)

23,350

 

26,475

 

 

(76,283

)

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

119,262

 

$

58,283

 

$

26,475

 

$

11,204

 

$

215,224

 

 

10




 

NBTY, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

ASSETS

(Dollars and shares in thousands)

 

 

September 30,

 

September 30,

 

 

 

2006

 

2005

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

89,805

 

$

67,282

 

Investments

 

 

39,900

 

Accounts receivable, less allowance for doubtful accounts of $10,361 and $9,155, respectively

 

89,154

 

73,226

 

 

 

 

 

 

 

Inventories

 

354,496

 

491,335

 

 

 

 

 

 

 

Deferred income taxes

 

26,636

 

23,645

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

42,261

 

54,469

 

 

 

 

 

 

 

Total current assets

 

602,352

 

749,857

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation of $296,069 and $279,883, respectively

 

309,437

 

320,528

 

 

 

 

 

 

 

Goodwill

 

235,959

 

228,747

 

 

 

 

 

 

 

Other intangible assets, net

 

146,169

 

166,325

 

 

 

 

 

 

 

Other assets

 

10,393

 

16,845

 

 

 

 

 

 

 

Total assets

 

$

1,304,310

 

$

1,482,302

 

 

11




 

NBTY, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

LIABILITIES AND STOCKHOLDERS’ EQUITY

(Dollars and shares in thousands)

 

 

September 30,

 

September 30,

 

 

 

2006

 

2005

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

18,660

 

$

80,922

 

Accounts payable

 

64,211

 

72,720

 

Accrued expenses and other current liabilities

 

127,768

 

120,487

 

Total current liabilities

 

210,639

 

274,129

 

 

 

 

 

 

 

Long-term debt, net of current of portion

 

191,045

 

428,204

 

Deferred income taxes

 

55,276

 

57,092

 

Other liabilities

 

7,918

 

6,822

 

Total liabilities

 

464,878

 

766,247

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.008 par; authorized 175,000 shares; issued and outstanding 67,212 shares and 67,191 shares at September 30, 2006 and 2005

 

538

 

537

 

Capital in excess of par

 

138,777

 

138,657

 

Retained earnings

 

671,060

 

559,275

 

Accumulated other comprehensive income

 

29,057

 

17,586

 

Total stockholders’ equity

 

839,432

 

716,055

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

1,304,310

 

$

1,482,302

 

 

12




 

NBTY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)

 

 

For the fiscal year

 

 

 

ended September 30,

 

 

 

2006

 

2005

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

111,785

 

$

78,137

 

Adjustments to reconcile net income to cash and cash equivalents provided by operating activities:

 

 

 

 

 

Provision relating to impairments and disposals of property, plant and quipment

 

4,420

 

5,471

 

Depreciation and amortization

 

56,048

 

58,283

 

Foreign currency transaction loss / (gain)

 

1,851

 

(4,286

)

Amortization and write-off of deferred financing costs

 

3,975

 

2,398

 

Amortization and write-off of bond discount

 

379

 

152

 

Loss on bond redemption

 

 

790

 

Gain on extinguishment of debt

 

(425

)

 

Gain on settlement of interest rate SWAP

 

(353

)

 

Compensation expense for ESOP

 

 

2,583

 

Impairment on asset held for sale

 

 

1,908

 

Gain on sale of business assets

 

 

(1,999

)

Trademark / goodwill impairments

 

10,450

 

7,686

 

Provision for doubtful accounts

 

1,427

 

182

 

Inventory reserves

 

8,908

 

9,500

 

Excess income tax benefit from exercise of stock options

 

(15

)

220

 

Deferred income taxes

 

(12,019

)

4,527

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

Accounts receivable

 

(16,056

)

29,354

 

Inventories

 

131,469

 

(87,434

)

Prepaid expenses and other current assets

 

11,105

 

(1,613

)

Other assets

 

1,954

 

(139

)

Accounts payable

 

(4,852

)

(28,519

)

Accrued expenses and other liabilities

 

2,912

 

8,647

 

Net cash provided by operating activities

 

312,963

 

85,848

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of property, plant and equipment

 

(35,308

)

(71,516

)

Proceeds from sale of property, plant, and equipment

 

1,426

 

298

 

Proceeds from sale of property, plant, and equipment held for sale

 

 

 

9,950

 

Proceeds from sale of business assets

 

 

5,766

 

Proceeds from sale / (purchase) of available-for-sale marketable securities

 

39,900

 

(39,900

)

Cash paid for acquisitions, net of cash acquired

 

 

(131,397

)

Purchase price settlements, net

 

1,845

 

(8,236

)

Purchase / sale of intangible assets

 

(478

)

(533

)

Purchase of industrial revenue bonds

 

 

(14,973

)

Net cash provided by (used in) investing activities

 

7,385

 

(250,541

)

 

13




 

Cash flows from financing activities:

 

 

 

 

 

Principal payments under long-term debt agreements and capital leases

 

(312,107

)

(138,544

)

Proceeds from borrowings under long-term agreements

 

 

132,950

 

Proceeds from short-term borrowings

 

18,204

 

 

Principal payments under the Revolving Credit Facility

 

(11,000

)

(20,000

)

Proceeds from borrowings under the Revolving Credit Facility

 

5,000

 

26,000

 

Proceeds from sale-leaseback

 

 

14,973

 

Proceeds from bond offering, net of discount

 

 

198,234

 

Bond issuance costs

 

 

(3,329

)

Proceeds from settlement of interest rate SWAP

 

353

 

 

Excess income tax benefit from exercise of stock options

 

15

 

 

Proceeds from stock options exercised

 

105

 

225

 

Purchase of treasury stock

 

 

(176

)

Net cash (used in) provided by financing activities

 

(299,430

)

210,333

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

1,605

 

(109

)

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

22,523

 

45,531

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of year

 

67,282

 

21,751

 

 

 

 

 

 

 

Cash and cash equivalents at end of year

 

$

89,805

 

$

67,282

 

 

14




 

NBTY’s preliminary unaudited net sales results for October 2006 by segment are as follows (amounts are rounded):

NET SALES

(Preliminary and Unaudited)

FOR THE MONTH OF OCTOBER

($ In Millions)

 

 

 

2006

 

2005

 

% Change

 

 

 

 

 

 

 

 

 

Wholesale/ US Nutrition

 

$

87

 

$

78

 

13

%

 

 

 

 

 

 

 

 

North American Retail / Vitamin World

 

$

18

 

$

19

 

-4

%

 

 

 

 

 

 

 

 

European Retail / Holland & Barrett / GNC (UK)

 

$

50

 

$

48

 

4

%

 

 

 

 

 

 

 

 

Direct Response/ Puritan’s Pride

 

$

12

 

$

10

 

17

%

 

 

 

 

 

 

 

 

Total

 

$

168

 

$

155

 

8

%

European Retail net sales in local currency decreased 4% in October 2006.  Vitamin World same store sales increased 4% in October 2006.

 

15