EX-99.1 2 a16-4941_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Unaudited Pro Forma Financial Information

 

On February 16, 2016, NBTY, Inc. (“NBTY”, and together with its subsidiaries, the “Company”) completed its previously announced disposition of Vitamin World, Inc. (“Vitamin World”), a subsidiary of the Company, and certain assets (including real property) associated with Vitamin World (collectively, the “Business”), to VWRE Holdings, Inc., an affiliate of Centre Lane Partners, LLC (“Purchaser”).

 

On the closing date, NBTY received aggregate proceeds from the sale of approximately $25.6 million, consisting of cash and a promissory note from the Purchaser.  The Company will also receive $5.5 million of cash 45 days after the closing date for payment of certain pre-closing inventory pursuant to the financial terms of a new supply agreement. In addition, NBTY received a warrant entitling it to purchase, in whole but not in part, common stock of the Purchaser representing 10% of the fully diluted equity of the Purchaser as of February 16, 2016.  The warrant is exercisable at any time, expiring upon the earlier of 10 years following the date of issuance or subsequent sale of the Business. Based on the fair value of the proceeds received, the cumulative expected loss on sale, inclusive of the $11.7 million impairment of the Business’s store assets in the first quarter of fiscal 2016, will range from $35 million to $40 million, pending the resolution of certain post-closing adjustments.

 

In connection with the sale of the Business, NBTY has agreed to provide the Purchaser certain transition services related to the operation of the Business.  In addition, NBTY has agreed to supply the Business with certain vitamin and nutritional supplement products for a period of up to two years.

 

The unaudited pro forma condensed consolidated balance sheet as of December 31, 2015 presents the pro forma effects of the transaction assuming the disposition occurred on December 31, 2015. The unaudited condensed consolidated statements of operations for the three months ended December 31, 2015 and for the fiscal year ended September 30, 2015, present the pro forma effects of the transaction for both periods assuming the disposition occurred on October 1, 2014. The following unaudited pro forma condensed consolidated balance sheet reflects the elimination of net assets and liabilities related to the Business and the following unaudited pro forma condensed consolidated statements of operations reflect the elimination of sales, costs and expenses related to the Business and the inclusion of the income and corresponding costs that will be incurred by the Company subsequent to the sale including, but not limited to, transitional services as well as the supply agreement. The pro forma adjustments related to the disposition are preliminary and are based upon available information and certain assumptions which management believes are reasonable under the circumstances. For the unaudited pro forma condensed consolidated statements of operations for the fiscal year ended September 30, 2015, and the three months ended December 31, 2015, respectively, a statutory tax rate of 38.3 percent was applied, as the disposition is predominately in the United States of America.

 

The preparation of this unaudited condensed consolidated pro forma financial information requires management to make estimates and assumptions based upon the information known at that time. Actual results could differ from these estimates.

 

This unaudited pro forma condensed consolidated financial information should be read in conjunction with the historical financial information and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015 and the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2015.

 



 

NBTY, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2015
(in thousands, except share amounts)

 

 

 

Company
(as reported)

 

Business
(historical)

 

Pro forma
adjustments

 

 

 

Pro forma
Company

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

204,925

 

$

736

 

$

10,561

 

A

 

$

 

214,750

 

Accounts receivable, net

 

189,224

 

101

 

 

 

 

189,123

 

Inventories

 

855,193

 

33,299

 

 

 

 

821,894

 

Deferred income taxes

 

56,425

 

1,879

 

 

 

 

54,546

 

Other current assets

 

74,392

 

3,229

 

5,486

 

A

 

76,649

 

Total current assets

 

1,380,159

 

39,244

 

16,047

 

 

 

1,356,962

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

573,826

 

17,502

 

 

 

 

556,324

 

Goodwill

 

1,200,501

 

 

 

 

 

1,200,501

 

Intangible assets, net

 

1,714,112

 

 

 

 

 

1,714,112

 

Other assets

 

32,729

 

65

 

10,297

 

A

 

42,961

 

Total assets

 

$

4,901,327

 

$

56,811

 

$

26,344

 

 

 

 

$

4,870,860

 

Liabilities and Stockholder’s Equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Current portion long-term debt

 

$

59,814

 

$

 

$

 

 

 

 

$

59,814

 

Accounts payable

 

311,138

 

1,051

 

 

 

 

310,087

 

Accrued expenses and other current liabilities

 

199,145

 

4,501

 

3,600

 

B

 

198,244

 

Total current liabilities

 

570,097

 

5,552

 

3,600

 

 

 

568,145

 

Long-term debt, net of current portion

 

2,085,689

 

 

 

 

 

 

 

2,085,689

 

Deferred income taxes

 

723,201

 

(2,128

)

 

 

 

725,329

 

Other liabilities

 

41,179

 

4,452

 

 

 

 

36,727

 

Total liabilities

 

3,420,166

 

7,876

 

3,600

 

 

 

3,415,890

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Redeemable non-controlling interest

 

103,511

 

 

 

 

 

103,511

 

Stockholder’s equity

 

1,377,650

 

48,935

 

22,744

 

A, B

 

1,351,459

 

Total liabilities and stockholder’s equity

 

$

4,901,327

 

$

56,811

 

$

26,344

 

 

 

 

$

4,870,860

 

 

A.            Proceeds from the transaction are as follow:

 

Cash received at closing

 

$

10,561

 

Short-term receivable for inventory

 

5,486

 

Promissory note, net of fair value adjustment

 

9,500

 

Estimated fair value of warrant

 

797

 

Total non-cash proceeds

 

15,783

 

Total Proceeds

 

26,344

 

Net assets sold as part of the Business

 

48,935

 

Transaction costs

 

(3,600

)

Loss on sale of the Business

 

$

(26,191

)

 

Based on the fair value of the proceeds received, the cumulative expected loss on sale, inclusive of the $11,656 impairment of the Business’s store assets in the first quarter of fiscal 2016, will range from $35,000 to $40,000, pending the resolution of certain post-closing adjustments.

 

B.            Reflects accruals for transaction fees and employee completion bonuses relating to the sale of the Business.

 



 

NBTY, Inc. and Subsidiaries
Unaudited Pro Forma  Condensed Consolidated Statement of Operations
For the three months ended December 31, 2015
(in thousands, except share amounts)

 

 

 

Company
(as reported)

 

Business
(historical)

 

Pro forma
adjustments

 

 

 

Company
Pro forma

 

Net sales

 

$

801,990

 

$

49,547

 

$

10,542

 

A

 

$

762,985

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

443,144

 

18,484

 

10,040

 

A

 

434,700

 

Advertising, promotion and catalog

 

46,463

 

1,950

 

 

 

 

44,513

 

Selling, general and administrative

 

253,192

 

30,050

 

(963

)

B, C

 

222,179

 

Impairment of Vitamin World assets

 

11,656

 

11,656

 

 

 

 

 

Facility restructuring charges

 

5,494

 

 

 

 

 

5,494

 

Total costs and expenses

 

759,949

 

62,140

 

9,077

 

 

 

706,886

 

Income (loss) from operations

 

42,041

 

(12,593

)

1,465

 

 

 

56,099

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest

 

(34,336

)

 

 

 

 

(34,336

)

Miscellaneous, net

 

(1,962

)

 

263

 

D

 

(1,699

)

Total other (expense) income

 

(36,298

)

 

263

 

 

 

(36,035

)

(Loss) income from operations before income taxes

 

5,743

 

(12,593

)

1,728

 

 

 

20,064

 

(Benefit) provision for income taxes

 

1,945

 

(4,823

)

662

 

E

 

7,430

 

Net (loss) income

 

3,798

 

(7,770

)

1,066

 

 

 

12,634

 

Net loss attributable to non-controlling interests

 

(139

)

 

 

 

 

(139

)

Net (loss) income attributable to NBTY, Inc.

 

$

3,937

 

$

(7,770

)

$

1,066

 

 

 

 

$

12,773

 

 

A.            Net sales and Cost of sales were estimated based on the cost of actual sales to Vitamin World for the respective period with a 5% markup in accordance with the terms of the new supply agreement.  This arrangement is for a guaranteed term of six months and can be extended for a period of up to a total of two years; for the purposes of this pro forma presentation, it is assumed that this arrangement remains in place for two years.

 

B.            Reduction of costs associated with reimbursements of $1,472 for services provided in accordance with a transition services agreement. These services are for various functions including accounting, legal, human resources, information technology, warehousing and other support.

 

C.            Increase in SG&A of $509 related to estimated rent costs for the lease of a building that was sold as part of the Business.

 

D.            Interest income on the long-term promissory note of $15,000 received as part of the proceeds of the sale of Vitamin World at an interest rate of 7% in accordance with the promissory note.

 

E.             A statutory tax rate of 38.3% was applied to all pro forma adjustments.

 



 

NBTY, Inc. and Subsidiaries
Unaudited Pro Forma  Condensed Consolidated Statement of Operations
For the fiscal year ended September 30, 2015
(in thousands, except share amounts)

 

 

 

Company
(as reported)

 

Business
(historical)

 

Pro forma
adjustments

 

 

 

Company
Pro forma

 

Net sales

 

$

3,226,124

 

$

208,106

 

$

45,022

 

A

 

$

3,063,040

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

1,746,462

 

75,256

 

42,878

 

A

 

1,714,084

 

Advertising, promotion and catalog

 

198,203

 

8,081

 

 

 

 

190,122

 

Selling, general and administrative

 

978,265

 

121,418

 

(6,006

)

B, C

 

850,841

 

Goodwill and intangible asset impairment charges

 

55,000

 

55,000

 

 

 

 

 

Facility restructuring charges

 

29,493

 

 

 

 

 

29,493

 

 

 

3,007,423

 

259,755

 

36,872

 

 

 

2,784,540

 

Income (loss) from operations

 

218,701

 

(51,649

)

8,150

 

 

 

278,500

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest

 

(132,930

)

 

 

 

 

(132,930

)

Miscellaneous, net

 

1,734

 

 

1,050

 

D

 

2,784

 

Total other (expense) income

 

(131,196

)

 

1,050

 

 

 

(130,146

)

Income (loss) before income taxes

 

87,505

 

(51,649

)

9,200

 

 

 

148,354

 

Provision (benefit) for income taxes

 

13,087

 

(19,782

)

3,524

 

E

 

36,393

 

Net income (loss)

 

$

74,418

 

$

(31,867

)

$

5,676

 

 

 

$

111,961

 

 

A.            Net sales and Cost of sales were estimated based on the cost of actual sales to Vitamin World for the respective period with a 5% markup in accordance with the terms of the new supply agreement.  This arrangement is for a guaranteed term of six months and can be extended for a period of up to a total of two years; for the purposes of this pro forma presentation, it is assumed that this arrangement remains in place for two years.

 

B.            Reduction of costs associated with reimbursements of $8,040 for services provided in accordance with a transition services agreement.  These services are for various functions including Accounting, Legal, Human Resources, Information and Technology, Warehousing and other support.

 

C.            Increase in SG&A of $2,034 related to estimated rent costs for the lease of a building that was sold as part of the Business.

 

D.            Interest income on the long-term promissory note of $15,000 received as part of the proceeds of the sale of Vitamin World at an interest rate of 7% in accordance with the promissory note.

 

E.    A statutory tax rate of 38.3% was applied to all pro forma adjustments.