Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2015 | Feb. 08, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | NBTY INC | |
Entity Central Index Key | 70,793 | |
Document Type | 10-Q/A | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | true | |
Amendment Description | NBTY, Inc. (the ‘‘Company'') is filing this amendment No. 1 on Form 10-Q/A (this ‘‘Amendment'') to amend its Quarterly Report on Form 10-Q for the three month period ended December 31, 2015, as filed on February 9, 2016 (the ‘‘Original Filing''), to revise its consolidated financial statements. During the second quarter of 2016, the Company identified the following errors related to its previously issued financial statements that the Company concluded, based on its evaluation of both quantitative and qualitative factors, were not material to any of its previously issued consolidated financial statements: • In accounting for deferred taxes related to certain of the Company's long-lived assets recorded in connection with the acquisition of the Company by Carlyle, inclusive of intangible assets and property, plant and equipment, the Company did not properly consider the implications of income tax and foreign currency rate changes when recording deferred taxes at the end of each reporting period. The correction of these errors results in the reduction of long-term deferred income tax liabilities of $45,235 and $38,671 as of December 31, 2015 and September 30, 2015, respectively, the reduction in Provision (benefit) for income taxes of $4,680 for the three months ended December 31, 2015 and an increase in Foreign currency translation adjustments of $1,884 and $3,477, for the three months December 31, 2015 and 2014, respectively. Accordingly, the Consolidated Balance Sheets, Statements of Operations and Comprehensive Income (Loss) and Statements of Stockholders' Equity have been revised, as applicable, to reflect these changes. The impact of these errors for fiscal periods prior to 2013 but subsequent to the acquisition of the Company by Carlyle was recorded as an adjustment to Shareholder's Equity as of September 30, 2012. • In accounting for the acquisition of the Company by Carlyle, the Company improperly recorded a deferred tax liability related to carryover tax-deductible goodwill resulting in an overstatement of its long-term deferred tax liabilities and goodwill in the amount of $13,930. The Consolidated Balance Sheets have been revised to reflect this change. The correction of these errors had no impact on the total captions as reported in the Consolidated Statements of Cash Flows and no impact on any covenants contained in its debt agreements. Refer to Note 1, Basis of Presentation, in the Notes to the Consolidated Financial Statements set forth in this Amendment for further information relating to this revision. This amended Quarterly Report on Form 10-Q/A sets forth the Original Filing in its entirety; however, pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this amended Quarterly Report on Form 10-Q/A amends and revises the Original Filing only with respect to matters affected by the revision. The following items in the Original Filing have been amended as a result of this revision: • Part I, Item 1. Financial Statements • Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations • Part II, Item 6. Exhibits (with respect to Exhibits 31 and 32) The Company's Chief Executive Officer and Chief Financial Officer are providing currently dated certifications in connection with this amended Quarterly Report on Form 10-Q/A and various exhibits related to XBRL. These certifications are filed as Exhibits 31 and 32 to this Amendment. This amended Quarterly Report on Form 10-Q/A does not modify or update other disclosures presented in the Original Filing, including the exhibits to the Original Filing, except as identified above. As such, except for the items identified above, this amended Quarterly Report on Form 10-Q/A is as of February 9, 2016, the original filing date, and any forward-looking statements represent management's views as of that date and should be not be assumed to be accurate as of any date thereafter. This amended Quarterly Report on Form 10-Q/A should be read in conjunction with our other filings made with the Securities and Exchange Commission subsequent to February 9, 2016. | |
Current Fiscal Year End Date | --09-30 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | Yes | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,000 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Current assets: | ||||
Cash and cash equivalents | $ 204,925 | $ 303,350 | $ 212,047 | $ 139,488 |
Accounts receivable, net | 189,224 | 198,693 | ||
Inventories | 855,193 | 844,223 | ||
Deferred income taxes | 56,425 | 56,194 | ||
Other current assets | 74,392 | 59,831 | ||
Total current assets | 1,380,159 | 1,462,291 | ||
Property, plant and equipment, net | 573,826 | 605,708 | ||
Goodwill | 1,186,571 | 1,104,090 | ||
Intangible assets, net | 1,714,112 | 1,664,538 | ||
Other assets | 32,729 | 17,852 | ||
Total assets | 4,887,397 | 4,854,479 | ||
Current liabilities: | ||||
Current portion long-term debt | 59,814 | 34,496 | ||
Accounts payable | 311,138 | 282,479 | ||
Accrued expenses and other current liabilities | 199,145 | 249,561 | ||
Total current liabilities | 570,097 | 566,536 | ||
Long-term debt, net of current portion | 2,085,689 | 2,129,158 | ||
Deferred income taxes | 677,966 | 663,023 | ||
Other liabilities | 41,179 | 39,275 | ||
Total liabilities | 3,374,931 | $ 3,397,992 | ||
Redeemable non-controlling interest | $ 103,511 | |||
Commitments and contingencies | ||||
Shareholder's equity: | ||||
Common stock, successor, $0.01 par; one thousand shares authorized, issued and outstanding at December 31, 2015 and September 30, 2015 | ||||
Capital in excess of par | $ 1,529,906 | $ 1,542,584 | ||
Retained earnings | 16,682 | |||
Accumulated other comprehensive loss | (120,951) | (102,779) | ||
Total shareholder's equity | 1,408,955 | 1,456,487 | ||
Total liabilities and shareholder's equity | $ 4,887,397 | $ 4,854,479 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Sep. 30, 2015 |
Common stock, par (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000 | 1,000 |
Common stock, shares issued (in shares) | 1,000 | 1,000 |
Common stock, shares outstanding (in shares) | 1,000 | 1,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed Consolidated Statements of Income and Comprehensive (Loss) Income | ||
Net sales | $ 801,990 | $ 825,771 |
Costs and expenses: | ||
Cost of sales (See Note 3) | 443,144 | 448,887 |
Advertising, promotion and catalog | 46,463 | 46,894 |
Selling, general and administrative | 253,192 | 238,172 |
Impairment of Vitamin World assets (See Note 7 and 14) | 11,656 | |
Facility restructuring charges (See Note 3) | 5,494 | |
Total costs and expenses | 759,949 | 733,953 |
Income from operations | 42,041 | 91,818 |
Other income (expense): | ||
Interest | (34,336) | (34,747) |
Miscellaneous, net | (1,962) | (1,355) |
Total other expense | (36,298) | (36,102) |
Income from operations before income taxes | 5,743 | 55,716 |
Provision (benefit) for income taxes | (2,735) | 19,809 |
Net income | 8,478 | 35,907 |
Net loss attributable to non-controlling interests | (139) | |
Net income attributable to NBTY, Inc. | 8,617 | 35,907 |
Net income | 8,478 | 35,907 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, net of taxes of ($997) and $396, respectively | (18,746) | (26,830) |
Change in fair value of interest rate swaps, net of taxes of $0 and $(442), respectively | 721 | |
Total Other comprehensive income (loss) net of tax | (18,746) | (26,109) |
Comprehensive (loss) income | (10,268) | 9,798 |
Less: Net loss attributable to non-controlling interests | (139) | |
Less: Foreign currency translation adjustment attributable to non-controlling interest | (574) | |
Comprehensive loss attributable to non-controlling interest | (713) | |
Comprehensive (loss) income attributable to NBTY, Inc. | $ (9,555) | $ 9,798 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed Consolidated Statements of Income and Comprehensive (Loss) Income | ||
Foreign currency translation adjustment, tax expense (benefit) | $ (997) | $ 396 |
Change in fair value of interest rate swaps, tax expense (benefit) | $ 0 | $ (442) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 8,478 | $ 35,907 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Impairments and disposals of assets | 12,912 | 659 |
Depreciation of property, plant and equipment | 20,208 | 16,707 |
Amortization of intangible assets | 11,644 | 11,358 |
Foreign currency transaction gain | (1,359) | (87) |
Amortization and write-off of deferred financing fees | 5,744 | 5,071 |
Stock-based compensation | 773 | 732 |
Allowance for doubtful accounts | 41 | 35 |
Inventory reserves | 10,606 | 5,369 |
Deferred income taxes | 819 | (256) |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 24,702 | (12,105) |
Inventories | 10,024 | 41,311 |
Other assets | (10,953) | 6,229 |
Accounts payable | 27,527 | 38,953 |
Accrued expenses and other liabilities | (56,537) | (16,813) |
Net cash provided by operating activities | 64,629 | 133,070 |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (40,038) | (19,090) |
Proceeds from sale of bar assets | 7,910 | 193 |
Proceeds from sale of building and equipment | 384 | |
Cash paid for acquisitions, net of cash acquired | (45,011) | |
Net cash used in investing activities | (76,755) | (18,897) |
Cash flows from financing activities: | ||
Principal payments | (56,941) | (67) |
Proceeds from Issuance of Debt | 6,123 | |
Payments for financing fees | (611) | |
Dividends paid | (38,750) | (38,750) |
Net cash used in financing activities | (89,568) | (39,428) |
Effect of exchange rate changes on cash and cash equivalents | 3,269 | (2,186) |
Net (decrease) increase in cash and cash equivalents | (98,425) | 72,559 |
Cash and cash equivalents at beginning of period | 303,350 | 139,488 |
Cash and cash equivalents at end of period | 204,925 | 212,047 |
Property, plant and equipment additions included in total liabilities | $ 18,575 | $ 11,748 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2015 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation NBTY, Inc. ("NBTY"), together with its subsidiaries, (the "Company," "we," or "us"), is the leading global vertically integrated manufacturer, marketer, distributor and retailer of a broad line of high-quality vitamins, minerals, herbs, specialty supplements, and sports/active nutrition products ("VMHS") in the United States, with operations worldwide. We have prepared these financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") applicable to interim financial information and on a basis that is consistent with the accounting principles applied in our audited financial statements for the fiscal year ended September 30, 2015, including the notes thereto (our "2015 Financial Statements") included in our Annual Report on Form 10-K/A for the fiscal year ended September 30, 2015 ("2015 Annual Report"). In our opinion, these financial statements reflect all adjustments (including normal recurring items) necessary for a fair presentation of our results for the interim periods presented. These financial statements do not include all information or notes necessary for a complete presentation in conformity with GAAP. Accordingly, these financial statements should be read in conjunction with the 2015 Financial Statements. Results for interim periods are not necessarily indicative of results which may be achieved for a full year. Revision to Financial Statements During the preparation of the annual consolidated financial statements for the fiscal year ended September 30, 2015 ("fiscal 2015"), the Company discovered a financial statement error attributable to the accounting for the accelerated depreciation of assets being sold in conjunction with the closure of its nutritional bar manufacturing plant. More specifically, the Company determined that accelerated depreciation had been understated for the three and nine months ended June 30, 2015 by $4,904 and $6,539, respectively. Accordingly, the Company restated those periods. Additionally, in prior interim periods during fiscal 2015 the Company had recorded and disclosed out-of-period adjustments that the Company concluded at the time of recording of those adjustments, based on its evaluation of both quantitative and qualitative factors, were not material to any of its previously issued consolidated financial statements. These adjustments included the following: • During the first quarter of fiscal 2015, the Company recorded an out-of-period adjustment to cost of sales and label inventory of $3,707. This immaterial adjustment is a result of the Company correcting its policy of expensing all labels upon receipt. Accordingly on-hand labels are now recorded as a part of ending inventory on the consolidated balance sheet. • During the second and third quarters of fiscal 2015, the Company recorded an out-of-period adjustment to selling, general and administrative expenses and cost of sales and prepaid rent totaling $3,252. This immaterial adjustment is a result of the Company correcting its policy of expensing rent, primarily at certain retail locations, at the payment date. Accordingly prepaid rent is now recorded on the consolidated balance sheet and expensed during the period of use. The Company concluded that the aggregate impact of these errors resulted in a material misstatement to its consolidated financial statements for the three and nine months ended June 30, 2015. In connection with the Company's restatement of those interim consolidated financial statements the Company revised its historical financial statements to reflect the impact of the correction of the accounting policies noted above. The impact of correcting these policies was recorded as an adjustment to Shareholder's Equity as of September 30, 2012. Therefore, the Consolidated Statements of Shareholder's Equity and the Consolidated Balance Sheet have been revised to reflect this change. There was no change to the previously reported Consolidated Statements of Operations and Comprehensive Income (Loss), for these adjustments as the impact to the Company's results of operations for all previously reported periods was de minimis. Furthermore, there was no change to the Consolidated Statements of Cash Flows and no impact on any covenants contained in its debt agreements. During the second quarter of 2016, the Company identified errors related to its previously issued financial statements that the Company concluded, based on its evaluation of both quantitative and qualitative factors, were not material to any of its previously issued consolidated financial statements: • In accounting for deferred taxes related to certain of the Company's long-lived assets recorded in connection with the acquisition of the Company by Carlyle, inclusive of intangible assets and property, plant and equipment, the Company did not properly consider the implications of income tax and foreign currency rate changes when recording deferred taxes at the end of each reporting period. The correction of these errors results in the reduction of long-term deferred income tax liabilities of $45,235 and $38,671 as of December 31, 2015 and September 30, 2015, respectively, the reduction in Provision (benefit) for income taxes of $4,680 for the three months ended December 31, 2015 and an increase in Foreign currency translation adjustments of $1,884 and $3,477, for the three months December 31, 2015 and 2014, respectively. Accordingly, the Consolidated Balance Sheets, Statements of Operations and Comprehensive Income (Loss) and Statements of Stockholders' Equity have been revised, as applicable, to reflect these changes. The impact of these errors for fiscal periods prior to 2013 but subsequent to the acquisition of the Company by Carlyle was recorded as an adjustment to Shareholder's Equity as of September 30, 2012. • In accounting for the acquisition of the Company by Carlyle, the Company improperly recorded a deferred tax liability related to carryover tax-deductible goodwill resulting in an overstatement of its long-term deferred tax liabilities and goodwill in the amount of $13,930. The Consolidated Balance Sheets have been revised to reflect this change. The correction of these errors had no impact on the total captions as reported in the Consolidated Statements of Cash Flows and no impact on any covenants contained in its debt agreements. The aggregate impact of these revisions to correct the previously issued financial statements is follows: December 31, 2015 September 30, 2015 As Reported Adjustment As Revised As Reported Adjustment As Revised Consolidated Balance Sheets Goodwill $ $ ) $ $ $ ) $ Total assets $ $ ) $ $ $ ) $ Deferred income taxes $ $ ) $ $ $ ) $ Total liabilities $ $ ) $ $ $ ) $ Capital in excess of par $ $ $ $ $ — $ Retained earnings $ — $ — $ — $ ) $ $ Accumulated other comprehensive loss $ ) $ $ ) $ ) $ $ ) Total shareholder's equity $ $ $ $ $ $ Total liabilities and shareholder's equity $ $ ) $ $ $ ) $ Three months ended December 31, 2015 Three months ended December 31, 2014 As Reported Adjustment As Revised As Reported Adjustment As Revised Consolidated Statements of Income and Comprehensive Income (Loss) Cost of sales (See Note 3) $ $ — $ $ $ $ Total costs and expenses $ $ — $ $ $ $ Income from operations $ $ — $ $ $ ) $ Income from operations before income taxes $ $ — $ $ $ ) $ (Benefit) provision for income taxes $ $ ) $ ) $ $ ) $ Net income (loss) $ $ $ $ $ ) $ Net (loss) income attributable to NBTY, Inc. $ $ $ $ $ ) $ Foreign currency translation adjustment, net of taxes of ($997) and $396, respectively $ ) $ $ ) $ ) $ $ ) Total other comprehensive loss, net of tax: $ ) $ $ ) $ ) $ $ ) Comprehensive loss $ ) $ $ ) $ $ $ Comprehensive loss attributable to NBTY, Inc. $ ) $ $ ) $ $ $ Three months ended December 31, 2015 Three months ended December 31, 2014 As Reported Adjustment As Revised As Reported Adjustment As Revised Consolidated Statement of Cash Flows Net income (loss) $ $ $ $ $ ) $ Inventories $ $ — $ $ $ $ Deferred income taxes $ $ ) $ $ ) $ — $ ) Net cash provided by operating activities $ $ — $ $ $ — $ Accrued expenses and other liabilities $ ) $ — $ ) $ ) $ ) ) Estimates The preparation of financial statements in conformity with GAAP requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements and reported amounts of revenues and expenses during the reporting periods. These judgments can be subjective and complex, and consequently actual results could differ materially from those estimates and assumptions. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our most significant estimates include: sales returns, promotions and other allowances; inventory valuation and obsolescence; valuation and recoverability of long-lived assets, including goodwill and intangible assets; income taxes, and accruals for the outcome of current litigation. Accounts Receivable Reserves Accounts receivable are presented net of the following reserves: December 31, 2015 September 30, 2015 Promotional program incentive allowances $ $ Allowance for sales returns Allowance for doubtful accounts Other accounts receivable allowances $ $ Redeemable non-controlling interest In December 2015, we acquired a controlling interest in Dr. Organic Limited ("Dr. Organic"). The Company assessed the terms of the redemption features related to the non-controlling interest ("NCI") and concluded that based on the nature of those features the NCI should be accounted for as redeemable non-controlling interest. Accordingly, the NCI is classified outside of stockholders' equity in the Consolidated Balance Sheets as temporary equity under the caption, Redeemable non-controlling interest. The Company measures the NCI at its redemption value at the end of each period and if the redemption value is greater than the carrying value, an adjustment is recorded in retained earnings to record the NCI at its redemption value. Net income attributable to the NCI reflects the portion of the net income (loss) of the consolidated entities applicable to the NCI stockholders in the accompanying Consolidated Statements of Operations. The net income attributable to NCIs is classified in the Consolidated Statements of Operations as part of consolidated net income and deducted from total consolidated net income to arrive at the net income attributable to the Company. The changes in the temporary equity attributable to the redeemable NCI for the three months ended December 31, 2015 are as follows: Equity attributable to redeemable non-controlling interest Balance at September 30, 2015 $ — Issuance of non-controlling interest—Doctor Organic Limited Net loss attributable to non-controlling interests ) Other comprehensive loss ) Balance at December 31, 2015 $ Recent Accounting Developments In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance on revenue from contracts with customers that will supersede virtually all existing revenue recognition guidance, including industry-specific guidance, and is designed to create greater comparability for financial statement users across industries and jurisdictions. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. The guidance would have been effective for us beginning October 1, 2017, however in July 2015, the FASB decided to defer the effective date of the new standard by one year. Early adoption would be permitted for us beginning October 1, 2017. The guidance permits the use of either a retrospective or cumulative effect transition method. We have not yet selected a transition method and are currently evaluating the impact of the amended guidance on our consolidated financial statements and related disclosures. In July 2015, the FASB issued guidance which applies to inventory for which cost is determined by methods other than the last-in first-out and the retail inventory method. Under the new guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance is effective for us beginning October 1, 2017, and should be applied prospectively with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our consolidated financial statements and related disclosures. In November 2015, the Financial Accounting Standards Board issued guidance which requires all deferred tax assets and liabilities to be presented in the balance sheet as noncurrent. This guidance is effective for us on October 1, 2017. Upon adoption, we will present the net deferred tax assets as noncurrent and reclassify any current deferred tax assets and liabilities in our consolidated financial position on a retrospective basis and will not have a material impact on our Consolidated Balance Sheets. |
Acquisition of Dr. Organic
Acquisition of Dr. Organic | 3 Months Ended |
Dec. 31, 2015 | |
Acquisition of Dr. Organic | |
Acquisitions | 2. Acquisition of Dr. Organic In December 2015, NBTY (2015) Limited ("NBTY (2015)"), a private limited company incorporated in England and Wales and an indirect subsidiary of Alphabet Holding Company, Inc. ("Holdings"), our parent company, and Holland & Barrett Group Limited ("H&B"), a company incorporated in England and Wales and an indirect subsidiary of Holdings, completed the purchase Dr. Organic, pursuant to which NBTY (2015) acquired all of the ordinary shares of Dr. Organic, a manufacturer, marketer and distributor of a broad line of naturally-inspired personal care products. The purchase price for the ordinary shares of Dr. Organic was £53,384 (approximately $80,519), paid in (i) cash of £33,384 (approximately $50,353) (the "cash consideration"), (ii) loan notes in an aggregate principal amount of £20,000 (approximately $30,166) (the "completion loan notes") issued by NBTY (2015) to the sellers, which mature 18 months after issuance and are redeemable at any time after six months at the option of the holders, (iii) 399,000 class B ordinary shares, par value £0.01 (the "rollover shares"), issued by NBTY (2015) to the sellers and (iv) 222,000 class C ordinary shares, par value £0.01, issued by NBTY (2015) to certain of the sellers at a premium of £0.04 each (which will be redeemed by NBTY (2015) for £0.05 18 months after issuance). Holders of the rollover shares may require us to repurchase them for an amount based on the future earnings of Dr. Organic and its subsidiaries (the "repurchase amount"), which amount is payable, at the election of holders, in cash or through the issuance of loan notes by NBTY (2015) with terms similar to the completion loan notes. To the extent the holders do not exercise their put right, we will have the right to call the rollover shares at the repurchase amount. The put is exercisable for thirty days commencing in January 2019 and the call is exercisable thirty days after the expiration of the put for a period of thirty days. The following allocation of the purchase price is preliminary and based on information available to the Company's management at the time the consolidated financial statements were prepared. Accordingly, the allocation is subject to change and the impact of such changes could be material. The allocation of the purchase price is as follows: Fair value of consideration: Cash $ Completion loan notes at fair value Redeemable non-controlling interest Less: Settlement of payables due to Dr. Organic ) Cash and cash equivalents acquired ) $ Allocated to: Assets: Accounts receivable $ Inventories Other current assets Property, plant, and equipment Intangibles assets Liabilities: Accounts payable ) Accrued expenses and other current liabilities ) Deferred income taxes ) Net assets acquired Goodwill $ The fair values of the net assets acquired were determined using discounted cash flow analyses and estimates made by management. The purchase price was allocated to intangible assets as follows: $94,399 to goodwill, which is non-amortizable and is not deductible for income tax purposes, approximately $46,000 to tradenames, which are amortizable over 10-15 years and approximately $25,000 to customer relationships, which are amortizable over 25 years. Acquisition costs for Dr. Organic amounted to approximately $5,000. The acquisition of Dr. Organic is expected to expand our operations in the Consumer Products Group segment in the distribution of natural personal care products. Additionally, we believe that we can leverage our existing distribution channels of our Consumer Products Group, which is the primary driver behind the excess of the purchase price paid over the fair value of the assets and liabilities acquired. Results since the acquisition to date and pro forma information with respect to Dr. Organic have not been provided as this acquisition was not considered material to our operations. |
Sale of Nutritional Bar Assets
Sale of Nutritional Bar Assets and Powder Facility | 3 Months Ended |
Dec. 31, 2015 | |
Sale of Nutritional Bar Assets and Powder Facility | |
Sale of Nutritional Bar Assets and Powder Facility | 3. Sale of Nutritional Bar Assets and Powder Facility In March 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 closing of the sale pursuant to the Powder APA occurred on June 26, 2015. The sales price for the production assets and transferred contracts was $4,228. The sales price for the raw materials, packaging, labels, work-in-process and component inventories was $16,722, net of post-closing adjustments. A significant portion of the sale of assets pursuant to the Bar APA has already been completed with the remaining portion of the sale expected to be completed by the end of the first half of fiscal 2016. The aggregate sales price for the production assets to be sold pursuant to the Bar APA is approximately $12,000, which resulted in accelerated depreciation as noted below. The aggregate sales price for the raw materials, packaging, labels, work-in-process and component inventories to be transferred pursuant to the Bar APA is equal to NBTY's book value for such assets, as estimated by NBTY prior to the closing of the transactions, and subject to post-closing adjustments. As of December 31, 2015, $7,910 of production assets have been transferred. As of December 31, 2015, the remaining production assets of approximately $4,100 and inventory of $4,700 within the bar plant that are waiting to be transferred are recorded in other current assets, as they are no longer being used for manufacturing operations and are readily available to be sold in their existing condition. As a result of these arrangements, we will incur cumulative net charges ranging from $36,000 to $39,000 before tax over the period in which these transactions are completed, of which non-cash charges will consist primarily of accelerated depreciation and a write-off of goodwill of approximately $28,000; costs related to workforce reductions will be approximately $2,500 and other costs ranging from $7,000 to 10,000, partially offset by a gain of $1,692 on the sale of a contract. All costs associated with the Divested Manufacturing Operations are being reflected in Corporate / Manufacturing, with the exception of the write-off of goodwill for which $4,892 and $649 was recorded in the Consumer Products Group and Puritan's Pride segments, respectively. Charges related to these divestitures of $5,494 for the three months ended December 31, 2015 were $2,337 for accelerated depreciation and $3,157 of other costs, which primarily relate to inventory write-offs, and are recorded in Facility restructuring charges. Cumulative charges since inception of these arrangements totaled $34,987 through December 31, 2015 and include $22,540 for accelerated depreciation, $5,541 for a write off of goodwill associated with the fair value of the business; $2,510 for severance and employee related costs and $6,088 of other costs, which primarily relate to inventory write offs; partially offset by a gain on a transferred contract of $1,692, and are recorded in Facility restructuring charges. |
Inventories
Inventories | 3 Months Ended |
Dec. 31, 2015 | |
Inventories | |
Inventories | 4. Inventories The components of inventories are as follows: December 31, 2015 September 30, 2015 Raw materials $ $ Work-in-process Finished goods Total $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 5. Goodwill and Intangible Assets The change in the carrying amount of goodwill by segment is as follows: Consumer Products Group Holland & Barrett International Puritan's Pride Consolidated Balance at September 30, 2015 $ $ $ $ Acquisition of Dr. Organic Limited — — Foreign currency translation ) ) — ) Balance at December 31, 2015 $ $ $ $ The previously reported amounts have been revised to correct for the impact of the error with regard to the improper recognition of a deferred tax liability related to carryover tax-deductible goodwill (see Note 2). The correction of this error resulted in a reduction in goodwill from what was previously reported in the amounts of $7,129, $3,086 and $3,715 related to the Consumer Products Group, Holland & Barrett International and Puritan's Pride segments, respectively. The carrying amounts of acquired other intangible assets, which are subject to the impact of changes in foreign currency for the periods indicated are as follows: December 31, 2015 September 30, 2015 Gross carrying amount Accumulated amortization Gross carrying amount Accumulated amortization Amortization period (years) Definite lived intangible assets: Brands and customer relationships $ $ $ $ 10 - 25 Tradenames and other 20 - 30 Indefinite lived intangible assets: Tradenames — — Total intangible assets $ $ $ $ Aggregate amortization expense of definite lived intangible assets included in the consolidated statements of operations and comprehensive loss in selling, general and administrative expenses for the three months ended December 31, 2015 and 2014 was $11,644 and $11,358, respectively. Assuming no changes in our intangible assets, estimated amortization expense for each of the five succeeding years will be approximately $49,000 per year. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Dec. 31, 2015 | |
Long-Term Debt | |
Long-Term Debt | 6. Long-Term Debt The components of long-term debt are as follows: December 31, 2015 September 30, 2015 Senior Secured Credit Facilities: Term loan B-2 Principal amount $ $ Less unamortized debt issuance costs ) ) Notes Principal amount Less unamortized debt issuance costs ) ) Long-term obligations under capital lease Completion loan notes (See Note 2) — Other — Less current portion ) ) Total $ $ Senior secured credit facilities On October 1, 2010, NBTY entered into its senior secured credit facilities with Barclays Bank PLC, as administrative agent (the "Original Credit Agreement"). The Original Credit Agreement was amended pursuant to the First Amendment and Refinancing Agreement, dated as of March 1, 2011, and further amended pursuant to that Second Amendment Agreement, dated as of October 11, 2012. On March 21, 2013, NBTY, Holdings, our parent company, Barclays Bank PLC, as administrative agent, and several other lenders entered into the Third Amendment and Second Refinancing Agreement (the "Second Refinancing") pursuant to which NBTY repriced its term loan B-1 under its then existing credit agreement. Under the terms of the Second Refinancing, the $1,750,000 term loan B-1 was replaced with a new $1,507,500 term loan B-2. Borrowings under term loan B-2 and the revolving credit facility bear interest at a floating rate which can be, at NBTY's option, either (i) eurodollar (LIBOR) rate plus an applicable margin, or (ii) base rate plus an applicable margin, in each case, subject to a eurodollar (LIBOR) rate floor of 1.00% or a base rate floor of 2.00%, as applicable. The applicable margin for term loan B-2 is 2.50% per annum for eurodollar (LIBOR) loans and 1.50% per annum for base rate loans. The applicable margin for the revolving credit facility remained at 3.25% per annum for eurodollar (LIBOR) loans and 2.25% per annum for base rate loans, with a step-down of 25 basis points upon the achievement of a total senior secured leverage ratio as set forth in the senior secured credit facilities. Substantially all other terms are consistent with the original term loan B-1, including the maturity dates. Costs incurred and recorded as deferred financing costs were approximately $15,190, including $13,924 of the call premium paid on term loan B-1, and are being amortized using the effective interest method. In accordance with the provisions of the credit agreement governing the senior secured credit facilities, future scheduled payments of principal will not be required until the final balloon payment at maturity in October 2017. On November 20, 2014, NBTY amended its senior secured revolving credit facility, extending its maturity to September 2017 and reducing the commitment from $200,000 to $175,000. The following fees are applicable under the revolving credit facility: (i) an unused line fee of 0.50% per annum, based on the unused portion of the revolving credit facility; (ii) a letter of credit participation fee on the aggregate stated amount of each letter of credit available to be drawn equal to the applicable margin for eurodollar rate loans; (iii) a letter of credit fronting fee equal to 0.25% per annum on the daily amount of each letter of credit available to be drawn; and (iv) certain other customary fees and expenses of our letter of credit issuers. As of December 31, 2015, there were no borrowings drawn from our $175,000 revolving credit facility and there was a letter of credit totaling $6,100, reducing the net availability to $168,900. NBTY may voluntarily prepay loans or reduce commitments under its senior secured credit facilities, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty. NBTY must make prepayments on the term loan B-2 facility with the net cash proceeds of certain asset sales, casualty and condemnation events, the incurrence or issuance of indebtedness (other than indebtedness permitted to be incurred under its senior secured credit facilities unless specifically incurred to refinance a portion of its senior secured credit facilities) and 50% of excess cash flow, as defined in the credit agreement (such percentage subject to reduction based on achievement of total senior secured leverage ratios), in each case, subject to certain reinvestment rights and other exceptions. An excess cash flow payment of $31,941 was paid in November 2015. Furthermore NBTY made a voluntary prepayment of $25,000 on December 30, 2015. As a result of these two payments, $1,058 of deferred financing costs were written off during the three months ended December 31, 2015. For the fiscal year ending September 30, 2016 we anticipate an excess cash flow payment of approximately $30,000 and have recorded this in Current portion of long-term debt. NBTY is also required to make prepayments under its revolving credit facility at any time when, and to the extent that, the aggregate amount of the outstanding loans and letters of credit under the revolving credit facility exceeds the aggregate amount of commitments in respect of the revolving credit facility. Obligations under the senior secured credit facilities are guaranteed by Holdings and each of NBTY's current and future direct and indirect subsidiaries other than (i) foreign subsidiaries, (ii) unrestricted subsidiaries, (iii) non-wholly owned subsidiaries, (iv) certain receivables financing subsidiaries, (v) certain immaterial subsidiaries and (vi) certain holding companies of foreign subsidiaries, and are secured by a first lien on substantially all of their assets, including capital stock of subsidiaries (subject to certain exceptions). The senior secured credit facilities contain customary negative covenants, including, but not limited to, restrictions on NBTY and its restricted subsidiaries' ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, prepay or modify terms of certain junior indebtedness, enter into transactions with affiliates, amend organizational documents, or change our line of business or fiscal year. In addition, NBTY's senior secured credit facilities require the maintenance of a maximum total senior secured leverage ratio on a quarterly basis, calculated with respect to Consolidated EBITDA, as defined therein, if at any time amounts are outstanding under the revolving credit facility, including swingline loans and letters of credit. NBTY was in compliance with all financial covenants under the senior secured credit facilities at December 31, 2015. The senior secured credit facilities provide that, upon the occurrence of certain events of default, the obligations thereunder may be accelerated and the lending commitments terminated. Such events of default include payment defaults to the lenders, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy proceedings, material money judgments, material ERISA/pension plan events, certain change of control events and other customary events of default. Holdco Notes On October 17, 2012 and December 12, 2013, Holdings issued $550,000 and $450,000, respectively, in aggregate principal amount of 7.75%/8.50% contingent cash pay senior notes ("Holdco Notes") that mature on November 1, 2017. Interest on the Holdco Notes accrues at the rate of 7.75% per annum with respect to cash interest and 8.50% per annum with respect to any paid-in-kind interest ("PIK Interest"). Interest on the Holdco Notes is payable semi-annually in arrears on May 1 and November 1 of each year. All interest payments made to date have been in cash and were funded by dividends from NBTY. Holdings is a holding company with no operations and has no ability to service interest or principal on the Holdco Notes, other than through dividends it may receive from NBTY. NBTY is restricted, in certain circumstances, from paying dividends to Holdings by the terms of the indenture governing the Notes and the senior secured credit facilities. NBTY has not guaranteed the indebtedness of Holdings, nor pledged any of its assets as collateral and the Holdco Notes are not reflected on NBTY's balance sheet. Interest on the Holdco Notes shall be payable entirely in cash ("Cash Interest") to the extent that it is less than the maximum amount of allowable dividends and distributions plus any cash at Holdings ("Applicable Amount") as defined by the indenture governing the Holdco Notes. For any interest period after May 1, 2013 (other than the final interest period ending at stated maturity), if the Applicable Amount for such interest period will: (i) equal or exceed 75%, but be less than 100%, of the aggregate amount of Cash Interest that would otherwise be due on the relevant interest payment date, then Holdings may, at its option, elect to pay interest on (a) 25% of the then outstanding principal amount of the Holdco Notes by increasing the principal amount of the outstanding Holdco Notes or by issuing payment in kind notes ("PIK Notes") in a principal amount equal to such interest and (b) 75% of the then outstanding principal amount of the Holdco Notes as Cash Interest; (ii) equal or exceed 50%, but be less than 75%, of the aggregate amount of Cash Interest that would otherwise be due on the relevant interest payment date, then Holdings may, at its option, elect to pay interest on (a) 50% of the then outstanding principal amount of the Holdco Notes as PIK Interest and (b) 50% of the then outstanding principal amount of the Holdco Notes as Cash Interest; (iii) equal or exceed 25%, but be less than 50%, of the aggregate amount of Cash Interest that would otherwise be due on the relevant interest payment date, then Holdings may, at its option, elect to pay interest on (a) 75% of the then outstanding principal amount of the Holdco Notes as PIK Interest and (b) 25% of the then outstanding principal amount of the Holdco Notes as Cash Interest; or (iv) be less than 25% of the aggregate amount of Cash Interest that would otherwise be due on the relevant interest payment date, then Holdings may, at its option, elect to pay interest on the Holdco Notes as PIK Interest. As described above, Holdings' ability to pay PIK Interest depends on the calculation of the Applicable Amount regardless of the availability of cash at Holdings. Holdings may redeem the Holdco Notes, at its option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on November 1 of the years set forth below: Period Redemption Price 2015 % 2016 and thereafter % Notes On October 1, 2010, NBTY issued $650,000 in aggregate principal amount of senior notes bearing interest at 9% in a private placement. On August 2, 2011, these privately placed notes were exchanged for substantially identical notes that were registered under the Securities Act of 1933, as amended, and therefore are freely tradable (the privately placed notes and such registered notes exchanged therefor, the "Notes"). The Notes are senior unsecured obligations and mature on October 1, 2018. Interest on the Notes is paid on April 1 and October 1 of each year, and commenced on April 1, 2011. NBTY may redeem the Notes, at its option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on October 1 of the years set forth below: Period Redemption Price 2015 % 2016 and thereafter % The Notes are jointly and severally irrevocably and unconditionally guaranteed by each of NBTY's subsidiaries that is a guarantor under the credit agreement. The Notes are uncollateralized and rank senior in right of payment to existing and future indebtedness that is expressly subordinated to the Notes, rank equally in right of payment to NBTY and its subsidiary guarantors' senior unsecured debt, and are effectively junior to any of NBTY or its subsidiary guarantors' secured debt, to the extent of the value of the collateral securing such debt. The Notes contain certain customary covenants including, but not limited to, restrictions on NBTY and its restricted subsidiaries' ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, or pay dividends. NBTY was in compliance with all financial covenants under the Notes at December 31, 2015. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Dec. 31, 2015 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 7. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following table summarizes the assets / (liabilities) measured at fair value on a recurring basis at December 31, 2015: Level 1 Level 2 Level 3 Current (included in accrued expenses and other current liabilities): Cross currency swaps $ — $ — $ ) Non-current (included in other assets): Cross currency swaps $ — $ — $ The following table summarizes the assets / (liabilities) measured at fair value on a recurring basis at September 30, 2015: Level 1 Level 2 Level 3 Current (included in accrued expenses and other current liabilities): Cross currency swaps $ — $ — $ ) Non-current (included in other assets): Cross currency swaps $ — $ — $ The Company's swap contracts are measured at fair value based on a market approach valuation technique. With the market approach, fair value is derived using prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. As non-performance risk of the Company and the counterparty is present in all swap contracts and is a component of the estimated fair values, and is a significant input to the fair value for our cross currency swap contracts, the Company classifies these swap contracts as "Level 3" in the fair value hierarchy and, accordingly, records estimated fair value adjustments based on internal projections and views of those contracts. The performance risk for the cross currency swap contracts as a percentage of the unadjusted assets / (liabilities) ranged from 2.0% to 3.0% (2.7% weighted average) as of December 31, 2015 and 6.1% to 11.4% (9.5% weighted average) as of September 30, 2015. The following table shows the Level 3 activity related to our cross currency swaps for the three months ended December 31, 2015 and 2014: Three Months Ended December 31, 2015 2014 Beginning balance: $ $ ) Unrealized gain on cross currency swaps Ending balance: $ $ ) Interest Rate Swaps During March 2011, we entered into three interest rate swap contracts to fix the LIBOR indexed interest rates on a portion of our senior secured credit facilities until the indicated expiration dates of these swap contracts. Each swap contract had a declining notional amount with a fixed interest rate of 1.92% for a four-year term and matured in December 2014. Under the terms of the swap contracts, variable interest payments for a portion of our senior secured credit facilities were swapped for fixed interest payments. These interest rate swap contracts were designated as a cash flow hedge of the variable interest payments on a portion of our term loan debt. Hedge effectiveness was assessed based on the overall changes in the fair value of the interest rate swap contracts. Hedge ineffectiveness was insignificant, and was recorded in Miscellaneous, net. Cross Currency Swaps To manage the potential exposure from adverse changes in currency exchange rates, specifically the British pound sterling, arising from our net investment in British pound sterling denominated operations, we entered into three cross currency swap contracts in December 2010, to hedge a portion of the net investment in our British pound denominated foreign operations. The aggregate notional amount of the swap contracts is £194,200 British pounds sterling (approximately $300,000 U.S. dollars), with a forward rate of 1.565, and a termination date of September 30, 2017. These cross currency contracts were designated as a net investment hedge to the net investment in our British pound sterling denominated operations. Hedge effectiveness is assessed based on the overall changes in the fair value of the cross currency swap contracts. Any potential hedge ineffectiveness is measured using the hypothetical derivative method and is recognized in current earnings. Hedge ineffectiveness loss for the three months ended December 31, 2015 and 2014 was $751 and $1,934, respectively, and is recorded in Miscellaneous, net. The following table shows the effect, net of tax impact, of the Company's derivative instruments designated as cash flow and net investment hedging instruments: Three Months Ended December 31, 2015 2014 Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Cash Flow Hedges: Interest rate swaps $ — $ — $ ) $ ) Net Investment Hedges: Cross currency swaps — — Total $ $ — $ $ ) Notes The fair value of the Notes, based on quoted market prices (Level 2), was approximately $656,000 as of December 31, 2015. Completion Loan Notes (See Note 2) The face value of the completion loan notes issued in connection with the acquisition of Doctor Organic (see Note 2) is £20,000 (approximately $30,166). These notes were recorded at fair value in our Consolidated Balance Sheet on December 7, 2015, the date of acquisition of Doctor Organic, and as a result their carrying value continues to approximate fair value as of December 31, 2015. Term loan B-2 The face amount of the term loan B-2 is $1,450,559, which approximates fair value based on Level 2 inputs, as this loan accrues interest at a variable interest rate. Assets Re-measured at Fair Value on a Non-recurring Basis In connection with the sale of Vitamin World, the Company performed an impairment analysis with respect to the assets that will be sold, resulting in an impairment of $11,656 relating to the furniture and fixtures at the retail locations. This impairment analysis utilized unobservable inputs primarily with respect to the future cash flows of the Vitamin World business as well as potential cash flows from a sale transaction. (See Note 14). ] |
Litigation Summary
Litigation Summary | 3 Months Ended |
Dec. 31, 2015 | |
Litigation Summary | |
Litigation Summary | 8. Litigation Summary Herbal Dietary Supplements In February 2015, the State of New York Office of the Attorney General (the "NY AG") began an investigation concerning the authenticity and purity of herbal supplements and associated marketing. As part of this investigation, the NY AG is reviewing the sufficiency of the measures that several manufacturers and retailers, including NBTY, are taking to independently assess the validity of their representations and advertising in connection with the sale of herbal supplements. On September 9, 2015, the NY AG sent letters to fourteen separate companies, including NBTY, concerning an additional herbal product. NBTY has fully cooperated with the NY AG; however until these investigations are concluded, no final determination can be made as to its ultimate outcome or the amount of liability, if any, on the part of NBTY. Following the NY AG investigation, starting in February 2015, numerous putative class actions were filed in various jurisdictions against NBTY, certain of its customers and/or other companies as to which there may be a duty to defend and indemnify, challenging the authenticity and purity of herbal supplements and associated marketing, under various states' consumer protection statutes. Motions for transfer and consolidation of all of the federal actions as multidistrict litigation into a single district before a single judge were granted on June 9, 2015, and the cases are consolidated before Judge John W. Darrah of the United States District Court, North District of Illinois—Eastern Division (the "MDL Case"). Three class actions against one of our customers to which we may have a duty to indemnify have not been transferred and consolidated with the MDL Case, and are at the initial stages of litigation. At this time, no determination can be made as to the ultimate outcome of the investigation and related litigation or the amount of liability, if any, on the part of NBTY. Glucosamine-Based Dietary Supplements Beginning in June 2011, certain putative class actions have been filed in various jurisdictions against NBTY, its subsidiary Rexall Sundown, Inc. ("Rexall"), and/or other companies as to which there may be a duty to defend and indemnify, challenging the marketing of glucosamine-based dietary supplements, under various states' consumer protection statutes. The lawsuits against NBTY and its subsidiaries are: Cardenas v. NBTY, Inc. and Rexall Sundown, Inc. (filed June 14, 2011) in the United States District Court for the Eastern District of California, on behalf of a putative class of California consumers seeking unspecified compensatory damages based on theories of restitution and disgorgement, plus punitive damages and injunctive relief; Jennings v. Rexall Sundown, Inc. (filed August 22, 2011) in the United States District Court for the District of Massachusetts, on behalf of a putative class of Massachusetts consumers seeking unspecified trebled compensatory damages; and Nunez v. NBTY, Inc. et al. (filed March 1, 2013) in the United States District Court for the Southern District of California (the "Nunez Case"), on behalf of a putative class of California consumers seeking unspecified compensatory damages based on theories of restitution and disgorgement, plus injunctive relief, as well as other cases in California and Illinois against certain Consumer Products Group customers as to which we may have certain indemnification obligations. In March 2013, NBTY agreed upon a proposed settlement with the plaintiffs, which included all cases and resolved all pending claims without any admission of or concession of liability by NBTY, and which provided for a release of all claims in return for payments to the class, together with attorneys' fees, and notice and administrative costs. Fairness Hearings took place on October 4, 2013 and November 20, 2013. On January 3, 2014, the court issued an opinion and order approving the settlement as modified (the "Order"). The final judgment was issued on January 22, 2014 (the "Judgment"). Certain objectors filed a notice of appeal of the Order and the Judgment on January 29, 2014 and the plaintiffs filed a notice of appeal on February 3, 2014. In fiscal 2013, NBTY recorded a provision of $12,000 reflecting its best estimate of exposure for payments to the class together with attorney's fees and notice and administrative costs in connection with this class action settlement. As a result of the court's approval of the settlement and the closure of the claims period, NBTY reduced its estimate of exposure to $6,100. This reduction in the estimated exposure was reflected in the Company's first quarter results for fiscal 2014. On November 19, 2014, the appellate court issued a decision granting the objectors' appeal. The appellate court reversed and remanded the matter to the district court for further proceedings consistent with the appellate court's decision. In April 2015, NBTY agreed upon a revised proposed settlement with certain plaintiffs which includes all cases and resolves all pending claims without any admission of or concession of liability by NBTY. The parties have signed settlement documentation providing for a release of all claims in return for payments to the class, together with attorneys' fees, and notice and administrative costs estimated to be in the amount of $9,000, which resulted in an additional charge of $4,300 in the second quarter results for fiscal 2015. On May 14, 2015, the settlement was submitted to the court for preliminary approval and a preliminary conference was held before the court on July 22, 2015. The court issued a preliminary approved order on February 1, 2016 preliminarily approving the settlement. Until the cases are resolved, no final determination can be made as to the ultimate outcome of the litigation or the amount of liability on the part of NBTY. Telephone Consumer Protection Act Claim NBTY, and certain of its subsidiaries, are defendants in a class-action lawsuit, captioned John H. Lary Jr. v. Rexall Sundown, Inc.; Rexall Sundown 3001, LLC; Rexall, Inc.; NBTY, Inc.; Corporate Mailings, Inc. d/b/a CCG Marketing Solutions ("CCG") and John Does 1-10 (originally filed October 22, 2013), brought in the United States District Court, Eastern District of New York. The plaintiff alleges that the defendants faxed advertisements to plaintiff and others without invitation or permission, in violation of the Telephone Consumer Protection Act ("TCPA"). On May 2, 2014, NBTY and its named subsidiary defendants cross-claimed against CCG, who was a third party vendor engaged by NBTY, and CCG cross-claimed against NBTY and named subsidiary defendants on June 13, 2014. CCG brought a third party complaint against an unrelated entity, Healthcare Data Experts, LLC, on June 27, 2014. On July 21, 2014, CCG filed a motion to dismiss the amended complaint and on February 11, 2015 the court issued an Order and Opinion dismissing the class-action. On February 27, 2015, the plaintiff filed an appeal to the court's dismissal of the action and that appeal is pending. Oral arguments were held December 10, 2015 and the appeal is pending. At this time, no determination can be made as to the ultimate outcome of the litigation or the amount of liability on the part of NBTY. Claims in the Ordinary Course In addition to the foregoing, other regulatory inquiries, audits, investigations, claims, suits and complaints (including false advertising, product liability, escheat laws, intellectual property and Proposition 65 claims) arise from time to time in the ordinary course of our business. We currently believe that such other inquiries, claims, suits and complaints would not have a material adverse effect on our consolidated financial statements, if adversely determined against us. Over the past several years, we have been served with various false advertising putative class action cases in various U.S. jurisdictions, as have various other companies in the industry. Over the past few years, the number of these cases has increased, such that at any given time we are defending several suits concerning a variety of products. These cases challenge the marketing of the subject dietary supplements under various states' consumer protection statutes and generally seek unspecified compensatory damages based on theories of restitution and disgorgement, plus punitive damages and injunctive relief. Until these cases are resolved, no determination can be made as to the ultimate outcome of the litigation or the amount of liability on our part. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Income Taxes | 9. Income Taxes Our provision for income taxes is impacted by a number of factors, including federal taxes, our international tax structure, state tax rates in the jurisdictions where we conduct business, and our ability to utilize state tax credits that expire between 2016 and 2030. Therefore, our overall effective income tax rate could vary. The effective income tax rate for the three months ended December 31, 2015 and 2014 was (47.6%) and 35.6%, respectively. Our effective tax rates for the three month periods are different than the federal statutory rate generally due to the impact of state and local taxes in fiscal 2016 and 2015 and the partial reinvestment of foreign earnings in fiscal 2016 as well as a one-time benefit related to the remeasurement of our deferred taxes in the UK due to an enacted tax rate change. We accrue interest and penalties related to unrecognized tax benefits in the provision for income taxes. At December 31, 2015, we had accrued $330 and $137 for the potential payment of interest and penalties, respectively. As of December 31, 2015, we were subject to U.S. federal income tax examinations for the tax years 2012 through 2015, and to non-U.S. examinations for tax years 2010 through 2015. In addition, we are generally subject to state and local examinations for fiscal years 2012 through 2015. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss). | |
Accumulated Other Comprehensive Income (Loss) | 10. Accumulated Other Comprehensive Income (Loss) Additions to and reclassifications out of accumulated other comprehensive income (loss) attributable to the Company for the three months ended December 31, 2015 and 2014 were as follows: Three Months Ended December 31, 2015(1) Foreign currency translation adjustments Gains and losses on cash flow hedges Total Balance at September 30, 2015 $ ) $ — $ ) Other comprehensive income (loss) ) — ) Less: foreign currency translation adjustment attributable to non-controlling interest — Balance at December 31, 2015 $ ) $ — $ ) Three Months Ended December 31, 2014(1) Foreign currency translation adjustments Gains and losses on cash flow hedges Total Balance at September 30, 2014 $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) ) ) Amounts reclassified from accumulated other comprehensive income (loss)(2) — Balance at December 31, 2014 $ ) $ — $ ) (1) All amounts are net of tax, amounts in parentheses indicate debits. (2) These losses are reclassified into Interest expense. See Note 7, Fair Value of Financial Instruments. |
Business and Credit Concentrati
Business and Credit Concentration | 3 Months Ended |
Dec. 31, 2015 | |
Business and Credit Concentration | |
Business and Credit Concentration | 11. Business and Credit Concentration Financial Instruments Financial instruments that potentially subject us to credit risk consist primarily of cash and cash equivalents (the amounts of which may, at times, exceed Federal Deposit Insurance Corporation limits on insurable amounts), investments and trade accounts receivable. We mitigate our risk by investing in or through major financial institutions. Customers We perform on-going credit evaluations of our customers and adjust credit limits based upon payment history and the customers' current creditworthiness, as determined by review of their current credit information. Customers' account activity is continuously monitored. As a result of this review process, we record bad debt expense, which is based upon historical experience as well as specific customer collection issues that have been identified, to adjust the carrying amount of the related receivable to its estimated realizable value. While such bad debt expenses historically have been within expectations and the allowances established, if the financial condition of one or more of our customers were to deteriorate, additional bad debt provisions may be required. The following customers accounted for the following percentages of net sales for the three months ended December 31, 2015 and 2014, respectively: Consumer Products Group Segment Net Sales Total Consolidated Net Sales Three Months Ended December 31, Three Months Ended December 31, 2015 2014 2015 2014 Customer A % % % % Customer B % % % % Customer C % % % % The following customers accounted for the following percentages of the Consumer Products Group segment's gross accounts receivable: December 31, 2015 September 30, 2015 Customer A % % Customer B % % Customer C % % The loss of any of these customers, or any one of our other major customers, would have a material adverse effect on our consolidated financial statements if we were unable to replace that customer. Suppliers For the quarter ended December 31, 2015 one supplier was in excess of 10% of our inventory purchases. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions | |
Related Party Transactions | 12. Related Party Transactions Consulting Agreement—The Carlyle Group ("Carlyle") NBTY entered into a consulting agreement with Carlyle under which it pays Carlyle a fee for consulting services Carlyle provides to it and its subsidiaries. Under this agreement, subject to certain conditions, NBTY expects to pay an annual consulting fee to Carlyle of $3,000; NBTY reimburses Carlyle for out-of-pocket expenses, and may pay Carlyle additional fees associated with other future transactions. For the three months ended December 31, 2015 and 2014, these fees totaled $750 and are recorded in selling, general and administrative expenses. Out of pocket expenditures paid to Carlyle were $434 and $334 for the three months ended December 31, 2015 and 2014, respectively. Services from Portfolio Companies of Funds Affiliated with Carlyle From time to time, we receive services from other portfolio companies of funds that are affiliated with Carlyle, which includes payments for services to one such vendor in the amounts of $3,526 and $62 for the three months ended December 31, 2015 and 2014. |
Segment Information
Segment Information | 3 Months Ended |
Dec. 31, 2015 | |
Segment Information | |
Segment Information | 13. Segment Information We are organized by segments on a worldwide basis. We evaluate performance based on a number of factors; however, the primary measures of performance are the net sales and income or loss from operations (before corporate allocations) of each segment, as these are the key performance indicators that we review. Operating income or loss for each segment does not include the impact of any intercompany transfer pricing mark-up, corporate general and administrative expenses, interest expense and other miscellaneous income/expense items. Corporate general and administrative expenses include, but are not limited to, human resources, legal, finance, and various other corporate-level activity related expenses. Such unallocated expenses remain within Corporate/Manufacturing. All of our products fall into one or more of these four segments: • Consumer Products Group —This segment sells products worldwide under various brand names and third-party private labels. Our products are sold to the major mass merchandisers, club stores, drug store chains and supermarkets, as well as to online retailers, independent pharmacies, health food stores, the military and other retailers. • Holland & Barrett International —This segment operates 1,088 stores including 857 Holland & Barrett stores (including 701 company-owned stores in the UK, 50 in Ireland and one in Sweden; and franchised stores in the following countries: 35 in China, 27 in Singapore, 19 in United Arab Emirates, 11 in Cyprus, five in Malta, four in Kuwait, three in Spain and one in Gibraltar). Holland & Barrett International also operated 167 De Tuinen stores (including cobranded stores) in the Netherlands (of which five were franchises), 18 Essenza stores in Belgium, and 46 GNC/MET-Rx stores in the UK. Holland & Barrett International operates Holland & Barrett retail websites in the UK, Ireland, the Netherlands and Belgium, as well as retail websites for De Tuinen in the Netherlands and the GNC/MET-Rx brands in the UK. The revenue generated by this segment consists of sales of its branded products and third-party products as well as franchise fees. We are in the process of rebranding or cobranding our De Tuinen and Essenza stores to leverage consumer awareness of our Holland & Barrett brand. We are also in the process of rebranding our GNC brand stores to MET-Rx. • Puritan's Pride —This segment generates revenue through the sale of proprietary brand and third-party products primarily through mail order catalogs and the internet under the Puritan's Pride tradename. Catalogs are strategically mailed to customers who order by mail, internet, or phone. • Vitamin World —This segment generates revenue through its 378 owned and operated U.S. Vitamin World stores selling proprietary brand and third-party products, as well as internet-based sales from www.vitaminworld.com . In February 2016, the company entered into an agreement to divest this segment. This transaction is expected to close during the second fiscal quarter of fiscal 2016. (See Note 14) In the first quarter of our fiscal year ending September 30, 2016, we changed our internal reporting by (i) presenting certain executive compensation within the segment that is managed by such executive rather than within Corporate/Manufacturing and (ii) transferring certain immaterial customers to the Puritan's Pride segment from the Consumer Products Group segment, as that is how this business is now managed. Accordingly, for the three months ended December 31, 2014, we made certain reclassifications to our segment presentation to conform to current period presentation for these above changes. The following table represents key financial information of our business segments: Total Reportable Business Segments Consumer Products Group Holland & Barrett International Puritan's Pride Vitamin World(1) Total Corporate/ Manufacturing Consolidated Three Months Ended December 31, 2015: Net sales $ $ $ $ $ $ — $ Income (loss) from operations ) ) Depreciation and amortization Capital expenditures Three Months Ended December 31, 2014: Net sales $ $ $ $ $ $ — $ Income (loss) from operations ) Depreciation and amortization Capital expenditures (1) Includes an impairment of $11,656 for the three months ended December 31, 2015. (See Note 7 and 14) Total assets by segment are as follows: December 31, 2015 September 30, 2015 Reportable Business Segments: Consumer Products Group $ $ Holland & Barrett International Puritan's Pride Vitamin World Total Reportable Business Segments: Corporate / Manufacturing Consolidated assets $ $ Assets by segment as of December 31, 2015 and September 30, 2015 were revised to reflect the correction of the Company's recording of deferred tax liabilities related to carryover tax-deductible goodwill in the amounts of $7,129, $3,086 and $3,715 related to the Consumer Products Group, Holland & Barrett International and Puritan's Pride segments, respectively. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Dec. 31, 2015 | |
Subsequent Event. | |
Subsequent Event | 14. Subsequent Event In February 2016, the Company entered into an agreement to sell its Vitamin World segment and certain other assets (including real property) associated with Vitamin World for aggregate consideration of approximately $25,000, consisting of $10,000 in cash, a promissory note with a face value of $15,000 and a warrant to purchase 10% of the equity of the acquiring entity expiring ten years after the closing of the transaction. This transaction is expected to close during the second fiscal quarter of fiscal 2016, and is subject to post-closing adjustments. In conjunction with this divestiture, an impairment of $11,656, which contemplated this potential transaction, was recorded in our first fiscal quarter ended December 31, 2015 and a loss on the sale of the remaining assets will be recorded in the second fiscal quarter of fiscal 2016 based upon the fair value of the expected proceeds. The cumulative expected loss and impairments on this sale will range from $35,000 to $45,000; inclusive of the impairment described above. |
Condensed Consolidating Financi
Condensed Consolidating Financial Statements of Guarantors | 3 Months Ended |
Dec. 31, 2015 | |
Condensed Consolidating Financial Statements of Guarantors | |
Condensed Consolidating Financial Statements of Guarantors | 15. Condensed Consolidating Financial Statements of Guarantors The Notes were issued by NBTY and are guaranteed by each of its current and future direct and indirect 100% owned subsidiaries, subject to certain exceptions. These guarantees are full, unconditional and joint and several. The following condensed consolidating financial information presents: 1. Condensed consolidating financial statements as of December 31, 2015 and September 30, 2015 and for the three months ended December 31, 2015 and 2014 of (a) NBTY, the parent and issuer, (b) the guarantor subsidiaries, (c) the non-guarantor subsidiaries and (d) NBTY on a consolidated basis; and 2. Elimination entries necessary to consolidate NBTY, 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, other comprehensive income, capital contributions, distributions and other equity changes. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. For cashflow presentation purposes, cash transfers between the Guarantors and Non-guarantors (the "Operating Entities") are presented as operating activities and cash transfers between the Parent and the Operating Entities are presented as financing cashflows, unless the cash transfers relate to a statutorily recorded dividend or a formally documented loan agreement. Cash transfers which are statutorily recorded as dividends are presented as a financing outflow by the remitting entity and an operating inflow for the receiving entity, provided that the dividends remitted do not exceed the cumulative earnings of the remitting entity at the time the dividend is remitted. Cash transfers related to formally documented loans are treated as financing activities for all entities that are party to the transfer. This financial information should be read in conjunction with the financial statements and other notes related thereto. These condensed consolidating financial statements have been revised to reflect the correction of errors as described in Note 2. Condensed Consolidating Balance Sheet As of December 31, 2015 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ $ $ $ — $ Accounts receivable, net — — Intercompany — ) — Inventories — — Deferred income taxes — — Other current assets — Total current assets ) Property, plant and equipment, net — Goodwill — — Other intangible assets, net — — Other assets — Intercompany loan receivable — ) — Investments in subsidiaries — ) — Total assets $ $ $ $ ) $ Liabilities and Shareholders's Equity Current liabilities: Current portion of long-term debt $ $ — $ $ — $ Accounts payable — — Intercompany — — ) — Accrued expenses and other current liabilities — Total current liabilities ) Intercompany loan payable ) — Long-term debt, net of current portion — — Deferred income taxes — — Other liabilities — — Total liabilities ) Noncontrolling interest — ) Commitments and contingencies Shareholder's Equity: Common stock — — — — — Capital in excess of par ) (Accumulated deficit) retained earnings — ) — Accumulated other comprehensive income (loss) ) ) ) ) Total shareholder's equity ) Total liabilities and shareholder's equity $ $ $ $ ) $ Condensed Consolidating Balance Sheet As of September 30, 2015 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ $ $ $ — $ Accounts receivable, net — — Intercompany — ) — Inventories — — Deferred income taxes — — Other current assets — Total current assets ) Property, plant and equipment, net — Goodwill — — Other intangible assets, net — — Other assets — Intercompany loan receivable — ) — Investments in subsidiaries — ) — Total assets $ $ $ $ ) $ Liabilities and Shareholder's Equity Current liabilities: Current portion of long-term debt $ $ — $ $ — $ Accounts payable — — Intercompany — — ) — Accrued expenses and other current liabilities — Total current liabilities ) Intercompany loan payable ) — Long-term debt, net of current portion — — Deferred income taxes — — Other liabilities — — Total liabilities ) Commitments and contingencies Shareholder's Equity: Common stock — — — — — Capital in excess of par ) (Accumulated deficit) retained earnings ) Accumulated other comprehensive income (loss) ) ) ) ) Total shareholder's equity ) Total liabilities and shareholder's equity $ $ $ $ ) $ Consolidated Statements of Operations and Comprehensive Income (Loss) For three months ended December 31, 2015 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ ) $ Costs and expenses: Cost of sales (See Note 3) — ) Advertising, promotion and catalog — — Selling, general and administrative — Impairment of Vitamin World assets (See Note 7 and 14) — — — Facility restructuring charges (See Note 3) — — — ) (Loss) income from operations ) — Other income (expense): Intercompany interest ) ) — — Interest ) — ) — ) Miscellaneous, net ) ) — ) ) ) — ) (Loss) income before income taxes ) ) — (Benefit) provision for income taxes ) ) — ) Equity in income of subsidiaries — ) — Net income (loss) ) Deduct net loss attributable to noncontrolling interests — — ) — ) Net income (loss) attributable to NBTY, Inc. $ $ $ $ ) $ Net income (loss) $ $ $ $ ) $ Other comprehensive income (loss), net of tax: Foreign currency translation adjustment, net of taxes ) ) ) ) Change in fair value of interest rate swaps, net of taxes — — — — — Total other comprehensive income (loss), net of tax ) ) ) ) Comprehensive income (loss) $ ) $ $ $ ) $ ) Less: Net loss attributable to non-controlling interests — — ) — ) Less : Foreign currency translation adjustment attributable to non-controlling interest — — ) — ) Comprehensive loss attributable to non-controlling interest — — ) — ) Comprehensive (loss) income attributable to NBTY, Inc. $ ) $ $ $ ) $ ) Consolidated Statements of Operations and Comprehensive Income (Loss) For three months ended December 31, 2014 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ ) $ Costs and expenses: Cost of sales — ) Advertising, promotion and catalog — — Selling, general and administrative — ) Income (loss) from operations ) — Other income (expense): Intercompany interest ) ) — — Interest ) ) — ) Miscellaneous, net ) ) — ) ) ) — ) Income (loss) before income taxes ) — Provision (benefit) for income taxes ) — Equity in income of subsidiaries — ) — Net income (loss) ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustment, net of taxes ) ) ) ) Change in fair value of interest rate swaps, net of taxes — ) Total other comprehensive income (loss), net of tax ) ) ) ) Comprehensive income (loss) $ $ $ $ ) $ Condensed Consolidating Statement of Cash Flows Three Months Ended December 31, 2015 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash (used in) provided by operating activities $ ) $ $ $ ) $ Cash flows from investing activities: Purchase of property, plant and equipment ) ) ) — ) Proceeds from sale of bar assets — — — Proceeds from sale of property, plant and equipment — — — Cash paid for acquisition, net of cash acquired — — ) — ) Net cash used in investing activities ) ) — ) Cash flows from financing activities: Principal payments under long-term agreements ) — — — ) Proceeds from issuance of debt — — — Dividends paid ) — ) ) Intercompany accounts ) — — — Net cash used in financing activities ) ) ) ) Effect of exchange rate changes on cash — — — Net increase in cash and cash equivalents ) ) — ) Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ $ $ $ — $ Condensed Consolidating Statement of Cash Flows Three Months Ended December 31, 2014 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash (used in) provided by operating activities $ ) $ $ $ ) $ Cash flows from investing activities: Purchase of property, plant and equipment ) ) ) — ) Proceeds from sale of property, plant and equipment — — Investment in subsidiary ) — — — Net cash used in investing activities ) ) ) ) Cash flows from financing activities: Principal payments under long-term agreements — — ) — ) Payments for financing fees ) — — — ) Dividends paid ) — ) ) Capital contribution — — ) — Intercompany accounts ) — — — Net cash used in financing activities ) ) ) Effect of exchange rate changes on cash — — ) — ) Net increase in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ $ $ $ — $ |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Basis of Presentation | |
Revision to Financial Statements | Revision to Financial Statements During the preparation of the annual consolidated financial statements for the fiscal year ended September 30, 2015 ("fiscal 2015"), the Company discovered a financial statement error attributable to the accounting for the accelerated depreciation of assets being sold in conjunction with the closure of its nutritional bar manufacturing plant. More specifically, the Company determined that accelerated depreciation had been understated for the three and nine months ended June 30, 2015 by $4,904 and $6,539, respectively. Accordingly, the Company restated those periods. Additionally, in prior interim periods during fiscal 2015 the Company had recorded and disclosed out-of-period adjustments that the Company concluded at the time of recording of those adjustments, based on its evaluation of both quantitative and qualitative factors, were not material to any of its previously issued consolidated financial statements. These adjustments included the following: • During the first quarter of fiscal 2015, the Company recorded an out-of-period adjustment to cost of sales and label inventory of $3,707. This immaterial adjustment is a result of the Company correcting its policy of expensing all labels upon receipt. Accordingly on-hand labels are now recorded as a part of ending inventory on the consolidated balance sheet. • During the second and third quarters of fiscal 2015, the Company recorded an out-of-period adjustment to selling, general and administrative expenses and cost of sales and prepaid rent totaling $3,252. This immaterial adjustment is a result of the Company correcting its policy of expensing rent, primarily at certain retail locations, at the payment date. Accordingly prepaid rent is now recorded on the consolidated balance sheet and expensed during the period of use. The Company concluded that the aggregate impact of these errors resulted in a material misstatement to its consolidated financial statements for the three and nine months ended June 30, 2015. In connection with the Company's restatement of those interim consolidated financial statements the Company revised its historical financial statements to reflect the impact of the correction of the accounting policies noted above. The impact of correcting these policies was recorded as an adjustment to Shareholder's Equity as of September 30, 2012. Therefore, the Consolidated Statements of Shareholder's Equity and the Consolidated Balance Sheet have been revised to reflect this change. There was no change to the previously reported Consolidated Statements of Operations and Comprehensive Income (Loss), for these adjustments as the impact to the Company's results of operations for all previously reported periods was de minimis. Furthermore, there was no change to the Consolidated Statements of Cash Flows and no impact on any covenants contained in its debt agreements. During the second quarter of 2016, the Company identified errors related to its previously issued financial statements that the Company concluded, based on its evaluation of both quantitative and qualitative factors, were not material to any of its previously issued consolidated financial statements: • In accounting for deferred taxes related to certain of the Company's long-lived assets recorded in connection with the acquisition of the Company by Carlyle, inclusive of intangible assets and property, plant and equipment, the Company did not properly consider the implications of income tax and foreign currency rate changes when recording deferred taxes at the end of each reporting period. The correction of these errors results in the reduction of long-term deferred income tax liabilities of $45,235 and $38,671 as of December 31, 2015 and September 30, 2015, respectively, the reduction in Provision (benefit) for income taxes of $4,680 for the three months ended December 31, 2015 and an increase in Foreign currency translation adjustments of $1,884 and $3,477, for the three months December 31, 2015 and 2014, respectively. Accordingly, the Consolidated Balance Sheets, Statements of Operations and Comprehensive Income (Loss) and Statements of Stockholders' Equity have been revised, as applicable, to reflect these changes. The impact of these errors for fiscal periods prior to 2013 but subsequent to the acquisition of the Company by Carlyle was recorded as an adjustment to Shareholder's Equity as of September 30, 2012. • In accounting for the acquisition of the Company by Carlyle, the Company improperly recorded a deferred tax liability related to carryover tax-deductible goodwill resulting in an overstatement of its long-term deferred tax liabilities and goodwill in the amount of $13,930. The Consolidated Balance Sheets have been revised to reflect this change. The correction of these errors had no impact on the total captions as reported in the Consolidated Statements of Cash Flows and no impact on any covenants contained in its debt agreements. The aggregate impact of these revisions to correct the previously issued financial statements is follows: December 31, 2015 September 30, 2015 As Reported Adjustment As Revised As Reported Adjustment As Revised Consolidated Balance Sheets Goodwill $ $ ) $ $ $ ) $ Total assets $ $ ) $ $ $ ) $ Deferred income taxes $ $ ) $ $ $ ) $ Total liabilities $ $ ) $ $ $ ) $ Capital in excess of par $ $ $ $ $ — $ Retained earnings $ — $ — $ — $ ) $ $ Accumulated other comprehensive loss $ ) $ $ ) $ ) $ $ ) Total shareholder's equity $ $ $ $ $ $ Total liabilities and shareholder's equity $ $ ) $ $ $ ) $ Three months ended December 31, 2015 Three months ended December 31, 2014 As Reported Adjustment As Revised As Reported Adjustment As Revised Consolidated Statements of Income and Comprehensive Income (Loss) Cost of sales (See Note 3) $ $ — $ $ $ $ Total costs and expenses $ $ — $ $ $ $ Income from operations $ $ — $ $ $ ) $ Income from operations before income taxes $ $ — $ $ $ ) $ (Benefit) provision for income taxes $ $ ) $ ) $ $ ) $ Net income (loss) $ $ $ $ $ ) $ Net (loss) income attributable to NBTY, Inc. $ $ $ $ $ ) $ Foreign currency translation adjustment, net of taxes of ($997) and $396, respectively $ ) $ $ ) $ ) $ $ ) Total other comprehensive loss, net of tax: $ ) $ $ ) $ ) $ $ ) Comprehensive loss $ ) $ $ ) $ $ $ Comprehensive loss attributable to NBTY, Inc. $ ) $ $ ) $ $ $ Three months ended December 31, 2015 Three months ended December 31, 2014 As Reported Adjustment As Revised As Reported Adjustment As Revised Consolidated Statement of Cash Flows Net income (loss) $ $ $ $ $ ) $ Inventories $ $ — $ $ $ $ Deferred income taxes $ $ ) $ $ ) $ — $ ) Net cash provided by operating activities $ $ — $ $ $ — $ Accrued expenses and other liabilities $ ) $ — $ ) $ ) $ ) ) |
Estimates | Estimates The preparation of financial statements in conformity with GAAP requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements and reported amounts of revenues and expenses during the reporting periods. These judgments can be subjective and complex, and consequently actual results could differ materially from those estimates and assumptions. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our most significant estimates include: sales returns, promotions and other allowances; inventory valuation and obsolescence; valuation and recoverability of long-lived assets, including goodwill and intangible assets; income taxes, and accruals for the outcome of current litigation. |
Accounts Receivable Reserves | Accounts Receivable Reserves Accounts receivable are presented net of the following reserves: December 31, 2015 September 30, 2015 Promotional program incentive allowances $ $ Allowance for sales returns Allowance for doubtful accounts Other accounts receivable allowances $ $ |
Redeemable non-controlling interest | Redeemable non-controlling interest In December 2015, we acquired a controlling interest in Dr. Organic Limited ("Dr. Organic"). The Company assessed the terms of the redemption features related to the non-controlling interest ("NCI") and concluded that based on the nature of those features the NCI should be accounted for as redeemable non-controlling interest. Accordingly, the NCI is classified outside of stockholders' equity in the Consolidated Balance Sheets as temporary equity under the caption, Redeemable non-controlling interest. The Company measures the NCI at its redemption value at the end of each period and if the redemption value is greater than the carrying value, an adjustment is recorded in retained earnings to record the NCI at its redemption value. Net income attributable to the NCI reflects the portion of the net income (loss) of the consolidated entities applicable to the NCI stockholders in the accompanying Consolidated Statements of Operations. The net income attributable to NCIs is classified in the Consolidated Statements of Operations as part of consolidated net income and deducted from total consolidated net income to arrive at the net income attributable to the Company. The changes in the temporary equity attributable to the redeemable NCI for the three months ended December 31, 2015 are as follows: Equity attributable to redeemable non-controlling interest Balance at September 30, 2015 $ — Issuance of non-controlling interest—Doctor Organic Limited Net loss attributable to non-controlling interests ) Other comprehensive loss ) Balance at December 31, 2015 $ |
Recent Accounting Developments | Recent Accounting Developments In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance on revenue from contracts with customers that will supersede virtually all existing revenue recognition guidance, including industry-specific guidance, and is designed to create greater comparability for financial statement users across industries and jurisdictions. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. The guidance would have been effective for us beginning October 1, 2017, however in July 2015, the FASB decided to defer the effective date of the new standard by one year. Early adoption would be permitted for us beginning October 1, 2017. The guidance permits the use of either a retrospective or cumulative effect transition method. We have not yet selected a transition method and are currently evaluating the impact of the amended guidance on our consolidated financial statements and related disclosures. In July 2015, the FASB issued guidance which applies to inventory for which cost is determined by methods other than the last-in first-out and the retail inventory method. Under the new guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance is effective for us beginning October 1, 2017, and should be applied prospectively with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our consolidated financial statements and related disclosures. In November 2015, the Financial Accounting Standards Board issued guidance which requires all deferred tax assets and liabilities to be presented in the balance sheet as noncurrent. This guidance is effective for us on October 1, 2017. Upon adoption, we will present the net deferred tax assets as noncurrent and reclassify any current deferred tax assets and liabilities in our consolidated financial position on a retrospective basis and will not have a material impact on our Consolidated Balance Sheets. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Basis of Presentation | |
Schedule of corrections of the misstatement on the Company's consolidated balance sheets, consolidated statements of income and comprehensive income (loss) and consolidated statement of cash flows | December 31, 2015 September 30, 2015 As Reported Adjustment As Revised As Reported Adjustment As Revised Consolidated Balance Sheets Goodwill $ $ ) $ $ $ ) $ Total assets $ $ ) $ $ $ ) $ Deferred income taxes $ $ ) $ $ $ ) $ Total liabilities $ $ ) $ $ $ ) $ Capital in excess of par $ $ $ $ $ — $ Retained earnings $ — $ — $ — $ ) $ $ Accumulated other comprehensive loss $ ) $ $ ) $ ) $ $ ) Total shareholder's equity $ $ $ $ $ $ Total liabilities and shareholder's equity $ $ ) $ $ $ ) $ Three months ended December 31, 2015 Three months ended December 31, 2014 As Reported Adjustment As Revised As Reported Adjustment As Revised Consolidated Statements of Income and Comprehensive Income (Loss) Cost of sales (See Note 3) $ $ — $ $ $ $ Total costs and expenses $ $ — $ $ $ $ Income from operations $ $ — $ $ $ ) $ Income from operations before income taxes $ $ — $ $ $ ) $ (Benefit) provision for income taxes $ $ ) $ ) $ $ ) $ Net income (loss) $ $ $ $ $ ) $ Net (loss) income attributable to NBTY, Inc. $ $ $ $ $ ) $ Foreign currency translation adjustment, net of taxes of ($997) and $396, respectively $ ) $ $ ) $ ) $ $ ) Total other comprehensive loss, net of tax: $ ) $ $ ) $ ) $ $ ) Comprehensive loss $ ) $ $ ) $ $ $ Comprehensive loss attributable to NBTY, Inc. $ ) $ $ ) $ $ $ Three months ended December 31, 2015 Three months ended December 31, 2014 As Reported Adjustment As Revised As Reported Adjustment As Revised Consolidated Statement of Cash Flows Net income (loss) $ $ $ $ $ ) $ Inventories $ $ — $ $ $ $ Deferred income taxes $ $ ) $ $ ) $ — $ ) Net cash provided by operating activities $ $ — $ $ $ — $ Accrued expenses and other liabilities $ ) $ — $ ) $ ) $ ) ) |
Schedule of accounts receivable reserves | December 31, 2015 September 30, 2015 Promotional program incentive allowances $ $ Allowance for sales returns Allowance for doubtful accounts Other accounts receivable allowances $ $ |
Schedule of changes in the temporary equity attributable to the redeemable NCI | Equity attributable to redeemable non-controlling interest Balance at September 30, 2015 $ — Issuance of non-controlling interest—Doctor Organic Limited Net loss attributable to non-controlling interests ) Other comprehensive loss ) Balance at December 31, 2015 $ |
Acquisition of Dr. Organic (Tab
Acquisition of Dr. Organic (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Acquisition of Dr. Organic | |
Schedule of allocation of the purchase price | Fair value of consideration: Cash $ Completion loan notes at fair value Redeemable non-controlling interest Less: Settlement of payables due to Dr. Organic ) Cash and cash equivalents acquired ) $ Allocated to: Assets: Accounts receivable $ Inventories Other current assets Property, plant, and equipment Intangibles assets Liabilities: Accounts payable ) Accrued expenses and other current liabilities ) Deferred income taxes ) Net assets acquired Goodwill $ |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Inventories | |
Schedule of components of inventories | December 31, 2015 September 30, 2015 Raw materials $ $ Work-in-process Finished goods Total $ $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets | |
Schedule of change in carrying amount of goodwill by segment | Consumer Products Group Holland & Barrett International Puritan's Pride Consolidated Balance at September 30, 2015 $ $ $ $ Acquisition of Dr. Organic Limited — — Foreign currency translation ) ) — ) Balance at December 31, 2015 $ $ $ $ |
Schedule of carrying amounts of acquired other intangible assets | December 31, 2015 September 30, 2015 Gross carrying amount Accumulated amortization Gross carrying amount Accumulated amortization Amortization period (years) Definite lived intangible assets: Brands and customer relationships $ $ $ $ 10 - 25 Tradenames and other 20 - 30 Indefinite lived intangible assets: Tradenames — — Total intangible assets $ $ $ $ |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Long-Term Debt | |
Schedule of components of long-term debt | December 31, 2015 September 30, 2015 Senior Secured Credit Facilities: Term loan B-2 Principal amount $ $ Less unamortized debt issuance costs ) ) Notes Principal amount Less unamortized debt issuance costs ) ) Long-term obligations under capital lease Completion loan notes (See Note 2) — Other — Less current portion ) ) Total $ $ |
Schedule of redemption prices of Holdco Notes | Period Redemption Price 2015 % 2016 and thereafter % |
Schedule of redemption prices of Notes | Period Redemption Price 2015 % 2016 and thereafter % |
Fair Value of Financial Instr28
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Fair Value of Financial Instruments | |
Summary of the liabilities measured at fair value on a recurring basis | The following table summarizes the assets / (liabilities) measured at fair value on a recurring basis at December 31, 2015: Level 1 Level 2 Level 3 Current (included in accrued expenses and other current liabilities): Cross currency swaps $ — $ — $ ) Non-current (included in other assets): Cross currency swaps $ — $ — $ The following table summarizes the assets / (liabilities) measured at fair value on a recurring basis at September 30, 2015: Level 1 Level 2 Level 3 Current (included in accrued expenses and other current liabilities): Cross currency swaps $ — $ — $ ) Non-current (included in other assets): Cross currency swaps $ — $ — $ |
Schedule of the Level 3 activity related to cross currency swaps | Three Months Ended December 31, 2015 2014 Beginning balance: $ $ ) Unrealized gain on cross currency swaps Ending balance: $ $ ) |
Schedule of effect of derivative instruments designated as cash flow and net investment hedging instruments | Three Months Ended December 31, 2015 2014 Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Cash Flow Hedges: Interest rate swaps $ — $ — $ ) $ ) Net Investment Hedges: Cross currency swaps — — Total $ $ — $ $ ) |
Accumulated Other Comprehensi29
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss). | |
Schedule of additions to and reclassifications out of accumulated other comprehensive income (loss) | Three Months Ended December 31, 2015(1) Foreign currency translation adjustments Gains and losses on cash flow hedges Total Balance at September 30, 2015 $ ) $ — $ ) Other comprehensive income (loss) ) — ) Less: foreign currency translation adjustment attributable to non-controlling interest — Balance at December 31, 2015 $ ) $ — $ ) Three Months Ended December 31, 2014(1) Foreign currency translation adjustments Gains and losses on cash flow hedges Total Balance at September 30, 2014 $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications ) ) ) Amounts reclassified from accumulated other comprehensive income (loss)(2) — Balance at December 31, 2014 $ ) $ — $ ) (1) All amounts are net of tax, amounts in parentheses indicate debits. (2) These losses are reclassified into Interest expense. See Note 7, Fair Value of Financial Instruments. |
Business and Credit Concentra30
Business and Credit Concentration (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Business and Credit Concentration | |
Schedule of specified customers percentages accounted for | The following customers accounted for the following percentages of net sales for the three months ended December 31, 2015 and 2014, respectively: Consumer Products Group Segment Net Sales Total Consolidated Net Sales Three Months Ended December 31, Three Months Ended December 31, 2015 2014 2015 2014 Customer A % % % % Customer B % % % % Customer C % % % % The following customers accounted for the following percentages of the Consumer Products Group segment's gross accounts receivable: December 31, 2015 September 30, 2015 Customer A % % Customer B % % Customer C % % |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Segment Information | |
Schedule of financial information of business segments | Total Reportable Business Segments Consumer Products Group Holland & Barrett International Puritan's Pride Vitamin World(1) Total Corporate/ Manufacturing Consolidated Three Months Ended December 31, 2015: Net sales $ $ $ $ $ $ — $ Income (loss) from operations ) ) Depreciation and amortization Capital expenditures Three Months Ended December 31, 2014: Net sales $ $ $ $ $ $ — $ Income (loss) from operations ) Depreciation and amortization Capital expenditures (1) Includes an impairment of $11,656 for the three months ended December 31, 2015. (See Note 7 and 14) |
Schedule of total assets by segment | December 31, 2015 September 30, 2015 Reportable Business Segments: Consumer Products Group $ $ Holland & Barrett International Puritan's Pride Vitamin World Total Reportable Business Segments: Corporate / Manufacturing Consolidated assets $ $ |
Condensed Consolidating Finan32
Condensed Consolidating Financial Statements of Guarantors (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Condensed Consolidating Financial Statements of Guarantors | |
Schedule of condensed consolidating balance sheet | Condensed Consolidating Balance Sheet As of December 31, 2015 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ $ $ $ — $ Accounts receivable, net — — Intercompany — ) — Inventories — — Deferred income taxes — — Other current assets — Total current assets ) Property, plant and equipment, net — Goodwill — — Other intangible assets, net — — Other assets — Intercompany loan receivable — ) — Investments in subsidiaries — ) — Total assets $ $ $ $ ) $ Liabilities and Shareholders's Equity Current liabilities: Current portion of long-term debt $ $ — $ $ — $ Accounts payable — — Intercompany — — ) — Accrued expenses and other current liabilities — Total current liabilities ) Intercompany loan payable ) — Long-term debt, net of current portion — — Deferred income taxes — — Other liabilities — — Total liabilities ) Noncontrolling interest — ) Commitments and contingencies Shareholder's Equity: Common stock — — — — — Capital in excess of par ) (Accumulated deficit) retained earnings — ) — Accumulated other comprehensive income (loss) ) ) ) ) Total shareholder's equity ) Total liabilities and shareholder's equity $ $ $ $ ) $ Condensed Consolidating Balance Sheet As of September 30, 2015 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ $ $ $ — $ Accounts receivable, net — — Intercompany — ) — Inventories — — Deferred income taxes — — Other current assets — Total current assets ) Property, plant and equipment, net — Goodwill — — Other intangible assets, net — — Other assets — Intercompany loan receivable — ) — Investments in subsidiaries — ) — Total assets $ $ $ $ ) $ Liabilities and Shareholder's Equity Current liabilities: Current portion of long-term debt $ $ — $ $ — $ Accounts payable — — Intercompany — — ) — Accrued expenses and other current liabilities — Total current liabilities ) Intercompany loan payable ) — Long-term debt, net of current portion — — Deferred income taxes — — Other liabilities — — Total liabilities ) Commitments and contingencies Shareholder's Equity: Common stock — — — — — Capital in excess of par ) (Accumulated deficit) retained earnings ) Accumulated other comprehensive income (loss) ) ) ) ) Total shareholder's equity ) Total liabilities and shareholder's equity $ $ $ $ ) $ |
Schedule of condensed consolidating statement of operations and comprehensive income (loss) | Consolidated Statements of Operations and Comprehensive Income (Loss) For three months ended December 31, 2015 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ ) $ Costs and expenses: Cost of sales (See Note 3) — ) Advertising, promotion and catalog — — Selling, general and administrative — Impairment of Vitamin World assets (See Note 7 and 14) — — — Facility restructuring charges (See Note 3) — — — ) (Loss) income from operations ) — Other income (expense): Intercompany interest ) ) — — Interest ) — ) — ) Miscellaneous, net ) ) — ) ) ) — ) (Loss) income before income taxes ) ) — (Benefit) provision for income taxes ) ) — ) Equity in income of subsidiaries — ) — Net income (loss) ) Deduct net loss attributable to noncontrolling interests — — ) — ) Net income (loss) attributable to NBTY, Inc. $ $ $ $ ) $ Net income (loss) $ $ $ $ ) $ Other comprehensive income (loss), net of tax: Foreign currency translation adjustment, net of taxes ) ) ) ) Change in fair value of interest rate swaps, net of taxes — — — — — Total other comprehensive income (loss), net of tax ) ) ) ) Comprehensive income (loss) $ ) $ $ $ ) $ ) Less: Net loss attributable to non-controlling interests — — ) — ) Less : Foreign currency translation adjustment attributable to non-controlling interest — — ) — ) Comprehensive loss attributable to non-controlling interest — — ) — ) Comprehensive (loss) income attributable to NBTY, Inc. $ ) $ $ $ ) $ ) Consolidated Statements of Operations and Comprehensive Income (Loss) For three months ended December 31, 2014 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Net sales $ — $ $ $ ) $ Costs and expenses: Cost of sales — ) Advertising, promotion and catalog — — Selling, general and administrative — ) Income (loss) from operations ) — Other income (expense): Intercompany interest ) ) — — Interest ) ) — ) Miscellaneous, net ) ) — ) ) ) — ) Income (loss) before income taxes ) — Provision (benefit) for income taxes ) — Equity in income of subsidiaries — ) — Net income (loss) ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustment, net of taxes ) ) ) ) Change in fair value of interest rate swaps, net of taxes — ) Total other comprehensive income (loss), net of tax ) ) ) ) Comprehensive income (loss) $ $ $ $ ) $ |
Schedule of condensed consolidating statement of cash flows | Condensed Consolidating Statement of Cash Flows Three Months Ended December 31, 2015 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash (used in) provided by operating activities $ ) $ $ $ ) $ Cash flows from investing activities: Purchase of property, plant and equipment ) ) ) — ) Proceeds from sale of bar assets — — — Proceeds from sale of property, plant and equipment — — — Cash paid for acquisition, net of cash acquired — — ) — ) Net cash used in investing activities ) ) — ) Cash flows from financing activities: Principal payments under long-term agreements ) — — — ) Proceeds from issuance of debt — — — Dividends paid ) — ) ) Intercompany accounts ) — — — Net cash used in financing activities ) ) ) ) Effect of exchange rate changes on cash — — — Net increase in cash and cash equivalents ) ) — ) Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ $ $ $ — $ Condensed Consolidating Statement of Cash Flows Three Months Ended December 31, 2014 Parent Company Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated Cash (used in) provided by operating activities $ ) $ $ $ ) $ Cash flows from investing activities: Purchase of property, plant and equipment ) ) ) — ) Proceeds from sale of property, plant and equipment — — Investment in subsidiary ) — — — Net cash used in investing activities ) ) ) ) Cash flows from financing activities: Principal payments under long-term agreements — — ) — ) Payments for financing fees ) — — — ) Dividends paid ) — ) ) Capital contribution — — ) — Intercompany accounts ) — — — Net cash used in financing activities ) ) ) Effect of exchange rate changes on cash — — ) — ) Net increase in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ $ $ $ — $ |
Basis of Presentation - Revisio
Basis of Presentation - Revisions (Details) - Adjustment - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2015 | |
Revision to Financial Statements | ||||
Accelerated depreciation charges | $ 4,904 | $ 6,539 | ||
Benefit from adjustment to correct inventory, which is included in income (loss) from operations | $ 3,707 | |||
Benefit from adjustment to correct prepaid rent, which is included in income (loss) from operations | $ 3,252 | $ 3,252 |
Basis of Presentation - Revis34
Basis of Presentation - Revision of Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Consolidated Balance Sheets | ||
Goodwill | $ 1,186,571 | $ 1,104,090 |
Total assets | 4,887,397 | 4,854,479 |
Deferred income taxes | 677,966 | 663,023 |
Total liabilities | 3,374,931 | 3,397,992 |
Capital in excess of par | 1,529,906 | 1,542,584 |
Retained earnings | 16,682 | |
Accumulated other comprehensive loss | (120,951) | (102,779) |
Total shareholder's equity | 1,408,955 | 1,456,487 |
Total liabilities and shareholder's equity | 4,887,397 | 4,854,479 |
As Reported | ||
Consolidated Balance Sheets | ||
Goodwill | 1,200,501 | 1,118,020 |
Total assets | 4,901,327 | 4,868,409 |
Deferred income taxes | 723,201 | 701,694 |
Total liabilities | 3,420,166 | 3,436,663 |
Capital in excess of par | 1,507,408 | 1,542,584 |
Retained earnings | (1,136) | |
Accumulated other comprehensive loss | (129,758) | (109,702) |
Total shareholder's equity | 1,377,650 | 1,431,746 |
Total liabilities and shareholder's equity | 4,901,327 | 4,868,409 |
Adjustment | ||
Consolidated Balance Sheets | ||
Goodwill | (13,930) | (13,930) |
Total assets | (13,930) | (13,930) |
Deferred income taxes | (45,235) | (38,671) |
Total liabilities | (45,235) | (38,671) |
Capital in excess of par | 22,498 | |
Retained earnings | 17,818 | |
Accumulated other comprehensive loss | 8,807 | 6,923 |
Total shareholder's equity | 31,305 | 24,741 |
Total liabilities and shareholder's equity | $ (13,930) | $ (13,930) |
Basis of Presentation - Revis35
Basis of Presentation - Revision of Consolidated Statements of Income and Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Income and Comprehensive Income (Loss) | ||
Cost of sales (See Note 3) | $ 443,144 | $ 448,887 |
Total costs and expenses | 759,949 | 733,953 |
Income from operations | 42,041 | 91,818 |
Income from operations before income taxes | 5,743 | 55,716 |
(Benefit) provision for income taxes | (2,735) | 19,809 |
Net income (loss) | 8,478 | 35,907 |
Net (loss) income attributable to NBTY, Inc. | 8,617 | 35,907 |
Foreign currency translation adjustment, net of taxes of ($997) and $396, respectively | (18,746) | (26,830) |
Foreign currency translation adjustment, tax expense (benefit) | (997) | 396 |
Total other comprehensive (loss) income, net of tax | (18,746) | (26,109) |
Comprehensive loss | (10,268) | 9,798 |
Comprehensive (loss) income | (9,555) | 9,798 |
As Reported | ||
Consolidated Statements of Income and Comprehensive Income (Loss) | ||
Cost of sales (See Note 3) | 443,144 | 445,180 |
Total costs and expenses | 759,949 | 730,246 |
Income from operations | 42,041 | 95,525 |
Income from operations before income taxes | 5,743 | 59,423 |
(Benefit) provision for income taxes | 1,945 | 21,232 |
Net income (loss) | 3,798 | 38,191 |
Net (loss) income attributable to NBTY, Inc. | 3,937 | 38,191 |
Foreign currency translation adjustment, net of taxes of ($997) and $396, respectively | (20,630) | (30,307) |
Total other comprehensive (loss) income, net of tax | (20,630) | (29,586) |
Comprehensive loss | (16,832) | 8,606 |
Comprehensive (loss) income | (16,119) | 8,606 |
Adjustment | ||
Consolidated Statements of Income and Comprehensive Income (Loss) | ||
Cost of sales (See Note 3) | 3,707 | |
Total costs and expenses | 3,707 | |
Income from operations | (3,707) | |
Income from operations before income taxes | (3,707) | |
(Benefit) provision for income taxes | (4,680) | (1,423) |
Net income (loss) | 4,680 | (2,284) |
Net (loss) income attributable to NBTY, Inc. | 4,680 | (2,284) |
Foreign currency translation adjustment, net of taxes of ($997) and $396, respectively | 1,884 | 3,477 |
Total other comprehensive (loss) income, net of tax | 1,884 | 3,477 |
Comprehensive loss | 6,564 | 1,192 |
Comprehensive (loss) income | $ 6,564 | $ 1,192 |
Basis of Presentation - Revis36
Basis of Presentation - Revision of Consolidated Statements of Cash flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statement Of Cash flow | ||
Net income (loss) | $ 8,478 | $ 35,907 |
Inventories | 10,024 | 41,311 |
Deferred income taxes | 819 | (256) |
Net cash provided by operating activities | 64,629 | 133,070 |
Accrued expenses and other liabilities | (56,537) | (16,813) |
As Reported | ||
Consolidated Statement Of Cash flow | ||
Net income (loss) | 3,798 | 38,191 |
Inventories | 10,024 | 37,604 |
Deferred income taxes | 5,499 | (256) |
Net cash provided by operating activities | 64,629 | 133,070 |
Accrued expenses and other liabilities | (56,537) | (15,390) |
Adjustment | ||
Consolidated Statement Of Cash flow | ||
Net income (loss) | 4,680 | (2,284) |
Inventories | 3,707 | |
Deferred income taxes | $ (4,680) | |
Accrued expenses and other liabilities | $ (1,423) |
Basis of Presentation - Reserve
Basis of Presentation - Reserves (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Accounts receivable reserves | ||
Total accounts receivable reserves | $ 127,188 | $ 106,859 |
Promotional program incentive allowances | ||
Accounts receivable reserves | ||
Total accounts receivable reserves | 102,758 | 84,088 |
Allowance for sales returns | ||
Accounts receivable reserves | ||
Total accounts receivable reserves | 18,282 | 17,080 |
Allowance for doubtful accounts | ||
Accounts receivable reserves | ||
Total accounts receivable reserves | 2,632 | 2,600 |
Other accounts receivable allowances | ||
Accounts receivable reserves | ||
Total accounts receivable reserves | $ 3,516 | $ 3,091 |
Basis of Presentation - Redeema
Basis of Presentation - Redeemable NonControlling Interest (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2015USD ($) | |
Temporary equity attributable to the redeemable NCI | |
Net loss attributable to non-controlling interests | $ (139) |
Balance at end of the period | 103,511 |
Dr Organic Limited | |
Temporary equity attributable to the redeemable NCI | |
Issuance of non-controlling interest - Doctor Organic Limited | 104,224 |
Net loss attributable to non-controlling interests | (139) |
Other comprehensive loss | (574) |
Balance at end of the period | $ 103,511 |
Acquisition of Dr. Organic (Det
Acquisition of Dr. Organic (Details) £ / shares in Units, $ / shares in Units, £ in Thousands, $ in Thousands | 1 Months Ended | |||
Dec. 31, 2015GBP (£)£ / sharesshares | Dec. 31, 2015USD ($)shares | Dec. 31, 2015USD ($)$ / shares | Sep. 30, 2015USD ($)$ / shares | |
Allocated to: | ||||
Goodwill | $ 1,186,571 | $ 1,104,090 | ||
Common stock, par (in GBP per share) | $ / shares | $ 0.01 | $ 0.01 | ||
Dr Organic Limited | NBTY (2015) | ||||
Acquisitions | ||||
Total purchase price | £ 53,384 | $ 80,519 | ||
Cash consideration | 33,384 | 50,353 | ||
Completion loan notes | £ 20,000 | 30,166 | ||
Fair value of consideration: | ||||
Cash | $ 50,353 | |||
Completion loan notes at fair value | 28,931 | |||
Redeemable non-controlling interest | 104,224 | |||
Less: Settlement of payables due to Dr. Organic | (6,032) | |||
Cash and cash equivalents acquired | (5,342) | |||
Fair value of consideration | $ 172,134 | |||
Allocated to: | ||||
Accounts receivable | 7,922 | |||
Inventories | 22,474 | |||
Other current assets | 2,045 | |||
Property, plant and equipment | 276 | |||
Intangibles | 70,438 | |||
Accounts payable | (7,175) | |||
Accrued expenses and other current liabilities | (3,059) | |||
Deferred income taxes | (15,186) | |||
Net assets acquired | 77,735 | |||
Goodwill | 94,399 | |||
Acquisition costs | 5,000 | |||
Debt term | 18 months | 18 months | ||
Period of time after after issuance the notes can be redeemed | 6 months | 6 months | ||
Goodwill not deductible for tax purposes | 94,399 | |||
Dr Organic Limited | NBTY (2015) | Class B Common stock | ||||
Acquisitions | ||||
Number of days the put is exercisable | 30 days | 30 days | ||
Number of days the call is exercisable | 30 days | 30 days | ||
Number of days after the put has expired before the call is exercisable | 30 days | 30 days | ||
Allocated to: | ||||
Number of shares issued | shares | 399,000 | 399,000 | ||
Common stock, par (in GBP per share) | £ / shares | £ 0.01 | |||
Dr Organic Limited | NBTY (2015) | Class C Common stock | ||||
Allocated to: | ||||
Number of shares issued | shares | 222,000 | 222,000 | ||
Common stock, par (in GBP per share) | £ / shares | £ 0.01 | |||
Common stock premium (in GBP per share) | £ / shares | 0.04 | |||
Common stock redemption price (in GBP per share) | £ / shares | £ 0.05 | |||
Period of time after issuance of share that they will be redeemed | 18 months | 18 months | ||
Dr Organic Limited | Tradenames | NBTY (2015) | ||||
Allocated to: | ||||
Intangibles | 46,000 | |||
Dr Organic Limited | Tradenames | NBTY (2015) | Minimum | ||||
Allocated to: | ||||
Amortization period | 10 years | 10 years | ||
Dr Organic Limited | Tradenames | NBTY (2015) | Maximum | ||||
Allocated to: | ||||
Amortization period | 15 years | 15 years | ||
Dr Organic Limited | Customer relationships | NBTY (2015) | ||||
Allocated to: | ||||
Intangibles | $ 25,000 | |||
Amortization period | 25 years | 25 years |
Sale of Nutritional Bar Asset40
Sale of Nutritional Bar Assets and Powder Facility (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 10 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2015 | Jun. 26, 2015 | |
Bar APA | Held-for-sale or Disposed of by Sale | ||||
Divestiture | ||||
Sales price of assets and transferred contracts | $ 7,910 | $ 7,910 | ||
Bar APA | Held-for-sale or Disposed of by Sale | Other Current Assets | ||||
Divestiture | ||||
Sales price of assets and transferred contracts | 4,100 | 4,100 | ||
Sales price of inventory | 4,700 | 4,700 | ||
Bar APA | Held-for-sale | ||||
Divestiture | ||||
Sales price of assets and transferred contracts | $ 12,000 | |||
Powder APA | Disposed of by Sale | ||||
Divestiture | ||||
Sales price of assets and transferred contracts | $ 4,228 | |||
Sales price of inventory | $ 16,722 | |||
APAs | Held-for-sale or Disposed of by Sale | ||||
Divestiture | ||||
Cumulative charges | 34,987 | |||
Accelerated depreciation expense and write off of goodwill related to divestiture | 28,000 | |||
Workforce reduction | 2,500 | |||
Charges related to divestiture | 5,494 | |||
Loss on write-off of goodwill | 5,541 | |||
Accelerated depreciation charges | 2,337 | 22,540 | ||
Severance and employee related costs | $ 3,157 | 2,510 | ||
Gain on transferred contract | 1,692 | 1,692 | ||
Other costs | $ 6,088 | |||
APAs | Held-for-sale or Disposed of by Sale | Minimum | ||||
Divestiture | ||||
Cumulative charges | 36,000 | |||
Other costs | 7,000 | |||
APAs | Held-for-sale or Disposed of by Sale | Maximum | ||||
Divestiture | ||||
Cumulative charges | 39,000 | |||
Other costs | 10,000 | |||
APAs | Held-for-sale or Disposed of by Sale | Consumer Products Group | ||||
Divestiture | ||||
Write-off of goodwill | 4,892 | |||
APAs | Held-for-sale or Disposed of by Sale | Puritan's Pride | ||||
Divestiture | ||||
Write-off of goodwill | $ 649 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Inventories | ||
Raw materials | $ 167,669 | $ 178,464 |
Work-in-process | 24,065 | 20,265 |
Finished goods | 663,459 | 645,494 |
Total inventories | $ 855,193 | $ 844,223 |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2015USD ($) | |
Changes in goodwill | |
Balance at the beginning of the period | $ 1,104,090 |
Acquisition of Dr. Organic Limited | 94,399 |
Foreign currency translation | (11,918) |
Balance at the end of the period | 1,186,571 |
Consumer Products Group | |
Changes in goodwill | |
Balance at the beginning of the period | 611,678 |
Acquisition of Dr. Organic Limited | 94,399 |
Foreign currency translation | (4,747) |
Balance at the end of the period | 701,330 |
Holland & Barrett International | |
Changes in goodwill | |
Balance at the beginning of the period | 293,381 |
Foreign currency translation | (7,171) |
Balance at the end of the period | 286,210 |
Puritan's Pride | |
Changes in goodwill | |
Balance at the beginning of the period | 199,031 |
Balance at the end of the period | 199,031 |
Adjustment | |
Changes in goodwill | |
Balance at the beginning of the period | (13,930) |
Balance at the end of the period | (13,930) |
Adjustment | Consumer Products Group | |
Changes in goodwill | |
Balance at the end of the period | (7,129) |
Adjustment | Holland & Barrett International | |
Changes in goodwill | |
Balance at the end of the period | (3,086) |
Adjustment | Puritan's Pride | |
Changes in goodwill | |
Balance at the end of the period | $ (3,715) |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Sep. 30, 2015 | |
Definite lived intangible assets: | ||
Gross carrying amount | $ 1,140,814 | $ 1,073,614 |
Accumulated amortization | 232,691 | 221,450 |
Indefinite lived intangible asset: | ||
Tradenames | 805,989 | 812,374 |
Total intangible assets | 1,946,803 | 1,885,988 |
Brands and customer relationships | ||
Definite lived intangible assets: | ||
Gross carrying amount | 930,267 | 907,039 |
Accumulated amortization | $ 204,082 | 194,407 |
Brands and customer relationships | Minimum | ||
Definite lived intangible assets: | ||
Amortization period | 10 years | |
Brands and customer relationships | Maximum | ||
Definite lived intangible assets: | ||
Amortization period | 25 years | |
Tradenames and other | ||
Definite lived intangible assets: | ||
Gross carrying amount | $ 210,547 | 166,575 |
Accumulated amortization | $ 28,609 | $ 27,043 |
Tradenames and other | Minimum | ||
Definite lived intangible assets: | ||
Amortization period | 20 years | |
Tradenames and other | Maximum | ||
Definite lived intangible assets: | ||
Amortization period | 30 years |
Goodwill and Intangible Asset44
Goodwill and Intangible Assets - Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible Assets | ||
Aggregate amortization expense of definite lived intangible assets | $ 11,644 | $ 11,358 |
Estimated amortization expense | ||
2,016 | 49,000 | |
2,017 | 49,000 | |
2,018 | 49,000 | |
2,019 | 49,000 | |
2,020 | 49,000 | |
Selling, General and Administrative Expenses | ||
Intangible Assets | ||
Aggregate amortization expense of definite lived intangible assets | $ 11,644 | $ 11,358 |
Long-Term Debt (Details)
Long-Term Debt (Details) £ in Thousands, $ in Thousands | Dec. 30, 2015USD ($) | Nov. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2015GBP (£) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Nov. 20, 2014USD ($) | Dec. 12, 2013USD ($) | Mar. 21, 2013USD ($) | Oct. 17, 2012USD ($) | Oct. 01, 2010USD ($) |
Long-Term Debt | |||||||||||||
Total Long-term debt | $ 2,145,503 | $ 2,163,654 | |||||||||||
Capital lease obligation | 46,341 | 47,440 | |||||||||||
Less: current portion, including obligations under capital lease | (59,814) | (34,496) | |||||||||||
Long-term debt, net of current portion | 2,085,689 | 2,129,158 | |||||||||||
Cash prepayment | $ 56,941 | $ 67 | |||||||||||
Adjustments. | |||||||||||||
Other assets | 32,729 | 17,852 | |||||||||||
Other current assets | 74,392 | 59,831 | |||||||||||
Term loan B-2 | |||||||||||||
Long-Term Debt | |||||||||||||
Principal amount | 1,450,559 | 1,507,500 | |||||||||||
Less unamortized debt issuance costs | (26,278) | (31,046) | |||||||||||
Total Long-term debt | $ 1,424,281 | 1,476,454 | |||||||||||
Face amount of debt | $ 1,507,500 | ||||||||||||
Portion of excess cash flow (as defined) as part of additional prepayments on term loan (as a percent) | 50.00% | 50.00% | |||||||||||
Excess cash payment required | $ 31,941 | ||||||||||||
Cash prepayment | $ 25,000 | ||||||||||||
Write off deferred financing cost | $ 1,058 | ||||||||||||
Term loan B-2 | Forecast | Current portion of long term debt | |||||||||||||
Long-Term Debt | |||||||||||||
Excess cash payment required | $ 30,000 | ||||||||||||
Term loan B-2 | Eurodollar (LIBOR) | |||||||||||||
Long-Term Debt | |||||||||||||
Floor for reference rate (as a percent) | 1.00% | ||||||||||||
Margin rate over reference rate (as a percent) | 2.50% | ||||||||||||
Term loan B-2 | Base rate | |||||||||||||
Long-Term Debt | |||||||||||||
Floor for reference rate (as a percent) | 2.00% | ||||||||||||
Margin rate over reference rate (as a percent) | 1.50% | ||||||||||||
Notes | |||||||||||||
Long-Term Debt | |||||||||||||
Principal amount | $ 650,000 | 650,000 | |||||||||||
Less unamortized debt issuance costs | (9,484) | (10,240) | |||||||||||
Total Long-term debt | 640,516 | 639,760 | |||||||||||
Face amount of debt | $ 650,000 | ||||||||||||
Interest rate on debt instrument (as a percent) | 9.00% | ||||||||||||
Notes | On or after October 1, 2015 | |||||||||||||
Long-Term Debt | |||||||||||||
Redemption price as a percentage of principal amount | 102.25% | ||||||||||||
Notes | On and after October 1, 2016 and thereafter | |||||||||||||
Long-Term Debt | |||||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||
Completion loan notes | |||||||||||||
Long-Term Debt | |||||||||||||
Total Long-term debt | 28,444 | ||||||||||||
Face amount of debt | £ | £ 20,000 | ||||||||||||
Other | |||||||||||||
Long-Term Debt | |||||||||||||
Total Long-term debt | 5,921 | ||||||||||||
Revolving credit facility | |||||||||||||
Long-Term Debt | |||||||||||||
Borrowing capacity | 175,000 | $ 200,000 | $ 175,000 | ||||||||||
Outstanding balance | 0 | ||||||||||||
Letters of credit | 6,100 | ||||||||||||
Net availability | $ 168,900 | ||||||||||||
Step down percentage upon achievement of a total senior secured leverage ratio (as a percent) | 0.25% | ||||||||||||
Unused line fee percentage | 0.50% | ||||||||||||
Fronting fee Percentage | 0.25% | ||||||||||||
Revolving credit facility | Eurodollar (LIBOR) | |||||||||||||
Long-Term Debt | |||||||||||||
Margin rate over reference rate (as a percent) | 3.25% | ||||||||||||
Revolving credit facility | Base rate | |||||||||||||
Long-Term Debt | |||||||||||||
Margin rate over reference rate (as a percent) | 2.25% | ||||||||||||
Holdco Notes | |||||||||||||
Long-Term Debt | |||||||||||||
Face amount of debt | $ 450,000 | $ 550,000 | |||||||||||
Holdco Notes | Parent Company | |||||||||||||
Long-Term Debt | |||||||||||||
Cash interest rate (as a percent) | 7.75% | ||||||||||||
PIK interest (as a percent) | 8.50% | ||||||||||||
Holdco Notes | Parent Company | Equal or exceed 75%, but less than 100% | |||||||||||||
Long-Term Debt | |||||||||||||
Percentage of outstanding principal amount in which interest is payable by increasing the principal amount of outstanding notes or by issuing PIK Notes equal to such interest | 25.00% | ||||||||||||
Percentage of outstanding principal amount in which interest is payable in cash | 75.00% | ||||||||||||
Holdco Notes | Parent Company | Equal or exceed 50%, but less than 75% | |||||||||||||
Long-Term Debt | |||||||||||||
Percentage of outstanding principal amount in which interest is payable in kind | 50.00% | ||||||||||||
Percentage of outstanding principal amount in which interest is payable in cash | 50.00% | ||||||||||||
Holdco Notes | Parent Company | Equal or exceed 25%, but less than 50% | |||||||||||||
Long-Term Debt | |||||||||||||
Percentage of outstanding principal amount in which interest is payable in kind | 75.00% | ||||||||||||
Percentage of outstanding principal amount in which interest is payable in cash | 25.00% | ||||||||||||
Holdco Notes | Minimum | Parent Company | Equal or exceed 75%, but less than 100% | |||||||||||||
Long-Term Debt | |||||||||||||
Applicable amount for interest period expressed as a percentage of the aggregate amount of cash interest | 75.00% | ||||||||||||
Holdco Notes | Minimum | Parent Company | Equal or exceed 50%, but less than 75% | |||||||||||||
Long-Term Debt | |||||||||||||
Applicable amount for interest period expressed as a percentage of the aggregate amount of cash interest | 50.00% | ||||||||||||
Holdco Notes | Minimum | Parent Company | Equal or exceed 25%, but less than 50% | |||||||||||||
Long-Term Debt | |||||||||||||
Applicable amount for interest period expressed as a percentage of the aggregate amount of cash interest | 25.00% | ||||||||||||
Holdco Notes | Maximum | Parent Company | Equal or exceed 75%, but less than 100% | |||||||||||||
Long-Term Debt | |||||||||||||
Applicable amount for interest period expressed as a percentage of the aggregate amount of cash interest | 100.00% | ||||||||||||
Holdco Notes | Maximum | Parent Company | Equal or exceed 50%, but less than 75% | |||||||||||||
Long-Term Debt | |||||||||||||
Applicable amount for interest period expressed as a percentage of the aggregate amount of cash interest | 75.00% | ||||||||||||
Holdco Notes | Maximum | Parent Company | Equal or exceed 25%, but less than 50% | |||||||||||||
Long-Term Debt | |||||||||||||
Applicable amount for interest period expressed as a percentage of the aggregate amount of cash interest | 50.00% | ||||||||||||
Holdco Notes | Maximum | Parent Company | Less than 25% | |||||||||||||
Long-Term Debt | |||||||||||||
Applicable amount for interest period expressed as a percentage of the aggregate amount of cash interest | 25.00% | ||||||||||||
Holdco Notes | On or after November 1, 2015 | Holdings Shareholders | |||||||||||||
Long-Term Debt | |||||||||||||
Redemption price as a percentage of principal amount | 101.00% | ||||||||||||
Holdco Notes | On or after November 1, 2016 and thereafter | Holdings Shareholders | |||||||||||||
Long-Term Debt | |||||||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||||||
Term loan B-1 | |||||||||||||
Long-Term Debt | |||||||||||||
Face amount of debt repurchased | 1,750,000 | ||||||||||||
Financing costs capitalized | 15,190 | ||||||||||||
Remaining portion of the call premium capitalized | $ 13,924 |
Fair Value of Financial Instr46
Fair Value of Financial Instruments (Details) - Recurring - Level 3 - Cross currency swaps - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Accrued Expenses and Other Current Liabilities | ||
Fair value measurements | ||
Derivative liabilities | $ (2,174) | $ (2,715) |
Other Assets | ||
Fair value measurements | ||
Derivative assets | $ 14,145 | $ 6,852 |
Fair Value of Financial Instr47
Fair Value of Financial Instruments - Level 3 (Details) - Cross currency swaps - Level 3 - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Level 3 activity | |||
Beginning balance: | $ 4,137 | $ (18,630) | |
Unrealized gain on cross currency swaps | 7,834 | 11,748 | |
Ending balance: | $ 11,971 | $ 4,137 | $ (6,882) |
Minimum | |||
Fair Value Measurements | |||
Performance risk for derivative contracts as a percentage of unadjusted liabilities | 2.00% | 6.10% | |
Maximum | |||
Fair Value Measurements | |||
Performance risk for derivative contracts as a percentage of unadjusted liabilities | 3.00% | 11.40% | |
Weighted average | |||
Fair Value Measurements | |||
Performance risk for derivative contracts as a percentage of unadjusted liabilities | 2.70% | 9.50% |
Fair Value of Financial Instr48
Fair Value of Financial Instruments - Swaps (Details) £ in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Mar. 31, 2011contract | Dec. 31, 2015GBP (£) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2010contract | |
Interest rate swaps | |||||
Derivative information | |||||
Number of derivative contracts entered into by the entity | 3 | ||||
Fixed interest rate (as a percent) | 1.92% | ||||
Derivative term | 4 years | ||||
Cross currency swaps | |||||
Derivative information | |||||
Number of derivative contracts entered into by the entity | 3 | ||||
Notional amount of each derivative contract | £ 194,200 | $ 300,000 | |||
Forward rate (as a percent) | 1.565 | 1.565 | |||
Cross currency swaps | Miscellaneous, net | |||||
Derivative information | |||||
Hedge ineffectiveness (gain) / loss | $ | $ 751 | $ 1,934 |
Fair Value of Financial Instr49
Fair Value of Financial Instruments - AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Impact on income statement of derivative instruments designated as cash flow and net investment hedging instruments | ||
Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion) | $ 5,467 | $ 8,733 |
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (1,159) | |
Interest rate swaps | Cash Flow Hedges: | ||
Impact on income statement of derivative instruments designated as cash flow and net investment hedging instruments | ||
Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion) | (438) | |
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | (1,159) | |
Cross currency swaps | Net Investment Hedges: | ||
Impact on income statement of derivative instruments designated as cash flow and net investment hedging instruments | ||
Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion) | $ 5,467 | $ 9,171 |
Fair Value of Financial Instr50
Fair Value of Financial Instruments - Notes (Details) £ in Thousands, $ in Thousands | 3 Months Ended | ||||||
Dec. 31, 2015USD ($) | Dec. 31, 2015GBP (£) | Dec. 31, 2015USD ($) | Dec. 12, 2013USD ($) | Mar. 21, 2013USD ($) | Oct. 17, 2012USD ($) | Oct. 01, 2010USD ($) | |
Fair value measurements | |||||||
Impairment on furniture and fixtures | $ 11,656 | ||||||
Vitamin World | |||||||
Fair value measurements | |||||||
Impairment on furniture and fixtures | $ 11,656 | ||||||
Term loan B-2 | |||||||
Fair value measurements | |||||||
Face value of debt instrument | $ 1,507,500 | ||||||
Notes | |||||||
Fair value measurements | |||||||
Face value of debt instrument | $ 650,000 | ||||||
Holdco Notes | |||||||
Fair value measurements | |||||||
Face value of debt instrument | $ 450,000 | $ 550,000 | |||||
Completion loan notes | |||||||
Fair value measurements | |||||||
Face value of debt instrument | £ | £ 20,000 | ||||||
Level 2 | Term loan B-2 | |||||||
Fair value measurements | |||||||
Face value of debt instrument | $ 1,450,559 | ||||||
Level 2 | Holdco Notes | |||||||
Fair value measurements | |||||||
Fair value of Notes | $ 656,000 |
Litigation Summary (Details)
Litigation Summary (Details) $ in Thousands | Sep. 09, 2015action | Dec. 31, 2015customeraction | Mar. 31, 2015USD ($) | Apr. 30, 2015USD ($) | Dec. 31, 2013USD ($) | Sep. 30, 2013USD ($) |
Employment class Actions | ||||||
Number of class actions | action | 3 | |||||
Number of customers against whom class actions are filed | customer | 1 | |||||
Herbal Dietary Supplements | ||||||
Employment class Actions | ||||||
Number of companies notified | action | 14 | |||||
Glucosamine-Based Dietary Supplements | ||||||
Employment class Actions | ||||||
Potential payments under settlement agreement, maximum | $ 9,000 | |||||
Additional charges | $ 4,300 | |||||
Provision as per best estimate | $ 6,100 | $ 12,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes | ||
Accrued interest | $ 330 | |
Accrued penalties | $ 137 | |
Effective income tax rate (as a percent) | (47.60%) | 35.60% |
Accumulated Other Comprehensi53
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Additions to and reclassifications out of accumulated other comprehensive income (loss) | ||
Balance, beginning of period | $ 1,456,487 | |
Other comprehensive income (loss) | (18,746) | $ (26,109) |
Less: Foreign currency translation adjustment attributable to non-controlling interest | (574) | |
Balance, end of period | 1,408,955 | |
Accumulated Other Comprehensive Income (Loss) | ||
Additions to and reclassifications out of accumulated other comprehensive income (loss) | ||
Balance, beginning of period | (102,779) | (29,082) |
Other comprehensive income (loss) | (18,746) | |
Other comprehensive income (loss) before reclassifications | (27,268) | |
Less: Foreign currency translation adjustment attributable to non-controlling interest | 574 | |
Balance, end of period | (120,951) | (55,191) |
Accumulated Other Comprehensive Income (Loss) | Reclassifications out of accumulated other comprehensive income (loss) | ||
Additions to and reclassifications out of accumulated other comprehensive income (loss) | ||
Amounts reclassified from accumulated other comprehensive income (loss) (2) | 1,159 | |
Foreign currency translation adjustment | ||
Additions to and reclassifications out of accumulated other comprehensive income (loss) | ||
Balance, beginning of period | (102,779) | (28,361) |
Other comprehensive income (loss) | (18,746) | |
Other comprehensive income (loss) before reclassifications | (26,830) | |
Less: Foreign currency translation adjustment attributable to non-controlling interest | 574 | |
Balance, end of period | $ (120,951) | (55,191) |
Gains and losses on cash flow hedges | ||
Additions to and reclassifications out of accumulated other comprehensive income (loss) | ||
Balance, beginning of period | (721) | |
Other comprehensive income (loss) before reclassifications | (438) | |
Gains and losses on cash flow hedges | Reclassifications out of accumulated other comprehensive income (loss) | ||
Additions to and reclassifications out of accumulated other comprehensive income (loss) | ||
Amounts reclassified from accumulated other comprehensive income (loss) (2) | $ 1,159 |
Business and Credit Concentra54
Business and Credit Concentration (Details) - item | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Net sales | Customer concentration risk | Customer A | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 13.00% | 11.00% | |
Net sales | Customer concentration risk | Customer A | Consumer Products Group | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 22.00% | 18.00% | |
Net sales | Customer concentration risk | Customer B | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 9.00% | 10.00% | |
Net sales | Customer concentration risk | Customer B | Consumer Products Group | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 15.00% | 17.00% | |
Net sales | Customer concentration risk | Customer C | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 4.00% | 6.00% | |
Net sales | Customer concentration risk | Customer C | Consumer Products Group | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 7.00% | 11.00% | |
Gross accounts receivable | Customer concentration risk | Customer A | Consumer Products Group | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 16.00% | 12.00% | |
Gross accounts receivable | Customer concentration risk | Customer B | Consumer Products Group | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 11.00% | 11.00% | |
Gross accounts receivable | Customer concentration risk | Customer C | Consumer Products Group | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 11.00% | 9.00% | |
Inventory purchases | Supplier concentration risk | |||
Business and Credit Concentration | |||
Number of suppliers | 1 | ||
Inventory purchases | Supplier concentration risk | One supplier | Minimum | |||
Business and Credit Concentration | |||
Percentage of concentration risk | 10.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Carlyle | ||
Related party transactions | ||
Expected annual consulting fee | $ 3,000 | |
Expenses incurred from transactions with related party | 750 | $ 750 |
Out of pocket expenditures paid to related party | 434 | 334 |
Vendor affiliated with Carlyle | ||
Related party transactions | ||
Expenses incurred from transactions with related party | $ 3,526 | $ 62 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015USD ($)segmentstoreitem | Dec. 31, 2014USD ($) | |
Segment Information | ||
Number of business segments | segment | 4 | |
Net sales | $ 801,990 | $ 825,771 |
Income (loss) from operations | 42,041 | 91,818 |
Depreciation and amortization | 31,852 | 28,065 |
Capital expenditures | 40,038 | 19,090 |
Facility restructuring charges (See Note 3) | 5,494 | |
Impairment on furniture and fixtures | 11,656 | |
Operating Segments | ||
Segment Information | ||
Net sales | 801,990 | 825,771 |
Income (loss) from operations | 77,129 | 114,340 |
Depreciation and amortization | 19,617 | 17,776 |
Capital expenditures | 29,737 | 11,812 |
Corporate/Manufacturing | ||
Segment Information | ||
Income (loss) from operations | (35,088) | (22,522) |
Depreciation and amortization | 12,235 | 10,289 |
Capital expenditures | 10,301 | 7,278 |
Consumer Products Group | Operating Segments | ||
Segment Information | ||
Net sales | 472,430 | 494,705 |
Income (loss) from operations | 46,338 | 61,148 |
Depreciation and amortization | 9,359 | 9,002 |
Capital expenditures | $ 7,861 | 73 |
Holland & Barrett International | Operating Segments | ||
Segment Information | ||
Number of stores | item | 1,088 | |
Net sales | $ 218,461 | 213,597 |
Income (loss) from operations | 38,839 | 46,315 |
Depreciation and amortization | 6,472 | 5,049 |
Capital expenditures | $ 21,228 | 10,703 |
Holland & Barrett International | Operating Segments | Holland & Barrett | ||
Segment Information | ||
Number of stores | store | 857 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | U.K. | ||
Segment Information | ||
Number of stores | store | 701 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | China | ||
Segment Information | ||
Number of franchised stores | store | 35 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | Singapore | ||
Segment Information | ||
Number of franchised stores | store | 27 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | United Arab Emirates | ||
Segment Information | ||
Number of franchised stores | store | 19 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | Cyprus | ||
Segment Information | ||
Number of franchised stores | store | 11 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | Malta | ||
Segment Information | ||
Number of franchised stores | store | 5 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | Kuwait | ||
Segment Information | ||
Number of franchised stores | store | 4 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | Gibraltar | ||
Segment Information | ||
Number of franchised stores | store | 1 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | Spain | ||
Segment Information | ||
Number of franchised stores | store | 3 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | Ireland | ||
Segment Information | ||
Number of stores | store | 50 | |
Holland & Barrett International | Operating Segments | Holland & Barrett | Sweden | ||
Segment Information | ||
Number of stores | store | 1 | |
Holland & Barrett International | Operating Segments | De Tuinen | Netherlands | ||
Segment Information | ||
Number of co-branded stores, including owned stores | store | 167 | |
Number of franchised stores | store | 5 | |
Holland & Barrett International | Operating Segments | GNC (UK) stores | U.K. | ||
Segment Information | ||
Number of stores | store | 46 | |
Holland & Barrett International | Operating Segments | Essenza | Belgium | ||
Segment Information | ||
Number of stores | store | 18 | |
Puritan's Pride | Operating Segments | ||
Segment Information | ||
Net sales | $ 61,552 | 63,564 |
Income (loss) from operations | 5,089 | 5,677 |
Depreciation and amortization | 2,914 | 2,830 |
Capital expenditures | 20 | 13 |
Vitamin World | ||
Segment Information | ||
Impairment on furniture and fixtures | 11,656 | |
Vitamin World | Operating Segments | ||
Segment Information | ||
Net sales | 49,547 | 53,905 |
Income (loss) from operations | (13,137) | 1,200 |
Depreciation and amortization | 872 | 895 |
Capital expenditures | $ 628 | $ 1,023 |
Vitamin World | Operating Segments | Vitamin World | ||
Segment Information | ||
Number of stores | store | 378 |
Segment Information - Total Ass
Segment Information - Total Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2015 |
Total assets by segment | ||
Consolidated assets | $ 4,887,397 | $ 4,854,479 |
Adjustment | ||
Total assets by segment | ||
Consolidated assets | (13,930) | (13,930) |
Operating Segments | ||
Total assets by segment | ||
Consolidated assets | 4,133,803 | 4,040,513 |
Corporate/Manufacturing | ||
Total assets by segment | ||
Consolidated assets | 753,594 | 813,966 |
Consumer Products Group | Adjustment | ||
Total assets by segment | ||
Consolidated assets | (7,129) | (7,129) |
Consumer Products Group | Operating Segments | ||
Total assets by segment | ||
Consolidated assets | 2,643,347 | 2,535,813 |
Holland & Barrett International | Adjustment | ||
Total assets by segment | ||
Consolidated assets | (3,086) | (3,086) |
Holland & Barrett International | Operating Segments | ||
Total assets by segment | ||
Consolidated assets | 945,879 | 941,739 |
Puritan's Pride | Adjustment | ||
Total assets by segment | ||
Consolidated assets | (3,715) | (3,715) |
Puritan's Pride | Operating Segments | ||
Total assets by segment | ||
Consolidated assets | 502,636 | 511,080 |
Vitamin World | Operating Segments | ||
Total assets by segment | ||
Consolidated assets | $ 41,941 | $ 51,881 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Feb. 29, 2016 | Dec. 31, 2015 | |
Subsequent Events | ||
Impairment on furniture and fixtures | $ 11,656 | |
Vitamin World | ||
Subsequent Events | ||
Impairment on furniture and fixtures | $ 11,656 | |
Subsequent event | Vitamin World | Forecast | ||
Subsequent Events | ||
Total consideration | $ 25,000 | |
Consideration in cash | 10,000 | |
Consideration by Promissory Note | $ 15,000 | |
Percentage of equity to be purchased by issuance of warrants | 10.00% | |
Period of option to purchase minority equity percentage of the divested business | 10 years | |
Subsequent event | Vitamin World | Forecast | Minimum | ||
Subsequent Events | ||
Cumulative expected loss and impairments | $ 35,000 | |
Subsequent event | Vitamin World | Forecast | Maximum | ||
Subsequent Events | ||
Cumulative expected loss and impairments | $ 45,000 |
Condensed Consolidating Finan59
Condensed Consolidating Financial Statements of Guarantors - Balance Sheet (Detail) - USD ($) $ in Thousands | 3 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Parent Company Balance Sheets | ||||
Noncontrolling Interest, Ownership Percentage by Parent | 100.00% | |||
Net income (loss) | $ 8,617 | $ 35,907 | ||
Current assets: | ||||
Cash and cash equivalents | 204,925 | 212,047 | $ 303,350 | $ 139,488 |
Accounts receivable, net | 189,224 | 198,693 | ||
Inventories | 855,193 | 844,223 | ||
Deferred income taxes | 56,425 | 56,194 | ||
Other current assets | 74,392 | 59,831 | ||
Total current assets | 1,380,159 | 1,462,291 | ||
Property, plant and equipment, net | 573,826 | 605,708 | ||
Goodwill | 1,186,571 | 1,104,090 | ||
Other intangible assets, net | 1,714,112 | 1,664,538 | ||
Other assets | 32,729 | 17,852 | ||
Total assets | 4,887,397 | 4,854,479 | ||
Current liabilities: | ||||
Current portion long-term debt | 59,814 | 34,496 | ||
Accounts payable | 311,138 | 282,479 | ||
Accrued expenses and other current liabilities | 199,145 | 249,561 | ||
Total current liabilities | 570,097 | 566,536 | ||
Long-term debt, net of current portion | 2,085,689 | 2,129,158 | ||
Deferred income taxes | 677,966 | 663,023 | ||
Other liabilities | 41,179 | 39,275 | ||
Total liabilities | 3,374,931 | $ 3,397,992 | ||
Noncontrolling interest | $ 103,511 | |||
Commitments and contingencies | ||||
Shareholder's equity: | ||||
Common stock | ||||
Capital in excess of par | $ 1,529,906 | $ 1,542,584 | ||
(Accumulated deficit) retained earnings | 16,682 | |||
Accumulated other comprehensive income (loss) | (120,951) | (102,779) | ||
Total shareholder's equity | 1,408,955 | 1,456,487 | ||
Total liabilities and shareholder's equity | 4,887,397 | 4,854,479 | ||
As Reported | ||||
Condensed Parent Company Balance Sheets | ||||
Net income (loss) | 3,937 | 38,191 | ||
Current assets: | ||||
Goodwill | 1,200,501 | 1,118,020 | ||
Total assets | 4,901,327 | 4,868,409 | ||
Current liabilities: | ||||
Deferred income taxes | 723,201 | 701,694 | ||
Total liabilities | 3,420,166 | 3,436,663 | ||
Shareholder's equity: | ||||
Capital in excess of par | 1,507,408 | 1,542,584 | ||
(Accumulated deficit) retained earnings | (1,136) | |||
Accumulated other comprehensive income (loss) | (129,758) | (109,702) | ||
Total shareholder's equity | 1,377,650 | 1,431,746 | ||
Total liabilities and shareholder's equity | 4,901,327 | 4,868,409 | ||
Adjustment | ||||
Condensed Parent Company Balance Sheets | ||||
Net income (loss) | 4,680 | (2,284) | ||
Current assets: | ||||
Goodwill | (13,930) | (13,930) | ||
Total assets | (13,930) | (13,930) | ||
Current liabilities: | ||||
Deferred income taxes | (45,235) | (38,671) | ||
Total liabilities | (45,235) | (38,671) | ||
Shareholder's equity: | ||||
Capital in excess of par | 22,498 | |||
(Accumulated deficit) retained earnings | 17,818 | |||
Accumulated other comprehensive income (loss) | 8,807 | 6,923 | ||
Total shareholder's equity | 31,305 | 24,741 | ||
Total liabilities and shareholder's equity | (13,930) | (13,930) | ||
Reportable Legal Entities | Parent Company | ||||
Condensed Parent Company Balance Sheets | ||||
Net income (loss) | 8,617 | 35,907 | ||
Current assets: | ||||
Cash and cash equivalents | 133,351 | 136,850 | 164,443 | 77,550 |
Intercompany | 14,632 | 29,258 | ||
Other current assets | 876 | 876 | ||
Total current assets | 148,859 | 194,577 | ||
Property, plant and equipment, net | 122,812 | 120,977 | ||
Other assets | 15,021 | 7,728 | ||
Intercompany loan receivable | 2,438,594 | 2,497,035 | ||
Investments in subsidiaries | 2,269,515 | 2,103,686 | ||
Total assets | 4,994,801 | 4,924,003 | ||
Current liabilities: | ||||
Current portion long-term debt | 30,000 | 33,498 | ||
Accrued expenses and other current liabilities | 16,806 | 31,971 | ||
Total current liabilities | 46,806 | 65,469 | ||
Intercompany loan payable | 1,400,732 | 1,319,331 | ||
Long-term debt, net of current portion | 2,034,797 | 2,082,716 | ||
Total liabilities | 3,482,335 | $ 3,467,516 | ||
Noncontrolling interest | 103,511 | |||
Commitments and contingencies | ||||
Shareholder's equity: | ||||
Capital in excess of par | 1,529,906 | $ 1,542,584 | ||
(Accumulated deficit) retained earnings | 16,682 | |||
Accumulated other comprehensive income (loss) | (120,951) | (102,779) | ||
Total shareholder's equity | 1,408,955 | 1,456,487 | ||
Total liabilities and shareholder's equity | 4,994,801 | 4,924,003 | ||
Reportable Legal Entities | Guarantor Subsidiaries | ||||
Condensed Parent Company Balance Sheets | ||||
Net income (loss) | 2,532 | 24,986 | ||
Current assets: | ||||
Cash and cash equivalents | 3,670 | 3,674 | 1,344 | 751 |
Accounts receivable, net | 132,087 | 149,423 | ||
Inventories | 602,699 | 630,013 | ||
Deferred income taxes | 56,352 | 56,119 | ||
Other current assets | 35,003 | 24,148 | ||
Total current assets | 829,811 | 861,047 | ||
Property, plant and equipment, net | 218,721 | 266,401 | ||
Goodwill | 709,968 | 709,969 | ||
Other intangible assets, net | 1,331,187 | 1,341,784 | ||
Other assets | 17,658 | 10,066 | ||
Intercompany loan receivable | 1,400,732 | 1,319,331 | ||
Investments in subsidiaries | 146,921 | 146,539 | ||
Total assets | 4,654,998 | 4,655,137 | ||
Current liabilities: | ||||
Accounts payable | 202,683 | 188,599 | ||
Intercompany | 86,306 | 114,771 | ||
Accrued expenses and other current liabilities | 125,668 | 137,817 | ||
Total current liabilities | 414,657 | 441,187 | ||
Intercompany loan payable | 2,064,797 | 2,116,214 | ||
Deferred income taxes | 599,742 | 594,152 | ||
Other liabilities | 14,133 | 12,731 | ||
Total liabilities | 3,093,329 | $ 3,164,284 | ||
Commitments and contingencies | ||||
Shareholder's equity: | ||||
Capital in excess of par | 1,459,143 | $ 1,407,725 | ||
(Accumulated deficit) retained earnings | 116,857 | 96,025 | ||
Accumulated other comprehensive income (loss) | (14,331) | (12,897) | ||
Total shareholder's equity | 1,561,669 | 1,490,853 | ||
Total liabilities and shareholder's equity | 4,654,998 | 4,655,137 | ||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||
Condensed Parent Company Balance Sheets | ||||
Net income (loss) | 29,244 | 35,696 | ||
Current assets: | ||||
Cash and cash equivalents | 67,904 | 71,523 | 137,563 | $ 61,187 |
Accounts receivable, net | 57,137 | 49,270 | ||
Intercompany | 71,674 | 85,513 | ||
Inventories | 252,494 | 214,210 | ||
Deferred income taxes | 73 | 75 | ||
Other current assets | 38,513 | 34,807 | ||
Total current assets | 487,795 | 521,438 | ||
Property, plant and equipment, net | 232,293 | 218,330 | ||
Goodwill | 476,603 | 394,121 | ||
Other intangible assets, net | 382,925 | 322,754 | ||
Other assets | 50 | 58 | ||
Total assets | 1,579,666 | 1,456,701 | ||
Current liabilities: | ||||
Current portion long-term debt | 29,814 | 998 | ||
Accounts payable | 108,455 | 93,880 | ||
Accrued expenses and other current liabilities | 56,671 | 79,773 | ||
Total current liabilities | 194,940 | 174,651 | ||
Intercompany loan payable | 373,797 | 380,821 | ||
Long-term debt, net of current portion | 50,892 | 46,442 | ||
Deferred income taxes | 78,224 | 68,871 | ||
Other liabilities | 27,046 | 26,544 | ||
Total liabilities | 724,899 | $ 697,329 | ||
Noncontrolling interest | 103,511 | |||
Commitments and contingencies | ||||
Shareholder's equity: | ||||
Capital in excess of par | 743,617 | $ 743,618 | ||
(Accumulated deficit) retained earnings | 120,905 | 110,100 | ||
Accumulated other comprehensive income (loss) | (113,266) | (94,346) | ||
Total shareholder's equity | 751,256 | 759,372 | ||
Total liabilities and shareholder's equity | 1,579,666 | 1,456,701 | ||
Eliminations | ||||
Condensed Parent Company Balance Sheets | ||||
Net income (loss) | (31,776) | $ (60,682) | ||
Current assets: | ||||
Intercompany | (86,306) | (114,771) | ||
Total current assets | (86,306) | (114,771) | ||
Intercompany loan receivable | (3,839,326) | (3,816,366) | ||
Investments in subsidiaries | (2,416,436) | (2,250,225) | ||
Total assets | (6,342,068) | (6,181,362) | ||
Current liabilities: | ||||
Intercompany | (86,306) | (114,771) | ||
Total current liabilities | (86,306) | (114,771) | ||
Intercompany loan payable | (3,839,326) | (3,816,366) | ||
Total liabilities | (3,925,632) | $ (3,931,137) | ||
Noncontrolling interest | (103,511) | |||
Commitments and contingencies | ||||
Shareholder's equity: | ||||
Capital in excess of par | (2,202,760) | $ (2,151,343) | ||
(Accumulated deficit) retained earnings | (237,762) | (206,125) | ||
Accumulated other comprehensive income (loss) | 127,597 | 107,243 | ||
Total shareholder's equity | (2,312,925) | (2,250,225) | ||
Total liabilities and shareholder's equity | $ (6,342,068) | $ (6,181,362) |
Condensed Consolidating Finan60
Condensed Consolidating Financial Statements of Guarantors - Statements of Operations and Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed Parent Company Statements of Operations and Comprehensive Income (Loss) | ||
Net sales | $ 801,990 | $ 825,771 |
Costs and expenses: | ||
Cost of sales (See Note 3) | 443,144 | 448,887 |
Advertising, promotion and catalog | 46,463 | 46,894 |
Selling, general and administrative | 253,192 | 238,172 |
Impairment of Vitamin World assets (See Note 7 and 14) | 11,656 | |
Facility restructuring charges (See Note 3) | 5,494 | |
Total costs and expenses | 759,949 | 733,953 |
Income from operations | 42,041 | 91,818 |
Other income (expense): | ||
Interest | (34,336) | (34,747) |
Miscellaneous, net | (1,962) | (1,355) |
Total other expense | (36,298) | (36,102) |
Income from operations before income taxes | 5,743 | 55,716 |
(Benefit) provision for income taxes | (2,735) | 19,809 |
Net income | 8,478 | 35,907 |
Deduct net loss attributable to noncontrolling interests | (139) | |
Net income attributable to NBTY, Inc. | 8,617 | 35,907 |
Net income (loss) | 8,478 | 35,907 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, net of tax | (18,746) | (26,830) |
Change in fair value of interest rate swaps, net of tax | 721 | |
Total Other comprehensive income (loss) net of tax | (18,746) | (26,109) |
Comprehensive (loss) income | (10,268) | 9,798 |
Less: Net loss attributable to non-controlling interests | (139) | |
Less: Foreign currency translation adjustment attributable to non-controlling interest | (574) | |
Comprehensive loss attributable to non-controlling interest | (713) | |
Comprehensive (loss) income attributable to NBTY, Inc. | (9,555) | 9,798 |
As Reported | ||
Costs and expenses: | ||
Cost of sales (See Note 3) | 443,144 | 445,180 |
Total costs and expenses | 759,949 | 730,246 |
Income from operations | 42,041 | 95,525 |
Other income (expense): | ||
Income from operations before income taxes | 5,743 | 59,423 |
(Benefit) provision for income taxes | 1,945 | 21,232 |
Net income | 3,798 | 38,191 |
Net income attributable to NBTY, Inc. | 3,937 | 38,191 |
Net income (loss) | 3,798 | 38,191 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, net of tax | (20,630) | (30,307) |
Total Other comprehensive income (loss) net of tax | (20,630) | (29,586) |
Comprehensive (loss) income | (16,832) | 8,606 |
Comprehensive (loss) income attributable to NBTY, Inc. | (16,119) | 8,606 |
Reportable Legal Entities | Parent Company | ||
Costs and expenses: | ||
Selling, general and administrative | 29,261 | 22,890 |
Total costs and expenses | 29,261 | 22,890 |
Income from operations | (29,261) | (22,890) |
Other income (expense): | ||
Intercompany interest | 38,605 | 39,809 |
Interest | (33,905) | (34,781) |
Miscellaneous, net | (680) | (1,746) |
Total other expense | 4,020 | 3,282 |
Income from operations before income taxes | (25,241) | (19,608) |
(Benefit) provision for income taxes | (4,850) | (1,166) |
Equity in income of subsidiaries | 29,008 | 54,349 |
Net income | 8,617 | |
Net income attributable to NBTY, Inc. | 8,617 | 35,907 |
Net income (loss) | 8,617 | |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, net of tax | (18,746) | (26,830) |
Change in fair value of interest rate swaps, net of tax | 721 | |
Total Other comprehensive income (loss) net of tax | (18,746) | (26,109) |
Comprehensive (loss) income | (10,129) | |
Comprehensive (loss) income attributable to NBTY, Inc. | (10,129) | 9,798 |
Reportable Legal Entities | Guarantor Subsidiaries | ||
Condensed Parent Company Statements of Operations and Comprehensive Income (Loss) | ||
Net sales | 537,364 | 557,361 |
Costs and expenses: | ||
Cost of sales (See Note 3) | 336,853 | 342,653 |
Advertising, promotion and catalog | 35,331 | 34,947 |
Selling, general and administrative | 114,685 | 114,937 |
Impairment of Vitamin World assets (See Note 7 and 14) | 11,656 | |
Facility restructuring charges (See Note 3) | 5,494 | |
Total costs and expenses | 504,019 | 492,537 |
Income from operations | 33,345 | 64,824 |
Other income (expense): | ||
Intercompany interest | (33,905) | (34,781) |
Interest | 65 | |
Miscellaneous, net | 188 | (843) |
Total other expense | (33,717) | (35,559) |
Income from operations before income taxes | (372) | 29,265 |
(Benefit) provision for income taxes | (136) | 10,612 |
Equity in income of subsidiaries | 2,768 | 6,333 |
Net income | 2,532 | |
Net income attributable to NBTY, Inc. | 2,532 | 24,986 |
Net income (loss) | 2,532 | |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, net of tax | (1,434) | (4,253) |
Change in fair value of interest rate swaps, net of tax | 721 | |
Total Other comprehensive income (loss) net of tax | (1,434) | (3,532) |
Comprehensive (loss) income | 1,098 | |
Comprehensive (loss) income attributable to NBTY, Inc. | 1,098 | 21,454 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||
Condensed Parent Company Statements of Operations and Comprehensive Income (Loss) | ||
Net sales | 283,548 | 289,017 |
Costs and expenses: | ||
Cost of sales (See Note 3) | 125,213 | 126,841 |
Advertising, promotion and catalog | 11,132 | 11,947 |
Selling, general and administrative | 109,246 | 100,345 |
Total costs and expenses | 245,591 | 239,133 |
Income from operations | 37,957 | 49,884 |
Other income (expense): | ||
Intercompany interest | (4,700) | (5,028) |
Interest | (431) | (31) |
Miscellaneous, net | (1,470) | 1,234 |
Total other expense | (6,601) | (3,825) |
Income from operations before income taxes | 31,356 | 46,059 |
(Benefit) provision for income taxes | 2,251 | 10,363 |
Net income | 29,105 | |
Deduct net loss attributable to noncontrolling interests | (139) | |
Net income attributable to NBTY, Inc. | 29,244 | 35,696 |
Net income (loss) | 29,105 | |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, net of tax | (19,494) | (28,398) |
Total Other comprehensive income (loss) net of tax | (19,494) | (28,398) |
Comprehensive (loss) income | 9,611 | |
Less: Net loss attributable to non-controlling interests | (139) | |
Less: Foreign currency translation adjustment attributable to non-controlling interest | (574) | |
Comprehensive loss attributable to non-controlling interest | (713) | |
Comprehensive (loss) income attributable to NBTY, Inc. | 10,324 | 7,298 |
Eliminations | ||
Condensed Parent Company Statements of Operations and Comprehensive Income (Loss) | ||
Net sales | (18,922) | (20,607) |
Costs and expenses: | ||
Cost of sales (See Note 3) | (18,922) | (20,607) |
Total costs and expenses | (18,922) | (20,607) |
Other income (expense): | ||
Equity in income of subsidiaries | (31,776) | (60,682) |
Net income | (31,776) | |
Net income attributable to NBTY, Inc. | (31,776) | (60,682) |
Net income (loss) | (31,776) | |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, net of tax | 20,928 | 32,651 |
Change in fair value of interest rate swaps, net of tax | (721) | |
Total Other comprehensive income (loss) net of tax | 20,928 | 31,930 |
Comprehensive (loss) income | (10,848) | |
Comprehensive (loss) income attributable to NBTY, Inc. | $ (10,848) | $ (28,752) |
Condensed Consolidating Finan61
Condensed Consolidating Financial Statements of Guarantors - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Cash (used in) provided by operating activities | $ 64,629 | $ 133,070 |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (40,038) | (19,090) |
Proceeds from sale of bar assets | 7,910 | 193 |
Proceeds from sale of building and equipment | 384 | |
Cash paid for acquisitions, net of cash acquired | (45,011) | |
Net cash used in investing activities | (76,755) | (18,897) |
Cash flows from financing activities: | ||
Principal payments under long-term agreements | (56,941) | (67) |
Proceeds from Issuance of Debt | 6,123 | |
Payments for financing fees | (611) | |
Dividends paid | (38,750) | (38,750) |
Net cash used in financing activities | (89,568) | (39,428) |
Effect of exchange rate changes on cash | 3,269 | (2,186) |
Net (decrease) increase in cash and cash equivalents | (98,425) | 72,559 |
Cash and cash equivalents at beginning of period | 303,350 | 139,488 |
Cash and cash equivalents at end of period | 204,925 | 212,047 |
Reportable Legal Entities | Parent Company | ||
Cash flows from operating activities: | ||
Cash (used in) provided by operating activities | (11,049) | (24,334) |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (7,029) | (8,954) |
Investment in subsidiary | (7,000) | |
Net cash used in investing activities | (7,029) | (15,954) |
Cash flows from financing activities: | ||
Principal payments under long-term agreements | (56,941) | |
Payments for financing fees | (611) | |
Dividends paid | (38,750) | (38,750) |
Intercompany accounts | 82,677 | 138,949 |
Net cash used in financing activities | (13,014) | 99,588 |
Net (decrease) increase in cash and cash equivalents | (31,092) | 59,300 |
Cash and cash equivalents at beginning of period | 164,443 | 77,550 |
Cash and cash equivalents at end of period | 133,351 | 136,850 |
Reportable Legal Entities | Guarantor Subsidiaries | ||
Cash flows from operating activities: | ||
Cash (used in) provided by operating activities | 84,026 | 142,688 |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (7,317) | (1,009) |
Proceeds from sale of bar assets | 7,910 | 193 |
Proceeds from sale of building and equipment | 384 | |
Net cash used in investing activities | 977 | (816) |
Cash flows from financing activities: | ||
Intercompany accounts | (82,677) | (138,949) |
Net cash used in financing activities | (82,677) | (138,949) |
Net (decrease) increase in cash and cash equivalents | 2,326 | 2,923 |
Cash and cash equivalents at beginning of period | 1,344 | 751 |
Cash and cash equivalents at end of period | 3,670 | 3,674 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||
Cash flows from operating activities: | ||
Cash (used in) provided by operating activities | 9,952 | 23,505 |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (25,692) | (9,127) |
Cash paid for acquisitions, net of cash acquired | (45,011) | |
Net cash used in investing activities | (70,703) | (9,127) |
Cash flows from financing activities: | ||
Principal payments under long-term agreements | (67) | |
Proceeds from Issuance of Debt | 6,123 | |
Dividends paid | (18,300) | (8,789) |
Capital contribution | 7,000 | |
Net cash used in financing activities | (12,177) | (1,856) |
Effect of exchange rate changes on cash | 3,269 | (2,186) |
Net (decrease) increase in cash and cash equivalents | (69,659) | 10,336 |
Cash and cash equivalents at beginning of period | 137,563 | 61,187 |
Cash and cash equivalents at end of period | 67,904 | 71,523 |
Eliminations | ||
Cash flows from operating activities: | ||
Cash (used in) provided by operating activities | (18,300) | (8,789) |
Cash flows from investing activities: | ||
Investment in subsidiary | 7,000 | |
Net cash used in investing activities | 7,000 | |
Cash flows from financing activities: | ||
Dividends paid | 18,300 | 8,789 |
Capital contribution | (7,000) | |
Net cash used in financing activities | $ 18,300 | $ 1,789 |