Exhibit 99.1
FOR IMMEDIATE RELEASE
- ---------------------
Contact: Harvey Kamil Carl Hymans
NBTY, Inc. G.S. Schwartz & Co.
President and CFO 212-725-4500
631-244-2020 carlh@schwartz.com
NBTY REPORTS SECOND QUARTER RESULTS
BOHEMIA, N.Y. - April 23, 2003 - NBTY, Inc. (Nasdaq: NBTY) (www.NBTY.com),
a leading manufacturer and marketer of nutritional supplements, today
announced results for the fiscal second quarter and six months ended March
31, 2003.
For the fiscal second quarter ended March 31, 2003, net sales increased 10%
to $278 million compared to net sales of $252 million for the fiscal second
quarter last year. Excluding one-time events, earnings per diluted share
for the fiscal second quarter of 2003 and 2002 were $0.34 and $0.33,
respectively. Net income for the fiscal second quarter was $20 million, or
$0.29 per diluted share, compared to net income of $26 million or $0.38 per
diluted share for the fiscal second quarter last year. Results for the
fiscal second quarter of 2003 were affected by a previously announced one-
time charge of $6 million reflecting NBTY's March 15, 2003 voluntary
discontinuance of sales of products containing ephedra. Without this one-
time discontinued product charge, net income and earnings per diluted share
for the fiscal second quarter of 2003 would have been $24 million and
$0.34, respectively. Included in the pre-tax results for the fiscal second
quarter of 2002 was a $5.5 million payment received by NBTY in partial
settlement of on-going price fixing litigation in which the Company was a
plaintiff. Without this payment, net income and earnings per diluted share
for the fiscal second quarter of 2002 would have been $22 million and
$0.33, respectively.
For the six months ended March 31, 2003, net sales increased 11% to $519
million compared to $467 million for the same period last fiscal year.
Excluding one-time events, earnings per diluted share for the first six
months of 2003 and 2002 were $0.59 and $0.49, respectively. Net income for
the six-month period was $36 million, or $0.53 per diluted share, compared
with net income of $37 million, or $0.54 per diluted share for the
comparable period last year. Without the aforementioned one-time $6
million charge, net income and earnings per diluted share for the first six
months of fiscal 2003 would have been $40 million and $0.59, respectively.
Pre-tax results for the first six months of fiscal 2002 included the
previously mentioned $5.5 million payment received by NBTY in a partial
settlement of on-going price fixing litigation in which the Company was a
plaintiff. Without this payment, net income and earnings per diluted share
for the first six months of fiscal 2002 would have been $33 million and
$0.49, respectively.
NBTY's belief that its ephedra products were safe when used as directed has
been supported by scientific evidence, and the Company has not been a
defendant in any lawsuit for any of its ephedra products. However, in
light of adverse publicity surrounding ephedra and the current environment
in the U.S., NBTY believes it was in the best interest of the Company to
cease selling ephedra products which represent an insignificant portion of
the Company's overall business.
NBTY continues to enhance its financial strength. At March 31, 2003, total
assets were $792 million and working capital was $194 million compared to
total assets of $692 million and working capital of $149 million at March
31, 2002. During the fiscal second quarter ended March 31, 2003 total bank
debt was reduced by $6 million to $20 million.
OPERATIONS FOR THE FISCAL SECOND QUARTER ENDED MARCH 31, 2003
Sales for the Nature's Bounty wholesale division increased 18% to $85
million from $72 million for the comparable period of fiscal 2002. NBTY
remains focused on increasing market share in the wholesale arena and
expanding its presence in the nutritional supplement marketplace. NBTY
recently added the Marc's store chain to its growing wholesale customer
base. Headquartered in Cleveland, Ohio, Marc's owns and operates 54 stores
located throughout Northern Ohio. Marc's stores will carry over 180 SKUs
of Nature's Bounty brand products.
The Nature's Bounty brand continues to be recognized for its ability to
generate greater sales than competing brands. By utilizing consumer sales
information received from its Vitamin World and direct-response/e-commerce
operations, the Company has been able to provide its mass-market customers
with tools to drive sales. The Company continues to respond to consumer
preferences and to monitor the market for trends and ideas, and these
efforts have translated into increased sales.
The Company will be introducing a new line of low carbohydrate nutritional
products. CarbWise(TM) will be sold through food, drug and mass-market
channels. Shipments are anticipated in July 2003.
Vitamin World second quarter sales were $54 million compared to $51 million
a year ago, an increase of 5%. Same store sales increased 4% for the
quarter. Vitamin World operations were profitable with pre-tax income of
$1 million compared to a loss of $2.3 million for the comparable quarter
last year. Vitamin World currently has 541 stores in operation nationwide.
Holland & Barrett sales increased 20% to $87 million from $73 million for
the comparable prior period. Holland & Barrett continues to be a leader in
the United Kingdom with same store sales increasing 14% for the fiscal
second quarter. Holland & Barrett's retail business has been strategically
enhanced with the recent acquisitions of Health & Diet
Group Ltd., with a total of 56 GNC stores, and the FSC wholesale business
purchased from Royal Numico. In addition, the planned acquisition of the
De Tuinen chain of health food stores, which operates 63 stores in the
Netherlands, is expected to be completed by the end of May 2003. Holland &
Barrett currently operates 525 stores in the UK, Ireland and Germany.
Revenues from Puritan's Pride direct response/e-commerce operations for the
fiscal second quarter decreased 7% to $52 million from $56 million for the
comparable prior period. The timing of promotional catalog mailings was
not comparable to the second quarter a year ago. The three-for-one sales
catalog which ran from January through March last year will be running from
March through May this year and is expected to generate a comparable
increase in sales for the third quarter. Puritan Pride's advertising
expenses for the fiscal second quarter of 2003 increased by $3 million.
These investments in additional advertising, sales promotions and efforts
to generate faster product delivery to customers are part of NBTY's
strategic efforts to increase long-term growth. The operations have
already witnessed the success of these initiatives as advertising for new
customers in the fiscal second quarter generated over 500,000 responses.
NBTY Chairman and CEO, Scott Rudolph, said: "We are very pleased with the
addition of Marc's stores to our wholesale operation's growing customer
base. The addition of Marc's stores, combined with our purchase of the FSC
wholesale business from Royal Numico, bolsters the expansion of our
wholesale operation. We have also significantly enhanced our United
Kingdom retail business with the recent acquisition of GNC UK."
"Acquisitions and the expansion of our wholesale customer base are part of
our strategic plan to enhance wholesale operations and further our position
as the dominant force in the worldwide nutritional supplement market. We
are confident in our ability to further capitalize on market opportunities,
complement our operations through strategic acquisitions and enhance our
financial strength," concluded Mr. Rudolph.
ABOUT NBTY
NBTY is a leading vertically integrated U.S. manufacturer and distributor
of a broad line of high-quality, value-priced nutritional supplements in
the United States and throughout the world. The Company markets more than
1,100 products under several brands, including Nature's Bounty(R), Vitamin
World(R), Puritan's Pride(R), Holland & Barrett(R), Nutrition
Headquarters(R), American Health(R), Nutrition Warehouse(R) and Dynamic
Essentials(R).
This release contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 with respect to our
financial condition, results of operations and business. All of these
forward-looking statements, which can be identified by the use of
terminology such as "subject to," "believe," "expects," "may," "will,"
"should," "can," or "anticipates," or the negative thereof, or variations
thereon, or comparable terminology, or by discussions of strategy which,
although believed to be reasonable, are inherently uncertain. Factors
which may materially affect such forward-looking statements include: (i)
slow or negative growth in the nutritional supplement industry; (ii)
interruption of business or negative impact on sales and earnings due to
acts of war, terrorism, bio-terrorism, civil unrest or disruption of mail
service; (iii) adverse publicity regarding the consumption of nutritional
supplements; (iv) inability to retain customers of companies (or mailing
lists) recently acquired; (v) increased competition; (vi) increased costs;
(vii) loss or retirement of key members of management; (viii) increases in
the cost of borrowings and unavailability of additional debt or equity
capital; (ix) unavailability of, or inability to consummate, advantageous
acquisitions in the future, including those that may be subject to
bankruptcy approval or the inability of the Company (as defined below) to
integrate acquisitions into the mainstream of its business; (x) changes in
general worldwide economic and political conditions in the markets in which
the Company may compete from time to time; (xi) the inability of the
Company to gain and/or hold market share of its wholesale and retail
customers; (xii) loss or reduction in ephedra sales; (xiii) unavailability
of electricity in certain geographical areas; (xiv) exposure to and expense
of defending and resolving, product liability claims and other litigation;
(xv) the ability of the Company to successfully implement its business
strategy; (xvi) the inability of the Company to manage its retail,
wholesale, manufacturing and other operations efficiently; (xvii) consumer
acceptance of the Company's products; (xviii) the inability of the Company
to renew leases on its retail locations; (xix) inability of the Company's
retail stores to attain or maintain profitability; (xx) the absence of
clinical trials for many of the Company's products; (xxi) sales and
earnings volatility and/or trends; (xxii) the effect on Company sales of
the rapidly changing nature of the Internet and on-line commerce; (xxiii)
fluctuations in foreign currencies, and more particularly the British
Pound; (xxiv) import-export controls on sales to foreign countries; (xxv)
the inability of the Company to secure favorable new sites for, and delays
in opening, new retail locations; (xxvi) introduction of new federal,
state, local or foreign legislation or regulation or adverse determinations
by regulators, and more particularly the Food Supplements Directive and the
Traditional Herbal Medicinal Products Directive in Europe; (xxvii) the mix
of the Company's products and the profit margins thereon; (xxviii) the
availability and pricing of raw materials; (xxix) risk factors discussed in
the Company's filings with the U.S. Securities and Exchange Commission (the
"SEC"); and (xxx) other factors beyond the Company's control.
Readers are cautioned not to place undue reliance on forward-looking
statements. The Company cannot guarantee future results, trends, events,
levels of activity, performance or achievements. The Company does not
undertake and specifically declines any obligation to update, republish or
revise forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrences of unanticipated events.
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars and shares in thousands, except per share amounts)
For the three months
ended March 31,
2003 2002
---- ----
<s> <c> <c>
Net sales $277,824 $251,544
Cost and expenses:
Cost of sales 124,679 112,989
Discontinued product charge 6,000
Catalog printing, postage and promotion 16,782 12,731
Selling, general and administrative 99,170 86,636
Recovery of raw material costs (5,467)
-------- --------
246,631 206,889
-------- --------
Income from operations 31,193 44,655
Other income (expense):
Interest (3,774) (4,226)
Miscellaneous, net 2,274 1,152
-------- --------
(1,500) (3,074)
-------- --------
Income before income taxes 29,693 41,581
Provision for income taxes 10,082 16,010
-------- --------
Net income $ 19,611 $ 25,571
======== ========
Net income per share:
Basic $ 0.30 $ 0.39
======== ========
Diluted $ 0.29 $ 0.38
======== ========
Weighted average common shares outstanding:
Basic 66,261 65,883
======== ========
Diluted 68,323 67,755
======== ========
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars and shares in thousands, except per share amounts)
For the six months
ended March 31,
2003 2002
---- ----
<s> <c> <c>
Net sales $519,228 $466,634
Cost and expenses:
Cost of sales 231,359 213,899
Discontinued product charge 6,000
Catalog printing, postage and promotion 30,637 21,741
Selling, general and administrative 192,546 168,549
Recovery of raw material costs (5,467)
-------- --------
460,542 398,722
-------- --------
Income from operations 58,686 67,912
-------- --------
Other income (expense):
Interest (7,820) (10,234)
Miscellaneous, net 3,513 2,055
-------- --------
(4,307) (8,179)
-------- --------
Income before income taxes 54,379 59,733
Provision for income taxes 18,145 22,998
-------- --------
Net income $ 36,234 $ 36,735
======== ========
Net income per share:
Basic $ 0.55 $ 0.56
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Diluted $ 0.53 $ 0.54
======== ========
Weighted average common shares outstanding:
Basic 66,216 65,814
======== ========
Diluted 68,205 67,536
======== ========
SALES
(Thousands)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
% Increase % Increase
2003 2002 (% Decrease) 2003 2002 (% Decrease)
---- ---- ------------ ---- ---- ------------
<s> <c> <c> <c> <c> <c> <c>
Wholesale $ 84,850 $ 71,889 18% $158,967 $137,525 16%
US Retail / Vitamin World 53,556 50,850 5% 103,819 95,061 9%
UK Retail /
Holland & Barrett / GNC 87,089 72,714 20% 169,702 145,318 17%
Direct Response /
Puritan's Pride 52,329 56,091 -7% 86,740 88,730 -2%
-------------------------------- --------------------------------
Total $277,824 $251,544 10% $519,228 $466,634 11%
================================ ================================
GROSS PROFIT
PERCENTAGES
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
% Increase % Increase
2003 2002 (% Decrease) 2003 2002 (% Decrease)
---- ---- ------------ ---- ---- ------------
<s> <c> <c> <c> <c> <c> <c>
Wholesale 41% 40% 1% 42% 37% 5%
US Retail / Vitamin World 59% 57% 2% 59% 58% 1%
UK Retail /
Holland & Barrett / GNC 63% 64% -1% 63% 63% 0%
Direct Response /
Puritan's Pride 61% 61% 0% 62% 63% -1%
------------------------------ ------------------------------
Total (without discontinued
product charge) 55% 55% 0% 55% 54% 1%
Discontinued product charge -2% -1%
------------------------------ ------------------------------
Total 53% 55% -2% 54% 54% 0%
============================== ==============================
INCOME FROM OPERATIONS BY SEGMENT
(Thousands)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
2003 2002 2003 2002
---- ---- ---- ----
<s> <c> <c> <c> <c>
Wholesale $ 17,950 $ 14,063 $ 32,154 $ 23,652
US Retail / Vitamin World 1,093 (2,290) (562) (4,940)
UK Retail /
Holland & Barrett / GNC 23,069 20,444 45,360 40,508
Direct Response / Puritan's Pride 13,958 22,404 24,973 34,229
--------------------- ---------------------
Segment Results 56,070 54,621 101,925 93,449
Corporate Expenses (18,877) (15,433) (37,239) (31,004)
Discontinued Product Charge (6,000) (6,000)
Recovery of Raw Material Costs 5,467 5,467
--------------------- ---------------------
Income from Operations $ 31,193 $ 44,655 $ 58,686 $ 67,912
===================== =====================
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
(Dollars and shares in thousands)
March 31, September 30,
2003 2002
--------- -------------
<s> <c> <c>
Current assets:
Cash and cash equivalents $ 33,774 $ 26,229
Investments in bonds 8,012 8,194
Accounts receivable, less
allowance for doubtful accounts
of $4,292 at March 31, 2003
and $4,194 at September 30, 2002 46,649 41,362
Inventories 220,894 204,402
Deferred income taxes 11,206 11,206
Prepaid expenses and other
current assets 35,285 24,691
-------- --------
Total current assets 355,820 316,084
Property, plant and equipment 411,215 392,033
less accumulated depreciation
and amortization 191,805 175,788
-------- --------
219,410 216,245
Goodwill 163,911 144,999
Intangible assets, net 46,000 48,413
Other assets 6,634 8,936
-------- --------
Total assets $791,775 $734,677
======== ========
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars and shares in thousands)
March 31, September 30,
2003 2002
--------- -------------
<s> <c> <c>
Current liabilities:
Current portion of long-term debt
and capital lease obligations $ 20,665 $ 23,044
Accounts payable 72,856 48,616
Accrued expenses and other current liabilities 68,498 58,714
-------- --------
Total current liabilities 162,019 130,374
Long-term debt 154,700 163,874
Deferred income taxes 16,612 16,928
Other liabilities 3,006 4,244
-------- --------
Total liabilities 336,337 315,420
-------- --------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.008 par; authorized 175,000
shares; issued and outstanding 66,263 shares
at March 31, 2003 and 66,133 shares at
September 30, 2002 530 529
Capital in excess of par 128,282 126,283
Retained earnings 324,102 287,868
-------- --------
452,914 414,680
Accumulated other comprehensive income 2,524 4,577
-------- --------
Total stockholders' equity 455,438 419,257
-------- --------
Total liabilities and stockholders' equity $791,775 $734,677
======== ========
NBTY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands) For the six months
ended March 31,
2003 2002
---- ----
<s> <c> <c>
Cash flows from operating activities:
Net income $ 36,234 $ 36,735
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on disposal/sale of property, plant
and equipment (962) (69)
Depreciation and amortization 21,752 21,554
Foreign currency exchange rate gain (906) (62)
Amortization of deferred financing costs 394 388
Amortization of bond discount 62 62
Allowance for doubtful accounts (98) 1,002
Compensation expense for ESOP 855
Tax benefit from exercise of stock options 113 791
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (4,240) (7,435)
Inventories (6,877) 22,856
Prepaid expenses and other current assets (7,251) (342)
Other assets 59 1,120
Accounts payable 7,426 (13,411)
Accrued expenses and other current liabilities 1,359 3,921
Other liabilities (1,239) 15
---------------------
Net cash provided by operating activities 46,681 67,125
---------------------
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired (14,786) (7,256)
Release of cash held in escrow 2,403 4,600
Purchase of property, plant and equipment (17,686) (10,516)
Proceeds from sale of property, plant and equipment 1,293 991
---------------------
Net cash used in investing activities (28,776) (12,181)
---------------------
Cash flows from financing activities:
Principal payments under long-term debt agreements
and capital leases (11,616) (38,027)
Proceeds from stock options exercised 176 557
---------------------
Net cash used in financing activities (11,440) (37,470)
---------------------
Effect of exchange rate changes on cash and cash equivalents 1,080 (1,246)
---------------------
Net increase in cash and cash equivalents 7,545 16,228
Cash and cash equivalents at beginning of period 26,229 34,434
---------------------
Cash and cash equivalents at end of period $ 33,774 $ 50,662
=====================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 8,218 $ 9,946
Cash paid during the period for income taxes $ 15,480 $ 17,065