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 FOURTH QUARTER AND YEAR-END RESULTS
BOHEMIA, N.Y. - November 10, 2003 - NBTY, Inc. (NYSE: NTY) (www.NBTY.com),
a leading manufacturer and marketer of nutritional supplements today
announced results for the fiscal fourth quarter and fiscal year ended
September 30, 2003.
For the fiscal fourth quarter ended September 30, 2003, sales increased 49%
to $365 million, compared to $245 million for the fiscal fourth quarter
ended September 30, 2002. Net income for the fiscal fourth quarter 2003 was
$14 million, or $0.20 per diluted share, compared to net income of $29
million, or $0.43 per diluted share, for the comparable period last year.
Results for the fiscal fourth quarter 2003 included certain non-recurring
charges totaling $10 million, pre-tax, that decreased net earnings by $0.11
per diluted share. Included in these one-time charges was a write-off of $7
million relating to the Company's investment in high yield bonds purchased
in anticipation of an acquisition which NBTY determined not to pursue
because of ephedra exposure, among other things. The balance of these
charges were attributed to various items, including: the discontinuation of
the Company's network marketing operations; fees and expenses associated
with another acquisition which the Company chose not to consummate
principally because of litigation exposure; and the closure of the
Company's facilities in Murphysboro, Illinois and Thornton, Colorado that
occurred in conjunction with integrating the operations of Rexall Sundown.
NBTY acquired Rexall on July 25, 2003. Rexall's sales from that date until
September 30, 2003 were $73 million. Without Rexall sales, NBTY sales would
have increased 19% in the fiscal fourth quarter 2003.
For fiscal 2003, sales increased 24% to $1.2 billion compared to $964
million for fiscal 2002. Net income for fiscal 2003 was $80 million, or
$1.16 per diluted share, compared to net income of $96 million, or $1.41
per diluted share, for fiscal 2002. Results for fiscal year 2003 included
the aforementioned non-recurring charges totaling $10 million, pre-tax,
that decreased net earnings by $0.11 per diluted share. Without Rexall
sales, NBTY sales would have increased 16% for fiscal 2003.
At September 30, 2003, the Company's total assets were $1.2 billion and its
working capital was $312 million, compared with total assets of $730
million and working capital of $186 million at September 30, 2002.
OPERATIONS FOR THE FISCAL FOURTH QUARTER ENDED SEPTEMBER 30, 2003
For the fiscal fourth quarter 2003, sales for the wholesale division
increased $90 million to $164 million, an increase of 122%, compared to $74
million for the fiscal fourth quarter 2002. The increase in 2003 includes
$73 million of Rexall sales with EBITDA of $10 million. Without Rexall
sales, the wholesale division's sales would have increased by 23% for the
fiscal fourth quarter 2003.
The Rexall acquisition added numerous well-known brands to the Company's
wholesale operation. These brands include Rexall(R), Sundown(R), Osteo Bi-
Flex(R), CarbSolutions(TM), MET-Rx(R) and WORLDWIDE Sports Nutrition(R).
With this acquisition, NBTY reinforces its dominant position in the
wholesale sector. The integration of the acquisition is on schedule.
The Company continues to leverage valuable consumer sales information it
receives from its Vitamin World and direct response/e-commerce operations.
This information is monitored on a daily basis and used as a planning tool
in the introduction of new products to our wholesale customers. The success
of this strategy is demonstrated by the acceptance of our new products by
the mass-market retailers and their customers. NBTY remains focused on
increasing market share in the wholesale channel and expanding its presence
in the nutritional supplement marketplace.
Vitamin World sales for the fiscal fourth quarter 2003 were $54 million,
compared to $52 million for the comparable prior period. Vitamin World's
same store sales for the fiscal fourth quarter 2003 increased 4%. Although
Vitamin World generated EBITDA of $2 million for the fiscal fourth quarter
2003, Vitamin World operations recorded a loss of $2 million. Included in
this loss is an asset impairment charge, in the form of accelerated
depreciation, for certain unprofitable stores. Vitamin World currently has
533 stores in operation nationwide. During fiscal 2003, the Company closed
twenty Vitamin World stores and added nine new stores.
Sales from NBTY's European retail operations for the fiscal fourth quarter
2003 increased 27% to $95 million from $74 million for the fiscal fourth
quarter 2002. This 27% increase includes sales generated by 50 GNC stores
in the UK and 65 DeTuinen stores in the Netherlands acquired earlier this
fiscal year. GNC (UK) and DeTuinen each generated sales of $9 million in
the fiscal fourth quarter 2003. Although GNC (UK) was marginally
profitable, DeTuinen incurred a $500,000 loss for the fiscal fourth quarter
2003. Holland & Barrett's same store sales for the fiscal fourth quarter
2003 increased 2% with foreign exchange. Holland & Barrett continues to be
a leader in the UK and Ireland. The Company's European division currently
operates 589 stores in the UK, Ireland and the Netherlands.
Revenues from Puritan's Pride direct response/e-commerce operations for the
fiscal fourth quarter 2003 increased 16% to $52 million from $45 million
for the fiscal fourth quarter 2002. Online sales, which increased more than
50% for the fiscal fourth quarter 2003, comprised 21% of sales for the
fiscal fourth quarter 2003. The increase in sales reflects the continued
success of investments in advertising, sales promotions and faster product
delivery to customers.
OPERATIONS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003
Sales by segment for fiscal 2003 were as follows: wholesale sales were $417
million, an increase of 43%; Vitamin World sales were $212 million, an
increase of 7%; European retail operation sales were $364 million, an
increase of 25%; and Puritan's Pride sales were $200 million, an increase
of 9%. Excluding $73 million of Rexall sales, wholesale sales would have
increased by 18% for fiscal 2003.
NBTY Chairman and CEO, Scott Rudolph, said: "The fourth quarter reflected a
wide array of transitional issues which we anticipate will be resolved in
fiscal 2004. The integration of Rexall is on schedule and has already
contributed significantly to our revenue growth. The Rexall acquisition is
indicative of our commitment to the wholesale segment, and we anticipate
continued growth in revenue and market share for NBTY."
ABOUT NBTY
NBTY is a leading vertically integrated 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 approximately
1,500 products under several brands, including Nature's Bounty(R), Vitamin
World(R), Puritan's Pride(R), Holland & Barrett(R), Rexall(R), Sundown(R),
MET-Rx(R), WORLDWIDE Sports Nutrition(R), American Health(R), GNC (UK)(R)
and DeTuinen(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 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 NBTY to integrate acquisitions into the mainstream of its business; (x)
changes in general worldwide economic and political conditions in the
markets in which NBTY may compete from time to time; (xi) the inability of
NBTY to gain and/or hold market share of its wholesale and/or retail
customers anywhere in the world; (xii) unavailability of electricity in
certain geographical areas; (xiii) the inability of NBTY to obtain and/or
renew insurance; (xiv) exposure to and expense of defending and resolving,
product liability claims and other litigation; (xv) the ability of NBTY to
successfully implement its business strategy; (xvi) the inability of NBTY
to manage its retail, wholesale, manufacturing and other operations
efficiently; (xvii) consumer acceptance of NBTY's products; (xviii) the
inability of NBTY to renew leases on its retail locations; (xix) inability
of NBTY's retail stores to attain or maintain profitability; (xx) the
absence of clinical trials for many of NBTY's products; (xxi) sales and
earnings volatility and/or trends; (xxii) the efficacy of NBTY's Internet
and on-line sales and marketing; (xxiii) fluctuations in foreign
currencies, including the British Pound; (xxiv) import-export controls on
sales to foreign countries; (xxv) the inability of NBTY to secure favorable
new sites for, and delays in opening, new retail locations; (xxvi)
introduction of new federal, state, local or foreign legislation or
regulation or adverse determinations by regulators anywhere in the world,
and more particularly the Food Supplements Directive and the Traditional
Herbal Medicinal Products Directive in Europe; (xxvii) the mix of NBTY's
products and the profit margins thereon; (xxviii) the availability and
pricing of raw materials; (xxix) risk factors discussed in NBTY's filings
with the U.S. Securities and Exchange Commission; and (xxx) other factors
beyond NBTY's control.
Readers are cautioned not to place undue reliance on forward-looking
statements. NBTY cannot guarantee future results, trends, events, levels of
activity, performance or achievements. NBTY does not undertake and
specifically declines any obligation to update, republish or revise
forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrences of unanticipated events.
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share amounts)
For the three months
ended September 30,
2003 2002
<s> <c> <c>
Net sales $364,847 $245,461
Cost and expenses:
Cost of sales 182,249 107,805
Discontinued product charge (1,500)
Catalog printing, postage and promotion 20,439 13,561
Selling, general and administrative 132,281 90,568
Litigation recovery of raw material costs (836)
-------- --------
333,469 211,098
-------- --------
Income from operations 31,378 34,363
-------- --------
Other (expense):
Interest (5,674) (3,912)
Investment write down (6,659)
Miscellaneous, net (112) (765)
-------- --------
(12,445) (4,677)
-------- --------
Income before income taxes 18,933 29,686
Provision for income taxes 4,951 338
-------- --------
Net income $ 13,982 $ 29,348
======== ========
Net income per share:
Basic $ 0.21 $ 0.44
======== ========
Diluted $ 0.20 $ 0.43
======== ========
Weighted average common shares outstanding:
Basic 66,547 66,122
======== ========
Diluted 68,796 67,986
======== ========
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share amounts)
For the fiscal years
ended September 30,
2003 2002
---------- --------
<s> <c> <c>
Net sales $1,192,548 $964,083
Cost and expenses:
Cost of sales 554,804 433,611
Discontinued product charge 4,500
Catalog printing, postage and promotion 66,455 47,846
Selling, general and administrative 435,748 348,334
Litigation recovery of raw material costs (21,354)
---------- --------
1,061,507 808,437
---------- --------
Income from operations 131,041 155,646
---------- --------
Other income (expense):
Interest (17,384) (18,499)
Investment write down (6,659)
Miscellaneous, net 5,424 1,560
---------- --------
(18,619) (16,939)
---------- --------
Income before income taxes 112,422 138,707
Provision for income taxes 32,738 42,916
---------- --------
Net income $ 79,684 $ 95,791
========== ========
Net income per share:
Basic $ 1.20 $ 1.45
========== ========
Diluted $ 1.16 $ 1.41
========== ========
Weighted average common shares outstanding:
Basic 66,452 65,952
========== ========
Diluted 68,538 67,829
========== ========
SALES
(Thousands)
THREE MONTHS ENDED FISCAL YEARS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 % Increase 2003 2002 % Increase
--------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
Wholesale $163,721 $ 73,610 122% $ 416,627 $291,287 43%
US Retail / Vitamin World 54,138 52,255 4% 212,380 198,602 7%
European Retail /
Holland & Barrett / GNC 94,694 74,397 27% 363,597 290,881 25%
Direct Response /
Puritan's Pride 52,294 45,199 16% 199,944 183,313 9%
------------------------------ --------------------------------
Total $364,847 $245,461 49% $1,192,548 $964,083 24%
------------------------------ --------------------------------
GROSS PROFIT
PERCENTAGES
THREE MONTHS ENDED FISCAL YEARS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 % Increase 2003 2002 % Increase
--------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
Wholesale 39% 44% -5% 40% 41% -1%
US Retail / Vitamin World 60% 59% 1% 60% 59% 1%
European Retail /
Holland & Barrett / GNC 59% 64% -5% 61% 63% -2%
Direct Response /
Puritan's Pride 60% 60% 0% 62% 61% 1%
-------------------------- --------------------------
Total (without discontinued
product charge) 50% 56% -6% 54% 55% -1%
Discontinued product charge 1% 1% -1% -1%
-------------------------- --------------------------
Total 51% 56% -5% 53% 55% -2%
-------------------------- --------------------------
INCOME FROM OPERATIONS BY SEGMENT
(Thousands)
THREE MONTHS ENDED FISCAL YEARS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
-----------------------------------------------
<s> <c> <c> <c> <c>
Wholesale $ 23,149 $ 15,986 $ 76,933 $ 60,197
US Retail / Vitamin World (1,983) 59 (1,643) (4,975)
European Retail /
Holland & Barrett / GNC 18,802 20,380 83,345 79,421
Direct Response / Puritan's Pride 17,440 14,333 62,184 66,273
-------- -------- -------- --------
Segment Results 57,408 50,758 220,819 200,916
Corporate Expenses (27,530) (17,231) (85,278) (66,624)
Discontinued Product Charge 1,500 (4,500)
Litigation Recovery of
Raw Material Costs 836 21,354
-------- -------- -------- --------
Income from Operations $ 31,378 $ 34,363 $131,041 $155,646
-------- -------- -------- --------
Non-recurring charges included in operations:
- ---------------------------------------------
Provision for plant closures 2,645
Unsuccessful acquisition costs 1,000
-------- --------
Total non-recurring charges included in operations 3,645 -
-------- --------
Income from operations
excluding non-recurring charges $ 35,023 $ 34,363
-------- --------
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars and shares in thousands)
September 30, September 30,
2003 2002
------------- -------------
<s> <c> <c>
Current assets:
Cash and cash equivalents $ 49,349 $ 26,229
Investments in bonds 1,583 8,194
Accounts receivable, less
allowance for doubtful accounts
of $10,463 at September 30, 2003
and $4,194 at September 30, 2002 89,430 36,825
Inventories 314,091 204,402
Deferred income taxes 37,021 11,206
Prepaid expenses and other
current assets 44,736 24,691
---------- --------
Total current assets 536,210 311,547
Property, plant and equipment, net 298,344 216,245
Goodwill 213,362 144,999
Intangible assets, net 137,469 48,413
Other assets 16,423 8,936
---------- --------
Total assets $1,201,808 $730,140
========== ========
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars and shares in thousands)
September 30, September 30,
2003 2002
------------- -------------
<s> <c> <c>
Current liabilities:
Current portion of long-term debt
and capital lease obligations $ 12,841 $ 23,044
Accounts payable 87,039 48,616
Accrued expenses and other current liabilities 123,956 54,177
---------- --------
Total current liabilities 223,836 125,837
Long-term debt 413,989 163,874
Deferred income taxes 40,213 16,928
Other liabilities 10,872 4,244
---------- --------
Total liabilities 688,910 310,883
---------- --------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.008 par; authorized 175,000
shares; issued and outstanding 66,620 shares
at September 30, 2003 and 66,322 shares at
September 30, 2002 533 529
Capital in excess of par 130,208 126,283
Retained earnings 367,552 287,868
---------- --------
498,293 414,680
Accumulated other comprehensive income 14,605 4,577
---------- --------
Total stockholders' equity 512,898 419,257
---------- --------
Total liabilities and stockholders' equity $1,201,808 $730,140
========== ========
NBTY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
For the fiscal years
ended September 30,
2003 2002
-------- --------
<s> <c> <c>
Cash flows from operating activities:
Net income $ 79,684 $ 95,791
Adjustments to reconcile net income to
net cash provided by operating activities:
(Gain)/loss on disposal/sale of property, plant and equipment (711) 102
Depreciation and amortization 46,884 42,192
Foreign currency exchange rate (gain) loss (334) 1,556
Amortization of deferred financing costs 1,003 782
Amortization of bond discount 124 124
Investment write down 6,659
Allowance for doubtful accounts (2,906) 972
Deferred income taxes 6,033 (5,829)
Compensation expense for ESOP 1,710
Tax benefit from exercise of stock options 1,072 1,815
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (1,466) (7,011)
Inventories (23,879) (14,277)
Prepaid expenses and other current assets (15,855) (3,432)
Other assets 616 (586)
Accounts payable (2,773) (3,442)
Accrued expenses and other liabilities 15,671 (3,670)
-------- --------
Net cash provided by operating activities 111,532 105,087
-------- --------
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired (289,676) (7,702)
Purchase of property, plant and equipment (37,510) (21,489)
Proceeds from sale of property, plant, and equipment 1,498 1,004
Proceeds from sale of intangibles 53
Purchase of short term investments (8,242)
Release of cash held in escrow 2,403 4,600
-------- --------
Net cash used in investing activities (323,285) (31,776)
-------- --------
Cash flows from financing activities:
Principal payments under long-term
debt agreements and capital leases (35,212) (85,353)
Proceeds from borrowings under long term debt agreements 275,000
Payments for debt issuance costs (7,500)
Proceeds from stock options exercised 1,147 1,899
-------- --------
Net cash provided by (used in) financing activities 233,435 (83,454)
-------- --------
Effect of exchange rate changes on cash
and cash equivalents 1,438 1,938
-------- --------
Net increase (decrease) in cash and cash equivalents 23,120 (8,205)
Cash and cash equivalents at beginning of year 26,229 34,434
-------- --------
Cash and cash equivalents at end of year $ 49,349 $ 26,229
-------- --------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 17,709 $ 18,513
-------- --------
Cash paid during the period for income taxes $ 34,698 $ 55,101
-------- --------