UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: 12/31/03
or
|_| Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______
to _______.
Commission file number: 0-22818
THE HAIN CELESTIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3240619
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
58 South Service Road, Melville, New York 11747
----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (631) 730-2200
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
------- -------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
35,370,479 shares of Common Stock $.01 par value, as of February 4, 2004.
THE HAIN CELESTIAL GROUP, INC.
INDEX
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - December 31, 2003
(unaudited) and June 30, 2003 2
Consolidated Statements of Income -
Three months and six months ended December 31, 2003
and 2002 (unaudited) 3
Consolidated Statement of Stockholders' Equity -
Six months ended December 31, 2003 (unaudited) 4
Consolidated Statement of Cash Flows -
Six months ended December 31, 2003 and 2002 (unaudited) 5
Notes to Consolidated Financial Statements 6-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-16
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 17
Item 4. Controls and Procedures 17
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
1
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share and share amounts)
December 31, June 30, 2003
2003
--------------------- --------------------
ASSETS (Unaudited) (Note)
Current assets:
Cash and cash equivalents $ 23,771 $ 10,984
Accounts receivable, less allowance for doubtful
accounts of $1,641 and $1,748 74,876 61,215
Inventories 74,157 66,444
Recoverable income taxes, net 978 223
Deferred income taxes 3,171 3,171
Other current assets 8,779 7,671
--------------------- --------------------
Total current assets 185,732 149,708
Property, plant and equipment, net of accumulated
depreciation and amortization of $38,705 and $31,555 68,710 68,665
Goodwill 304,616 296,508
Trademarks and other intangible assets, net of
accumulated amortization of $7,875 and $7,377 55,819 55,975
Other assets 9,152 10,692
--------------------- --------------------
Total assets $ 624,029 $ 581,548
===================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 59,653 $ 55,710
Current portion of long-term debt 6,856 8,807
Income taxes payable 9,779 1,867
--------------------- --------------------
Total current liabilities 76,288 66,384
Long-term debt, less current portion 58,927 59,455
Deferred income taxes 14,912 14,912
--------------------- --------------------
Total liabilities 150,127 140,751
Stockholders' equity:
Preferred stock - $.01 par value, authorized 5,000,000
shares, no shares issued - -
Common stock - $.01 par value, authorized 100,000,000
shares, issued 35,992,995 and 34,810,722 shares 360 348
Additional paid-in capital 374,676 364,877
Retained earnings 96,003 79,089
Foreign currency translation adjustment 11,298 4,639
--------------------- --------------------
482,337 448,953
Less: 622,516 and 606,619 shares of
treasury stock, at cost (8,435) (8,156)
--------------------- --------------------
Total stockholders' equity 473,902 440,797
--------------------- --------------------
Total liabilities and stockholders' equity $ 624,029 $ 581,548
===================== ====================
Note: The balance sheet at June 30, 2003 has been derived from the audited
financial statements at that date.
See notes to consolidated financial statements.
2
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
--------------------------------------- ---------------------------------------
2003 2002 2003 2002
----------------- ------------------ ----------------- ------------------
(Unaudited) (Unaudited)
Net sales $ 142,792 $ 123,006 $ 269,845 $ 219,426
Cost of sales 95,693 82,235 185,584 150,857
----------------- ------------------ ----------------- ------------------
Gross profit 47,099 40,771 84,261 68,569
Selling, general and
administrative expenses 30,047 26,975 55,866 47,070
Restructuring and other
non-recurring charges - 440 - 440
----------------- ------------------ ----------------- ------------------
Operating income 17,052 13,356 28,395 21,059
Interest expense and other
expenses, net 350 206 1,141 376
----------------- ------------------ ----------------- ------------------
Income before income taxes 16,702 13,150 27,254 20,683
Provision for income taxes 6,330 4,964 10,340 7,808
----------------- ------------------ ----------------- ------------------
Net income $ 10,372 $ 8,186 16,914 $ 12,875
================= ================== ================= ==================
Net income per share:
Basic $ 0.30 $ 0.24 $ 0.49 $ 0.38
================= ================== ================= ==================
Diluted $ 0.29 $ 0.24 $ 0.47 $ 0.37
================= ================== ================= ==================
Weighted average common shares outstanding:
Basic 34,913 33,776 34,567 33,739
================= ================== ================= ==================
Diluted 36,135 34,467 35,745 34,425
================= ================== ================= ==================
See notes to consolidated financial statements.
3
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
SIX MONTHS ENDED DECEMBER 31, 2003 (In thousands, except per share and share
data)
Common Stock Additional
Amount Paid-in Retained Treasury Stock
Shares at $.01 Capital Earnings Shares Amount
--------------- ----------- --------------- -------------- ----------- ------------
Balance at June 30, 2003 34,810,722 $348 $ 364,877 $ 79,089 606,619 $(8,156)
Exercise of stock options 1,182,273 12 9,776
and warrants
Purchase of treasury shares 15,897 (279)
Non-cash compensation charge 23
Comprehensive income:
Net income for the period 16,914
Translation adjustments
Total comprehensive income
--------------- ----------- --------------- -------------- ----------- ------------
Balance at December 31, 2003 35,992,995 $ 360 $374,676 $ 96,003 622,516 $(8,435)
=============== =========== =============== ============== =========== ============
Foreign
Currency
Translation Comprehensive
Adjustment Total Income
---------------- ------------- ---------------------
Balance at June 30, 2003 $ 4,639 $440,797
Exercise of stock options 9,788
and warrants
Purchase of treasury shares (279)
Non-cash compensation charge 23
Comprehensive income:
Net income for the period 16,914 $ 16,914
Translation adjustments 6,659 6,659 6,659
---------------------
Total comprehensive income $ 23,573
---------------- ------------- =====================
Balance at December 31, 2003 $ 11,298 $473,902
================ =============
See notes to consolidated financial statements.
4
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Six Months Ended
December 31,
------------------------------------------
2003 2002
------------------ -------------------
CASH FLOWS FROM OPERATING ACTIVITIES (Unaudited)
Net income $ 16,914 $ 12,875
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,331 4,163
Provision for doubtful accounts (115) (138)
Increase (decrease) in cash attributable to changes in
operating assets and liabilities, net of amounts
applicable to acquired businesses:
Accounts receivable (12,641) (7,740)
Inventories (7,126) 3,100
Other current assets (1,364) (1,536)
Other assets 1,868 (1,950)
Accounts payable and accrued expenses 1,837 (4,191)
Accrued restructuring and non-recurring charges - (1,046)
Income taxes, net 7,912 8,695
------------------ -------------------
Net cash provided by operating activities 12,616 12,232
------------------ -------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (2,293) (4,262)
Acquisitions of businesses, net of cash acquired - (44,659)
------------------ -------------------
Net cash used in investing activities (2,293) (48,921)
------------------ -------------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayments) proceeds from bank revolving
credit facility, net (1,650) 44,300
Payments on economic development revenue bonds (258) (250)
Purchase of treasury stock (279) (2,579)
Proceeds from exercise of warrants and options, net of
related expenses 9,788 4
(Repayments) proceeds of other long-term debt, net (2,352) 589
------------------ -------------------
Net cash provided by financing activities 5,249 42,064
------------------ -------------------
Effect of exchange rate changes on cash (2,758) (240)
------------------ -------------------
Net increase in cash and cash equivalents 12,787 5,135
Cash and cash equivalents at beginning of period 10,984 7,538
------------------ -------------------
Cash and cash equivalents at end of period $ 23,771 $ 12,673
================== ===================
See notes to consolidated financial statements.
5
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
The Hain Celestial Group, Inc. (herein referred to as "we","us" and "our")
is a natural, organic, specialty and snack food company. We are a leader in many
of the top natural food categories, with such well-known natural food brands as
Celestial Seasonings(R) teas, Hain Pure Foods(R), Westbrae(R), Westsoy(R), Rice
Dream(R), Soy Dream(R), Imagine(R), Little Bear Organic Foods(R), Bearitos(R),
Arrowhead Mills(R), Health Valley(R), Breadshop(R), Casbah(R), Garden of
Eatin'(R), Walnut Acres Certified Organic(R), Terra Chips(R), Harry's Premium
Snacks(R), Boston's(R), Yves Veggie Cuisine(R), DeBoles(R), Earth's Best(R),
Nile Spice(R), Lima(R), Biomarche(R) and Grains Noirs(R). Our principal
speciality product lines include Hollywood(R) cooking oils, Estee(R) sugar-free
products, Kineret(R) kosher foods, Boston Better Snacks(R), and Alba Foods(R).
We operate in one business segment: the sale of natural, organic and other
food and beverage products. In our 2003 fiscal year, approximately 42% of our
revenues were derived from products that were manufactured within our own
facilities with 58% produced by various co-packers.
Certain reclassifications have been made to our previous year's
consolidated financial statements to conform them to the current year's
presentation.
All amounts in our consolidated financial statements have been rounded to
the nearest thousand dollars, except share and per share amounts.
2. BASIS OF PRESENTATION
Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States. In the opinion of management, all adjustments (including normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three months and six months ended December
31, 2003 are not necessarily indicative of the results that may be expected for
the year ending June 30, 2004. Please refer to the footnotes to our consolidated
financial statements as of June 30, 2003 and for the year then ended included in
our Annual Report on Form 10-K for information not included in these condensed
footnotes.
3. EARNINGS PER SHARE
We report basic and diluted earnings per share in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" ("SFAS
No. 128"). Basic earnings per share excludes the dilutive effects of options and
warrants. Diluted earnings per share includes only the dilutive effects of
common stock equivalents such as stock options and warrants.
6
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-Continued
The following table sets forth the computation of basic and diluted
earnings per share pursuant to SFAS No. 128:
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------ ---------------------------------
2003 2002 2003 2002
--------------- -------------- ---------------- ----------------
Numerator:
Net income $ 10,372 $ 8,186 $ 16,914 $ 12,875
=============== ============== ================ ================
Denominator (in thousands):
Denominator for basic earnings per
share - weighted average shares
outstanding during the period 34,913 33,776 34,567 33,739
--------------- -------------- ---------------- ----------------
Effect of dilutive securities:
Stock options 1,072 535 1,018 529
Warrants 150 156 160 157
--------------- -------------- ---------------- ----------------
1,222 691 1,178 686
--------------- -------------- ---------------- ----------------
Denominator for diluted earnings per
share - adjusted weighted average
shares and assumed conversions 36,135 34,467 35,745 34,425
=============== ============== ================ ================
Basic net income per share $ 0.30 $ 0.24 $ 0.49 $ 0.38
=============== ============== ================ ================
Diluted net income per share $ 0.29 $ 0.24 $ 0.47 $ 0.37
=============== ============== ================ ================
4. INVENTORIES
Inventories consisted of the following:
December 31, June 30,
2003 2003
------------------------ -------------------------
Finished goods $47,019 $43,022
Raw materials, work-in-progress
and packaging 27,138 23,422
------------------------ -------------------------
$74,157 $66,444
======================== =========================
7
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-Continued
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
December 31, June 30,
2003 2003
----------------------- -------------------------
Land $ 7,053 $ 6,913
Building and improvements 26,355 24,448
Machinery and equipment 66,259 61,949
Furniture and fixtures 2,425 2,383
Leasehold improvements 1,548 1,457
Construction in progress 3,775 3,070
----------------------- -------------------------
107,415 100,220
Less: Accumulated depreciation
and amortization 38,705 31,555
----------------------- -------------------------
$ 68,710 $ 68,665
======================= =========================
6. ACQUISITIONS
On June 17, 2003, we acquired 100% of the stock of privately-held Acirca,
Inc. ("Acirca"), the owner of the Walnut Acres Certified Organic(R) brand of
organic fruit juices, soups, pasta sauces and salsas. Since June 2000, the
financial and investment group Acirca has expanded Walnut Acres, its premier
certified organic food and beverage brand, by integrating a series of organic
brands including Mountain Sun(R), ShariAnn's(R), Millina's Finest(R), and Frutti
di Bosco(R) into its Walnut Acres flagship. The acquisition of these product
lines allows us to add natural and organic juices and sauces to our product
offerings, and enhance our offerings of soups and salsas. The purchase price
consisted of approximately $9 million in cash, 134,797 shares of our common
stock valued at $2.2 million, plus the assumption of certain liabilities. At
December 31, 2003, goodwill from this transaction was estimated to be $15.2
million.
On December 2, 2002, we acquired substantially all of the assets and
assumed certain liabilities of privately-held Imagine Foods, Inc. ("Imagine") in
the United States and the United Kingdom. Imagine is a non-dairy beverage
company specializing in aseptic and refrigerated rice and soy milks, organic
aseptic soups and broths, and organic frozen desserts in the U.S., Canada, and
Europe. The acquisition of these product lines is expected to enhance our
existing market positions in non-dairy beverages and soups while adding frozen
dessert products to our offerings to customers. The purchase price consisted of
approximately $44.2 million in cash, 532,765 shares of our common stock valued
at $7 million, plus the assumption of certain liabilities. At December 31, 2003,
goodwill from this transaction was valued at $37.3 million, trademarks and other
non-amortizable intangibles were $15.7 million, and patents and other
amortizable intangibles were valued at $1.2 million.
8
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-Continued
The following table summarizes the estimated fair values of assets acquired
and liabilities assumed of Acirca and Imagine at the dates of the acquisitions:
Current assets $17,714
Property and equipment 2,409
--------------------
Total assets 20,123
Liabilities assumed 14,937
--------------------
Net assets acquired $ 5,186
====================
The balance sheet at December 31, 2003, includes the assets acquired and
liabilities assumed valued at fair market value at the date of purchase. We have
completed all of the procedures required to finalize the purchase price
allocation for Imagine, while such procedures required for Acirca are in the
early stages and are expected to be completed during 2004.
Our results of operations for the three and six months ended December 31,
2003 include the results of the above described acquisitions for the complete
period. The following table presents information about sales and net income had
the operations of the acquired businesses been combined with our business as of
the first day of each of the periods shown. This information has not been
adjusted to reflect any changes in the operations of these businesses subsequent
to their acquisition by us. Changes in operations of these acquired businesses
include, but are not limited to, integration of systems and personnel,
discontinuation of products (including discontinuation resulting from the
integration of acquired and existing brands with similar products), changes in
trade practices, application of our credit policies, changes in manufacturing
processes or locations, and changes in marketing and advertising programs. Had
any of these changes been implemented by the former management of the businesses
acquired prior to acquisition by us, the sales and net income information might
have been materially different than the actual results achieved and from the pro
forma information provided below.
Three Months Ended Six Months Ended
December 31, 2002 December 31, 2002
================================ =============================
Net sales $ 144,010 $ 267,140
================================ =============================
Net income $ 5,882 $ 9,109
================================ =============================
Income per share:
Basic $ 0.17 $ 0.27
================================ =============================
Diluted $ 0.17 $ 0.26
================================ =============================
Weighted average shares:
Basic $ 34,131 $ 34,318
================================ =============================
Diluted $ 34,957 $ 35,004
================================ =============================
In management's opinion, the unaudited pro forma results of operations are
not indicative of the actual results that would have occurred had the Acirca and
Imagine acquisitions been consummated at the beginning of the periods presented
or of future operations of the combined companies under our management.
On May 14, 2003, our subsidiary in Belgium acquired Grains Noirs, N.V., a
Belgian producer and marketer of fresh prepared organic appetizers, salads,
9
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-Continued
sandwiches and other full-plated dishes. The purchase price paid was
approximately $2.2 million in cash. The net assets acquired, as well as the
sales and results of operations of Grains Noirs, are not material and,
therefore, have not been included in the detailed information about our
acquisitions.
7. CREDIT FACILITY
We have a $240 million credit facility with a group of banks (the "Credit
Facility") which provides us with a $145 million revolving credit facility (the
"Revolving Credit Facility") through March 29, 2005 and a $95 million 364-day
facility (the "364-Day Facility") through March 25, 2004. The Credit Facility is
unsecured but is guaranteed by all of our current and future direct and indirect
domestic subsidiaries. We are required to comply with customary affirmative and
negative covenants for facilities of this nature. Revolving credit loans under
this facility bear interest at a base rate (greater of the applicable prime rate
or Federal Funds Rate plus applicable margin) or, at our option, the reserve
adjusted LIBOR rate plus an applicable margin. As of December 31, 2003, $52.2
million was borrowed under the Revolving Credit Facility with interest at 2.5%.
At December 31, 2003, there were no borrowings under the 364-Day Facility.
8. STOCK-BASED COMPENSATION
The Company accounts for its stock-based compensation plans using the
intrinsic value method under APB Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25") and related Interpretations. Under APB 25, when the
exercise price of our employee stock options at least equals the market price of
the underlying stock on the date of grant, no compensation expense is
recognized.
If compensation cost for the Company's stock-based compensation plans had
been determined based on the fair value at the grant dates consistent with the
method prescribed by SFAS No. 123, "Accounting For Stock-Based Compensation",
net earnings and earnings per share for the three months and six months ended
December 31, 2003 and 2002 would have been the pro forma amounts that follow:
Three Months Ended Six Months Ended
December 31, December 31,
----------------- ------------- --------------- --------------
2003 2002 2003 2002
----------------- ------------- --------------- --------------
Net income, as reported $10,372 $ 8,186 $16,914 $ 12,875
Non-cash compensation charge, net of related tax
effects 7 7 14 14
Stock-based employee compensation expense
determined under fair value method, net of related
tax effects (716) (2,374) (1,937) (4,815)
----------------- ------------- --------------- --------------
Pro forma net income $ 9,663 $ 5,819 $ 14,991 $ 8,074
================= ============= =============== ==============
Basic net income per share:
As reported $ 0.30 $ 0.24 $ 0.49 $ 0.38
=========== ========== ============ ========
Pro forma $ 0.28 $ 0.17 $ 0.43 $ 0.24
=========== ========== ============ ========
Diluted net income per share:
As reported $ 0.29 $ 0.24 $ 0.47 $ 0.37
=========== =========== ============ ========
Pro forma $ 0.27 $ 0.17 $ 0.42 $ 0.23
=========== =========== ============ ========
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
We manufacture, market, distribute and sell natural, organic, specialty and
snack food products under brand names which are sold as "better-for-you"
products. We are a leader in many of the top natural food categories, with such
well-known natural food brands as Celestial Seasonings(R) teas, Hain Pure
Foods(R), Westbrae(R), Westsoy(R), Arrowhead Mills(R), Health Valley(R),
Breadshop's(R), Casbah(R), Garden of Eatin'(R), Rice Dream(R), Soy Dream(R),
Imagine(R), Walnut Acres Certified Organic(R), Little Bear Organic Foods(R),
Bearitos(R), Terra Chips(R), Harry's Premium Snacks(R), Boston's(R),
Gaston's(R), Yves Veggie Cuisine(R), DeBoles(R), Earth's Best(R), Nile Spice(R),
Lima(R), Biomarche(R) and Grains Noirs(R). Our principal specialty product lines
include Hollywood(R) cooking oils, Estee(R) sugar-free products, Kineret(R)
kosher foods, Boston Better Snacks(R), and Alba Foods(R). Our website can be
found at www.hain-celestial.com.
Our products are sold primarily to specialty and natural food distributors,
supermarkets, natural food stores, and other retail classes of trade including
mass-market stores, drug stores, food service channels and club stores.
Our brand names are well recognized in the various market categories they
serve. We have acquired numerous brands and we will seek future growth through
internal expansion as well as the acquisition of additional complementary
brands.
Our overall mission is to be a leading marketer and seller of natural,
organic, beverage, snack and specialty food products by integrating all of our
brands under one management team and employing a uniform marketing, sales and
distribution program. Our business strategy is to capitalize on the brand equity
and the distribution previously achieved by each of our acquired product lines
and to enhance revenues by strategic introductions of new product lines that
complement existing products.
Results of Operations
Three months ended December 31, 2003
Net sales for the three months ended December 31, 2003 were $142.8 million,
an increase of $19.8 million or 16.1% over net sales of $123.0 million in the
December 31, 2002 quarter. Our Canadian business grew 14.9%, our European
business grew 68.2% and our U.S. business grew 13.5%. These increases came
principally from volume increases, including increased volume from brands owned
for more than one year as well as the volume added to each geographic area by
the addition of the Imagine Foods, Walnut Acres and Grains Noirs brands to our
portfolio. Net sales were negatively impacted by the continuing strike of
grocery workers in Southern California as well as the transition to a new
supplier by a major natural foods retailer, while net sales benefited from the
movement of foreign currencies against the U.S. dollar.
Gross profit for the three months ended December 31, 2003 was 33.0% of net
sales as compared to 33.1% of net sales in the December 31, 2002 quarter. The
0.1% decrease in gross profit percentage was principally due to higher consumer
spending and promotional allowances offset by lower delivery and warehousing
expenses. We spent more in promotional allowances than our usual rate because we
introduced the Carb Fit line of low carbohydrate products and we expanded our
refrigerated non-dairy beverages during the second quarter this year. In
addition, we spent approximately $1 million more in consumer coupons in this
11
year's second quarter as compared to the prior year's second quarter. These
promotional allowances and consumer spending are charged against sales under
current accounting rules and, therefore, have the effect of reducing gross
profit as a percentage of sales.
Selling, general and administrative expenses increased by $3.1 million to
$30.0 million for the three months ended December 31, 2003 as compared to $27.0
million in the December 31, 2002 quarter. Such expenses as a percentage of net
sales amounted to 21.0% for the three months ended December 31, 2003 compared
with 21.9% in the December 31, 2002 quarter. As a percentage of sales, selling,
general, and administrative expenses decreased while the overall dollars
increased. The increase in dollars was a result of increased advertising and
marketing expenses needed to support our increased sales, while as a percentage
of sales our selling costs decreased reflecting synergies from our acquired
businesses.
There were no restructuring and other non-recurring charges for the quarter
ended December 31, 2003. During the prior year quarter ended December 31, 2002,
we recorded approximately $0.4 million of restructuring and other non-recurring
charges related to the sale of our Health Valley facility.
Operating income was $17.1 million in the three months ended December 31,
2003 compared to $13.4 million in the December 31, 2002 quarter. Operating
income as a percentage of net sales was 11.9% in the December 31, 2003 quarter,
compared with 10.9% in the December 31, 2002 quarter. The dollar increase
resulted principally from higher sales and gross profits, while the percentage
increase resulted principally from lower selling, general and administrative
expenses as a percentage of sales.
Interest and other expenses amounted to $0.4 million for the three months
ended December 31, 2003 compared to $0.2 million for the three months ended
December 31, 2002. We incurred higher interest expense in the 2003 quarter
resulting from borrowings for acquisitions which were outstanding for a full
quarter this year.
Income before income taxes for the three months ended December 31, 2003
amounted to $16.7 million compared to $13.2 million in the comparable period of
the prior year. This increase was attributable to the increase in operating
income.
Our effective income tax rate approximated 38% of pre-tax income for both
the three months ended December 31, 2003 and 2002. We expect our effective tax
rate to approximate this rate during the remainder of fiscal 2004.
Net income for the three months ended December 31, 2003 was $10.4 million
compared to $8.2 million in the December 31, 2002 quarter. The increase of $2.2
million in earnings was primarily attributable to the aforementioned increase in
income before income taxes.
Six Months Ended December 31, 2003
Net sales for the six months ended December 31, 2003 were $269.8 million,
an increase of $50.4 million or 23.0% over net sales of $219.4 million for the
six months ended December 31, 2002. Our Canadian business grew 19.2%, our
European business grew 63.7% and our U.S. business grew 21.6%. These increases
came principally from volume increases, including increased volume from brands
owned for more than one year as well as the volume added to each geographic area
by the addition of the Imagine Foods, Walnut Acres and Grains Noirs brands to
our
12
portfolio. During the second quarter ended December 31, 2003, net sales were
negatively impacted by the continuing strike of grocery workers in Southern
California as well as the transition to a new supplier by a major natural foods
retailer, while net sales benefited from the movement of foreign currencies
against the U.S. dollar.
Gross profit for both the six months ended December 31, 2003 and the six
months ended December 31, 2002 was 31.2%. Gross profit was flat due to higher
consumer spending and promotional allowances in our second quarter offset by
lower delivery and warehousing expenses. During the second quarter ended
December 31, 2003, we spent more in promotional allowances than our normal rate
because we introduced the Carb Fit line of low carbohydrate products and we
expanded our refrigerated non-dairy beverages. In addition, we spent
approximately $1 million more in consumer coupons in this year's second quarter
as compared to the prior year's quarter. These promotional allowances and
consumer spending are charged against sales under current accounting rules and,
therefore, have the effect of reducing gross profits as a percentage of sales.
Selling, general and administrative expenses increased by $8.8 million to
$55.9 as compared to $47.1 million for the six months ended December 31, 2002.
Such expenses as a percentage of net sales amounted to 20.7% for the six months
ended December 31, 2003 compared with 21.5% for the six months ended December
31, 2002. As a percentage of sales, selling, general and administrative expenses
decreased while the dollars increased. The overall increase in dollars is a
result of increased advertising and marketing spending needed to support our
increased sales, while as a percentage of sales our selling costs decreased
reflecting synergies from our acquired businesses.
There were no restructuring and other non-recurring charges for the six
months ended December 31, 2003. During the six months ended December 31, 2002,
we recorded approximately $0.4 million of additional restructuring and other
non-recurring charges related to the sale of our Health Valley facility.
Operating income was $28.4 million in the six months ended December 31,
2003 compared to $21.1 million for the six months ended December 31, 2002.
Operating income as a percentage of net sales was 10.5% for the six months ended
December 31, 2003, compared with 9.6% for the six months ended December 31,
2002. The dollar increase resulted principally from higher sales and gross
profits, while the percentage increases resulted principally from lower selling,
general and administrative expenses as a percentage of sales.
Interest and other expenses amounted to $1.1 million for the six months
ended December 31, 2003 compared to $0.4 million for the six months ended
December 31, 2002. We incurred higher interest expense for the six months ended
December 31, 2003 resulting from borrowing for acquisitions which are
outstanding for the full six months this year.
Income before income taxes for the six months ended December 31 2003
amounted to $27.3 million compared to $20.7 million for the six months ended
December 31, 2002. This increase was attributable to the increase in operating
income offset by the increase in interest expenses and other expenses, net.
Our effective income tax rate approximated 38% of pre-tax income for both
the six months ended December 31, 2003 and 2002.
Net income for the six months ended December 31, 2003 was $16.9 million
compared to $12.9 million for the six months ended December 31, 2002. The
increase of $4.0 million in earnings was primarily attributable to the
13
aforementioned increase in income before income taxes.
Liquidity and Capital Resources
We finance our operations and growth primarily with the cash flows we
generate from our operations and from borrowings under our credit facility.
We have available to us a $240 million credit facility (the "Credit
Facility") which provides us with a $145 million revolving credit facility (the
"Revolving Credit Facility") through March 29, 2005 and a $95 million 364-Day
facility (the "364-Day Facility") through March 25, 2004. The Credit Facility is
unsecured but is guaranteed by all of our direct and indirect domestic
subsidiaries. We are required to comply with customary affirmative and negative
covenants for facilities of this nature. As of December 31, 2003 we had $52.2
million outstanding under the Revolving Credit Facility.
This access to capital provides us with flexible working capital in the
ordinary course of business, the opportunity to grow our business through
acquisitions and develop our existing infrastructure through capital investment.
Net cash provided by operations was $12.6 and $12.2 million for the six
months ended December 31, 2003 and 2002, respectively. Our working capital and
current ratio was $109.4 million and 2.4 to 1, respectively, at December 31,
2003 compared with $83.3 million and 2.3 to 1 respectively, at June 30, 2003.
The increase in working capital resulted principally from the net income earned
during the six months ended December 31, 2003.
Net cash provided by financing activities was $5.2 million and $42.1
million for the six months ended December 31, 2003 and 2002, respectively. In
the December 2003 period, we received proceeds from the exercise of stock
options and warrants, which were offset by the payment of debt. In the December
2002, period borrowings were offset by acquisitions of shares of our common
stock in open market purchases as part of our buy back program.
Obligations for all debt instruments, capital and operating leases and
other contractual obligations are as follows:
Payments Due by Period
---------------------------------------------------------------------------------------
More than 5
Total Less than 1 year 1 - 3 years 3-5 Years years
---------------- ----------------- ----------------- ---------------- -----------------
Debt instruments $ 63,103 $ 5,237 $ 55,159 $ 2,249
$ 458
Capital lease
obligations 2,680 1,619 1,049 12 -
Operating leases 18,344 2,988 5,641 3,623 6,092
---------------- ----------------- ----------------- ---------------- -----------------
Total contractual cash $ 84,127 $ 9,844 $ 61,849 $ 5,884
obligations $6,550
================ ================= ================= ================ =================
We believe that cash on hand of $23.8 million at December 31, 2003,
projected remaining fiscal 2004 cash flows from operations, and availability
under our Credit Facility are sufficient to fund our working capital needs,
anticipated capital expenditures of approximately $8 million for the remainder
of fiscal 2004, and the $9.8 million of debt and lease obligations described in
the table above. We currently invest our cash on hand in highly liquid
short-term investments yielding approximately 1% interest.
14
Critical Accounting Policies
Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States. The accounting principles we
use require us to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
amounts of income and expenses during the reporting periods presented. We
believe in the quality and reasonableness of our critical accounting policies;
however, it is likely that materially different amounts would be reported under
different conditions or using assumptions different from those that we have
consistently applied. We believe our critical accounting policies are as
follows, including our methodology for estimates made and assumptions used:
Valuation of Accounts and Chargebacks Receivables
We perform ongoing credit evaluations on existing and new customers daily.
We apply reserves for delinquent or uncollectible trade receivables based on a
specific identification methodology and also apply an additional reserve based
on the experience we have with our trade receivables aging categories. Credit
losses have been within our expectations over the last few years. While two of
our customers represent approximately 25% of our trade receivable balance on an
ongoing basis, we believe there is no credit exposure at this time.
Based on cash collection history and other statistical analysis, we
estimate the amount of unauthorized deductions that our customers have taken to
be repaid and collectible in the near future in the form of a chargeback
receivable. While our estimate of this receivable balance could be different had
we used different assumptions and judgments, historically our cash collections
of this type of receivable have generally been within our expectations. Our
chargebacks receivable balance at December 31, 2003 was $5.9 million as compared
to $6 million at June 30, 2003.
There can be no assurance that we would have the same experience with our
receivables during different economic conditions, or with changes in business
conditions, such as consolidation within the food industry and/or a change in
the way we market and sell our products.
Inventory
Our inventory is valued at the lower of cost or market. Cost has been
derived principally using standard costs utilizing the first-in, first-out
method. We provide write-downs for finished goods expected to become
non-saleable due to age and specifically identify and reserve for slow moving or
obsolete raw ingredients and packaging.
Property, Plant and Equipment
Our property, plant and equipment is carried at cost and depreciated or
amortized on a straight-line basis over the lesser of the estimated useful lives
or lease life, whichever is shorter. We believe the asset lives assigned to our
property, plant and equipment are within ranges/guidelines generally used in
food manufacturing and distribution businesses. Our manufacturing plants and
distribution centers, and their related assets, are periodically reviewed to
determine if any impairment exists by analyzing underlying cash flow
projections. At this time, we believe no impairment exists on the carrying value
of such assets. Ordinary repairs and maintenance are expensed as incurred.
15
Intangibles
Goodwill is no longer amortized and the value of an identifiable intangible
asset is amortized over its useful life unless the asset is determined to have
an indefinite useful life. The carrying values of goodwill and other intangible
assets with indefinite useful lives are tested annually for impairment.
Revenue Recognition and Sales Incentives
Sales are recognized upon the shipment of finished goods to customers and
are reported net of sales incentives. Allowances for cash discounts and returns
are recorded in the period in which the related sale is recognized. Shipping and
handling costs are included as a component of cost of sales.
Seasonality
Our tea business consists primarily of manufacturing and marketing hot tea
products and, as a result, its quarterly results of operations reflect seasonal
trends resulting from increased demand for its hot tea products in the cooler
months of the year. This is also true for our soups and hot cereals businesses,
but to a lesser extent. Quarterly fluctuations in our sales volume and operating
results are due to a number of factors relating to our business, including the
timing of trade promotions, advertising and consumer promotions and other
factors, such as seasonality, abnormal and inclement weather patterns and
unanticipated increases in labor, commodity, energy, insurance or other
operating costs. The impact on sales volume and operating results, due to the
timing and extent of these factors, can significantly impact our business. For
these reasons, you should not rely on our quarterly operating results as
indications of future performance. In some future periods, our operating results
may fall below the expectations of securities analysts and investors, which
could harm our business.
Inflation
The Company does not believe that inflation had a significant impact on the
Company's results of operations for the periods presented.
Note Regarding Forward Looking Information
Certain statements contained in this Quarterly Report constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1934 and Sections 21E of the Securities Exchange Act of 1934. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, levels of activity, performance
or achievements of the Company, or industry results, to be materially different
from any future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions; the
ability of the Company to implement its business and acquisition strategy; the
ability to effectively integrate its acquisitions; the ability of the Company to
obtain financing for general corporate purposes; competition; availability of
key personnel; and changes in, or the failure to comply with government
regulations. As a result of the foregoing and other factors, no assurance can be
given as to the future results, levels of activity and achievements and neither
the Company nor any person assumes responsibility for the accuracy and
completeness of these statements.
16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the reported market risks since the
end of the most recent fiscal year.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
Our Chief Executive Officer and Chief Financial Officer have reviewed our
disclosure controls and procedures as of the end of the period covered by this
report. Based upon this review, the Chief Executive Officer and Chief Financial
Officer concluded that, as of the end of the period covered by this report, the
Company's disclosure controls and procedures are adequately designed to ensure
that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time period specified in applicable rules and forms.
(b) Changes in Internal Controls.
There were no significant changes in our internal controls or in other factors
that could significantly affect these controls during the quarter covered by
this report or from the end of the reporting period to the date of this Form
10-Q.
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on December 4, 2003. The Company
submitted the following matters to a vote of security holders:
1. To elect a board of directors to serve until the next Annual Meeting of
Stockholders and until their successors are duly elected and qualified; and
2. To amend our 2002 Long Term Incentive and Stock Award Plan to increase the
number of shares issuable over the term of the plan by 1,500,000 shares to
3,100,000 shares in the aggregate; and
3. To amend our 2000 Directors Stock Option Plan to increase the number of
shares issuable over the term of the plan by 200,000 shares to 950,000
shares in the aggregate; and
4. To ratify the appointment of Ernst & Young LLP as our independent auditors
for fiscal 2004.
The stockholders elected the persons named below, the Company's nominees for
directors, as directors for the Company, casting votes as shown below:
- ----------------------------------- --------------------- -------------------
ELECTION OF DIRECTORS FOR WITHHELD
- ----------------------------------- --------------------- -------------------
Irwin D. Simon 29,921,053 1,445,899
- ----------------------------------- --------------------- -------------------
Beth L. Bronner 29,227,951 2,139,001
- ----------------------------------- --------------------- -------------------
Jack Futterman 23,900,726 7,466,226
- ----------------------------------- --------------------- -------------------
Daniel R. Glickman 30,079,294 1,287,658
- ----------------------------------- --------------------- -------------------
James S. Gold 21,580,456 9,786,496
- ----------------------------------- --------------------- -------------------
Marina Hahn 23,599,333 7,767,619
- ----------------------------------- --------------------- -------------------
Neil Harrison 28,884,675 2,482,277
- ----------------------------------- --------------------- -------------------
Andrew R. Heyer 29,612,612 1,754,340
- ----------------------------------- --------------------- -------------------
Joseph Jimenez 22,467,308 8,899,644
- ----------------------------------- --------------------- -------------------
Roger Meltzer 20,747,760 10,619,192
- ----------------------------------- --------------------- -------------------
Larry Zilavy 23,583,484 7,783,468
- ----------------------------------- --------------------- -------------------
17
The stockholders ratified the amendment to our 2002 Long Term Incentive and
Stock Award Plan casting 13,472,174 votes in favor, 11,573,732 votes against,
152,524 abstaining and 6,131,315 not voted.
The stockholders ratified the amendment to our 2000 Directors Stock Option Plan
casting 13,470,310 votes in favor, 11,551,598 votes against, 177,062 abstaining,
and 6,131,315 not voted.
The stockholders ratified the appointment of Ernst & Young, LLP casting
23,895,939 votes in favor, 7,376,448 against, and 94,565 abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K
On October 30, 2003, we furnished a report on Form 8-K, reporting on Item 12,
announcing our earnings for our first quarter ended September 30, 2003.
EXHIBITS
Exhibit Number Description
31.1 Certification of Chief Executive Officer pursuant to
Rule 13a-14(a) and Rule 15d-14(a) of the Securities
Exchange Act, as amended.
31.2 Certification of Chief Financial Officer pursuant to
Rule 13a-14(a) and Rule 15d-14(a) of the Securities
Exchange Act, as amended.
32.1 Certification by Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification by Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE HAIN CELESTIAL GROUP, INC.
Date: February 17, 2004 /s/ Irwin D. Simon
----------------------------------
Irwin D. Simon,
Chairman, President and Chief
Executive Officer
Date: February 17, 2004 /s/ Ira J. Lamel
----------------------------------
Ira J. Lamel,
Executive Vice President and
Chief Financial Officer
19
EXHIBIT 31.1
CERTIFICATION
I, Irwin D. Simon, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Hain Celestial
Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: February 17, 2004
/s/ Irwin D. Simon
- -------------------------------------
Irwin D. Simon
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION
I, Ira J. Lamel, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Hain Celestial
Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: February 17, 2004
/s/ Ira J. Lamel
- ----------------------------
Ira J. Lamel
Executive Vice President and
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION FURNISHED
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the period ended
December 31, 2003 (the "Report") filed by The Hain Celestial Group, Inc. (the
"Company") with the Securities and Exchange Commission, I, Irwin D. Simon, Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: February 17, 2004
/s/ Irwin D. Simon
- -------------------------------------
Irwin D. Simon
President and Chief Executive Officer
A signed original of this written statement required by Section 906 has been
provided to The Hain Celestial Group, Inc. and will be retained by The Hain
Celestial Group, Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.
EXHIBIT 32.2
CERTIFICATION FURNISHED
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the period ended
December 31, 2003 (the "Report") filed by The Hain Celestial Group, Inc. (the
"Company") with the Securities and Exchange Commission, I, Ira J. Lamel, Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: February 17, 2004
/s/ Ira J. Lamel
- -----------------------------
Ira J. Lamel
Executive Vice President and
Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to The Hain Celestial Group, Inc. and will be retained by The Hain
Celestial Group, Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.