UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED AUGUST 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ____.
COMMISSION FILE NUMBER:
333-12929
WEIDER NUTRITION INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 87-0563574
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2002 SOUTH 5070 WEST
SALT LAKE CITY, UTAH 84104-4726
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(801) 975-5000
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
requirements for the past 90 days. Yes [X] No[ ]
The number of shares outstanding of the Registrant's common stock is 25,042,073
(as of August 31, 1999.)
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AUGUST 31, MAY 31,
ASSETS 1999 1999
--------- ---------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents ..................................... $ 2,250 $ 1,926
Receivables ................................................... 52,974 60,524
Inventories ................................................... 60,695 63,658
Prepaid expenses and other .................................... 5,199 4,712
Deferred taxes ................................................ 5,400 7,387
--------- ---------
Total current assets ...................................... 126,518 138,207
--------- ---------
Property and equipment, net ..................................... 48,237 48,872
--------- ---------
Other assets:
Intangible assets, net ........................................ 52,121 51,980
Deposits and other assets ..................................... 11,722 12,806
Notes receivable related to
stock performance units ..................................... 4,157 4,164
--------- ---------
Total other assets ........................................ 68,000 68,950
--------- ---------
Total assets ........................................ $ 242,755 $ 256,029
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .............................................. $ 21,493 $ 25,492
Accrued expenses .............................................. 19,572 18,406
Earnout amounts payable ....................................... 3,246 3,246
Current portion of long-term debt(Note 2) ..................... 100,710 110,716
--------- ---------
Total current liabilities ................................. 145,021 157,860
--------- ---------
Long-term debt .................................................. 4,699 4,723
--------- ---------
Deferred taxes .................................................. 1,394 1,666
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01 per share; shares
authorized-10,000,000; no shares issued and outstanding ..... -- --
Class A common stock, par value $.01 per share; shares
authorized-50,000,000; shares issued and
outstanding-9,354,641 and 9,334,036 ......................... 93 93
Class B common stock, par value $.01 per share; shares
authorized-25,000,000; shares issued and
outstanding-15,687,432 ...................................... 157 157
Additional paid-in capital .................................... 83,198 82,985
Other accumulated comprehensive loss .......................... (1,990) (2,331)
Retained earnings ............................................. 10,183 10,876
--------- ---------
Total stockholders' equity ................................ 91,641 91,780
--------- ---------
Total liabilities and stockholders' equity .......... $ 242,755 $ 256,029
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
AUGUST 31,
-------------------------------
1999 1998
------------ ------------
Net sales ................................ $ 89,967 $ 67,946
Cost of goods sold ....................... 56,432 44,418
------------ ------------
Gross profit ............................. 33,535 23,528
------------ ------------
Operating expenses:
Selling and marketing .................. 19,407 12,351
General and administrative ............. 7,515 5,167
Research and development ............... 926 847
Amortization of intangible assets ...... 878 624
Severance and recruiting charges ....... 1,850 --
------------ ------------
Total operating expenses ........... 30,576 18,989
------------ ------------
Income from operations ................... 2,959 4,539
------------ ------------
Other income (expense):
Interest income ........................ 163 157
Interest expense ....................... (2,880) (1,695)
Other .................................. (15) (178)
------------ ------------
Total other expense, net ........... (2,732) (1,716)
------------ ------------
Income before income taxes (benefit) ..... 227 2,823
Provision for income taxes (benefit) ..... (19) 1,116
------------ ------------
Net income ............................... $ 246 $ 1,707
============ ============
Weighted average shares outstanding:
Basic .................................. 25,032,937 24,790,678
============ ============
Diluted ................................ 25,044,207 25,077,207
============ ============
Net income per share:
Basic .................................. $ 0.01 $ 0.07
============ ============
Diluted ................................ $ 0.01 $ 0.07
============ ============
Comprehensive income ..................... $ 587 $ 1,271
============ ============
See notes to condensed consolidated financial statements.
3
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
AUGUST 31,
---------------------
1999 1998
-------- --------
Cash flows from operating activities:
Net income ......................................... $ 246 $ 1,707
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Provision for bad debts ........................ 307 114
Deferred taxes ................................. 1,715 (626)
Depreciation and amortization .................. 2,983 2,324
Management and employee stock
compensation charges ......................... 201 --
Loss on disposition of equipment ............... 2 65
Changes in operating assets and liabilities-
net of assets acquired:
Receivables .................................... 7,242 6,071
Inventories .................................... 2,963 (8,543)
Prepaid expenses and other ..................... (487) (1,852)
Deposits and other assets ...................... 333 1,572
Accounts payable ............................... (3,999) (802)
Accrued expenses ............................... (1,166) (3,845)
-------- --------
Net cash provided by (used in)
operating activities ....................... 12,672 (3,815)
-------- --------
Cash flows from investing activities:
Acquisition, net of cash acquired .................. -- (24,621)
Purchase of property and equipment ................. (1,403) (2,348)
Proceeds from disposition of equipment ............. 1 184
Change in notes receivable ......................... 7 10
Investment in securities available for sale ........ -- (4,956)
-------- --------
Net cash used in investing activities ........ (1,395) (31,731)
-------- --------
Cash flows from financing activities:
Issuance of common stock ........................... 12 138
Dividends paid ..................................... (939) (926)
Proceeds from debt ................................. 2,012 37,827
Payments on debt ................................... (12,264) (800)
-------- --------
Net cash provided by (used in)
financing activities ........................ (11,179) 36,239
-------- --------
Effect of exchange rate changes on cash .............. 226 (243)
-------- --------
Increase in cash and cash equivalents ................ 324 450
Cash and cash equivalents, beginning of period ....... 1,926 684
-------- --------
Cash and cash equivalents, end of period ............. $ 2,250 $ 1,134
======== ========
See notes to condensed consolidated financial statements.
4
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION AND OTHER MATTERS
The accompanying unaudited interim consolidated financial statements
("interim financial statements") do not include all disclosures provided in the
annual consolidated financial statements. These interim financial statements
should be read in conjunction with the consolidated financial statements and the
footnotes thereto contained in the Weider Nutrition International, Inc. (the
"Company") Annual Report on Form 10-K for the year ended May 31, 1999 as filed
with the Securities and Exchange Commission. The May 31, 1999 consolidated
balance sheet was derived from audited financial statements, but all disclosures
required by generally accepted accounting principles are not provided in the
accompanying footnotes. The Company is a majority-owned subsidiary of Weider
Health and Fitness ("WHF").
In the opinion of the Company, the accompanying interim financial
statements contain all adjustments (which are of a normal recurring nature)
necessary for a fair presentation of the Company's financial position and
results of operations. Certain prior period amounts have been reclassified to
conform with the current interim period presentation.
2. CREDIT FACILITY
The Company's credit facility with General Electric Capital Corporation
("GECC") matures in February 2000. Therefore, the amounts outstanding under the
credit facility at August 31, 1999 ($86.5 million), are included in current
portion of long-term debt.
The Company has commenced discussions with its current lender and other
banking institutions regarding a new credit facility. Although management
believes that a new credit facility will be finalized prior to the filing of the
Company's Form 10-Q for the quarter ending November 30, 1999, there can be no
assurance that the new facility will be obtained by such date. Management
expects that amounts outstanding under a new credit facility will be
subsequently reclassified as a long-term obligation.
3. RECEIVABLES
Receivables consist of the following:
August 31, May 31,
1999 1999
---------- --------
Trade accounts ............................... $ 50,907 $ 59,389
Income taxes ................................. 3,106 2,195
Other ........................................ 984 1,168
---------- --------
54,997 62,752
Less allowance for doubtful accounts ......... (2,023) (2,228)
---------- --------
Total .................................. $ 52,974 $ 60,524
========== ========
5
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
4. INVENTORIES
Inventories consist of the following:
AUGUST 31, MAY 31,
1999 1999
---------- -------
Raw materials ..................................... $ 18,684 $24,364
Work in process ................................... 2,994 3,364
Finished goods .................................... 39,017 35,930
---------- -------
Total ................................. $ 60,695 $63,658
========== =======
Inventory totaling approximately $4.0 million, primarily consisting of two
raw materials, is included as a long-term asset in deposits and other assets in
the accompanying balance sheets.
5. INTANGIBLE ASSETS
Intangible assets consist of the following:
August 31, May 31,
1999 1999
---------- --------
Cost in excess of fair value
of net assets acquired (goodwill) .............. $ 54,032 $ 53,706
Patents and trademarks ........................... 11,172 10,452
Noncompete agreements ............................ 211 209
---------- --------
65,415 64,367
Less accumulated amortization .................... (13,294) (12,387)
---------- --------
Total ................................ $ 52,121 $ 51,980
========== ========
6. OPERATING SEGMENTS
In fiscal 1999, the Company adopted SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information", which changes the way the
Company reports information about its operating segments.
The Company has two primary reportable segments. These segments include
the Company's U.S. based or domestic operations, and the Company's international
operations. The Company has three primary areas within its domestic operations:
mass market; health food stores; and health clubs and gyms. The Company
manufactures and markets nutritional products, including a broad line of
vitamins, joint-related and other nutraceuticals, and sports nutrition
supplements in mass market; a broad line of vitamins, nutraceuticals and sports
nutrition products primarily through independent distributors and a significant
retailer in health food stores; and a broad line of sports nutrition products
primarily through distributors in health clubs and gyms. The Company also
manufactures and markets nutritional and other products, including a broad line
of sports nutrition supplements and
6
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
sportswear, together with certain other nutraceuticals within its international
operations.
The accounting policies of these segments are the same as those described
in Note 1 to the consolidated financial statements (See Annual Report on Form
10-K). The Company evaluates the performance of its operating segments based on
actual and expected operating results of the respective segments. Certain
noncash and other expenses, and domestic assets, are not allocated to the areas
within the domestic operating segment.
Segment information for the three months ended August 31, 1999 and 1998,
respectively, are summarized as follows:
<TABLE>
<CAPTION>
INCOME
(LOSS)
NET FROM INTEREST
SALES OPERATIONS EXPENSE
1999: -------- ---------- --------
<S> <C> <C> <C>
Domestic Operations:
Mass market ................................................ $ 45,757 $ 5,226 $ 890
Health food stores ......................................... 10,733 (1,185) 498
Health clubs and gyms ...................................... 5,839 281 321
Other ...................................................... 1,295 (203) 72
Unallocated ................................................ -- (1,850) --
-------- ---------- --------
63,624 2,269 1,781
International Operations ..................................... 26,343 690 1,099
-------- ---------- --------
$ 89,967 $ 2,959 $ 2,880
======== ========== ========
<CAPTION>
INCOME
(LOSS)
NET FROM INTEREST
SALES OPERATIONS EXPENSE
1998: -------- ---------- --------
Domestic Operations:
Mass market ................................................ $ 32,594 $ 3,470 $ 669
Health food stores ......................................... 13,416 28 340
Health clubs and gyms ...................................... 5,828 313 146
Other ...................................................... 5,140 (205) 78
-------- ---------- --------
56,978 3,606 1,233
International Operations ..................................... 10,968 933 462
-------- ---------- --------
$ 67,946 $ 4,539 $ 1,695
======== ========== ========
</TABLE>
Reconciliation of total assets for the reportable segments is as follows
at August 31, 1999:
Total domestic assets .... $ 213,080
Total international assets 80,708
Eliminations ............. (51,033)
---------
Total ............... $ 242,755
=========
7
<PAGE>
WEIDER NUTRITION INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
Capital expenditures for domestic and international operations amounted to
$1.1 million and $.3 million, respectively, for the three months ended August
31, 1999, and $2.2 million and $.1 million, respectively, for the three months
ended August 31, 1998. The majority of international related long-lived assets
are located in Germany.
7. SALES TO MAJOR CUSTOMERS
The Company's three largest customers accounted for approximately 47% and
39%, respectively, of net sales for the three months ended August 31, 1999 and
1998, respectively. At August 31, 1999 and May 31, 1999, amounts due from these
customers represented approximately 37% and 42%, respectively, of total trade
accounts receivable.
8. CONTINGENCIES
In March 1999, the plaintiff's attorney involved in a previously settled
California matter regarding certain of the Company's bar products filed a
lawsuit on behalf of Michael Morelli and an alleged class in the Supreme Court
of the State of New York (New York County) alleging similar unfair competition
and false claims under New York law. In May 1999, the plaintiffs' attorney also
filed a lawsuit on behalf of Lisa Fasig and an alleged class in the Circuit
Court of Lee County, Florida alleging similar claims under Florida law. The
Company disputes the allegations and will vigorously oppose the lawsuits.
The Company is involved in other claims, legal actions and governmental
proceedings that arise from the Company business operations. Although ultimate
liability cannot be determined at the present time, the Company believes that
any liability resulting from these matters, if any, after taking into
consideration the Company's insurance coverage, will not have a material adverse
effect on the Company's financial position or cash flows.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
THE CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q. EXCEPT FOR THE HISTORICAL
INFORMATION CONTAINED HEREIN, THE MATTERS DISCUSSED IN THIS QUARTERLY REPORT
CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, THAT ARE BASED ON MANAGEMENT'S BELIEFS AND ASSUMPTIONS,
CURRENT EXPECTATIONS, ESTIMATES, AND PROJECTIONS. STATEMENTS THAT ARE NOT
HISTORICAL FACTS, INCLUDING WITHOUT LIMITATION STATEMENTS WHICH ARE PRECEDED BY,
FOLLOWED BY OR INCLUDE THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS,"
"MAY," "SHOULD" OR SIMILAR EXPRESSIONS ARE FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND
THE COMPANY'S ABILITY TO PREDICT OR CONTROL, AND, THEREFORE, ACTUAL RESULTS MAY
DIFFER MATERIALLY. THE COMPANY DISCLAIMS ANY OBLIGATION TO UPDATE ANY
FORWARD-LOOKING STATEMENTS WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS
OR OTHERWISE.
IMPORTANT FACTORS THAT MAY EFFECT FUTURE RESULTS INCLUDE, BUT ARE NOT
LIMITED TO: COMPLETION OF THE SKU REDUCTION PROGRAM AS ANTICIPATED BY THE
COMPANY, THE COMPANY'S ABILITY TO IMPLEMENT MORE SOPHISTICATED OPERATING SYSTEMS
AND INVENTORY MANAGEMENT PROGRAMS, THE IMPACT OF COMPETITIVE PRODUCTS AND
PRICING, DEPENDENCE ON INDIVIDUAL PRODUCTS, THE REALIZABLE VALUE OF DISCONTINUED
SKUS, MARKET CONDITIONS INCLUDING PRICING, DEMAND FOR PRODUCTS, AND THE LEVEL OF
TRADE INVENTORIES, THE SUCCESS OF PRODUCT DEVELOPMENT AND NEW PRODUCT
INTRODUCTIONS INTO THE MARKETPLACE, CHANGES IN LAWS AND REGULATIONS, THE
COMPANY'S ABILITY TO IDENTIFY, RECRUIT AND INTEGRATE KEY MANAGEMENT PERSONNEL,
INCLUDING THE COST AND TIMING THEREOF, LITIGATION AND GOVERNMENT REGULATORY
ACTION, AVAILABILITY OF FUTURE FINANCING, UNCERTAINTY OF MARKET ACCEPTANCE OF
NEW PRODUCTS, RESULTS OF MANAGEMENT'S EVALUATION OF ITS BUSINESS OPERATIONS AND
STRATEGIES, AND OTHER RISKS INDICATED FROM TIME TO TIME IN THE COMPANY'S SEC
REPORTS, COPIES OF WHICH ARE AVAILABLE UPON REQUEST FROM THE COMPANY'S INVESTOR
RELATIONS DEPARTMENT.
GENERAL
Weider Nutrition International, Inc. (the "Company") develops,
manufactures, markets, distributes and sells branded and private label vitamins,
nutritional supplements and sports nutrition products in the United States and
throughout the world. The Company offers a broad range of capsules and tablets,
powdered drink mixes, bottled beverages and nutrition bars consisting of
approximately 850 nutritional supplement stock keeping units ("SKUs")
domestically and internationally. The Company has a portfolio of recognized
brands, including Schiff(R), Weider Sports Nutrition, MetaForm(R), American Body
Building(TM), Multipower(R), Multaben(R) and Venice Beach(R) that are primarily
marketed through mass market, health food store and/or health club and gym
distribution channels. The Company markets its branded nutritional supplement
products in four principal categories: sports nutrition; vitamins, minerals and
herbs; weight management; and healthy snacks. As a result of the Company's July
1998 acquisition of Haleko Hanseatisches Lebensmittel Kontor GmbH ("Haleko"),
the Company has significantly expanded its operations outside the United States.
The Company's international operations include sports nutrition supplements,
other nutraceuticals and sportswear products.
9
<PAGE>
The Company's principal executive offices are located at 2002 South 5070
West, Salt Lake City, Utah 84104 and its telephone number is (801) 975-5000. As
used herein, the "Company" means Weider Nutrition International, Inc. and its
subsidiaries, except where indicated otherwise.
RESULTS OF OPERATIONS (UNAUDITED)
(THREE MONTHS ENDED AUGUST 31, 1999 COMPARED TO THREE MONTHS ENDED
AUGUST 31, 1998)
The following table shows selected items expressed on an actual basis and
as a percentage of net sales for the respective interim periods:
<TABLE>
<CAPTION>
THREE MONTHS ENDED AUGUST 31,
------------------------------------------
1999 1998
-------------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales ............................................................... $ 89,967 100.0% $ 67,946 100.0%
Cost of goods sold ...................................................... 56,432 62.7 44,418 65.4
-------- ------- -------- -------
Gross profit ............................................................ 33,535 37.3 23,528 34.6
-------- ------- -------- -------
Operating expenses ...................................................... 28,726 31.9 18,989 27.9
Severance and recruiting
charges ............................................................... 1,850 2.1 -- --
-------- ------- -------- -------
Total operating expenses ................................................ 30,576 34.0 18,989 27.9
-------- ------- -------- -------
Income from operations .................................................. 2,959 3.3 4,539 6.7
Other expense, net ...................................................... 2,732 3.0 1,716 2.5
Income taxes (benefit) .................................................. (19) -- 1,116 1.6
-------- ------- -------- -------
Net income .............................................................. $ 246 .3% $ 1,707 2.5%
======== ======= ======== =======
</TABLE>
NET SALES. Net sales for the three months ended August 31, 1999 increased
$22.0 million, or 32.4%, to $90.0 million from $67.9 million for the three
months ended August 31, 1998. Sales to mass volume retailers (including food,
drug, mass, club and convenience stores) and international markets increased
during the three months ended August 31, 1999 compared to the three months ended
August 31, 1998. Sales to health food distributors and retailers and contract
manufacturing sales decreased during the first quarter of fiscal 1999 compared
to the first quarter of fiscal 1998. Sales to health club and gym distributors
were approximately the same for the first quarter of fiscal 1999 compared to the
first quarter of fiscal 1998.
First quarter fiscal 2000 sales to mass volume retailers increased
approximately 40.4% to $45.8 million from first quarter fiscal 1999 sales of
$32.6 million. The increase in sales to mass volume retailers was primarily the
result of increased sales to existing accounts of certain leading branded
products. Sales of Pain Free(TM) amounted to $26.3 million for the first quarter
of fiscal 2000 compared to $15.0 million for the first quarter of fiscal 1999.
Sales to health food distributors and retailers decreased approximately 20.0% to
$10.7 million for the fiscal 2000 first quarter from $13.4 million for the
fiscal 1999 first quarter. The decrease in sales resulted primarily from the
Company's increased focus on the mass market distribution channel together with
certain individual retailers in the health food distribution channel. Sales
volume with GNC, the Company's most significant health food retailer, increased
in the first quarter of fiscal 2000 compared to the first quarter of fiscal
1999, whereas sales to health food distributors decreased in the first quarter
of fiscal 2000 compared to the first quarter of fiscal 1999.
10
<PAGE>
Sales to international markets increased 139.5% to $26.3 million for the
three months ended August 31, 1999 compared to $11.0 million for the three
months ended August 31, 1998. The increase in sales to international markets
resulted primarily from the Company's acquisition of Haleko in July 1998. The
Company's financial results for the first quarter of fiscal 2000 included
Haleko's operating results for three months, which consisted of $22.4 million in
sales volume.
Contract manufacturing (private label) sales volume decreased
approximately 93.1% to $.3 million for the first quarter of fiscal 2000 from
$3.6 million for the first quarter of fiscal 1999. The decrease in contract
manufacturing sales is consistent with the Company's decision to limit contract
manufacturing business to only those customers who have, or may in the future
have, other business relationships with the Company. Private label business for
customers with whom other business relationships exist are included in the net
sales amounts for the distribution channel applicable to the customer.
GROSS PROFIT. Gross profit increased approximately 42.5% to $33.5 million
for the quarter ended August 31, 1999 compared to $23.5 million for the quarter
ended August 31, 1998. Gross profit, as a percentage of net sales, was 37.3% for
the quarter ended August 31, 1999 compared to 34.6% for the quarter ended August
31, 1998. The increase in the gross profit percentage resulted primarily from
consolidation of the Company's capsule and tablet manufacturing facilities,
increase in higher margin international sales, change in sales mix and reduced
credits for returned products.
OPERATING EXPENSES. Operating expenses, including severance and recruiting
charges, increased approximately 61.0% to $30.6 million for the fiscal 2000
first quarter from $19.0 million for the fiscal 1999 first quarter. During the
fiscal 2000 first quarter the Company continued its organizational changes and
upgrading of management systems (including senior management changes) that
resulted in approximately $1.9 million of costs during the three month period.
Excluding these charges, operating expenses increased $9.7 million, or 51.3%
during the first quarter of fiscal 2000 in comparison to the first quarter of
fiscal 1999. The increase resulted primarily from the continued implementation
of an expanded marketing plan resulting in significant increases in selling,
marketing and advertising costs and the inclusion of Haleko operating results
for three months (as compared to one month for the first quarter of fiscal
1999).
Selling and marketing expenses, including sales, marketing, advertising,
freight and other costs, increased approximately 57.1% to $19.4 million for the
fiscal 2000 first quarter from $12.4 million for the fiscal 1999 first quarter.
The increase in selling and marketing expenses resulted primarily from the
acquisition of Haleko ($5.5 million), increased advertising and promotion costs
associated with the Company's brand building initiative and personnel costs
required to handle higher sales volumes.
General and administrative expenses increased approximately 45.4% to $7.5
million for the quarter ended August 31, 1999 compared to $5.2 million for the
quarter ended August 31, 1998. The increase in general and administrative
expenses for the first quarter of fiscal 2000 resulted primarily from the
acquisition of Haleko ($2.6 million), additional overhead costs associated with
higher sales volumes and increased personnel related expenses.
11
<PAGE>
OTHER EXPENSE. Other expense, net, amounted to $2.7 million for the
quarter ended August 31, 1999 compared to $1.7 million for the quarter ended
August 31, 1998. The net increase of approximately $1.0 million resulted
primarily from increased interest costs associated with additional indebtedness
incurred in connection with the acquisition of Haleko, together with an overall
higher effective borrowing rate.
PROVISION FOR INCOME TAXES. Provision for income taxes amounted to a
nominal (benefit) for the quarter ended August 31, 1999 compared to tax expense
of $1.1 million for the quarter ended August 31, 1998. The decrease resulted
primarily from the reduction in pre-tax earnings and the net effect of tax rate
differences for the Company's domestic and international operations.
LIQUIDITY AND CAPITAL RESOURCES. Concurrent with the Company's IPO,
effective May 1, 1997, the Company entered into an amended credit agreement (the
"Credit Agreement") with GECC. The Credit Agreement is a $115.0 million senior
secured, long-term credit facility that contains standard terms and conditions,
including, subject to permitted amounts, a limitation on the ability of the
Company to pay dividends on the common stock and minimum net worth requirements.
The obligations of the Company under the Credit Agreement are secured by a first
priority lien on all owned or acquired tangible and intangible assets of the
Company and a pledge to GECC of the capital stock of the U.S. subsidiaries of
the Company, including the subsidiary that owns the Company's foreign
subsidiaries. Borrowings available under the Credit Agreement are used for
general working capital, to support capital expenditures and for other
investment considerations. Borrowings under the Credit Agreement bear interest
at floating rates and mature in February 2000. Accordingly, amounts outstanding
under the Credit Agreement at August 31, 1999, are included in the current
portion of long-term debt. At August 31, 1999, the Company had approximately
$28.5 million of available credit under the Credit Agreement.
Excluding amounts outstanding under the Credit Agreement($86.5 million),
the Company had working capital of approximately $68.0 million at August 31,
1999 compared to $79.0 million at May 31, 1999. The decrease resulted primarily
from reduced receivables and inventories. Current receivables and inventories
decreased $7.6 million and $3.0 million, respectively, during the quarter ended
August 31, 1999. The decrease in receivables was primarily attributable to a
change in customer sales mix. The decrease in inventories was primarily
attributable to improved inventory management, including the Company's SKU
reduction program.
During the first three months of fiscal 2000, the Company's aggregate
current and long-term debt decreased approximately $10.0 million to $105.4
million at August 31, 1999 primarily as a result of the decrease in receivables
and inventories.
The Company expects to fund its long-term capital requirements for the
next twelve months through the use of operating cash flow supplemented as
necessary by borrowings under the Credit Agreement (and/or alternative
financing; see Note No. 2)and, if necessary, through debt financing or the
issuance of additional equity. The Company also from time to time may evaluate
strategic acquisitions as the nutritional supplements industry continues to
consolidate. The funding of any future acquisitions, if any, may also require
borrowings under the Credit Agreement, as amended, and/or other debt financing
or the issuance of additional equity.
12
<PAGE>
The Company paid a quarterly dividend of $0.0375 per share subsequent to
August 31, 1999. The dividend was declared to be payable on September 20, 1999
to holders of all classes of common stock of record at the close of business on
September 10, 1999. The Company's Board of Directors will determine dividend
policy in the future based upon, among other things, the Company's results of
operations, financial condition, contractual restrictions and other factors
deemed relevant at the time. In addition, the Credit Agreement contains certain
customary financial covenants that may limit the Company's ability to pay
dividends on its common stock. Accordingly, there can be no assurance that the
Company will be able to sustain the payment of dividends in the future.
IMPACT OF INFLATION. The Company has historically been able to pass
inflationary increases for raw materials and other costs through to its
customers and anticipates that it will be able to continue to do so in the
future.
SEASONALITY. The Company's business is seasonal, with lower sales
typically realized during the first and second fiscal quarters and higher sales
typically realized during the third and fourth fiscal quarters. The Company
believes such fluctuations in sales are the result of greater marketing and
promotional activities toward the end of each fiscal year, customer buying
patterns, and consumer spending patterns related primarily to the consumers'
interest in achieving personal health and fitness goals after the beginning of
each new calendar year and before the summer fashion season.
Furthermore, as a result of changes in product sales mix and other
factors, as discussed above, the Company experiences fluctuations in gross
profit and operating margins on a quarter-to-quarter basis.
YEAR 2000. In fiscal 1998 the Company initiated a year 2000 compliance
project (the "Year 2000 Project"). The Company identified the Year 2000 Project
as a priority and has allocated resources to it in an effort to minimize the
impact of Year 2000 date related problems. The Company has assigned a senior
level manager to oversee the Year 2000 Project and has retained the services of
an outside year 2000 consulting firm. The scope of the Year 2000 Project
encompasses the Company's traditional mainframe based application software, its
midrange and personal computing platforms, and its embedded microprocessor
systems. Furthermore, the Company is conducting a year 2000 compliance
assessment of those of its suppliers, distributors and customers, whose
relationship, in the Company's business judgment, is material. Although the
Company's assessment of its year 2000 issues is not complete, the Company has
made a preliminary determination of its critical and non-critical items.
The Company's critical items include its JD Edwards accounting and
manufacturing support software and its IBM AS/400 operating system. Each of
these items has been certified by the vendor as year 2000 compliant. The Company
is conducting tests to support these claims.
Approximately $600,000 has been spent on the substantially completed Year
2000 Project at August 31, 1999. The Company is also in the process of
evaluating year 2000 compliance by its major business suppliers and vendors, and
is in the process of evaluating and formulating its contingency plans. Included
in these contingency plans are backup power supply systems for computers,
facilities and manufacturing. The Company continues to formulate these
contingency plans for critical issues involving business suppliers and
13
<PAGE>
vendors, information processing and its manufacturing process. Although the
Company is undertaking the Year 2000 Project, no assurance can be given that
such a program will be able to solve the year 2000 issues applicable to the
Company or that failure to solve will not have a material adverse effect on the
Company.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The information set forth in Note 8 to Condensed Consolidated
Financial Statements in Item 1 of this Quarterly Report on Form 10-Q is
incorporated herein by reference.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
5.1 Stock Purchase Agreement, dated July 9, 1998, by and among Weider
Nutrition Group, Inc. and Wolfgang Brandt and Eberhardt Schluter. (2)
5.2 Amendment Deed to Stock Purchase Agreement, dated July 24, 1998. (2)
5.3 Share Transfer Deed, dated July 24, 1998. (2)
3.1 Amended and Restated Certificate of Incorporation of Weider Nutrition
International, Inc. (1)
3.2 Amended and Restated Bylaws of Weider Nutrition International, Inc. (1)
4.1 Amended and Restated Credit Agreement dated as of May 6, 1997 among Weider
Nutrition International, Inc., certain subsidiaries, certain lenders and
General Electric Capital Corporation. (3)
4.2 First Amendment to Amended and Restated Credit Agreement dated as of
August 27, 1997 among Weider Nutrition International, Inc. and certain of
its affiliates and General Electric Capital Corporation and certain other
lenders. (3)
4.3 Second Amendment to Amended and Restated Credit Agreement dated as of
February 1998 among Weider Nutrition International, Inc. and certain of
its affiliates and General Electric Capital Corporation and certain other
lenders. (3)
4.4 Third Amendment to Amended and Restated Credit Agreement dated as of
July 28, 1998 among Weider Nutrition International, Inc. and certain of
its affiliates and General Electric Capital Corporation and certain other
lenders. (4)
4.5 Fourth Amendment to Amended and Restated Credit Agreement dated as of
December 2, 1998 among Weider Nutrition International, Inc. and certain of
its affiliates and General Electric Capital Corporation and certain other
lenders. (4)
14
<PAGE>
4.6 Fifth Amendment to Amended and Restated Credit Agreement dated as of
December 15, 1998 among Weider Nutrition International, Inc. and certain
of its affiliates and General Electric Capital Corporation and certain
other
lenders. (4)
4.7 Sixth Amendment to Amended and Restated Credit Agreement dated as of
March 4, 1999 among Weider Nutrition International, Inc. and certain of
its affiliates and General Electric Capital Corporation and certain other
lenders. (5)
4.8 Seventh Amendment to Amended and Restated Credit Agreement dated as of
June 24, 1999 among Weider Nutrition International, Inc. and certain of
its affiliates and General Electric Capital Corporation and certain other
lenders. (6)
4.9 Haleko Credit Agreement dated as of July 22, 1999, among Haleko and
certain other lenders. (7)
10.1 Build-To-Suit Lease Agreement, dated March 20, 1996, between SCI
Development Services Incorporated and Weider Nutrition Group, Inc. (1)
10.2 Agreement by and between Joseph Weider and Weider Health and Fitness. (1)
10.3 1997 Equity Participation Plan of Weider Nutrition International, Inc. (1)
10.4 Form of Tax Sharing Agreement by and among Weider Nutrition International,
Inc. and its subsidiaries and Weider Health and Fitness and its
subsidiaries. (1)
10.5 Form of employment Agreement between Weider Nutrition International, Inc.
and Richard B. Bizzaro. (1)
10.6 Form of Employment Agreement between Weider Nutrition International, Inc.
and Robert K. Reynolds, as amended. (5)
10.7 Form of Senior Executive Employment Agreement between Weider Nutrition
International, Inc. and certain senior executives of the Company. (1)
10.8 Advertising Agreement between Weider Nutrition International, Inc. and
Weider Publications, Inc. (1)
10.9 Amended and Restated Shareholders Agreement between Weider Health and
Fitness and Hornchurch Investments Limited. (1)
10.10 Amended and Restated Shareholders Agreement between Weider Health and
Fitness,
Bayonne Settlement and Ronald Corey. (1)
10.11 Indemnification Agreement between Weider Nutrition Group, Inc. and Showa
Denko
America. (1)
10.12 License Agreement between Mariz Gestao E Investmentos Limitada and Weider
Nutrition Group Limited. (1)
10.13 Form of Employment Agreement between Weider Nutrition International, Inc.
and
Bruce J. Wood. (6)
10.14 Separation Agreement between Weider Nutrition International, Inc. and
Robert K. Reynolds. (7)
21 Subsidiaries of Weider Nutrition International, Inc. (1)
27.1 FINANCIAL DATA SCHEDULE SUMMARY (7)
(1) Filed as an Exhibit to the Company's Registration Statement on From S-1
(File No. 333-12929) and incorporated herein by reference.
(2) Previously filed in the Company's Current Report on Form 8-K dated as of
July 24, 1998 and incorporated herein by reference.
(3) Previously filed in the Company's Current Report on Form 10-Q dated as of
October 14, 1998 and incorporated herein by reference.
(4) Previously filed in the Company's Current Report on Form 10-Q dated as of
January 14, 1999 and incorporated herein by reference.
(5) Previously filed in the Company's Current Report on Form 10-Q dated as of
April 6, 1999 and incorporated herein by reference.
(6) Previously filed in the Company's Current Report on From 10-K dated as of
August 30, 1999 and incorporated herein by reference.
(7) FILED HEREWITH.
(b) Reports on Form 8-K
None
15
<PAGE>
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.
WEIDER NUTRITION INTERNATIONAL, INC.
Date: October 15, 1999 BY: /s/ BRUCE J. WOOD
---------------------------------
Bruce J. Wood
President, Chief Executive Officer
and Director
Date: October 15, 1999 BY: /s/ JOSEPH W. BATY
----------------------------------
Joseph W. Baty
Senior Vice President, Finance
16
EXHIBIT-4.9
LOAN COMMITMENT
Dear Sirs,
We refer to the discussions held with you and are pleased to confirm that the
banks mentioned below have agreed to grant to Haleko, Hanseatisches Lebensmittel
Kontor GmbH & Co. OHG Hamburg through a bank syndicate led by Deutsche Bank AG
in Hamburg a credit line for working capital totaling
DM 30,000,000
(IN WORDS DEUTSCHE MARK THIRTY MILLIONS)
This confirmation is valid for the time being until July 31, 2000.
The granting of the credit line is based on the "Allgemeinen
Geschaftsbedingungen AGB) of Deutsche Bank AG which you find enclosed to this
letter, these conditions are also applicable for the other banks in the
syndicate.
In addition, the following rules and conditions are valid:
PURPOSE The credit line serves as the financing of operating expenses. The
credit line can be utilized either as cash, "guarantee/surety
credit", discounted notes or as letters of credit.
DRAWS According to the need as per conditions of the credit agreement.
BOOKING Through the current accounts of the banks.
COLLATERAL The following serves as collateral for the credit line:
A) Blanket assignment of trade receivables (contract of
2.2./3.2.95); additional assignment of claims of trade
receivables (credit) insurance from "Zurich Kautions- und
Kreditversicherungs AG (contract of 5.5.98).
B) Inventories contained in the:
o warehouse of Haleko in Bleckede
o warehouse of HTS
o warehouse of Burgmer Lager and Transportservice GmbH in
Herten/Westfalen.
C) Pos./Negative declaration for all other inventories which the
company has in its warehouse under consignment.
These collateral agreements will be administrated in accordance with the
collateral syndicate contract of July 22, 1999. Details will be set in the
collateral agreement.
INTEREST RATE 6.25 % until further notification
The percentage participations by the syndicated banks are as follows:
BANK
DEUTSCHE BANK AG HAMBURG 66.67 % (DM 20,000,000)
BERENBERG BANK, JOH. BERENBERG, GOSSLER & CO. 33,33 % (DM 10,000,000)
--------------------------
100,00 % (DM 30,000,000)
<PAGE>
For the Deutsche Bank portion a short-term special financing of DM 8,000,000
(including a spread of DM 160,000 for an interest swap) is calculated.
The bank syndicate grants the funds in accordance with the above mentioned
participations at its own expense. Joint and several liability is not
applicable; every bank only grants funds according to its own participation and
is only liable for this amount. The formation of a joint venture is not allowed.
In addition to its participation in the credit line for operation the Deutsche
Bank Hamburg grants several long-term redemption loans totaling DM 3,700,000 for
which you have already obtained separate loan commitments. In addition, Deutsche
Bank Hamburg agrees principally to finance the warehouse extension in Bleckede
with an additional redemption loan (terms and conditions still to be set)
totaling DM 1,800,000.
For the long-term redemption loans the following collateral arrangements were
agreed to:
o Mortgage totaling DM 8,355,000 of the company properties "Bahnhofstra(beTA)e
8 " and "Topferdamm". DM 2,000,000 of this amount is for a mortgage owed to
Frankfurter Hypothekenbank AG of which we have received a waiver of the right
to refix the value/availability date as well as a trust agreement.
o Positive/Negative declaration for machinery as well as technical and office
equipment in Bleckede dated May 28, 1996.
o Parent's guarantee of future funding (Letter of support) from WNI in SLC of
17.3.99.
Secondary liability against collateral relating to special agreements and/or the
AGB of Deutsche Bank remains hereby intact.
For the credit line granted by the bank syndicate, as well as for the long-term
redemption loans granted by the syndicate leader, the following additional
conditions were mutually agreed to:
1. You will take care during the credit term that shareholder's equity of
a minimum of 20 % of the balance sheet total of Haleko, Hanseatisches
Lebensmittel Kontor GmbH & Co. OHG as well as Haleko group are
maintained. Shareholder's equity includes: Subscribed capital +
Paid-in capital/other capital +/- retained earnings +/- net income/loss
for the year + subordinated shareholders loans of less intangible
assets (e.g. good will) less accounts receivables due to other
subsidiaries that have incurred losses in prior years and/or showed a
negative shareholder's equity.
2. It was mutually agreed that the accounts receivables owed by Haleko,
Hanseatisches Lebensmittel Kontor GmbH & Co. OHG to its subsidiaries will
not exceed 30 % or prior years sales of the subsidiaries.
3. The current economical development of your company as well as its
subsidiaries is to be reported to the bank syndicate via monthly financial
statements.
4. We would furthermore appreciate the timely submission to the syndicate
banks your cash flow/liquidity budget before the loan commitment takes
effect.
This letter replaces the loan commitment of Deutsche Bank AG Hamburg of December
21,1998.
Best regards
<PAGE>
COLLATERAL ARRANGEMENTS CONTAINED IN THE
SYNDICATE CONTRACT
between 1. Deutsche Bank (syndicate leader)
2. Berenberg Bank
in the following called "Bankers" or "Bank" the following agreement is
signed:
SS. 1 CREDITS
(1) The banks are connected in business with Haleko, Hanseatisches
Lebensmittel Kontor GmbH & Co. OHG, Hamburg (called: company) and each
have granted in this contract the credit lines indicated below:
1. Deutsche Bank DM 20,000,000 66,67 %
2. Berenberg Bank DM 10,000,000 33,37 %
------------- -------
DM 30,000,000 100 %
(2) These credit lines are for funding company operations and can be used
alternatively for cash expenses, surety credit and/or discount notes
and/or letters of credit.
(3) The company can utilize the credit line and credits at its own discretion.
The amounts are directly owed to each bank separately.
(4) The banks are jointly engaged to maintain the credit lines during the
length of the credit contract including any extensions, and to reduce or
terminate only by agreement between themselves. This is not valid for
loans granted outside of the syndicate.
SS. 2 SECURITIES
(1) The company has given or will give the following as security to the
Deutsche Bank AG in Hamburg:
a) Blanket assignment of trade receivables (contract 2.2.95/3.2.95),
additional assignment trade receivable at "Zurich Kautions- und
Kreditversicherungs-AG (contract dated 05.05.1998)
b) Inventories contained in the
o Bleckede warehouse
o Warehouse at HTS-Hamburger Trailer Spedition GmbH, Hamburg
o Warehouse at Burgmer, Lager- & TransportService GmbH,
Gelsenkirchen in Herten
c) Positive/Negative Declaration for all remaining inventories of the
company.
(2) If in the future one of the banks receives further collateral for the
mentioned credits or credit lines (ss. 1) these are to be included in the
syndicate contract.
(3) If one bank grants additional credits to the company and it receives
additional collateral so consequently these are to be included in the
syndicate contract. In case of salvage proceeds these are to serve as a
matter of first priority for the direct repayment of the banks debt,
outstanding.
<PAGE>
(4) The company obligates itself not to offer assets as security to third
parties before the banks are informed. This does not include customary
extended title reservations to suppliers and based on the general pledges
and security rights.
(5) Pledging of credit: The company pledges herewith the credit balance on the
bank accounts (current and future) to the remaining banks (credit granting
banks receiving the pledge). These lien rights are all ranked the same,
nevertheless according to those banks holding the company's deposits are
given priority over the lien rights. The pledges serve as collateral for
all existing, future and conditional claims which the creditor -
individually or jointly - including inland and foreign branches. The banks
will provide information to each of them about their lien rights contained
in this contract. The banks are allowed to make credit available up to the
amount of the pledge limit exceeds the company's bank deposits.
SS. 3 PURPOSED COLLATERAL
(1) The collateral mentioned in the syndicate contract is for the banks'
current, future and conditional claims (including all inland and foreign
branches/affiliates) arising from this business relationship.
(2) If the company co-signs the liabilities of another customer of one of the
banks (e.g., as guarantor) the collateral is only valid for the debt
assumed subsequent to its due date and only if the company is
simultaneously the principal.
SS. 4 BACK TRANSFER/COLLATERAL RELEASE
(1) If all claims are satisfied in accordance with ss. 3 the banks have to
retransfer all unclaimed collaterallized assets to the company. This is
not valid if the bank is obliged to transfer collateral or a probable
profit to third parties (e.g. guarantor who has to satisfy one or several
banks).
(2) The banks have to release the collateral of its choice, total or partial,
on request if the realizable value of the collateral exceeds 110 % of the
secured claims acc. to ss. 3. The value to be realized from the collateral
is set in accordance with the individual collateral arrangements if not
agreed upon separately in connection with the type of collateral involved.
(3) The agreements regarding collateral limits and release obligations in
these agreements will be amended by the before mentioned agreements during
the length of this contract.
SS. 5 TRUST AGREEMENT/ADMINISTRATION OF COLLATERAL
(1) The syndicate leader administrates the collateral included in this
contract in a fiduciary manner for the remaining banks.
(2) The syndicate leader will send copies on request to the other banks for
examination. In case of objections the other banks will inform the
syndicate leader in order to achieve a consensual regulation.
(3) The syndicate leader and the respective banks do not guarantee the
efficiency of the administrated collateral contracts and the respective
account to cover the claims of the collateral banks. Every bank has to
check the documents at its own responsibility and the inform the syndicate
leader in case of doubts in order to achieve a consensual regulation. The
syndicate leader will not guarantee for losses which occur in connection
with the breach of duties taken over in the collateral contracts by
<PAGE>
the guarantors. The banks renounce all claims against the syndicate leader
about possible legal faults of the collateral declarations.
(4) The banks give authorization to the syndicate leader to affect and accept
all necessary declarations for the appointment, administration and
exploitation of the collateral also in their names as well as to execute
all necessary and useful actions. The syndicate leader will be released
for all actions in connection with this contract from the restriction of
ss. 181.
(5) The total or partial release of collateral requires the agreement of all
banks involved. In connection with a release obligation in accordance with
ss. 4 Abs. 2 only the agreement for the selected collateral in necessary.
(6) The syndicate leader will transfer the administration of the collateral
only in accordance with the other banks to another trustee.
(7) If collateral is hold by another bank than the pool leader the
aforementioned agreements are validated accordingly. In addition the
syndicate leader has the right, but not the obligation, to execute all
control and administration rights resulting from this contract.
SS. 6 EXPLOITATION
(1) The syndicate leader will make use of the collateral mentioned in ss. 2 in
their own name but on account of the banks. As far as collateral are not
held by the syndicate leader, these are not to be exploited in agreement
with the syndicate leader, by the bank holding this collateral on behalf
of the banks.
(2) The question of how and when to use collateral the banks decide
consensual. In case of urgency the syndicate leader decides alone to its
best judgment and then informs the remaining banks immediately.
(3) The syndicate leader and the banks will observe all conditions in this
contract.
SS. 7 PAYMENT OF BALANCE
(1) The company will make use of the credit line - if possible-proportionally
to the sums mentioned in ss. 1 Abs. 1.
(2) The banks commit themselves in irrevocable order of the company and also
each other to bring the credit line in accordance with the proportions
mentioned in ss. 1.1 in case of exploitation (ss. 6). Each bank has to
settle its demands with amounts on other not appropriate accounts which
are in line with the credit lines mentioned in ss.1.1 of this contract.
Interests, fees and costs from the debt period (at its longest 3 months
before due date) will be added to the respective claims, even if this
exceeds the credit line mentioned in ss. 1.1. Charges from returns of
debit notes and checks are also added to the respective claims. This is
not valid in case of exceeding the credit lines mentioned in ss. 1.1.
Discounted notes will only be accepted if they are not paid. Letters of
credit and guarantee credits in the case that they are paid.
(3) The qualifying date for the payment of the debt balance is the completion
of a decision according to ss. 6.2 phrase 1 or in case of urgency the
earliest information of the other banks by the leading bank in connection
with the valuation measures.
<PAGE>
(4) If after the balance is executed the basis data are changed (e.g.
balance of credits, payments etc.) the balance is to be calculated
again.
(5) If a balance cannot be effected against the company or third parties the
banks have the obligation to collect the balance on an intercompany basis.
SS. 8 DISPOSITION OF PROFIT
(1) The profit of the collateral sales are to be divided as follows:
a) for the payment of costs, taxes and other expenditures occurring
through the administration and sales of the collateral as well as
the fee for the syndicate leader (ss.9)
b) for the settlement of the claims of credit granting banks in
accordance with ss.1.1 in the proportion of the credit after payment
of balance (ss.7) not exceeding the credit lines mentioned in
ss.1.1.
c) for the settlement of the claims of banks of which the credit line
is overrun - at the same proportion as the amount exceeded.
d) for the settlement of claims of banks of additional credit (same
proportion as the additional credit granted) not being netted with
the sales of collateralized assets. (ss.2.3).
e) for the settlement of other claims of banks in business relationship
with the company (in the proportion of other claims).
(2) Discounted notes are considered to be paid if any party redeeming the note
goes into bankruptcy; surety credits, promissory notes and letters of
credit if payment is effected.
(3) If the amount of claims is not fixed at the time od the distribution
profits these claims are to be settled at a later time between all banks
involved when the claims are fixed (according to ss. Section 4).
(4) The banks are allowed to change the allocations to themselves at any time.
(5) Proceeds which are not needed are to be forwarded to the company in case
the banks are not obliged to transfer to third parties to satisfy claims
of other banks.
SS. 9 COSTS, TAXES, FEES
(1) All costs incurring to the syndicate leading bank and to other banks
holding collateral in connection with the valuation of the collateralized
assets are to be paid by the company. In addition the syndicate leading
bank receives and executive fee of DM 20,000 p.a. pro rata temporis on
31.12.99 and 31.07.2000.
(2) As far as the costs and taxes are not paid by the company they are to be
paid by the bank in the proportion of the credit lines mentioned in ss.
1.1.
<PAGE>
SS. 10 INFORMATION
(1) The syndicate leading bank will inform the other banks about any
developments. The banks will provide it also with necessary information.
(2) The banks will inform themselves mutually if they obtain informations
about facts which endanger the repayment of the credit line mentioned in
ss. 1.1.(2).
(3) Every bank has the obligation to inform the other banks on request about
the claims against the company and the collateral covered by this
contract.
(4) The company releases in so far the banks from the prescriptions of the
confidentiality.
SS. 11 LIMITATION AND CANCELLATION
(1) This syndicate contract is unlimited.
(2) Every bank has the right to cancel this contract at a delay of three
months until the end of the calendar year. The delay starts at the moment
the syndicate leading bank obtains the cancellation letter. If the leading
bank cancels the contract the date of arriving of the cancellation letter
at one of the other banks is valid. After the due date of the cancellation
the respective bank is eliminated. The syndicate continues with the other
banks.
(3) In case of cancellation according to ss. 2 the disposition of the
collateral remains in the responsibility of the banks. The company has the
obligation to assist in collateral transfer if this is legally necessary.
On request a payment of the balance has to be effected even on request of
one bank at the moment of elimination of the canceling bank in accordance
with the regulations of ss. 7.
SS. 12 PLACE OF EXECUTION OF THIS CONTRACT, COURT OF JURISDICTION AND APPLICABLE
LAW
(1) Hamburg is the place of fulfillment of the contract as well as the court
of jurisdiction.
(2) This contract is subject to German Law.
SS. 13 CHANGES AND AMENDMENTS OF THE CONTRACT
Changes and amendments of this contract need the written form to become
valid. This is also necessary for the renouncement of this demand. Other
agreements are not made.
<PAGE>
SS. 14 "SALVATORY"-CLAUSE
If any one or several of the conditions of this contract becomes invalid or not
executable the validity of the other conditions are not impaired. The contract
parts will substitute such invalid sections or unexecutable conditions by others
which are the most similar. The same is necessary for items not directly covered
by the contract.
Dates Signatures
We take over the responsibility for all obligations of this contract especially
the regulations of ss. 3, ss.7, ss. 9, and ss. 10 and explicitly pledge our
claims against the respective syndicate banks in accordance with ss. 2.5.
We agree with this contract.
Date Signature Haleko
EXHIBIT-10.14
SEPARATION AGREEMENT
This Separation Agreement (the "Agreement") is dated as of July 15, 1999
by and between Robert Reynolds, residing at 546 E. 800 S., Centerville, Utah
84014 ("Executive") and Weider Nutrition International Inc. ("Nutrition"), a
Delaware corporation with an office at 2002 South 5070 West, Salt Lake City,
Utah 84104.
R E C I T A L S
A. Executive is the Chief Operating Officer and a Director of Nutrition and is
employed pursuant to an Employment Agreement between Nutrition and Employee
dated effective as of January 1, 1997, a copy of which is annexed as SCHEDULE 1
("Employment Agreement"). Terms used in this Agreement unless otherwise stated
shall have the meaning defined in the Employment Agreement.
B. Executive has subject to the provisions of this Agreement, tendered his
resignation as an employee, director and officer of Nutrition and its affiliates
and Nutrition has accepted Executive's resignation subject to the terms of this
Agreement.
C. Executive and Nutrition desire to document the termination of Executive's
employment relationship and fully resolve all employment and related matters
between them, as well as all claims and potential claims or disputes.
NOW, THEREFORE, in consideration of the covenants and agreements set forth
herein and for other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto covenant and agree as follows:
1. RESIGNATION: Executive hereby resigns as an employee, officer and
director of Nutrition and its affiliates effective 5 pm Mountain Time on July
15, 1999 ("Termination Date"). Nutrition hereby accepts Executive's resignation.
For purposes of resolving all compensation, benefits and other matters between
Executive and Nutrition, including Executive's Non-Qualified Stock Option
Agreement and the Retirement Agreement, Executive's resignation shall be treated
as a "Termination Without Cause" under the Employment Agreement and the
applicable provisions of Executive's Employment Agreement in the event of such a
termination shall continue to be operative.
2. PAYMENTS; STOCK OPTION STATUS; LITIGATION:
(a) Executive shall receive the $750,000 payment to which Executive
would be entitled under the provisions of the Employment Agreement in the event
of a "Termination Without Cause," and an additional payment of $175,000 which
payment, Executive acknowledges, includes any payment in lieu of 30 days notice
and any accrued vacation. This total amount of $925,000 shall be paid as
follows: $175,000 shall be paid within seven days after expiration of the period
described in Section 9(b)(iii) hereof and the remainder shall be paid in 24
monthly installments of $31,250 with the first such payment made on the first
monthly
<PAGE>
anniversary of the Termination Date. Such payments shall be subject to
Executive's continued compliance with the applicable provisions of the
Employment Agreement and shall be subject to applicable withholding and other
taxes.
(b)
(i) The 50,000 "Options" described in subsection (b) of
Schedule 3.4 to the Employment Agreement and the 40,000 "Options" described in
subsection (c) of Schedule 3.4 to the Employment Agreement shall become fully
vested as of the Termination Date and shall remain exercisable until the first
anniversary of the Termination Date.
(ii) The 120,000 "Options" described in subsection (a) of
Schedule 3.4 to the Employment Agreement shall vest and become exercisable under
the terms of the Employment Agreement and as such shall remain exercisable for
90 days from the Termination Date.
(iii) The shares underlying the "Options" described in (i) and
(ii) above shall not be subject to the Put Right described in Section 6.2 of the
Employment Contract.
(c) Executive shall continue to be subject to the non-competition
and non-solicitation and other provisions of the Employment Agreement which
would be operative in the event of a "Termination Without Cause" except that
Executive shall be permitted to offer employment to Steve Krzeski. Except as
described in the preceding sentence, nothing herein shall release Krzeski from
any obligations under any non-competition or non-solicitation obligations to
which he may subject.
(d) Nutrition shall at its expense continue to provide counsel to
Executive in connection with the Jim Horn litigation in a manner consistent with
past practice and shall indemnify Executive to the same extent as if he had
remained an employee, officer and director of Nutrition.
3. WHF EXECUTIVE RETIREMENT PROGRAM BENEFIT AGREEMENT: Weider Health and
Fitness ("WHF") has provided Executive with a copy of Executive's Executive
Retirement Program Benefit Agreement ("Retirement Agreement"). Subject to the
following sentence, Executive's rights and obligations with respect to the WHF
Executive Retirement Program shall be as set forth in the Retirement Agreement.
Pursuant to Section 6.3 of the Employment Agreement, Executive shall be entitled
to an "Early Retirement Benefit" with a "Vested Percent" of 40% under the
Retirement Agreement.
4. HEALTH BENEFITS: For until the earlier of 24 months from the
Termination Date or Executive's obtaining medical benefits from a new employer,
Nutrition shall to the extent permissible (using reasonable commercial efforts)
maintain Executive on Nutrition's Health Benefit Plan (as in effect from time to
time) at Nutrition's cost other than Executive's continued payments of his
current portion of such costs.
5. REIMBURSEMENT OF EXPENSES: Subject to Section 6(b), Executive shall
return all Nutrition credit cards and other Nutrition assets in his possession.
Nutrition shall reimburse
2
<PAGE>
Executive for all authorized expenses properly incurred on or prior to the
Termination date by Executive on Nutrition's behalf in the performance of
Executive's duties promptly upon submission of vouchers or receipts.
6. SECRETARIAL ASSISTANCE, BUSINESS MACHINES AND PERSONAL PICTURES:
(a) Nutrition will pay Executive a non-accountable allowance of $500
per month for six months for secretarial services so long as such secretarial
services are not provided by any person who is an employee of Nutrition as of
July 1, 1999. Nutrition shall also pay Executive a non-accountable allowance of
$500 per month for six months for office expenses. All of such payments shall be
made on the 9th day of each month.
(b) Executive shall be entitled to remove or retain, without charge,
his Nutrition-provided office desk-top computer and printer, lap-top computer
and computer and printer, if any, located at his home.
(c) Nutrition acknowledges that approximately 40 framed Sports
Illustrated covers, currently in Nutrition offices, are the property of
Executive and may be removed by Executive on 10 days notice to Nutrition.
7. NO DISCUSSIONS: Executive covenants that, except as may be required by
law, neither he nor any of his representatives, employees or affiliates shall
disclose Confidential Information or disparage Nutrition or its affiliates'
business or the business of any of their respective directors, officers or
employees to any customer, vendor, supplier, employee of Nutrition or its
affiliates or to any other person or entity. Executive will notify Nutrition as
soon as practical if he is served with any discovery requests regarding
Nutrition.
8. PRESS RELEASE: The Nutrition press release and internal memo announcing
Executive's resignation are attached hereto as SCHEDULE 2.
9. GENERAL RELEASE OF CLAIMS BY EXECUTIVE:
(a) Except for compliance with provisions of the Employment
Agreement which would be applicable in the event of a "Termination Without
Cause" including without limitation Section 1, the definition of "Final
Termination," Sections 3.8, 3.9, 6.2, 6.3, 7, 9, 10.2, 10.3, 10.5, 10.6, 10.7
and 10.8, (a) Executive, for Executive, Executive's spouse, heirs,
beneficiaries, devisees, executors, administrators, attorneys, personal
representatives, successors and assigns, hereby forever releases, discharges,
and covenants not to sue Nutrition or its affiliates, or any of Nutrition's or
its affiliates directors, shareholders, officers, general or limited partners,
employees, agents, and attorneys, and agents and representatives of such
entities and persons, and employee benefit plans in which Executive is or has
been a participant by virtue of Executive's employment with Nutrition or its
affiliates, from any and in whole or in part, all claims (as such term is
defined in 11 U.S.C. ss. 101), debts, demands, accounts, judgments, rights,
causes of action, equitable relief, damages, costs, charges, complaints,
obligations, promises, agreements, controversies, suits, expenses, compensation,
responsibility and liability of every kind and character whatsoever (including
attorney's fees and costs), whether in law or equity,
3
<PAGE>
known or unknown, asserted or unasserted, suspected or unsuspected, which
Executive has or may have had against such entities based on any events or
circumstances arising or occurring on or prior to the date hereof or on or prior
to the Termination Date, including but not limited to, any and all claims
arising under federal, state, or local laws relating to employment, including
without limitation claims of wrongful discharge, breach of express or implied
contract, fraud, misrepresentation, defamation, whistle-blowing or liability in
tort, claims of any kind that may be brought in any court or administrative
agency, any claims arising under Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act, the
Family and Medical Leave Act, Utah Anti-Discrimination Act, and similar state or
local statutes, ordinances, and regulations, PROVIDED, HOWEVER, notwithstanding
anything to the contrary set forth herein, that this General Release shall not
extend to (w) benefit claims under employee pension benefit plans in which
Executive is a participant by virtue of his employment with Nutrition or its
affiliates, including without limitation the Retirement Agreement or to benefit
claims under employee welfare benefit plans for occurrences (e.g. medical care,
death, or onset of disability) arising after the execution of this Agreement by
Executive, (x) Executive's right to exercise "Options" as described in Section
2(b) hereof (y) any obligation assumed under this Agreement by any party hereto
and (z) any existing indemnification provided Executive in his capacity as a
director, officer and employee UNDER (i) Nutrition's organizational documents,
including its By-Laws, to the extent permitted under terms of such
indemnification provisions, (ii) Nutrition's D&O policy to the extent permitted
under such policy and (iii) Nutrition's obligations under Section 2(d).
(b) Executive understands that this Agreement includes a release of
claims arising under the Age Discrimination in Employment Act (ADEA). In
accordance with the Older Workers Benefit Protection Act of 1990, Executive is
aware of the following:
(i) Executive has the right to consult with an attorney before
signing this Agreement;
(ii) Executive has twenty-one (21) days from the Termination Date
to review and consider this Agreement;
and
(iii) Executive has seven (7) days after signing this Agreement to
revoke this Agreement by notice in writing dispatched by
next-day delivery to Dan Thomson, General Counsel, Weider
Nutrition International, Inc., 2002 South 5070 West, Salt Lake
City, Utah 84104-4726. This Agreement shall be binding,
effective and enforceable upon both parties upon the
expiration of this seven-day revocation period without Mr.
Thomson having received such revocation, but not before such
time,
(c) EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS BEEN ADVISED BY
EXECUTIVE'S LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA
CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
4
<PAGE>
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
EXECUTIVE BEING AWARE OF CODE SECTION 1542, HEREBY EXPRESSLY WAIVES ANY
RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT.
10. GENERAL RELEASE OF CLAIMS BY NUTRITION: Except for compliance with
provisions of the Employment Agreement which would be applicable in the event of
a "Termination Without Cause" including without limitation Section 1, the
definition of "Final Termination," Sections 3.8, 3.9, 6.2, 6.3, 7, 9, 10.2,
10.3, 10.5, 10.6, 10.7 and 10.8, Nutrition hereby forever releases, discharges,
and covenants not to sue Executive, from any and all claims, (as this term is
defined in 11 U.S.C. ss. 101) debts, demands, accounts, judgments, rights,
causes of action, equitable relief, damages, costs, charges, complaints,
obligations, promises, agreements, controversies, suits, expenses, compensation,
responsibility and liability of every kind and character whatsoever (including
attorneys' fees and costs), whether in law or equity, known or unknown, asserted
or unasserted, suspected or unsuspected (collectively, "Claims"), which
Nutrition has or may have had against Executive based on any events or
circumstances arising or occurring on or prior to the date hereof or on or prior
to the Termination Date, including but not limited to, any and all claims
arising out of Executive's employment with Nutrition or the termination thereof
PROVIDED, HOWEVER, notwithstanding anything to the contrary set forth herein,
that this Release shall not extend to (a) any Claim which relates to or arises
from any criminal activity of Executive, and (b) any obligations assumed under
this Agreement by any party hereto.
11. RESIDUAL DUTIES: The parties agree and intend that any and all duties
of loyalty fidelity, and confidentiality running from Executive to Nutrition and
its affiliates and arising out of the common law as a consequence of the
parties' employment relationship shall continue in full force and effect.
Executive agrees that he shall not, intentionally waive the attorney-client
privilege, the attorney work product doctrines and /or any other applicable
privileges, provided that Nutrition has not waived these doctrines and
privileges.
12. TRADE SECRETS:
(a) Executive shall maintain in confidence and shall not directly,
indirectly or otherwise, use, disseminate, disclose or publish, or use for
Executive's benefit or the benefit of any person, firm, corporation or other
entity any confidential or proprietary information or trade secrets of or
relating to Nutrition or its affiliates (or which Nutrition or its affiliates
has a right to use), including, without limitation, confidential or proprietary
information with respect to Nutrition's or its affiliates operations, processes,
products, inventions, business practices, finances, principals, vendors,
suppliers, customers, potential customers, marketing methods, costs, prices,
contractual relationships, regulatory status, compensation paid to employees or
other terms of employment, or deliver to any person, firm, corporation or other
entity any document, record, notebook, computer program or similar repository of
or containing any such
5
<PAGE>
confidential or proprietary information or trade secrets, and Executive shall
abide by the covenants of the Utah Uniform Trade Secrets Act. The parties hereby
stipulate and agree that as between them the foregoing matters are important,
material and confidential proprietary information and trade secrets and affect
the successful conduct of the business of Nutrition and its affiliates (and any
successor or assignee of Nutrition or its affiliates).
(b) Executive covenants that Executive will within 10 days deliver
to Nutrition all correspondence, drawings, manuals, letters, notes, notebooks,
reports, programs, plans, proposals, financial documents, or any other documents
concerning any of Nutrition's customers, business plans, marketing strategies,
products or processes and/or which contain proprietary information or trade
secrets and will not retain copies of any of the foregoing.
13. TAXES: To the extent any personal income taxes may be due on the
payments to Executive provided in this Agreement beyond any withheld by
Nutrition, Executive agrees to pay them and to indemnify and hold Nutrition and
its affiliates harmless for any personal income tax claims or penalties
resulting from such payments. Executive further agrees to provide any and all
information pertaining to Executive upon request as reasonably necessary for
Nutrition or its affiliates to comply with applicable tax laws.
14. NO ADMISSION: Executive understands and agrees that neither Nutrition
nor any of its affiliates has admitted liability or obligation to provide the
consideration contemplated herein, and that Nutrition has entered into this
Agreement solely for the purpose of fully and finally resolving all matters
between it and Executive, and the Agreement cannot be used otherwise.
15. MISCELLANEOUS:
(a) GOVERNING LAW; INTERPRETATION: This Agreement shall be construed
in accordance with and governed for all purposes by the laws and public policy
of the State of Utah applicable to contracts executed and to be wholly performed
within such State. Service of process in any dispute shall be effective (a) upon
Nutrition, if served on any senior officer of Nutrition; (b) upon Executive, if
served at Executive's residence last known to Nutrition. Executive acknowledges
that breach of Sections 7, 11 and 12 of this Agreement, would entail irreparable
injury and that, in addition to Nutrition's other express and implied remedies,
including injunctive relief, any other remedies and all other provisions under
the Employment Agreement which by their terms "Survive a Termination Without
Cause," Nutrition shall be entitled to injunctive and other equitable relief to
prevent any actual, intended or likely such breach. Venue in any litigation
arising hereunder shall lie in the State of Utah and all parties consent to, and
submit to the jurisdiction of Utah's courts as the exclusive venue.
(b) AMENDMENT; WAIVER: This Agreement may not be amended,
supplemented, canceled or discharged, except by written instrument executed by
the party affected thereby. No failure to exercise, or delay in exercising, any
right, power or privilege hereunder shall operate as a waiver thereof. No waiver
of any preceding or succeeding breach of the Agreement shall constitute a waiver
of a succeeding breach.
6
<PAGE>
(c) BINDING EFFECT; ASSIGNMENT: The rights and obligations of this
Agreement shall bind and inure to the benefit of any successor or successors of
Nutrition and its affiliates by reorganization, merger or consolidation, or any
assignee of all or substantially all of Nutrition's or its affiliates business
and properties; Executive's rights or obligations under this Agreement may not
be assigned by Executive.
(d) HEADINGS: The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(e) COUNTERPARTS: This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
(f) EMPLOYMENT AGREEMENT: The parties each acknowledge that the
Employment Agreement annexed as Schedule 1 is the Employment Agreement between
Executive and Nutrition.
7
<PAGE>
16. NOTICES: All notices, demands or other communications regarding this
Agreement shall be in writing and shall be sufficiently given if either
personally delivered or sent by registered or certified mail, return receipt
requested, postage paid, addressed as follows:
(a) If to Nutrition: with a copy to:
Weider Nutrition International, Inc. Latham & Watkins
2002 South 5070 West 885 Third Avenue
Salt Lake City, Utah 84104-4726 Suite 1000
Attn: General Counsel New York, NY 10022
Attn: Roger Kimmel, Esq.
(b) If to Executive: with a copy to:
Robert Reynolds Ralph Chamness
546 E. 800 S. Cohne, Rappaport & Segal
Centerville, Utah 84104 525 E. 100 S.
Fifth Floor
Salt Lake City, Utah 84102
EXECUTION
EXECUTIVE UNDERSTANDS, AGREES AND REPRESENTS THAT THE COVENANTS MADE
HEREIN AND THE RELEASES HEREIN EXECUTED MAY AFFECT RIGHTS AND LIABILITIES OF
SUBSTANTIAL EXTENT. EXECUTIVE REPRESENTS AND WARRANTS THAT IN NEGOTIATING AND
EXECUTING THIS AGREEMENT, EXECUTIVE HAS HAD ADEQUATE OPPORTUNITY TO CONSULT WITH
COMPETENT LEGAL COUNSEL OF EXECUTIVE'S CHOOSING CONCERNING THE MEANING AND
EFFECT OF EACH TERM AND PROVISION HEREOF, AND THAT THERE ARE NO REPRESENTATIONS,
PROMISES, OR AGREEMENTS BETWEEN NUTRITION AND EXECUTIVE OTHER THAN THOSE
EXPRESSLY SET FORTH IN WRITING HEREIN OR REFERRED TO HEREIN.
8
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound, the parties have
executed the foregoing on the dates shown below.
ROBERT REYNOLDS
________________________________ ___________________________
Date
WEIDER NUTRITION INTERNATIONAL, INC.
By:_____________________________ ____________________________
Date
Title:__________________________
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF WEIDER NUTRITION INTERNATIONAL, INC. AS OF,
AND FOR THE THREE MONTHS ENDING AUGUST 31, 1999, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> AUG-31-1999
<CASH> 2,250
<SECURITIES> 2,372
<RECEIVABLES> 54,997
<ALLOWANCES> 2,023
<INVENTORY> 60,695
<CURRENT-ASSETS> 126,518
<PP&E> 68,138
<DEPRECIATION> 19,901
<TOTAL-ASSETS> 242,755
<CURRENT-LIABILITIES> 145,021
<BONDS> 0
0
0
<COMMON> 250
<OTHER-SE> 91,391
<TOTAL-LIABILITY-AND-EQUITY> 242,755
<SALES> 89,967
<TOTAL-REVENUES> 89,967
<CGS> 56,432
<TOTAL-COSTS> 56,432
<OTHER-EXPENSES> 30,576
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,880
<INCOME-PRETAX> 227
<INCOME-TAX> (19)
<INCOME-CONTINUING> 246
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 246
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
