<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
REPORT OF EMPLOYEE STOCK OWNERSHIP PLAN
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended December 31, 1997
NBTY, INC.
----------
(Exact name of registrant as specified in charter)
DELAWARE 0-10666 11-2228617
-------- ------- ----------
(State or other (Commission (IRS Employer
jurisdiction of File No.) identification
incorporation) number)
90 Orville Drive, Bohemia, New York 11716
-----------------------------------------
(Address of principal executive office and zip code)
Registrant's telephone number (516) 567-9500
<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
YEARS ENDED DECEMBER 31, 1997 AND 1996
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
YEARS ENDED DECEMBER 31, 1997 AND 1996
CONTENTS
Page
----
Report of Independent Certified Public Accountants 1
Financial statements:
Statements of net assets available for benefits 2
Statements of changes in net assets available
for benefits 3
Notes to financial statements 4 - 9
Supplemental schedule:
Item 27a - Schedule of assets held for investment
purposes 10
<PAGE>
Report of Independent Certified Public Accountants
Trustee of NBTY, Inc. Employees' Stock Ownership Plan
Bohemia, New York
We have audited the accompanying statements of net assets available for
benefits of NBTY, Inc. Employees' Stock Ownership Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statements of changes in net
assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amount and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
held for investment purposes as of December 31, 1997 is presented for the
purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedule
has been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Melville, New York
May 20, 1998
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<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 AND 1996
1997 1996
----------- -----------
Assets:
Investments at fair value:
NBTY, Inc. common stock $34,678,895 $20,693,546
Other -- 161,893
----------- -----------
Total investments 34,678,895 20,855,439
Cash and cash equivalents 5,335 274,825
Employer contribution receivable 50,000 --
----------- -----------
Net assets available for benefits $34,734,230 $21,130,264
=========== ===========
See notes to financial statements.
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<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
----------- -----------
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of investments $14,923,965 $15,392,862
Interest 6,258 8,899
Dividends 9,382 13,273
Employer contributions 700,000 225,000
----------- -----------
Total additions 15,639,605 15,640,034
Deductions from net assets attributed to benefits
paid to participants 2,035,639 372,925
Net increase 13,603,966 15,267,109
Net assets available for benefits:
Beginning of year 21,130,264 5,863,155
----------- -----------
End of year $34,734,230 $21,130,264
=========== ===========
See notes to financial statements.
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<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. Description of Plan
The following description of the NBTY, Inc. Employees' Stock Ownership
Plan (the "Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan is an employee stock ownership plan covering substantially all
employees of NBTY, Inc. and its subsidiaries (the "Employer") who are
employed at calendar year end, have completed one year of service and who
have attained the age of twenty and one-half. The assets of the plan are
to be invested primarily in common stock of NBTY, Inc. The purpose of the
Plan is to provide its eligible employees with the benefits of ownership
of common stock of NBTY, Inc. under the terms of the Plan. The Plan is
designed to comply with Section 4975(e)(7) and the regulations thereunder
of the Internal Revenue Code of 1986, as amended (Code) and is subject to
the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). Assets of the Plan are held by a trust established under the
Plan. The Employer shall have responsibility for the administration of
the Plan.
No distributions from the Plan will be made until a participant retires,
dies, or otherwise terminates employment with the Employer. Distributions
are made in the form of Company common shares plus cash for any
fractional share.
Each participant is entitled to exercise voting rights attributable to
the shares allocated to his or her account and is notified by the Trustee
prior to the time that such rights are to be exercised. The Trustee is
not permitted to vote any share for which instructions have not been
given by a participant.
Employer Contributions
The Plan provides that the Board of Directors of the Employer, at its
sole discretion, shall determine the amount, if any, that the Employer
shall contribute either in cash or shares of the Employer's common stock
to the trust fund for each Plan year, not to exceed the maximum amount
allowed by the applicable provisions of the Internal Revenue Code.
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<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
1. Description of Plan (Continued)
Participants' Accounts
Employer contributions are allocated to each participant's account in the
same proportion that each participant's compensation bears to the total
compensation of all participants for such year. Any earnings or losses
are allocated in the same proportion that each participant's account
bears to the total of all such accounts as of the end of the Plan year.
Forfeitures are first made available to reinstate previously forfeited
account balances of former participants. Remaining forfeitures, if any,
are allocated in the same manner as Employer contributions. All shares of
NBTY, Inc. common stock are allocated to participants' accounts at the
end of the calendar year.
Vested Benefits
The participant's account vesting is as follows:
Years of Service Percentage
---------------- ----------
0 - 4 0%
5 100%
If the Plan were to be classified as top heavy (as defined in the Plan
agreement), for every plan year once the Plan is initially classified as
top heavy, vesting would be as follows:
Years of Service Percentage
---------------- ----------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
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<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
1. Description of Plan (Continued)
Normal Retirement Benefits
Upon retirement or after attaining normal retirement age, participants
are entitled to receive a lump-sum payment of his/her account balance.
Vested Termination Benefits
A participant who terminates employment other than by death, total and
permanent disability or retirement may elect to receive a lump-sum
payment of his/her account.
Disability Benefits
Any participant who becomes totally and permanently disabled, as defined
in the Plan, is generally entitled to receive a fully vested immediate
lump-sum payment of his/her account.
Death Benefits
The beneficiary of a participant is generally entitled to receive a fully
vested lump-sum payment of the participant's account upon their death.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis
of accounting.
Investment Valuation
Investments of the Plan are stated at fair value. Securities traded in
public markets are valued at their quoted market prices. Purchases and
sales of securities are reflected on a trade-date basis.
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<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
2. Summary of Significant Accounting Policies (Continued)
Payment of Benefits
Benefits are recorded when paid. The value of a participant's benefit is
determined as of the year-end immediately preceding the date benefits are
paid.
Benefits Payable to Terminated Participants
Benefits payable to all Plan participants (both active and terminated)
are included in "net assets available for benefits." The amount payable
to terminated participants is $478,554 and $436,917 at December 31, 1997
and 1996.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Plan considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Reclassifications
Certain reclassifications have been made to conform to the 1997
presentation.
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<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
3. Investments
The following table presents the fair market value as determined by the
last quoted trading price on December 31, 1997 and 1996. Investments that
represent 5% or more of the Plan's net assets are separately identified.
<TABLE>
<CAPTION>
1997 1996
-------------------------------------- ----------------------------------------
Number of Fair Number of Fair
Shares Value Cost Shares Value Cost
--------- ----------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
NBTY, Inc.
Common stock 1,039,068 $34,678,895 $2,473,106 1,089,134 $20,693,546 $1,499,613
Other securities -- -- -- -- 161,893 168,175
--------- ----------- ---------- --------- ----------- ----------
Total $34,678,895 $2,473,106 $20,855,439 $1,667,788
=========== ========== =========== ==========
</TABLE>
4. Related Party Transaction
During 1997 and 1996, the Plan purchased 53,500 shares and 60,000 shares
for $1,041,799 and $430,737, respectively, of the Employer's common stock
as part of its investment portfolio. These transactions qualify as
party-in-interest.
5. Administration of Plan Assets
The Trustee, appointed by the Employer, has sole responsibility for
administration of the trust established under the Plan and for the
management of the assets of the Plan held under the trust. Certain
administrative functions are performed by officers or employees of the
Employer. No such officer or employee receives compensation from the
Plan. Administrative expenses of the Plan are paid directly by the
Employer.
-8-
<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997 AND 1996
6. Plan Termination
Although the Employer has not expressed any intention to do so, it has
the right to discontinue its contributions and to terminate the Plan at
any time, subject to the provisions of the Plan and ERISA. In the event
of Plan termination, participants will become fully vested in their
respective account balances.
7. Income Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated in 1988, that the Plan is qualified and the trust
established under the Plan is tax-exempt, under the appropriate sections
of the Code. The Plan has been amended since receiving the determination
letter. However, the Plan administrator and management of the employer
believe that the Plan is designed and is currently being operated in
compliance with applicable requirements of the Code.
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<PAGE>
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
ID#: 11-2228617
PN#: 001
(c)
(b) Description of Investment
Identity of Issue, Including Maturity Date, (e)
Borrower, Lessor, Rate of Interest, Collateral, (d) Current
(a) or Similar Party Par or Maturity Value Cost Value
- --- ------------------ ---------------------------- ---------- -----------
* NBTY, Inc. Common Stock $2,473,106 $34,678,895
========== ===========
* Party-In-Interest to the Plan
-10-
<PAGE>
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees have duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
NBTY, INC. EMPLOYEES' STOCK
OWNERSHIP PLAN
By: /s/
---------------------------
Harvey Kamil
Executive Vice President
Dated: June 30, 1998
