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, 1998
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
--------------
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
YEARS ENDED DECEMBER 31, 1998 AND 1997
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
YEARS ENDED DECEMBER 31, 1998 AND 1997
CONTENTS
Page
----
[S] [C]
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
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, 1998 and 1997, 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 amounts 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, 1998 and 1997, 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, 1998 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. This
supplemental schedule is the responsibility of the Plan's management. 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
June 15, 1999
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Assets:
Investment in NBTY, Inc. common
stock, at fair value $21,334,388 $34,678,895
Cash and cash equivalents 30,540 5,335
Employer contribution receivable - 50,000
----------- -----------
Net assets available for benefits $21,364,928 $34,734,230
=========== ===========
</TABLE>
See notes to financial statements.
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Investment income:
Net appreciation (depreciation) in fair
value of investments ($11,673,604) $14,923,965
Interest 1,388 6,258
Dividends - 9,382
Employer contributions 363,904 700,000
-----------------------------
(11,308,312) 15,639,605
Distributions to participants 2,060,990 2,035,639
-----------------------------
Net increase (decrease) (13,369,302) 13,603,966
Net assets available for benefits:
Beginning of year 34,734,230 21,130,264
-----------------------------
End of year $ 21,364,928 $34,734,230
=============================
</TABLE>
See notes to financial statements.
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
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.
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 beginning 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:
<TABLE>
<CAPTION>
Years of Service Percentage
---------------- ----------
<S> <C>
0 - 4 0%
5 100%
</TABLE>
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:
<TABLE>
<CAPTION>
Years of Service Percentage
---------------- ----------
<S> <C>
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
</TABLE>
Normal Retirement Benefits
Upon retirement or after attaining normal retirement age, a
participant is 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.
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 $503,816 and $478,554 at
December 31, 1998 and 1997.
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.
3. Investments
-----------
The following table presents the Plan's investment in NBTY, Inc.
common stock as determined by the last quoted trading price on
December 31, 1998 and 1997.
<TABLE>
<CAPTION>
1998 1997
---------------------------------------- ----------------------------------------
Number of Fair Number of Fair
Shares Value Cost Shares Value Cost
--------- ----- ---- --------- ----- ----
<S> <C> <C> <C> <C> <C>
2,994,300 $21,334,388 $2,796,869 3,117,204 $34,678,895 $2,473,106
</TABLE>
During 1998, there was a 3 for 1 stock split. All prior year amounts
have been restated to reflect this split.
4. Related Party Transactions
--------------------------
During 1998 and 1997, the Plan purchased at market value 60,000
shares and 160,500 shares for $363,904 and $1,041,799, 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.
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 July 22, 1998 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.
NBTY, INC. EMPLOYEES' STOCK OWNERSHIP PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
ID#: 11-2228617
PN#: 001
<TABLE>
<CAPTION>
(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
- --- ------------------ ------------------------------ ---- -------
<S> <C> <C> <C> <C>
* NBTY, Inc. Common Stock $2,796,869 $21,334,388
<FN>
<F*> Party-In-Interest to the Plan
</FN>
</TABLE>
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
________________________
Harvey Kamil
Executive Vice President
Dated: June 23, 1999
