UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the period ended December 31, 1999
Commission File Number: 0-10666
NBTY, Inc.
----------
(Exact name of registrant as specified in its charter)
Delaware 11-2228617
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90 Orville Drive, Bohemia, NY 11716
----------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 567-9500
--------------
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 and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registration was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Shares of Common Stock as of December 31, 1999: 66,141,294
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NBTY, INC. and SUBSIDIARIES
INDEX
PART I Financial Information
Condensed Consolidated Balance Sheets -
December 31, 1999 (unaudited) and
September 30, 1999 1 - 2
Condensed Consolidated Statements of Operations -
(unaudited) Three months Ended
December 31, 1999 and 1998 3
Condensed Consolidated Statements of
Stockholders' Equity
Year ended September 30, 1999 and
(unaudited) Three months Ended
December 31, 1999 4
Condensed Consolidated Statements of Cash Flows -
(unaudited) Three months Ended
December 31, 1999 and 1998 5 - 6
Notes to Condensed Consolidated
Financial Statements (unaudited) 7 - 11
Management's Discussion and Analysis
of Financial Condition and
Results of Operations 12 - 16
PART II Other Information 17
Signature 18
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars and shares in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
(Unaudited)
----------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 29,664 $ 18,269
Accounts receivable, less
allowance for doubtful accounts
of $1,247 at December 31, 1999
and $1,248 at September 30, 1999 25,496 24,336
Inventories 132,915 135,466
Deferred income taxes 3,250 3,250
Prepaid property taxes, rent,
and other current assets 16,927 19,243
------------------------
Total current assets 208,252 200,564
Property, plant and equipment 289,891 277,033
less accumulated depreciation
and amortization 93,630 87,471
------------------------
196,261 189,562
Intangible assets, net 137,737 141,410
Other assets 5,842 7,848
------------------------
Total assets $548,092 $539,384
========================
</TABLE>
See notes to condensed consolidated financial statements.
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars and shares in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
(Unaudited)
---------------------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt
and capital lease obligations $ 1,830 $ 1,799
Accounts payable 42,926 45,366
Accrued expenses 42,086 32,296
-----------------------
Total current liabilities 86,842 79,461
Long-term debt 213,187 217,136
Obligations under capital leases 2,645 2,372
Deferred income taxes 12,176 12,233
Other liabilities 4,061 4,233
-----------------------
Total liabilities 318,911 315,435
-----------------------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.008 par; authorized 175,000
shares; issued and outstanding 66,141 shares
at December 31, 1999 and 66,096 shares
at September 30, 1999 529 529
Capital in excess of par 106,483 106,332
Retained earnings 120,209 111,792
-----------------------
227,221 218,653
Stock subscriptions receivable (839) (839)
Accumulated other comprehensive earnings 2,799 6,135
-----------------------
Total stockholders' equity 229,181 223,949
-----------------------
Total liabilities and stockholders' equity $548,092 $539,384
=======================
</TABLE>
See notes to condensed consolidated financial statements.
NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars and shares in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the three months
ended December 31,
1999 1998
--------------------
<S> <C> <C>
Net sales $171,172 $141,013
Costs and expenses:
Cost of sales 80,943 68,958
Catalog printing, postage and promotion 8,286 8,788
Selling, general and administrative 63,924 53,472
--------------------
153,153 131,218
--------------------
Income from operations 18,019 9,795
--------------------
Other income (expense):
Interest, net (4,685) (4,268)
Miscellaneous, net 694 508
--------------------
(3,991) (3,760)
--------------------
Income before income taxes 14,028 6,035
Income taxes 5,611 2,567
--------------------
Net income $ 8,417 $ 3,468
====================
Net income per share:
Basic $ 0.13 $ 0.05
====================
Diluted $ 0.12 $ 0.05
====================
Weighted average common shares outstanding:
Basic 66,125 71,034
====================
Diluted 68,019 72,630
====================
</TABLE>
See notes to condensed consolidated financial statements.
NBTY, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity
for the year ended September 30, 1999 and
the three months ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
(Dollars and shares in thousands) Common stock Treasury stock
------------------ -------------------
Number of Capital in Retained Number of
shares Amount excess of par earnings shares Amount
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances, September 30, 1998 72,714 $582 $115,661 $105,989 4,511 ($3,206)
Net income for year ended September 30, 1999 27,279
Purchase of treasury stock, at cost 5,702 (34,438)
Treasury stock retired (10,213) (82) (16,086) (21,476) (10,213) 37,644
Exercise of stock options 3,596 29 888
Tax benefit from exercise of stock options 5,869
Foreign currency translation adjustment
------------------------------------------------------------------
Balances, September 30, 1999 66,097 529 106,332 111,792
Net income for three months ended December 31, 1999 8,417
Exercise of stock options 45 - 13
Tax benefit from exercise of stock options 138
Foreign currency translation adjustment
Balances, December 31, 1999 66,142 $529 $106,483 $120,209
- -------------------------------------------------------------------------------------------------------------------------
Accumulated
<CAPTION> Other
(Dollars and shares in thousands) Stock Comprehensive Total Total
subscriptions Income Stockholders' Comprehensive
receivable (Loss) Equity Income
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balances, September 30, 1998 $11,313 $230,339
Net income for year ended September 30, 1999 27,279 $27,279
Purchase of treasury stock, at cost (34,438)
Treasury stock retired -
Exercise of stock options $(839) 78
Tax benefit from exercise of stock options 5,869
Foreign currency translation adjustment (5,178) (5,178) (5,178)
- -------------------------------------------------------------------------------------------------------------------------
Balances, September 30, 1999 (839) 6,135 223,949 $27,279
-------
Net income for three months ended December 31, 1999 8,417 $ 8,417
Exercise of stock options 13
Tax benefit from exercise of stock options 138
Foreign currency translation adjustment (3,336) (3,336) (3,336)
---------------------------------------------------------
Balances, December 31, 1999 $(839) $ 2,799 $229,181 $ 5,081
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
NBTY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands)
For the three months
ended December 31,
1999 1998
----------------------
<S> <C> <C>
Net income $ 8,417 $ 3,468
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Loss on sale of property, plant and equipment 67 8
Depreciation and amortization 8,340 6,360
Provision for allowance for doubtful accounts 1 (130)
Changes in assets and liabilities:
Increase in accounts receivable (1,143) (3,169)
Decrease (increase) in inventories 1,974 (8,279)
Decrease (increase) in prepaid catalog
costs and other current assets 3,946 (6,564)
(Increase) decrease in other assets (896) 583
Decrease in accounts payable (5,342) (2,914)
Increase in accrued expenses 12,146 5,252
Decrease in other liabilities (172) (195)
------------------
Net cash provided by (used in) operating activities 27,338 (5,580)
------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (13,638) (10,562)
Proceeds from sale of property, plant, and equipment 15
Increase in intangible assets (214)
------------------
Net cash used in investing activities (13,837) (10,562)
------------------
Cash flows from financing activities:
Borrowings (payments) under long term debt agreements (1,394) 17,000
Principal payments under long-term
debt agreements and capital leases (675) (232)
Proceeds from stock options exercised 14
Stock subscriptions receivable (839)
Net cash (used in)provided by
------------------
financing activities (2,055) 15,928
------------------
Effect of exchange rate changes on cash
and cash equivalents (51) 4,279
------------------
Net increase in cash and cash equivalents 11,395 4,065
Cash and cash equivalents at beginning of period 18,269 14,308
Cash and cash equivalents at end of period $29,664 $18,373
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 4,695 $ 4,119
------------------
Cash paid during the period for taxes $ 7,089 $ 2,985
==================
</TABLE>
See notes to condensed consolidated financial statements.
NBTY, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three months ended December 31, 1999 and 1998
(Unaudited)
(In thousands, except per share amounts)
Supplemental Non-cash Investing and Financing Information:
During the three months ended December 31, 1999, options were exercised with
45 shares of common stock issued to an executive for cash of $14. As a
result of the exercise of those options, the Company expects to receive a
compensation deduction for tax purposes of approximately $352 and a tax
benefit of approximately $138.
During the three months ended December 31, 1998, options were exercised with
3,340 shares of common stock issued to certain officers for interest-bearing
stock subscriptions receivable aggregating $839. As a result of the
exercise of those options, the Company received a compensation deduction for
tax purposes of approximately $13,774 and a tax benefit of approximately
$5,372.
NBTY, INC. and SUBSIDIARIES
NOTES to CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share amounts)
1. Principles of consolidation and basis of presentation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All intercompany accounts and
transactions have been eliminated.
In the opinion of the Company, the unaudited condensed consolidated
financial statements contain all adjustments necessary to present fairly its
financial position as of December 31, 1999 and its results of operations for
the three months ended December 31, 1999 and 1998 and statements of cash
flows for the three months ended December 31, 1999 and 1998. The condensed
consolidated balance sheet as of September 30, 1999 has been derived from
the audited balance sheet as of that date. The results of operations for the
three months ended December 31, 1999 and statements of cash flows for the three
months ended December 31, 1999 are not necessarily indicative of the results to
be expected for the full year. This report should be read in conjunction with
the Company's annual report filed on Form 10-K for the fiscal year ended
September 30, 1999.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to conform prior year amounts to
the current year presentation.
New accounting standards
Effective October 1, 1998, Company adopted SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information," which establishes
standards for reporting information about operating segments. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS No. 131 requires comparative
information for earlier years to be restated. The adoption of SFAS No. 131
did not affect the Company's results of operations or financial position,
but did affect the disclosure of segment information.
In June 1998, the FASB issued SFAS No. 133, "Statement of Financial
Accounting Standards Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). SFAS 133 is effective fiscal years beginning after
June 15, 1999 (October 1, 1999 for the Company). SFAS 133 requires that all
derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is the type of hedge
transaction. Management of the Company anticipates that, due to its limited
use of derivative instruments, the adoption of SFAS 133 will not have a
significant effect on the Company's results of operations or its financial
position.
2. Acquisitions
In May 1999, the Company acquired the assets and certain liabilities of a
network marketing company, Dynamic Essentials, Inc. (DEI) for approximately
$1.2 million in cash. DEI was formed in December 1998 and had aggregate
sales of $2,081 during its first six months.
3. Comprehensive earnings
Comprehensive income for the Company includes net income and the effects of
translation, which are charged or credited to the cumulative translation
adjustment account within stockholders' equity.
Comprehensive earnings for the three months ended December 31, 1999 and 1998
are as follows:
<TABLE>
<CAPTION>
For the three months
ended December 31,
--------------------
1999 1998
---- ----
<S> <C> <C>
Net Income $8,417 $3,468
Changes in cumulative
translation adjustment (3,326) (3,918)
------------------
Comprehensive earnings
(deficit) $5,081 $ (450)
==================
</TABLE>
Accumulated other comprehensive earnings (deficit), which is classified as a
separate component of stockholders' equity, is comprised of cumulative
translation adjustments of $2,799 and $6,135 at December 31, 1999 and
September 30, 1999, respectively.
4. Inventories
Inventories have been estimated using the gross profit method for the
interim periods. The components of the inventories are as follows:
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
------------ -------------
<S> <C> <C>
Raw materials and
Work-in-process $ 46,939 $ 52,116
Finished goods 85,976 83,350
-------------------------
$132,915 $135,466
=========================
</TABLE>
5. Earnings per share (EPS)
Basic EPS computations are based on the weighted average number of common
shares outstanding during the three month periods ended December 31, 1999
and 1998. Diluted EPS include the dilutive effect of outstanding stock
options, if exercised. The following is a reconciliation between the basic
and diluted EPS:
<TABLE>
<CAPTION>
For the three months
December 31,
--------------------
1999 1998
---- ----
<S> <C> <C>
Numerator:
Numerator for basic EPS --
Income available o common stockholders $ 8,417 $3,468
===================
Numerator for diluted EPS --
Income available To common stockholders $ 8,417 $3,468
===================
Denominator:
Denominator for basic EPS --
Weighted average shares 66,125 71,034
Effect of dilutive securities:
Stock options 1,894 1,596
-------------------
Denominator for diluted EPS --
Weighted average shares 68,019 72,630
===================
Net EPS:
Basic EPS $0.13 $0.05
===================
Diluted EPS $0.12 $0.05
===================
</TABLE>
6. Stock options:
During the three months ended December 31, 1999, options were exercised with
45 shares of common stock issued to an executive for cash of $14. As a
result of the exercise of those options, the Company expects to receive a
compensation deduction for tax purposes of approximately $352 and a tax
benefit of approximately $138.
During the three months ended December 31, 1998, options were exercised with
3,340 shares of common stock issued to certain officers for interest-bearing
stock subscriptions receivable aggregating $839. As a result of the
exercise of those options, the Company received a compensation deduction for
tax purposes of approximately $13,774 and a tax benefit of approximately
$5,372.
7. Segment Information:
The Company's segments are organized by sales market on a worldwide basis.
The Company's management reporting system evaluates performance based on a
number of factors; however, the primary measure of performance is the pretax
operating income of each segment. Accordingly, the Company reports four
worldwide segments: Puritan.com/Direct Response, Retail: United States and
United Kingdom, and Wholesale. All of the Company's products fall into one
of these four segments. The Puritan.com/Direct Response segment generates
revenue through the sale of its products primarily through mail order
catalog and the internet. Catalogs are strategically mailed to customers who
order by mail or phoning customer service representatives in New York,
Illinois and the United Kingdom. The Retail United States segment generates
revenue through the sale of proprietary brand and third-party products
through its 380 Company-operated stores. The Retail United Kingdom segment
generates revenue through the sales of proprietary brand and third-party
products in 424 Company-operated stores. The Wholesale segment (including
Network Marketing) is comprised of several divisions each targeting specific
market groups. These market groups include wholesalers, distributors,
chains, pharmacies, health food stores, bulk and international customers.
The following table represents key financial information of the Company's
business segments (in thousands):
<TABLE>
<CAPTION>
Three months ended
December 31,
----------------------
1999 1998
---- ----
<S> <C> <C>
Puritan.com/Direct Response
Revenue $ 29,235 $ 30,220
Operating income 5,325 5,040
Depreciation and amortization 340 335
Identifiable assets 33,473 35,187
Retail:
United States
Revenue $ 34,330 $ 20,789
Operating (loss) income (3,495) (1,400)
Depreciation and amortization 2,275 981
Identifiable assets 58,559 46,097
United Kingdom
Revenue $ 71,223 $ 59,940
Operating income 12,146 4,473
Depreciation and amortization 3,238 3,070
Identifiable assets 219,832 228,150
Wholesale
Revenue $ 36,384 $ 30,064
Operating income(a) 6,344 3,648
Depreciation and amortization 188 72
Identifiable assets 15,270 15,239
Corporate
Depreciation and amortization $ 2,301 $ 1,967
Manufacturing identifiable assets 220,958 192,450
Consolidated totals
Revenue $171,172 $141,013
Operating income 18,019 9,794
Depreciation and amortization 8,432 6,425
Interest expense, net (3,991) (3,759)
Income taxes 5,611 2,567
Net income 8,417 3,468
Identifiable assets 548,092 517,123
- -------------------
<FN>
<Fa> Excludes corporate depreciation relating primarily to manufacturing
assets.
</FN>
</TABLE>
8. Subsequent event:
On January 3, 2000, the Company acquired Nutrition Warehouse, Inc. and its
affiliated companies ("NW") for $20 million cash and 1,058 shares of NBTY
stock. NW operates an e-commerce/direct response business while its
affiliated companies operate 15 retail stores in various locations in New
York. The e-commerce business will be combined with the company's
Puritan.com operation. Annual revenues approximated $14 million for the
e-commerce/direct response business and $14 million in retail sales for the
year ended December 31, 1999. The cash portion of the acquisition was funded
with $20 million borrowings under the Credit and Guarantee Agreement (CGA).
NBTY, INC. and SUBSIDIARIES
MANAGEMENT'S DISCUSSION and ANALYSIS of FINANCIAL
CONDITION and RESULTS of OPERATIONS
(In thousands, except per share amounts)
Results of Operations:
The following table sets forth income statement data of the Company as a
percentage of net sales for the periods indicated:
<TABLE>
<CAPTION>
Three months
Ended
December 31,
------------------
1999 1998
---- ----
<S> <C> <C>
Net sales 100.0% 100.0%
Costs and expenses:
Cost of sales 47.3 48.9
Catalog printing, postage and promotion 4.8 6.3
Selling, general and administrative 37.3 37.9
-----------------
89.4 93.1
-----------------
Income from operations 10.5 6.9
Other income (expenses), net (2.3) (2.6)
-----------------
Income before income taxes 8.3 4.3
Income taxes 3.3 1.8
-----------------
Net income 5.0% 2.5%
=================
</TABLE>
For the three months ended December 31, 1999
compared to the three months ended December 31, 1998:
Net sales. Net sales in the first quarter ended December 31, 1999 were $171,172
compared with $141,013 for the prior comparable period, an increase of $30,159
or 21.4%. Puritan.com/Direct Response sales were $29,235, compared to $30,220
for the prior comparable period (decrease of $985 or 3.3%), wholesale sales
were $36,384 compared to $30,064 (increase of $6,320 or 21.0%), U.S. retail
sales were $34,330 compared to $20,789 (increase of $13,541 or 65.1%) and U.K.
retail sales were $71,223 compared to $59,940 (increase of $11,283 or 18.8%).
Revenue increases in the wholesale market segment are attributed to the broad
base of the company's brands, private label, bulk sales and network marketing.
The Company operated 380 stores in the U.S. and 424 stores in the U.K. as of
December 31, 1999 compared to 253 stores in the U.S. and 415 in the U.K. as of
December 31, 1998. Sales growth in the U.S. retail channel reflected the
greater number of stores compared to last year. U.S. comparative store sales
increased $3,829 or 19.9% for stores open more than one year.
Costs and expenses. Cost of sales as a percentage of sales were 47.3% for 1999
and 48.9% for 1998 due to lower manufacturing costs.
Catalog printing, postage, and promotion expenses were $8,286 in 1999, a
decrease of $502 (5.7% decrease) from $8,788 in 1998. This decrease was due
primarily to a reduction in print media advertising in direct response. As a
percentage of sales, expenses were 4.8% for the current quarter and 6.3% for
the prior comparable quarter.
Selling, general and administrative expenses were $63,924 for the quarter, or
37.3% as a percentage of sales, compared with $53,472 or 37.9% as a percentage
of sales, an increase of $10,452 (19.5% increase). The largest categories and
increases are indirect salaries and rent expense which increased due primarily
to the U.S. retail store expansion program.
Interest expense. Interest expense was $4,685, an increase of $417 compared to
$4,268 during the comparable quarter. The major components are interest on
Senior Subordinated Notes associated with the Holland & Barrett acquisition,
the Credit and Guarantee Agreement (CGA) used for the stock repurchase and for
capital expenditures. Interest expense increased due to the additional
borrowings to fund the share repurchase program.
Income before income taxes was $14,028 for 1999 and $6,035 for 1998. After
income taxes, the Company had a net profit of $8,417 (or basic earnings per
share of $0.13, diluted earnings per share of $0.12) for the three month period
ended December 31, 1999, and $3,468 (or basic earnings per share of $0.05,
diluted earnings per share of $0.05) for the three months ended December 31,
1998.
Liquidity and Capital Resources
Working capital was $121.4 million at December 31, 1999, compared with
$121.1 million at September 30, 1999, an increase of $.3 million.
In April 1999, the Company entered into an amended and restated Credit and
Guarantee Agreement (CGA) which expires September 30, 2003 increasing the
borrowing limit from $60 million to $135 million, and on February 3, 2000
this amount was adjusted to $129 million. The CGA provides for borrowings
for working capital, general corporate purposes and acquisition of the
Company's securities. The CGA provides that loans be made under a
selection of rate formulas, including prime or Euro currency rates.
Virtually all of the company's assets are collateralized under the CGA and
subject to normal banking terms and conditions and the maintenance of
various financial ratios and covenants. At December 31, 1999, there were
borrowings of $51,000 under this facility. The Company plans on utilizing
the funds for working capital needs. In January 2000, the Company
borrowed $20 million for the cash portion of the January 3, 2000
acquisition of Nutrition Warehouse, Inc.
In connection with the August 1997 acquisition of Holland & Barrett, the
Company issued $150 million 8-5/8% senior subordinated Notes ("Notes") due
in 2007. The Notes are unsecured and subordinated in right of payment for
all existing and future indebtedness of the Company.
The Company believes that existing cash balances, internally-generated
funds from operations, amounts available under the CGA will provide
sufficient liquidity to satisfy the Companies' working capital needs for
the next 12 months and to finance anticipated capital expenditures
incurred in the normal course of business.
Net cash provided by operating activities was $27.4 million in 1999 and used
in operating activities was $5.6 million in 1998 primarily due to increases
in depreciation and amortization and accrued expenses. Net cash used in
investing activities was $13.6 million in 1999 and $10.6 million in 1998 due
to retail stores and plant expansion programs. Net cash used in financing
activities was $2.1 million in 1999 due to payment of loans and provided by
financing activities was $15.9 million in 1998 due to borrowings under the
CGA.
Management believes that inflation did not have a significant impact on its
operations.
Year 2000
The Company did not experience any disruptions to its normal operations as
a result of the transition into calendar year 2000. Thorough testing of
mission critical business processes was performed on January 1, 2000 in
order to validate the data integrity of internal and external system
interfaces. In addition, the Company obtained confirmation from its key
suppliers and vendors that services to NBTY, Inc. would not be
interrupted.
The total estimated cost associated with achieving worldwide Year 2000
compliance, excluding internal costs, are approximately $1,000.
The Company will continue to monitor its business processes and third
parties for potential problems that could arise in the first few months of
calendar year 2000. Based on the Company's preparations prior to January
1, 2000 and the absence of any problems to date, no significant
disruptions are anticipated.
New accounting standards
Effective October 1, 1998, Company adopted SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information," which establishes
standards for reporting information about operating segments. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS No. 131 requires comparative
information for earlier years to be restated. The adoption of SFAS No. 131
did not affect the Company's results of operations or financial position,
but did affect the disclosure of segment information.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (October
1, 1999 for the Company). SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in
the fair value of derivatives are recorded each period in current earnings
or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, the type of hedge
transaction. Management of the Company anticipates that, due to its limited
use of derivative instruments, the adoption of SFAS No. 133 will not have a
significant effect on the Company's results of operations or its financial
position.
This filing contains certain forward-looking statements and information that
are based on the beliefs of management, as well as assumptions made by and
information currently available to the Company's management. When used in
this document, the words "anticipate," "believe," "estimate," and "expect"
and similar expressions, as they relate to the Company are intended to
identify forward-looking statements. Such statements reflect the current
views of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated or expected. The Company does not intend to
update these forward-looking statements.
NBTY, INC. AND SUBSIDIARIES
PART II OTHER INFORMATION
(Unaudited)
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities Not applicable.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
There was no Form 8-K filed during the first quarter of the fiscal year
ending September 30, 2000.
NBTY, INC. and SUBSIDIARIES
SIGNATURE
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 there unto duly authorized.
NBTY, INC.
Date February 12, 2000 /s/ Harvey Kamil
--------------------------------
Harvey Kamil, Executive Vice
President, Secretary
(Principal Financial
and Accounting Officer)
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