<PAGE> 1
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 SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
----------- -----------
COMMISSION FILE #0-4829-03
NABI
----------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 59-1212264
- --------------------------------------------------- ---------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
5800 Park of Commerce Boulevard N.W., Boca Raton, FL 33487
- -------------------------------------------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (561) 989-5800
-------------------------------------------------------------------------
</TABLE>
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES (X) NO ( )
The number of shares outstanding of registrant's common stock at November 8,
1996 was 34,588,910 shares.
<PAGE> 2
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
NABI
===============================================================================
INDEX
-----
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION PAGE #
--------------------- ------
ITEM 1. FINANCIAL STATEMENTS ............................................................. 3
Consolidated Balance Sheet, September 30, 1996 and December 31, 1995 ...................... 3
Consolidated Statement of Operations for the three month and nine month periods ended
September 30, 1996 and 1995 .......................................................... 4
Consolidated Statement of Cash Flows for the nine month periods ended
September 30, 1996 and 1995 .......................................................... 5
Notes to Consolidated Financial Statements ............................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ........................................................................ 9
PART II. OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS ............................................................... 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................................ 12
Exhibit 11 - Calculation of Earnings per Share ........................................... 14
</TABLE>
2
<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
NABI
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,839 $ 3,991
Investments 12,670 --
Trade accounts receivable, net 40,911 28,213
Inventories, net 25,950 22,646
Prepaid expenses and other assets 4,562 2,380
--------- ---------
TOTAL CURRENT ASSETS 98,932 57,230
PROPERTY AND EQUIPMENT, NET 53,830 42,697
OTHER ASSETS:
Excess of acquisition cost over net assets acquired, net 18,015 18,882
Intangible assets, net 10,118 11,048
Other, net 10,180 8,118
--------- ---------
TOTAL ASSETS $ 191,075 $ 137,975
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 5,414 $ 6,758
Accrued expenses 24,207 18,618
Notes payable 5,394 17,164
--------- ---------
TOTAL CURRENT LIABILITIES 35,015 42,540
NOTES PAYABLE 80,947 25,730
OTHER 315 263
--------- ---------
TOTAL LIABILITIES 116,277 68,533
--------- ---------
STOCKHOLDERS' EQUITY:
Convertible preferred stock, par value $0.10 per share:
5,000 shares authorized; no shares outstanding -- --
Common stock, par value $0.10 per share: 75,000 shares authorized,
34,544 and 33,942 shares issued and outstanding, respectively 3,454 3,394
Capital in excess of par value 135,174 133,100
Accumulated deficit (63,830) (67,052)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 74,798 69,442
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 191,075 $ 137,975
========= =========
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
3
<PAGE> 4
NABI
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
1996 1995 1996 1995
------------------- --------------------
<S> <C> <C> <C> <C>
SALES $ 58,048 $ 49,631 $ 175,869 $ 146,734
COSTS AND EXPENSES:
Costs of products sold 44,762 37,271 133,226 111,315
Research and development expense 4,433 5,685 14,341 16,914
Royalty expense 1,182 709 3,514 1,922
Selling, general and administrative expense 5,549 6,302 18,274 17,435
-------- ------- --------- ---------
OPERATING INCOME (LOSS) 2,122 (336) 6,514 (852)
INTEREST AND OTHER INCOME 290 271 1,076 1,089
INTEREST AND OTHER EXPENSE (1,271) (841) (3,263) (1,529)
-------- ------- --------- ---------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
AND EXTRAORDINARY CHARGE 1,141 (906) 4,327 (1,292)
PROVISION FOR INCOME TAXES (46) (1,803) (173) (5,776)
-------- ------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE 1,095 (2,709) 4,154 (7,068)
EXTRAORDINARY CHARGE -- -- (932) --
-------- ------- --------- ---------
NET INCOME (LOSS) $ 1,095 $ (2,709) $ 3,222 $ (7,068)
======== ======== ========= =========
EARNINGS (LOSS) PER SHARE:
Income (loss) before extraordinary charge $ 0.03 $ (0.08) $ 0.12 $ (0.21)
Extraordinary charge -- -- (0.03) --
-------- ------- --------- ---------
Net income (loss) $ 0.03 $ (0.08) $ 0.09 $ (0.21)
======== ======== ========= =========
WEIGHTED AVERAGE NUMBER OF SHARES AND
COMMON SHARE EQUIVALENTS 35,548 33,643 35,680 33,518
======== ======== ========= =========
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
4
<PAGE> 5
NABI
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
($ IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
Nine Months Ended
September 30,
--------------------------
1996 1995
--------- ----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,222 $ (7,068)
Adjustments to reconcile net income (loss) to net cash used by
operating activities:
Depreciation and amortization 5,838 5,037
Gain on market value of trading securities -- (163)
Provision for doubtful accounts 505 (71)
Purchase of trading securities -- (4,036)
Sales and redemptions of trading securities -- 13,907
Extraordinary charge 932 --
Other 341 232
Change in assets and liabilities:
Decrease (increase) in accounts receivable (13,203) (3,778)
Decrease (increase) in inventories (3,304) (1,632)
Decrease (increase) in prepaid expenses and other assets (2,181) (454)
Decrease (increase) in other assets (1,048) (2,375)
Increase (decrease) in accounts payable and accrued liabilities 4,462 369
-------- ---------
Total adjustments (7,658) 7,036
-------- ---------
NET CASH USED BY OPERATING ACTIVITIES (4,436) (32)
-------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of investments available for sale (18,190) --
Proceeds from sale of investments available for sale 5,724 --
Collection on note receivable from stockholder -- 126
Cash consideration for business acquisition -- (6,075)
Capital expenditures (14,829) (18,822)
-------- ---------
NET CASH USED BY INVESTING ACTIVITIES (27,295) (24,771)
-------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Net proceeds from issuance of convertible subordinated notes 77,884 --
Repayments of flexible term notes (18,000) --
Borrowings of flexible term notes -- 12,936
Repayments of term debt, net (10,000) (2,394)
Repayments under line of credit, net (6,760) 4,756
Other debt (2,320) 1,732
Proceeds from the exercise of options and warrants 1,775 542
-------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 42,579 17,572
-------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 10,848 (7,231)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,991 12,132
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14,839 $ 4,901
======== ========
</TABLE>
The accompanying Notes are an integral part of these Financial Statements.
5
<PAGE> 6
NABI
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- GENERAL
NABI (formerly North American Biologicals, Inc.) is a vertically integrated
biopharmaceutical company that supplies human blood plasma and develops and
commercializes therapeutic products for the prevention and treatment of
infectious diseases and immunological disorders.
On November 29, 1995, Univax Biologics, Inc. ("Univax"), a publicly traded
biopharmaceutical company, was merged with and into NABI. Under the terms of
the agreement and plan of merger, Univax's common stockholders received .79 of
NABI common stock for each Univax share. Additionally, Univax's preferred
stockholders received 1.047 shares of NABI common stock for each preferred
share. NABI issued an aggregate of 14,173,508 shares of its common stock for
the outstanding shares of Univax common and preferred stock. The merger was
accounted for as a pooling of interests and accordingly, the prior period
financial statements have been combined.
The consolidated financial statements include the accounts of NABI (the
"Company") and its subsidiaries. All significant intercompany accounts and
transactions are eliminated in consolidation. These statements should be read
in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report to Stockholders for the year ended
December 31, 1995.
In the opinion of management, the unaudited consolidated financial statements
include all adjustments necessary to present fairly the Company's consolidated
financial position at September 30, 1996 and the consolidated results of its
operations for the three month and nine month periods ended September 30, 1996
and 1995, respectively. The interim results of operations are not necessarily
indicative of the results which may occur for the fiscal year.
NOTE 2 -- INVESTMENTS
At September 30, 1996, the Company had approximately $12.7 million in
short-term investments. The investments consist of securities issued or
guaranteed by the U.S. Treasury and U.S. Government Agency securities.
The following is a summary of securities available-for-sale as of September 30,
1996:
<TABLE>
<S> <C> <C> <C> <C>
AMORTIZED UNREALIZED
(In Thousands) COST GAINS LOSSES FAIR VALUE
--------- -------------------- ------------
U.S. Treasury Bill $ 4,890 - $ 34 $ 4,856
U.S. Government Agencies 7,832 - 18 7,814
-------- ------- ------- --------
Total $ 12,722 - $ 52 $ 12,670
======== ======= ======= ========
</TABLE>
6
<PAGE> 7
NOTE 3 -- INVENTORIES
The components of inventories, stated at the lower of cost (FIFO) or market,
are as follows:
<TABLE>
<S> <C> <C>
SEPTEMBER 30, DECEMBER 31,
(In Thousands) 1996 1995
------------ -----------
Finished goods $ 22,008 $ 19,054
Work in process 2,042 1,255
Raw materials 7,450 6,405
--------- --------
$ 31,500 $ 26,714
Less: valuation allowance (5,550) (4,068)
--------- --------
$ 25,950 $ 22,646
========= ========
</TABLE>
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment and related allowances for depreciation and amortization
are summarized below:
<TABLE>
<S> <C> <C>
(In Thousands) SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ -----------
Land and buildings $ 5,528 $ 5,551
Furniture and fixtures 4,288 3,691
Machinery and equipment 21,083 19,443
Leasehold improvements 13,714 12,055
Construction in progress 28,278 18,311
------------ -----------
72,891 59,051
Less: accumulated depreciation and
amortization (19,061) (16,354)
------------ -----------
$ 53,830 $ 42,697
=========== ===========
</TABLE>
Interest capitalized in connection with construction of NABI's
biopharmaceutical facility was $2,404 and $932 at September 30, 1996 and
December 31, 1995, respectively.
NOTE 5 -- CONVERTIBLE SUBORDINATED NOTES
During the first quarter of 1996, NABI issued $80.5 million of 6.5% convertible
subordinated notes due February 1, 2003 ("Notes") in a private placement. The
Notes are convertible into NABI common stock at a conversion price of $14 per
share at any time on or after May 6, 1996, unless previously redeemed or
repurchased. At any time on or after February 4, 1999, the Notes may be
redeemed at NABI's option without premium. A total of 5,750,000 shares of
common stock have been reserved for issuance upon conversion of the Notes.
NABI utilized a portion of the net proceeds of the offering to repay a $10
million term loan, $18 million in flexible term notes and approximately $12.2
million under a revolving credit facility.
In connection with the early extinguishment of the bank debt through the
application of the net proceeds of the Notes, NABI incurred an extraordinary
charge of approximately $932,000 in the first quarter of 1996.
7
<PAGE> 8
NOTE 6 -- INCOME TAXES
For the quarter ended September 30, 1996, the provision for income taxes is
comprised solely of state income taxes as a result of NABI recognizing net
deferred tax benefits equal to its current federal income tax provision.
NOTE 7 -- RECLASSIFICATIONS
Certain items in the consolidated financial statements for the 1995 periods
have been reclassified for comparative purposes.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
===============================================================================
The following is a discussion and analysis of the major factors contributing to
the Company's financial condition and results of operations for the three and
nine month periods ended September 30, 1996 and 1995. The discussion and
analysis should be read in conjunction with the condensed consolidated
financial statements and notes thereto. All amounts are expressed in thousands
of dollars, except per share amounts.
RESULTS OF OPERATIONS
---------------------
The following table sets forth the Company's results of operations expressed as
a percentage of sales:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of products sold 77.1 75.1 75.8 75.9
-------- ------- -------- -------
Gross profit margin 22.9 24.9 24.2 24.1
Research and development expense 7.6 11.5 8.1 11.5
Royalty expense 2.0 1.4 2.0 1.3
Selling, general and administrative expense 9.6 12.7 10.4 11.9
-------- ------- -------- -------
Operating income (loss) 3.7 (.7) 3.7 (.6)
Interest and other income .5 .6 .6 .7
Interest and other expense (2.2) (1.7) (1.8) (1.0)
-------- ------- -------- -------
Income (loss) before provision for income
taxes
and extraordinary charge 2.0 (1.8) 2.5 (.9)
Provision for income taxes (.1) (3.6) (.1) (3.9)
-------- ------- -------- -------
Income (loss) before extraordinary charge 1.9 (5.4) 2.4 (4.8)
Extraordinary charge -- -- (.6) --
-------- ------- -------- -------
Net income (loss) 1.9 % (5.4)% 1.8% (4.8)%
======== ======= ======== =======
</TABLE>
Information concerning NABI's sales by industry segment, for the respective
periods, is set forth in the following table. All dollar amounts set forth in
the table are expressed in thousands.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------------
1996 % 1995 %
-------- -------- -------- --------
Segment
- -------
<S> <C> <C> <C> <C>
Plasma -Source $ 29,951 51.6% $ 25,867 52.1%
-Specialty 19,547 33.7 16,209 32.7
-------- ------- -------- -------
49,498 85.3 42,076 84.8
Immunotherapeutic products 6,571 11.3 4,186 8.4
Diagnostic products and services 1,566 2.7 1,979 4.0
Research and development 413 .7 1,390 2.8
-------- ------- -------- -------
Total $ 58,048 100.0% $ 49,631 100.0%
======== ======= ======== =======
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------
1996 % 1995 %
-------- -------- --------- --------
Segment
- -------
<S> <C> <C> <C> <C>
Plasma -Source $ 88,778 50.5% $ 79,688 54.3%
-Specialty 63,559 36.1 44,698 30.5
--------- ------- --------- -------
152,337 86.6 124,386 84.8
Immunotherapeutic products 16,973 9.7 11,440 7.8
Diagnostic products and services 4,559 2.6 6,180 4.2
Research and development 2,000 1.1 4,728 3.2
--------- ------- --------- -------
$ 175,869 100.0% $ 146,734 100.0%
Total ========= ======= ========= =======
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
General. During the quarter ended September 30, 1996, NABI recorded a non-
recurring charge of approximately $2 million resulting from its voluntary
withdrawal of certain lots of H-BIG(R) distributed prior to 1996. The product
withdrawal was in response to implementation of second generation polymerase
chain reaction (PCR) testing requirements mandated by the Food and Drug
Administration in June 1996. All H-BIG(R) products sold in 1996 have been
tested with second generation PCR testing. Sales and net income were adversely
affected by approximately $2 million for the quarter.
Sales. Sales for the quarter rose 17% to $58 million compared to $49.6 million
for the third quarter of 1995. The increase was primarily attributable to
increased volume of shipments and improved pricing for plasma and
immunotherapeutic products, partially offset by the effects of the H-BIG(R)
withdrawal as discussed above.
Gross profit. Gross profit and related margin for the third quarter of 1996
was $13.3 million, or 22.9% of sales, compared to $12.4 million, or 24.9% of
sales, in the third quarter of 1995. Profitability was adversely affected
primarily by NABI's voluntary withdrawal of certain H-BIG(R) lots as discussed
above.
Research and development expense. Research and development expense was $4.4
million, or 7.6% of sales for the quarter compared to $5.7 million or 11.5% of
sales, in the third quarter of 1995. The decline in research and development
expenditures over the comparable period in 1995 is primarily attributed to the
discontinuation of clinical trials for HyperGAM+CF TM during June 1996.
Royalty expense. Royalty expense for the quarter was $1.2 million, or 2% of
sales, compared to $.7 million or 1.4% of sales, in the third quarter of 1995.
Increased immunotherapeutic sales during the quarter compared to the third
quarter of 1995 accounted for the increase in royalty expense.
Selling, general, and administrative expense. Selling, general and
administrative expense was $5.5 million, or 9.6% of sales, for the quarter
compared to $6.3 million, or 12.7% of sales, in the third quarter of 1995 due
primarily to a reduction in personnel related costs, partially offset by an
increase in the allowance for doubtful accounts arising from the insolvency of
an immunotherapeutics customer.
Net interest expense. Net interest expense for the quarter was $1.0 million,
or 1.7% of sales, compared to net interest expense of $.6 million, or 1.1% of
sales, in the third quarter of 1995. Net interest expense increased primarily
due to interest charges associated with the convertible subordinated notes
issued during the first quarter of 1996. Capitalized interest associated with
construction of NABI's biopharmaceutical facility increased during the quarter
as compared to the third quarter of 1995. This partially offset the increase
in net interest expense recognized during the quarter when compared to the
comparable period in 1995.
10
<PAGE> 11
Other factors. The provision for income taxes for the quarter was $46,000
compared to $1.8 million in the third quarter of 1995. The 4% effective tax
rate differs from the statutory rate of 35% primarily due to the reversal of a
portion of the valuation allowance associated with NOL carryforwards. The
provision for income taxes in the third quarter of 1995 reflects income taxes
on NABI's stand-alone pre-tax income which could not be offset by pre-merger
losses.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
---------------------------------------------
Sales. Sales for the year to date rose 20% to $175.9 million compared to
$146.7 million for the nine months of 1995. The increase was primarily
attributable to increased plasma shipments, primarily specialty plasma, and
increased immunotherapeutic sales, partially offset by the effect of NABI's
voluntary withdrawal of certain H-BIG(R) lots as discussed above.
Gross profit margin. Gross profit and related margin for the year to date was
$42.6 million or 24.2% of sales, compared to $35.4 million, or 24.1% of sales,
in 1995. An improved sales mix, resulting primarily from increased sales of
higher margin specialty plasma and immunotherapeutic products, accounted for
the improved profitability, which was partially offset by the withdrawal of
certain H-BIG(R) lots as discussed above.
Research and development expense. Research and development expense was $14.3
million or 8.1% of sales, compared to $16.9 million or 11.5% of sales in the
nine months of 1995. The decline in research and development expenditures in
the year to date over the comparable period in 1995 is attributed to the
discontinuation of clinical trials for HyperGAM+CF TM during June 1996 and
lower development costs incurred during 1996 for WinRho SD(TM) which was
commercially launched in mid 1995.
Royalty expense. Royalty expense for the year to date was $3.5 million, or 2%
of sales, compared to $1.9 million or 1.3% in 1995. Increased
immunotherapeutic sales during 1996 compared to 1995 accounted for the increase
in royalty expense.
Selling, general and administrative expense. Selling, general and
administrative expense was $18.3 million or 10.4% of sales compared to $17.4
million or 11.9% of sales in the nine months of 1995. While expenses decreased
as a percentage of sales, the dollar increase resulted primarily from an
increase in the allowance for doubtful accounts arising from the insolvency of
a certain immunotherapeutics customer, additional personnel costs and increased
freight expense.
Net interest expense. Net interest expense for the year to date was $2.2
million, or 1.2% of sales, compared to net interest expense of $.4 million or
.3% in 1995. The increase in net interest expense resulted primarily from
interest expense associated with the convertible subordinated notes issued
during the first quarter of 1996. Capitalized interest associated with
construction of NABI's biopharmaceutical facility increased during 1996 as
compared to 1995. This partially offset the increase in net interest expense
recognized during 1996 when compared to 1995.
Other factors. The provision for income taxes for the year to date was
$173,000 compared to $5.8 million in 1995. The 4% effective tax rate differs
from the statutory rate of 35% primarily due to the reversal of a portion of
the valuation allowance associated with NOL carryforwards. The provision for
income taxes for the year to date ended September 30, 1995 reflects income
taxes on NABI's stand-alone pre-tax income which could not be offset by
pre-merger losses.
The year to date ended September 30, 1996 reflects an extraordinary charge of
$.9 million, or $.03 per share, due to the immediate recognition and expense of
debt issue costs associated with NABI's early extinguishment of its bank debt
through the application of a portion of the net proceeds of the convertible
subordinated notes issued during the first quarter of 1996.
11
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
During the first quarter of 1996, NABI issued $80.5 million of 6.5% convertible
subordinated notes due 2003 ("Notes") in a private placement. A portion of the
net proceeds was used to repay a majority of NABI's outstanding bank
indebtedness aggregating approximately $22.2 million and $18 million was used
to retire all outstanding flexible term notes.
As of September 30, 1996, the Company's current assets exceeded current
liabilities by $63.9 million as compared to a net working capital position of
$14.7 million at December 31, 1995. The increase in working capital is
principally due to the net proceeds from the issuance of the Notes. In
addition, NABI's bank credit agreement, as amended through March 31, 1996,
provides for a $20 million revolving credit facility. At September 30, 1996,
NABI had no amounts outstanding under this credit facility.
The Company believes that cash on hand, available bank line of credit and cash
flow from operations will be sufficient to meet its anticipated cash needs for
the remainder of fiscal 1996.
FACTORS TO BE CONSIDERED
------------------------
NABI's Annual Report on Form 10-K for the year ended December 31, 1995, Item 1,
"Business-Factors to be considered," discusses certain factors that could cause
NABI's actual results to differ materially from the results projected in
forward-looking statements from time to time made by NABI or that otherwise
affect NABI's results of operations and financial condition. These factors
continue to apply, including those discussed under "--Government Regulation;
Uncertainty of Regulatory Approvals" with regard to the Food and Drug
Administration ("FDA") and NABI's H-BIG(R) product.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
NABI is a party to litigation in the ordinary course of business. NABI does
not believe that any such litigation will have a material adverse effect on its
business, financial position or results of operations.
In addition, NABI is a co-defendant with various other parties in numerous
suits filed in the U.S. and Canada brought by individuals or their
representatives who claim to have been infected with HIV as a result of either
using HIV-contaminated products made by the defendants other than NABI or
having familial relations with those so infected. The claims against NABI
generally are based on either or both negligence and strict liability. One of
the suits, filed in the Circuit Court for the Eleventh Judicial Circuit of Dade
County, Florida on May 23, 1995 (Case No. 95-10489 CA 02), purports to be a
class action. The defendants in this suit, other than NABI, include Bayer
Corporation, Armour Pharmaceutical Company, Rhone-Poulenc Rorer, Inc., Baxter
Healthcare Corporation, Alpha Therapeutic Corporation and The National
Hemophilia Foundation. The suits filed in Canada seek to impose liability on
NABI as the successor to a company acquired by NABI in 1986.
NABI denies all claims against it in these suits and intends to vigorously
defend the cases. Although NABI does not believe that any such litigation will
have a material adverse effect on its business, financial position or results
of operations, the defense of these lawsuits can be expensive and
time-consuming, regardless of the outcome, and an adverse result in one or more
of these lawsuits could have a material adverse effect on NABI's business,
financial condition and results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibits
11 Calculation of Earnings Per Share............................ 14
27 Financial Data Schedule (for SEC use)
b. Reports on Form 8-K:
None
12
<PAGE> 13
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.
NABI
DATE: November 12, 1996 By: /s/ Alfred J. Fernandez
----------------------------------------
ALFRED J. FERNANDEZ
Senior Vice President and Chief
Financial Officer
13
<PAGE> 1
EXHIBIT 11
NABI
CALCULATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1996 1995 1996 1995
--------- ------- --------- ---------
<S> <C> <C> <C> <C>
Net income (loss) $ 1,095 $ (2,709) $ 3,222 $ (7,068)
======== ======== ======== ========
Weighted average number of common shares
outstanding during the period 34,542 33,643 34,321 33,518
Add dilutive effect of common stock equivalents:
Stock options and warrants (as determined by the
application of the treasury stock method) 1,006 -- 1,359 --
-------- -------- -------- --------
Weighted average number of shares and common
share equivalents used in primary earnings
per share computations 35,548 33,643 35,680 33,518
======== ======== ======== ========
Earnings (loss) per share $0.03 $ (0.08) $ 0.09 $ (0.21)
======== ======== ======== ========
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1996 (UNAUDITED) AND THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 14,839
<SECURITIES> 12,670
<RECEIVABLES> 40,911<F1>
<ALLOWANCES> 0
<INVENTORY> 25,950<F1>
<CURRENT-ASSETS> 98,932
<PP&E> 53,830<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 191,075
<CURRENT-LIABILITIES> 35,015
<BONDS> 86,341
0
0
<COMMON> 3,454
<OTHER-SE> 71,344
<TOTAL-LIABILITY-AND-EQUITY> 191,075
<SALES> 173,869
<TOTAL-REVENUES> 175,869
<CGS> 133,226
<TOTAL-COSTS> 133,226
<OTHER-EXPENSES> 36,129
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 3,263
<INCOME-PRETAX> 4,327
<INCOME-TAX> 173
<INCOME-CONTINUING> 4,154
<DISCONTINUED> 0
<EXTRAORDINARY> 932
<CHANGES> 0
<NET-INCOME> 3,222
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0
<FN>
<F1>RECEIVABLES, INVENTORY AND PP&E REPRESENT NET AMOUNTS.
<F2>LOSS PROVISION INCLUDED IN OTHER EXPENSES.
</FN>
</TABLE>
