<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 JUNE 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>
<CAPTION>
<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 August 8, 1996
was 34,522,875 shares.
<PAGE> 2
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
NABI
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE #
<S> <C>
ITEM 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheet, June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Operations for the three month and six month periods ended
June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows for the six month periods ended
June 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exhibit 11 - Calculation of Earnings per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Exhibit 27 - Financial Data Schedule (for SEC use only) . . . . . . . . . . . . . . . . . . . . . . 16
</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)
June 30, December 31,
1996 1995
---------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,282 $ 3,991
Investments 16,569 --
Trade accounts receivable, net 48,474 28,213
Inventories, net 23,741 22,646
Prepaid expenses and other assets 3,375 2,380
-------- --------
TOTAL CURRENT ASSETS 98,441 57,230
PROPERTY AND EQUIPMENT, NET 49,920 42,697
OTHER ASSETS:
Excess of acquisition cost over net assets acquired, net 18,425 18,882
Intangible assets, net 10,505 11,048
Other, net 9,272 8,118
-------- --------
TOTAL ASSETS $186,563 $137,975
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 5,853 $ 6,758
Accrued expenses 20,506 18,618
Notes payable 5,362 17,164
-------- --------
TOTAL CURRENT LIABILITIES 31,721 42,540
NOTES PAYABLE 81,100 25,730
OTHER 298 263
-------- --------
TOTAL LIABILITIES 113,119 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,
34,519 and 33,942 shares issued and outstanding, respectively 3,452 3,394
Capital in excess of par value 134,917 133,100
Accumulated deficit (64,925) (67,052)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 73,444 69,442
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $186,563 $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 Six Months Ended
June 30, June 30,
-------------------- --------------------
1996 1995 1996 1995
------- -------- -------- -------
<S> <C> <C> <C> <C>
SALES $58,326 $48,975 $117,821 $97,103
COSTS AND EXPENSES:
Costs of products sold 43,625 37,034 88,464 74,044
Research and development expense 4,575 5,711 9,908 11,229
Royalty expense 1,084 764 2,332 1,213
Selling, general and administrative expense 6,691 5,940 12,725 11,133
------- ------- -------- -------
OPERATING INCOME (LOSS) 2,351 (474) 4,392 (516)
INTEREST AND OTHER INCOME 460 359 786 818
INTEREST AND OTHER EXPENSE (1,101) (314) (1,992) (688)
------- ------- -------- -------
INCOME BEFORE PROVISION FOR INCOME TAXES
AND EXTRAORDINARY CHARGE 1,710 (429) 3,186 (386)
PROVISION FOR INCOME TAXES (68) (2,100) (127) (3,973)
------- ------- -------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE 1,642 (2,529) 3,059 (4,359)
EXTRAORDINARY CHARGE --- --- (932) ---
------- ------- -------- -------
NET INCOME (LOSS) $ 1,642 $(2,529) $ 2,127 $(4,359)
======= ======= ======== =======
EARNINGS (LOSS) PER SHARE:
Income (loss) before extraordinary charge $ 0.05 $ (0.08) $ (0.09 $ (0.13)
Extraordinary charge --- --- (0.03) ---
------- ------- -------- -------
Net income (loss) $ 0.05 $ (0.08) $ 0.06 $ (0.13)
======= ======= ======== =======
WEIGHTED AVERAGE NUMBER OF SHARES AND
COMMON SHARE EQUIVALENTS 35,781 33,519 35,746 33,456
======= ======= ======== =======
</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)
Six Months Ended
June 30,
-------------------------
1996 1995
------- --------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $2,127 ($4,359)
Adjustments to reconcile net income (loss) to net cash used by
operating activities:
Depreciation and amortization 3,868 3,259
Gain on market value of trading securities -- (145)
Provision for doubtful accounts 120 (116)
Purchase of trading securities -- (4,036)
Sales and redemptions of trading securities -- 8,912
Extraordinary charge 932 --
Other 56 57
Change in assets and liabilities:
Decrease (increase) in accounts receivable (20,381) (4,976)
Decrease (increase) in inventories (1,095) 129
Decrease (increase) in prepaid expenses and other assets (995) (1,081)
Decrease (increase) in other assets (175) (998)
Increase (decrease) in accounts payable and accrued liabilities 1,160 (1,331)
-------- --------
Total adjustments (16,510) (326)
-------- --------
NET CASH USED BY OPERATING ACTIVITIES (14,383) (4,685)
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of investments available for sale (18,190) --
Proceeds from sale of investments available for sale 1,724 --
Collection on note receivable from stockholder -- 126
Capital expenditures (9,412) (11,529)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (25,878) (11,403)
-------- --------
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 -- 9,936
Repayments of term debt (10,426) (1,167)
Repayments under line of credit, net (6,760) (1,346)
Other debt (1,764) 949
Proceeds from the exercise of options and warrants 1,618 419
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 42,552 8,791
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,291 (7,297)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,991 12,132
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,282 $ 4,835
======== ========
</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 June 30, 1996 and the consolidated results of its
operations for the three month and six month periods ended June 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 June 30, 1996, the Company had approximately $16.6 million in short-term
investments. The investments consist of securities issued or guaranteed by the
U.S. Treasury and debt instruments including US Government Agency securities
and high-quality commercial paper.
During the second quarter of 1996, the Company sold a partial amount of one of
its US Agency securities for approximately its carrying value and reclassified
all its securities from held-to-maturity to available-for-sale based on a
reassessment of its intent and ability to hold these securities to maturity.
The following is a summary of securities available-for-sale as of June 30,
1996:
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED
(In Thousands) COST GAINS LOSSES FAIR VALUE
--------- ---------------------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury Bill $4,825 $-- $(7) $ 4,818
U.S. agencies 7,823 -- (41) 7,782
Corporate debt securities 3,969 -- -- 3,969
--------- ------- ------- ---------
Total $16,617 $-- $(48) $16,569
========= ======= ======= =========
</TABLE>
6
<PAGE> 7
NOTE 3 -- INVENTORIES
The components of inventories, stated at the lower of cost (FIFO) or market,
are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
(In Thousands) 1996 1995
---------- --------------
<S> <C> <C>
Finished goods $19,499 $19,054
Work in process 1,688 1,255
Raw materials 7,328 6,405
---------- --------------
28,515 26,714
Less: valuation allowance (4,774) (4,068)
--------- --------------
$23,741 $22,646
========= ==============
</TABLE>
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment and related allowances for depreciation and amortization
are summarized below:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
(In Thousands) 1996 1995
----------- ---------------
<S> <C> <C>
Land and buildings $ 5,588 $ 5,551
Furniture and fixtures 3,843 3,691
Machinery and equipment 21,102 19,443
Leasehold improvements 12,419 12,055
Construction in progress 25,398 18,311
----------- ---------------
68,350 59,051
Less: accumulated depreciation and
amortization (18,430) (16,354)
----------- ---------------
$49,920 $42,697
=========== ===============
</TABLE>
Interest capitalized in connection with construction of NABI's
biopharmaceutical facility was $1,831 and $932 at June 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 June 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
six month periods ended June 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of products sold 74.8 75.6 75.1 76.3
---------- ---------- ---------- ----------
Gross profit margin 25.2 24.4 24.9 23.7
Research and development expense 7.8 11.7 8.4 11.6
Royalty expense 1.9 1.6 2.0 1.2
Selling, general and administrative expense 11.5 12.1 10.8 11.4
---------- ---------- ---------- ----------
Operating income (loss) 4.0 (1.0) 3.7 (0.5)
Interest and other income 0.8 0.7 0.7 0.8
Interest and other expense (1.9) (0.6) (1.7) (0.7)
---------- ---------- ---------- ----------
Income before provision for income taxes and
extraordinary charge 2.9 (0.9) 2.7 (0.4)
Provision for income taxes (0.1) (4.3) (0.1) (4.1)
---------- ---------- ---------- ----------
Income (loss) before extraordinary charge 2.8 (5.2) 2.6 (4.5)
Extraordinary charge --- --- (0.8) ---
---------- ---------- ---------- ----------
Net income (loss) 2.8% (5.2)% 1.8% (4.5)%
========== ========== ========== ==========
</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 JUNE 30,
--------------------------------------------------------------
1996 % 1995 %
Segment ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Plasma -Source $28,200 48.4% $25,550 52.1%
-Specialty 22,351 38.3 14,828 30.3
---------- ---------- ---------- ----------
50,551 86.7 40,378 82.4
Immunotherapeutic products 5,605 9.6 4,653 9.5
Diagnostic products and services 1,526 2.6 2,431 5.0
Research and development 644 1.1 1,513 3.1
---------- ---------- ---------- ----------
Total $58,326 100.0% $48,975 100.0%
========== ========== ========== ==========
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------
1996 % 1995 %
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Segment
Plasma -Source $ 58,827 49.9% $53,821 55.5%
-Specialty 44,012 37.4 28,489 29.3
---------- ---------- ---------- ----------
102,839 87.3 82,310 84.8
Immunotherapeutic products 10,402 8.8 7,254 7.5
Diagnostic products and services 2,993 2.5 4,201 4.3
Research and development 1,587 1.4 3,338 3.4
---------- ---------- ---------- ----------
Total $117,821 100.0% $97,103 100.0%
========== ========== ========== ==========
</TABLE>
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
Sales. Sales for the second quarter of 1996 rose 19% to $58.3 million compared
to $49.0 million for the second quarter of 1995. The increase was primarily
attributable to increased volume of plasma shipments, primarily specialty
plasmas.
Gross profit margin. Gross profit and related margin for the second quarter of
1996 was $14.7 million, or 25.2% of sales, compared to $11.9 million, or 24.4%
of sales, in the second quarter of 1995. An improved sales mix, primarily from
increased sales of higher margin specialty plasmas, and increased
immunotherapeutic sales, accounted for the improved profitability.
Research and development expense. Research and development expense was $4.6
million, or 7.8% of sales for the second quarter of 1996 compared to $5.7
million or 11.7% of sales, in the second quarter of 1995. The decline in
research and development expenditures in the second quarter over the comparable
period in 1995 is attributed to higher development costs during 1995 for WinRho
SD which was commercially launched in mid 1995.
Royalty expense. Royalty expense for the second quarter of 1996 was $1.1
million, or 1.9% of sales, compared to $.8 million or 1.6 % of sales, in the
second quarter of 1995. Royalties associated with increased immunotherapeutic
sales in 1996 accounted for the increase in expense.
Selling, general, and administrative expense. Selling, general and
administrative expense was $6.7 million, or 11.5% of sales, for the second
quarter of 1996 compared to $5.9 million, or 12.1% of sales, in the second
quarter of 1995. While expenses decreased as a percentage of sales, the dollar
increase resulted primarily from personnel related expenses.
Interest and other expense. Interest and other expense for the second quarter
of 1996 was $0.6 million, or 1.1% of sales, compared to net interest income of
$45,000, or 0.1% of sales, in the second quarter of 1995. Interest expense
associated with the convertible subordinated notes issued during the first
quarter of 1996 was primarily responsible for the increased expense.
Other factors. Provision for income taxes was $68,000 or an effective rate of
4% in the second quarter of 1996, compared to $2.1 million in the second
quarter of 1995. The 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
second quarter of 1995 reflects income taxes on NABI's stand-alone pre-tax
income which could not be offset by pre-merger losses.
10
<PAGE> 11
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Sales. Sales for the first half of 1996 rose 21% to $117.8 million compared to
$97.1 million for the first half of 1995. The increase was primarily
attributable to increased plasma shipments, primarily specialty plasma, and
increased immunotherapeutic sales.
Gross profit margin. Gross profit and related margin for the first half of
1996 was $29.4 million or 24.9% of sales, compared to $23.1 million, or 23.7%
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.
Research and development expense. Research and development expense was $9.9
million or 8.4% of sales, compared to $11.2 million or 11.6% of sales in the
first half of 1995. The decline in research and development expenditures in the
first half of 1996 over the comparable period in 1995 is attributed to higher
development costs during 1995 for WinRho SD which was commercially launched in
mid 1995.
Royalty expense. Royalty expense for the first half of 1996 was $2.3 million
or 2% of sales, compared to $1.2 million or 1.2% in 1995. Royalties associated
with increased immunotherapeutic sales in 1996 accounted for the increase in
expense.
Selling, general and administrative expense. Selling, general and
administrative expense was $12.7 million or 10.8% of sales compared to $11.1
million or 11.4% of sales in the first half of 1995. While expenses decreased
as a percentage of sales, the dollar increase resulted primarily from
additional personnel and sales and marketing expenses related to the product
launch of WinRho SD in mid 1995.
Interest and other expense. Interest and other expense for the first half of
1996 was $1.2 million, or 1% of sales, compared to net interest income of
$130,000 or 0.1% in 1995. The increase in interest expense resulted primarily
from interest expense associated with the convertible subordinated notes issued
during the first quarter of 1996.
Other factors. The provision for income taxes was $127,000 or an effective
rate of 4% in the first half of 1996, compared to $4.0 million in 1995. The
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 second half of 1995
reflects income taxes on NABI's stand-alone pre-tax income which could not be
offset by pre- merger losses.
The first half of 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 June 30, 1996, the Company's current assets exceeded current liabilities
by $66.7 million as compared to a net working capital position of $14.7 million
at December 31, 1995. The increase in working capital was 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 June 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. In June, 1996 NABI
received notification from the FDA that all non-virally inactivated immune
globulin products available for use should be tested and found to be negative
by a modified protocol for polymerase chain reaction methodology (PCR2) or
evaluated by a test or procedure of equivalent sensitivity. NABI elected,
voluntarily and without charge, to withdraw previously distributed lots of this
product which had satisfied all official FDA release criteria then in effect
and exchange them for products which have been tested by the FDA under the PCR2
modified protocol. None of the previously distributed product had failed to
pass the official FDA release criteria in effect at the time the product was
manufactured.
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,
Armour Pharmaceutical Company, Rhone-Poulenc Rorer, Inc., Baxter, 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
12
<PAGE> 13
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matter was approved at the Company's annual stockholder's
meeting, which was held on May 31, 1996:
a) Election of the following Board of Directors:
<TABLE>
<CAPTION>
VOTES
------------------------------------------
FOR WITHHELD
------------------------------------------
<S> <C> <C>
Paul Bogikes 28,404,309 29,575
John C. Carlisle 28,406,163 27,721
David L. Castaldi 28,406,208 27,676
Joseph C. Cook, Jr. 28,405,758 28,126
Brian H. Dovey 28,405,284 28,600
George W. Ebright 28,405,608 28,276
David J. Gury 28,406,000 27,884
Richard A. Harvey, Jr. 28,405,834 28,050
David A. Thompson 28,406,158 27,726
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
a. Exhibits
<S> <C>
11 Calculation of Earnings Per Share . . . . . . . . . . . . . . . . . . . . . . . 15
27 Financial Data Schedule (for SEC use only) . . . . . . . . . . . . . . . . . . . 16
b. Reports on Form 8-K:
None
</TABLE>
13
<PAGE> 14
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: August 9, 1996 By: /s/ Alfred J. Fernandez
-------------------------------------------------
ALFRED J. FERNANDEZ
Senior Vice President and Chief Financial Officer
14
<PAGE> 1
EXHIBIT 11
NABI
CALCULATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1996 1995 1996 1995
------ ------- ------ ------
<S> <C> <C> <C> <C>
Net income (loss) $ 1,642 $ (2,529) $ 2,127 $ (4,359)
======= ======== ======= ========
Weighted average number of common shares
outstanding during the period 34,387 33,519 34,210 33,456
Add dilutive effect of common stock equivalents:
Stock options and warrants (as determined by the
application of the treasury stock method) 1,394 -- 1,536 --
------- -------- ------- --------
Weighted average number of shares and common
share equivalents used in primary earnings
per share computations 35,781 33,519 35,746 33,456
======= ======== ======= ========
Earnings (loss) per share $ 0.05 $ (0.08) $ 0.06 $ (0.13)
======= ======== ======= ========
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1996 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,282
<SECURITIES> 16,569
<RECEIVABLES> 48,474<F1>
<ALLOWANCES> 0
<INVENTORY> 23,741<F1>
<CURRENT-ASSETS> 98,441
<PP&E> 49,920<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 186,563
<CURRENT-LIABILITIES> 31,721
<BONDS> 86,462
0
0
<COMMON> 3,452
<OTHER-SE> 69,992
<TOTAL-LIABILITY-AND-EQUITY> 186,563
<SALES> 116,234
<TOTAL-REVENUES> 117,821
<CGS> 88,464
<TOTAL-COSTS> 88,464
<OTHER-EXPENSES> 24,965
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 1,992
<INCOME-PRETAX> 3,186
<INCOME-TAX> 127
<INCOME-CONTINUING> 3,059
<DISCONTINUED> 0
<EXTRAORDINARY> 932
<CHANGES> 0
<NET-INCOME> 2,127
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0
<FN>
<F1>RECEIVABLES, INVENTORY AND PP&E REPRESENT NET AMOUNTS.
<F2>LOSS PROVISION INCLUDED IN OTHER EXPENSES.
</FN>
</TABLE>
