<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, 1999
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 (R)
------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-1212264
- ------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation 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
-------------------------
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 9,
1999 was 34,960,243 shares.
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
NABI(R)
================================================================================
INDEX
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<TABLE>
<CAPTION>
<S> <C>
- -----------------------------
PART I. FINANCIAL INFORMATION PAGE
- ----------------------------- ----
ITEM 1. FINANCIAL STATEMENTS.............................................................................3
Consolidated Balance Sheets, September 30, 1999 and December 31, 1998.....................................3
Consolidated Statements of Operations for the three-month and nine-month periods ended
September 30, 1999 and 1998..........................................................................4
Consolidated Statements of Cash Flows for the nine-month periods ended
September 30, 1999 and 1998..........................................................................5
Notes to Consolidated Financial Statements................................................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.......................................................................................10
- -----------------------------
PART II. OTHER INFORMATION
- -----------------------------
ITEM 1. LEGAL PROCEEDINGS...............................................................................15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................15
</TABLE>
2
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NABI(R)
PART I Financial Information
Item 1 Financial Statements
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
IN THOUSANDS EXCEPT PER SHARE DATA 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 593 $ 1,016
Trade accounts receivable, net 28,059 40,029
Inventories, net 35,280 38,203
Prepaid expenses and other assets 6,082 6,227
--------- ---------
Total current assets 70,014 85,475
PROPERTY AND EQUIPMENT, NET 105,791 99,018
OTHER ASSETS:
Excess of acquisition cost over net assets acquired, net 13,418 16,165
Intangible assets, net 6,227 7,032
Other, net 7,689 10,610
--------- ---------
TOTAL ASSETS $ 203,139 $ 218,300
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Trade accounts payable $ 17,555 $ 14,964
Accrued expenses 22,833 28,466
Notes payable 5,145 81
--------- ---------
TOTAL CURRENT LIABILITIES 45,533 43,511
NOTES PAYABLE 100,178 117,963
OTHER 1,361 2,637
--------- ---------
TOTAL LIABILITIES 147,072 164,111
--------- ---------
STOCKHOLDERS' EQUITY:
Convertible preferred stock, par value $.10 per share:
5,000 shares authorized; no shares outstanding -- --
Common stock, par value $.10 per share: 75,000 shares authorized;
34,959 and 34,903 shares issued and outstanding, respectively 3,496 3,490
Capital in excess of par value 138,031 137,911
Accumulated deficit (84,746) (86,734)
Accumulated other comprehensive loss (714) (478)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 56,067 54,189
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 203,139 $ 218,300
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
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NABI(R)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $ 54,181 $ 58,713 $ 174,402 $ 178,505
COSTS AND EXPENSES:
Costs of products sold 37,589 42,520 125,487 130,651
Selling, general and administrative expense 8,859 7,449 23,855 23,622
Research and development expense 4,229 5,301 11,290 15,689
Royalty expense 2,786 2,694 8,877 8,557
Other operating expense, principally
freight and amortization 446 499 1,424 1,658
Non-recurring credit (1,935) -- (1,935) --
--------- --------- --------- ---------
OPERATING INCOME (LOSS) 2,207 250 5,404 (1,672)
INTEREST INCOME 7 24 67 36
INTEREST EXPENSE (1,012) (1,419) (3,303) (4,596)
OTHER, NET (11) (7) (65) 40
--------- --------- --------- ---------
INCOME (LOSS) BEFORE BENEFIT (PROVISION)
FOR INCOME TAXES 1,191 (1,152) 2,103 (6,192)
BENEFIT (PROVISION) FOR INCOME TAXES 259 (2,605) (115) --
--------- --------- --------- ---------
NET INCOME (LOSS) $ 1,450 $ (3,757) $ 1,988 $ (6,192)
========= ========= ========= =========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ 0.04 $ (0.11) $ 0.06 $ (0.18)
========= ========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
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NABI(R)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
Nine Months Ended September 30,
-------------------------------
DOLLARS IN THOUSANDS 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,988 $ (6,192)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 7,695 8,548
Non-recurring credit (1,935) --
Provision for doubtful accounts (98) (13)
Other 108 228
Change in assets and liabilities:
Decrease in trade accounts receivable 12,068 3,950
Decrease in inventories 2,923 4,214
Decrease in prepaid expenses and other assets 769 8,254
(Increase) decrease in other assets (223) 258
Increase (decrease) in accounts payable and accrued liabilities 1,493 (5,658)
-------- --------
Total adjustments 22,800 19,781
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 24,788 13,589
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of antibody centers 2,518 --
Capital expenditures (15,090) (14,786)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (12,572) (14,786)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Repayments under line of credit, net (12,785) (5,261)
Borrowings under term loan -- 5,000
Other debt 64 (1,394)
Proceeds from the exercise of options 82 135
-------- --------
NET CASH USED BY FINANCING ACTIVITIES (12,639) (1,520)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (423) (2,717)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,016 3,397
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 593 $ 680
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
5
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NABI
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------
NOTE 1 GENERAL
- --------------------------------
Nabi(R) (the "Company") is a fully-integrated biopharmaceutical company that
develops and commercializes pharmaceutical products used for the prevention and
treatment of infectious and autoimmune diseases and supplies specialty and
non-specific antibody products to pharmaceutical companies worldwide.
The consolidated financial statements include the accounts of Nabi and its
subsidiaries. All significant intercompany accounts and transactions were
eliminated during the consolidation. These statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in Nabi's Annual Report to Stockholders for the year ended December 31,
1998.
In the opinion of management, the unaudited consolidated financial statements
include all adjustments necessary to present fairly Nabi's consolidated
financial position at September 30, 1999 and the consolidated results of its
operations for the three and nine month periods ended September 30, 1999 and
1998. The interim results of operations are not necessarily indicative of the
results that may occur for the fiscal year.
- --------------------------------
NOTE 2 INVENTORIES
- --------------------------------
The components of inventories, stated at the lower of cost (FIFO) or market, are
as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
-------------------------------------------
DOLLARS IN THOUSANDS 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $33,890 $36,975
Work in process 1,328 1,964
Raw materials 2,861 3,772
------------- --------------
38,079 42,711
Less: reserves (2,799) (4,508)
------------- --------------
TOTAL $35,280 $38,203
============= ==============
</TABLE>
- --------------------------------
NOTE 3 NON-RECURRING CHARGES
- --------------------------------
During the fourth quarter of 1998, Nabi recorded a non-recurring charge that
included $13.2 million related to its strategic plan to sharpen the Company's
focus on improving profitability. The plan commenced during late 1998 and will
be substantially completed during 1999.
6
<PAGE> 7
A summary of the Company's restructuring activity for the first nine months of
1999 is presented below:
DOLLARS IN THOUSANDS
- -------------------------------------------------------------------------------
Balance at December 31, 1998 $13,214
Activity during 1999:
Non-cash write-downs of fixed and intangible assets (4,269)
Non-recurring credit (1,935)
Termination benefit payments (817)
Non-cancelable lease obligation payments
and other cash outflows (292)
-------------
BALANCE AT SEPTEMBER 30, 1999 $5,901
=============
Included in the original $13.2 million restructuring charge were estimated cash
expenses for severance and future lease costs related to the shut-down of the
Company's German operations which was planned for and determined likely to occur
at that time. Rather than shutting down the operations, Nabi has been able to
reach an agreement during the third quarter of 1999 to transfer those operations
to a third party. As a result, Nabi reversed $1.9 million of the accrued
severance and lease charges since the Company should avoid these obligations.
- --------------------------------
NOTE 4 EARNINGS PER SHARE
- --------------------------------
The following is a reconciliation between basic and diluted earnings per share
for the three and nine months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------- ------------------------------------------
Effect of Effect of
Dilutive Dilutive
Securites: Securites:
Stock Stock
Basic EPS Options Diluted EPS Basic EPS Options Diluted EPS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999
Net income $ 1,450 -- $ 1,450 $ 1,988 -- $ 1,988
Shares 34,943 1,688 36,631 34,925 725 35,650
Per share $ 0.04 -- $ 0.04 $ 0.06 -- $ 0.06
----------------------------------------------------------------------------------------
1998
Net loss $ (3,757) -- $ (3,757) $ (6,192) -- $ (6,192)
Shares 34,897 -- 34,897 34,879 -- 34,879
Per share $ (0.11) -- $ (0.11) $ (0.18) -- $ (0.18)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 8
- --------------------------------------
NOTE 5 COMPREHENSIVE INCOME
- --------------------------------------
The components of comprehensive income for the three and nine months ended
September 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------------------
DOLLARS IN THOUSANDS 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) $1,450 $(3,757) $1,988 $(6,192)
Foreign currency translation
gain (loss) 61 186 (236) 177
----------------- ----------------- ------------------ ----------------
COMPREHENSIVE INCOME (LOSS) $1,511 $(3,571) $1,752 $(6,015)
----------------- ----------------- ------------------ ----------------
</TABLE>
- --------------------------------------
NOTE 6 INDUSTRY SEGMENT INFORMATION
- --------------------------------------
The following table presents information related to Nabi's two operating
business segments for the three and nine months ended September 30, 1999 and
1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------------------------
DOLLARS IN THOUSANDS 1999 1998 1999 1998
- ------------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C>
Sales
Pharmaceutical products $18,222 $13,778 $ 47,974 $ 41,990
Antibody products 35,959 44,935 126,428 136,515
---------------- ---------------- ---------------- ----------------
TOTAL $54,181 $58,713 $174,402 $178,505
================ ================ ================ ================
Operating income (loss)
Pharmaceutical products $ 1,782 $ 182 $ 2,761 $ (424)
Antibody products 425 68 2,643 (1,248)
---------------- ---------------- ---------------- ----------------
TOTAL $ 2,207 $ 250 $ 5,404 $ (1,672)
================ ================ ================ ================
</TABLE>
The following summary reconciles reportable segment operating profit (loss) to
income (loss) before benefit (provision) for income taxes:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------------------------
DOLLARS IN THOUSANDS 1999 1998 1999 1998
- ------------------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C>
INCOME (LOSS) BEFORE BENEFIT
(PROVISION) FOR INCOME TAXES:
Reportable segment
operating income (loss) $ 2,207 $ 250 $ 5,404 $(1,672)
Unallocated interest expense (1,012) (1,419) (3,303) (4,596)
Unallocated other income
and expense, net (4) 17 2 76
---------------- ---------------- ---------------- ----------------
Consolidated income (loss)
before benefit (provision)
for income taxes $ 1,191 $(1,152) $ 2,103 $(6,192)
================ ================ ================ ================
</TABLE>
8
<PAGE> 9
- --------------------------------------
NOTE 7 RECLASSIFICATIONS
- --------------------------------------
Certain items in the consolidated financial statements for the 1998 period have
been reclassified for comparative purposes.
9
<PAGE> 10
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
Nabi's financial condition and results of operations for the three and nine
month periods ended September 30, 1999 and 1998. The discussion and analysis
should be read in conjunction with the condensed consolidated financial
statements and notes thereto. All dollar amounts are expressed in thousands,
except per share amounts.
- ---------------------------------
RESULTS OF OPERATIONS
- ---------------------------------
The following table sets forth Nabi's results of operations expressed as a
percentage of sales:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------- ---------------------
1999 1998 1999 1998
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Costs of products sold 69.4 % 72.4 % 72.0 % 73.2 %
------ ------ ------ ------
Gross profit margin 30.6 % 27.6 % 28.0 % 26.8 %
Selling, general and administrative expense 16.4 % 12.7 % 13.7 % 13.2 %
Research and development expense 7.8 % 9.0 % 6.5 % 8.8 %
Royalty expense 5.1 % 4.6 % 5.1 % 4.8 %
Other operating expense, principally
freight and amortization 0.8 % 0.8 % 0.8 % 0.9 %
Non-recurring charges (3.6)% -- % (1.1)% -- %
------ ------ ------ ------
Operating income (loss) 4.1 % 0.4 % 3.1 % (0.9)%
Interest income -- % -- % -- % -- %
Interest expense (1.9)% (2.3)% (1.9)% (2.5)%
Other, net -- % -- % -- % -- %
------ ------ ------ ------
Income (loss) before benefit (provision)
for income taxes 2.2 % (2.0)% 1.2 % (3.5)%
Benefit (provision) for income taxes 0.5 % (4.4)% (0.1)% -- %
------ ------ ------ ------
Net income (loss) 2.7 % (6.4)% 1.1 % (3.5)%
====== ====== ====== ======
</TABLE>
Information concerning Nabi's sales by operating segments for the respective
periods, is set forth in the following table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------
SEGMENT 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pharmaceutical products $18,222 33.6% $13,778 23.5%
Antibody products:
- Non-specific antibodies 24,850 45.9 30,579 52.1
- Specialty antibodies 11,109 20.5 14,356 24.4
------------ -------------- ------------- --------------
35,959 66.4 44,935 76.5
------------ -------------- ------------- --------------
TOTAL $54,181 100.0% $58,713 100.0%
============ ============== ============= ==============
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------
SEGMENT 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pharmaceutical products $47,974 27.5% $41,990 23.5%
Antibody products:
- Non-specific antibodies 86,812 49.8 97,273 54.5
- Specialty antibodies 39,616 22.7 39,242 22.0
------------- ------------- -------------- -------------
126,428 72.5 136,515 76.5
------------- ------------- -------------- -------------
TOTAL $174,402 100.0% $178,505 100.0%
============= ============= ============== =============
</TABLE>
- ----------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
- ----------------------------------------------------
SALES. Sales for the third quarter of 1999 decreased by $4.5 million to $54.2
million, compared to $58.7 million for the third quarter of 1998, reflecting
lower revenues for antibody products. Pharmaceutical sales increased 32% from
the third quarter of 1998 reflecting increased sales of WinRho SDF(TM) and
Nabi-HB(TM), and sales OF ALOPRIM(TM), a new pharmaceutical product that Nabi
in-licensed and launched in June 1999. Higher sales of WinRho SDF(TM) in the
third quarter of 1999 resulted primarily from increased demand from
distributors. In 1999, Nabi-HB(TM) sales results reflect the successful launch
of this product, which received expedited approval by the FDA in March, 1999. In
1998, Nabi exhausted the remaining inventory of its predecessor product,
H-BIG(R) during the third quarter.
Total antibody sales decreased by 20% from the third quarter of 1998 due to a
19% decline in non-specific antibody sales. Sales of non-specific antibody sales
decreased due to lower production reflecting the impact of the sale of six
antibody collection centers in April 1999, and lower overall antibody
collections on a same store basis. The Company believes low unemployment and the
increasing impact of regulations on donor eligibility have contributed to these
lower production levels. The impact of lower production was partially offset by
increased prices as a result of a new multi-year contract with a major customer.
The 23% decrease in specialty antibodies sales from the comparable 1998 period
included the effect of customer import licensing issues that delayed shipments
of some specialty antibodies until the fourth quarter.
GROSS PROFIT MARGIN. Gross profit and related margin for the third quarter of
1999 was $16.6 million, or 30.6% of sales, compared to $16.2 million, or 27.6%
of sales, in the third quarter of 1998. The increase in gross profit and related
margin reflects the Company's success in shifting the sales mix toward
higher-margin pharmaceutical products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
expense was $8.9 million, or 16.4% of sales, for the third quarter of 1999
compared to $7.4 million, or 12.7% of sales, in the third quarter of 1998. This
increase resulted from higher sales and marketing expenses associated with
increasing pharmaceutical product sales, as well as the cost related to Year
2000 preparedness efforts. The higher sales and marketing expenses included
costs related to the launch of ALOPRIM(TM) and continuing promotion of
Nabi-HB(TM). These increases were partially offset by a reduction in other
general and administrative expenses for the 1999 quarter.
RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense was $4.2
million, or 7.8% of sales, for the third quarter of 1999 compared to $5.3
million, or 9.0% of sales, in the third quarter of 1998. Nabi incurred
significant expenditures during the prior year period related to expenditures
incurred in conjunction with the submission of the Product License Application
("PLA") for Nabi-HB(TM), a product approved by the FDA in March 1999. In 1999,
Nabi has reduced pre-clinical product development activities and has focused its
ongoing research and development efforts to support currently marketed products
and those products in later stages of development, including Nabi-StaphVAX(TM).
At the same
11
<PAGE> 12
time, the Company is actively seeking corporate and government partners to fund
the significant cost of further development for the products in its extensive
research and development pipeline.
Nabi has continued to report promising data from its research and development
efforts in the third quarter of 1999, specifically the encouraging interim
results from a pivotal phase III trial of Nabi-StaphVAX(TM), for which the
Company anticipates final results to be available in the third quarter of 2000.
In addition, Nabi was recently issued two patents (US Pat. No. 5,866,140 &
5,961,975) containing claims covering both a Staphylococcus epidermidis vaccine
and a hyperimmune globulin made using the vaccine, thereby strengthening the
Company's proprietary position around the staphylococcal vaccines and
immunoglobulin products it has currently in development. It is Nabi's strategy
to integrate these antigens into pharmaceutical products aimed at preventing and
treating life threatening bacterial infections.
ROYALTY EXPENSE. Royalty expense is directly related to pharmaceutical sales.
The Company incurred $2.8 million of royalty expense, or 15.3% of pharmaceutical
sales, in the third quarter of 1999, compared to $2.7 million, or 19.6% of
sales, in the third quarter of 1998. Royalty expense decreased as a percentage
of pharmaceutical revenue reflecting the year to date effect of a recent
agreement limiting the amount of royalties to be paid on sales of Nabi-HB(TM).
The benefits of the restated royalty agreement will continue into the fourth
quarter.
NON-RECURRING CREDIT. During the third quarter of 1999, Nabi reversed a portion
of a non-recurring charge originally recorded in the fourth quarter of 1998 for
the planned shut-down of its German operations, which was planned for and
determined likely to occur at that time. Rather than shutting down the
operations, Nabi has been able to reach an agreement during the third quarter of
1999 to transfer those operations to a third party. As a result , Nabi should
avoid estimated cash expenses for severance and future lease costs amounting to
$1.9 million.
INTEREST EXPENSE. Interest expense for the third quarter of 1999 was $1.0
million, or 1.9% of sales, compared to $1.4 million, or 2.3% of sales, in the
third quarter of 1998. The decrease is attributable to higher amounts of
interest capitalized and lower average outstanding bank borrowings during the
third quarter of 1999 as compared to the third quarter of 1998. Capitalized
interest relating primarily to construction of Nabi's biopharmaceutical
manufacturing facility in Boca Raton, Florida was approximately $1.2 million in
the 1999 third quarter as compared to $0.9 million during the 1998 period.
OTHER FACTORS. Benefit for income taxes was $0.3 million, recorded at an
effective rate of 21.7%, in the third quarter of 1999 compared to a $2.6 million
provision in the third quarter of 1998. The 21.7% effective tax benefit rate for
the third quarter of 1999 differs from the statutory rate of 35% primarily due
to reversal of the prior 1999 six months' tax provision. This reversal is due to
Nabi's expectation of realizing the current year's benefit from a portion of its
net operating loss carryforwards from prior years.
- ------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
- ------------------------------------------------
SALES. Sales for the nine months ended September 30, 1999 decreased by $4.1
million to $174.4 million compared to $178.5 million for the nine months of
1998. Pharmaceutical sales increased by approximately $6.0 million primarily due
to increased sales of Autoplex(R)T and WinRho SDF(TM), and sales of ALOPRIM(TM),
a new pharmaceutical product that Nabi in-licensed and launched in June 1999.
Comparative increased sales of Autoplex(R)T during the first nine months of 1999
reflect the impact of increased supply of the product as compared to the first
nine months of 1998. Higher sales of WinRho SDF(TM) for the nine months of 1999
resulted primarily from increased distributor demand.
Total antibody sales decreased by 7% from the nine months of 1998. Non-specific
antibody sales decreased 11% due to lower production reflecting the impact of
the sale of six centers in April 1999, and
12
<PAGE> 13
overall lower antibody collections on a same store basis. The Company believes
low unemployment and the increasing impact of regulations on donor eligibility
have contributed to these lower production levels.
GROSS PROFIT MARGIN. Gross profit and related margin for the nine months ended
September 30, 1999 was $48.9 million, or 28.0% of sales, compared to $47.9
million, or 26.8% of sales, in the nine months of 1998. The increase in gross
profit and related margin resulted from an improved sales mix of higher-margin
pharmaceutical products.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
expense was $23.9 million, or 13.7% of sales, for the nine months ended
September 30, 1999 compared to $23.6 million, or 13.2% of sales, in the nine
months of 1998. This increase reflects increased sales and marketing expenses in
1999 associated with increased pharmaceutical product sales and the launches of
Nabi-HB(TM) and ALOPRIM(TM), as well as increased system costs related to Year
2000 readiness. The increase was offset by the impact of higher general and
administrative expenses in 1998 due to costs associated with reorganizational
measures initiated in the first half of 1998.
RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense was $11.3
million, or 6.5% of sales, for the nine months of 1999, compared to $15.7
million, or 8.8% of sales, in the prior year period. In 1998, Nabi incurred
significant expenditures related to the advancement of clinical trials and the
submission of the PLA for Nabi-HB(TM), a product approved by the FDA in March
1999. In 1999, Nabi has reduced pre-clinical product development activities and
has focused its ongoing research and development efforts to support currently
marketed products and those in later stages of development, including
Nabi-StaphVAX(TM). At the same time, the Company is actively seeking corporate
and government partners to fund the significant cost of further development for
the products in its extensive research and development pipeline.
ROYALTY EXPENSE. Royalty expense is directly related to pharmaceutical sales.
The Company incurred $8.9 million of royalty expense, or 18.5% of pharmaceutical
sales, in the first nine months of 1999, compared to $8.6 million, or 20.4% of
sales, in the first nine months of 1998. Royalty expense decreased as a
percentage of pharmaceutical revenue due to a recent agreement limiting the
amount of royalties to be paid on sales of Nabi-HB(TM). The benefits of the
restated royalty agreement will continue for the remainder of 1999.
NON-RECURRING CREDIT. During the third quarter of 1999, Nabi reversed a portion
of a non-recurring charge originally recorded in the fourth quarter of 1998
for the planned shut-down of its German operations, which was planned for and
determined likely to occur at that time. Rather than shutting down the
operations, Nabi has been able to reach an agreement to transfer those
operations to a third party. As a result, Nabi should avoid estimated cash
expenses for severance and future lease costs amounting to $1.9 million.
INTEREST EXPENSE. Interest expense for the nine months ended September 30, 1999
was $3.3 million, or 1.9% of sales, compared to $4.6 million, or 2.5% of sales,
in the nine months of 1998. The decrease is attributable to higher amounts of
interest capitalized and lower average outstanding bank borrowings during the
nine months of 1999. Capitalized interest relating primarily to construction of
Nabi's biopharmaceutical manufacturing facility in Boca Raton, Florida was
approximately $3.5 million during the first nine months of 1999 as compared to
$2.5 million during the 1998 period.
OTHER FACTORS. Benefit for income taxes was $0.1 million or an effective rate of
5.5%, in the nine months ended September 30, 1999. The 5.5% effective tax rate
for 1999 differs from the statutory rate of 35% due to Nabi's expectation of
realizing the current year's benefit from a portion of its net operating loss
carryforwards from prior years.
13
<PAGE> 14
- -----------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -----------------------------------
At September 30, 1999, Nabi's credit agreement provided for a revolving credit
facility of up to $45 million subject to certain borrowing base restrictions,
which matures in September 2002, and a $5 million term loan due in March 2000.
Borrowings under the agreement totaled $24.7 million at September 30, 1999 as
compared to $37.5 million at December 31, 1998, and additional availability was
approximately $5.6 million at September 30, 1999. The credit agreement is
secured by substantially all of Nabi's assets, requires the maintenance of
certain financial covenants and prohibits the payment of dividends.
As of September 30, 1999, Nabi's current assets exceeded current liabilities by
$24.5 million as compared to a net working capital position of $42 million at
December 31, 1998. Cash and cash equivalents at September 30, 1999 were $0.6
million compared to $1 million at December 31, 1998. The primary source of cash
during 1999 was operations, including cash earnings and reductions of trade
receivables and inventories. Net cash provided by operating activities was $24.8
million representing an improvement of $11.2 million from the comparable 1998
nine month period. The primary uses of cash during the nine months ended
September 30, 1999 were capital expenditures, principally associated with the
Company's manufacturing facility in Boca Raton, Florida, and a $12.8 million
reduction of borrowings under the revolving credit agreement.
Projected capital expenditures for the remainder of 1999 include costs
associated with the Boca Raton manufacturing facility, including capitalized
interest, development of information systems and related expenditures, and
antibody collection center renovations. Nabi believes that cash flow from
operations and its available bank credit facilities will be sufficient to meet
its anticipated cash requirements for the remainder of 1999. The Company is also
in the process of seeking additional cash to fund the development of its
pharmaceutical product pipeline from strategic alliances and additional funding
from new or existing credit facilities.
- -----------------------------------
YEAR 2000
- -----------------------------------
During 1998, a cross-functional team was established to address Year 2000
readiness for key financial and operational computer systems, equipment
(including lab equipment), information and business systems and external
supplier and customer relationships. The Company established a program to
address Year 2000 issues which focused on Nabi's business critical processes and
had four overlapping phases: Phase I, the identification and assessment of
systems, equipment and business relationships; Phase II, the testing of Year
2000 readiness for internal systems and equipment and the inquiry/audit of Year
2000 readiness for external suppliers and customers; Phase III, the remediation
or replacement of equipment or business relationships that will not be Year 2000
compliant/ready, including re-testing as required; and Phase IV, contingency
planning to mitigate the potential effect of problems which may be so deeply
embedded in the identified business critical processes that they are beyond the
Company's reasonable ability to identify and control.
Nabi has completed Year 2000 readiness efforts for its business critical
processes with two exceptions: 1) Desktop Computers - although the pilot program
began in August 1999, the installation of new desktop computers did not begin
until the end of August due to shipment delays. Nabi expects to complete the
installation of such systems at the Company's Boca Raton, Miami and Rockville
locations by mid-November 1999. 2) Donor Management System (DMS) - FDA review
was required before system implementation could begin. On July 2, 1999, a 510K
Notification of Intent was submitted to the FDA by the software developer. On
September 10, 1999, the FDA issued a finding of "substantial equivalence to a
legally marketed predicate device" which allowed for system implementation. Nabi
expects to complete
14
<PAGE> 15
the installation of this system by early December 1999 in the 13 U.S. antibody
collection centers that will require DMS implementation as a Year 2000 business
solution.
The project cost to achieve Year 2000 readiness is currently estimated at $2 to
$3 million dollars, including expense and capital expenditures, not all of which
are incremental to the Company's operations. These expenditures will primarily
be incurred during 1998 and 1999, however, some cost may be expended in 2000.
These costs will be funded by a combination of operating cash flows, bank credit
facilities, and operating and capital lease agreements. Approximately 25% of
Nabi's 1999 information technology planned expenditures will be directly
attributable to Year 2000 remediation efforts. Year 2000 related expenditures
were approximately $650,000 in the third quarter of 1999, and approximately
$1,520,000 for the nine months ended September 30, 1999.
The Company utilized both internal and external resources in the above Year 2000
efforts. Nabi will continue to communicate with business critical suppliers and
customers and monitor new developments through the end of the year, and beyond,
if necessary. However, given the nature of the Year 2000 problem, there can be
no assurance that the Company's efforts will be successful. If they are not, the
Company's operations or financial condition may be materially and adversely
affected.
FACTORS TO BE CONSIDERED
The parts of this Quarterly Report on Form 10-Q captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Legal Proceedings" contain certain forward-looking statements, which involve
risks and uncertainties. Readers should refer to a discussion under "Factors to
be Considered" contained in Nabi's Annual Report on Form 10-K for the year ended
December 31, 1998 concerning certain factors that could cause Nabi's actual
results to differ materially from the results anticipated in such
forward-looking statements. Said discussion is hereby incorporated by reference
into this Quarterly Report.
- -----------------------------------
PART II OTHER INFORMATION
- -----------------------------------
ITEM 1. LEGAL PROCEEDINGS
Nabi is a party to litigation in the ordinary course of business. In addition,
Nabi is a co-defendant with various other parties in two suits filed in the U.S.
by, or on behalf of, individuals 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. Nabi does not
believe that any such litigation will have a material adverse effect on its
business, financial position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit
10.24 Employment Agreement dated August 1, 1999 between
David D. Muth and Nabi......................................17
27 Financial Data Schedule (for S.E.C. use only) ..............22
b. Reports on Form 8-K:
On September 15, 1999, the Company filed a current report on Form 8-K, reporting
under Item 4 thereof, a change in Registrant's Certifying Accountant.
15
<PAGE> 16
NABI(R)
- --------------------------------------------------------------------------------
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(R)
Date: November 11, 1999 By: /s/ Thomas H. McLain
------------------------------------
THOMAS H. McLAIN
Senior Vice President, Corporate
Services and Chief Financial
Officer
16
<PAGE> 1
EXHIBIT 10.24
================================================================================
EMPLOYMENT AGREEMENT
DATED AUGUST 1, 1999
BETWEEN
DAVID D. MUTH AND NABI
<PAGE> 2
NABI(R)
- --------------------------------------------------------------------------------
5800 PARK OF COMMERCE BOULEVARD, N.W.
BOCA RATON, FL 33487
EFFECTIVE AS OF AUGUST 1, 1999
Mr. David D. Muth
1535 SW 6th Terrace
Boca Raton, Florida, 33486
Dear David:
You have agreed to serve as a Senior Vice President Business Operations for
Nabi. The following are the terms of such employment:
1. TERM: You will serve as a Senior Vice President Business Operations, of Nabi,
a period beginning as of the date hereof and ending on July 31, 2002, unless
your employment is sooner terminated as provided below (the "Employment
Period").
2. SALARY: Your salary will be $220,000.00 per year, payable bi-weekly during
the Employment Period. Your salary will be subject to discretionary annual
increases as determined by Nabi's Board of Directors.
3. BONUS: You will be entitled to participate in Nabi's VIP Management Incentive
Program.
Unless the Employment Period is terminated for "cause" pursuant to Section 7(B)
(b) below, bonus compensation shall be pro rated in respect of any calendar year
during which the Employment Period terminates based on the amount of bonus
compensation which would have been payable with respect to such year per your
original VIP Management Incentive Program participation, divided by 12, times
the number of full calendar months during the relevant year you were employed
prior to the termination of the Employment Period. If the Employment Period is
terminated pursuant to Section 7(B)(b) below, no bonus compensation is payable
with respect to the calendar year during which it is terminated.
Bonus payments shall be payable within 120 days after the end of the relevant
calendar year.
4. AUTO ALLOWANCE: You, while an employee under the terms of this Agreement,
shall receive an auto allowance of not less than $900.00 per month.
5. BENEFITS: You will be eligible to participate in Nabi's 401(k),
medical/dental insurance, life insurance, executive long term disability
program, Supplemental Executive Retirement Plan (SERP), and other benefit
programs upon the effective date of this Agreement. You will accrue Paid Leave
Bank (PLB) time at the rate of 15.33 hours per month.
6. DUTIES AND EXTENT OF SERVICES:
(A) During the Employment Period, you agree to devote substantially all of your
working time, and such energy, knowledge, and efforts as is necessary to the
discharge and performance of your duties provided for in this Agreement and such
other reasonable duties and responsibilities consistent with your position as
are assigned to you from time to time by the person to whom you report. You
shall be located primarily in Nabi's Boca Raton, Florida, facilities, but shall
travel to other locations from time to time as shall be reasonably required in
the course of performance of your duties.
18
<PAGE> 3
(B) During the Employment Period, you shall serve as a Nabi Senior Vice
President Business Operations. You shall have such duties as are delegated to
you by the person to whom you report provided that such duties shall be
reasonably consistent with those duties assigned to executive officers having
similar titles in organizations comparable to NABI.
7. TERMINATION:
(A) The Employment Period shall terminate upon your death. You may also
terminate the Employment Period upon thirty (30) days' prior written notice to
Nabi. Any termination pursuant to this Section 7(A) shall not affect any bonus
compensation applicable to the year of such termination, provided that any bonus
compensation payable pursuant to Section 3 of this Agreement shall be pro rated
as provided for in Section 3.
(B) Nabi may terminate the Employment Period in the event of (a) your disability
that prevents you from performing your obligations pursuant to this Agreement
for any three (3) consecutive months or (b) for "cause", which is defined as (i)
commission of fraud or embezzlement or other felonious acts by you, (ii) your
refusal to comply with reasonable directions in connection with the performance
of your duties as provided for in Section 6 of this Agreement after notice of
such failure is delivered to you, (iii) failure to comply with the provisions of
Section 8 or 9 of this Agreement or (iv) your gross negligence in connection
with the performance of your duties as provided for in this Agreement, which
gross negligence causes material damage to NABI, provided that, in the event of
termination under this clause (B), you shall receive ten (10) days' notice of
such failure prior to termination and a determination must be made by Nabi's
Board of Directors or a duly appointed committee of the Board, after you are
afforded an opportunity to be heard, that it is, at the date of such
termination, reasonable to conclude that grounds for such termination under this
clause (B) still exists.
(C) Nabi may otherwise terminate the Employment Period upon thirty (30) days'
prior notice to you. In the event of such termination based on the effective
date of such termination, Nabi will pay you severance pay of twelve (12) months
of your annual base salary as in effect at the time of such termination
("Severance Pay") and maintain in effect for a twelve (12) month period all then
existing benefits, (subject to the limitations of the applicable plans),
including but not limited to, the auto allowance, life insurance, short and long
term disability programs, health care coverages, and SERP benefits. Severance
Pay provided for in this paragraph shall be made in the form of salary
continuation and would be paid on Nabi's regular bi-weekly pay date through the
period covered. If you terminate your employment with Nabi within thirty (30)
days of the expiration of the Employment Period, you shall be entitled to
receive Severance Pay under Section 7C unless during the thirty (30) day period
prior to the expiration of the Employment Period, Nabi offered to renew this
Agreement on terms no less favorable to you than the terms then in effect.
(D) If your employment terminates pursuant to Section 7B(a) or Section 7C, all
non-vested stock options, restricted stock or similar incentive equity
instruments pursuant to the Company's 1990 Equity Incentive Plan and/or
successor plans, (the "Options"), shall immediately vest. All such "Options"
shall be exercisable for one (1) year past termination date, except that no
"Options" shall be exercisable beyond the original "Option" expiration date. To
the extent the terms of any "Options" are inconsistent with this Agreement, the
terms of this Agreement shall control.
(E) Your confidentiality and non-competition agreements set forth in Sections 8
and 9 below shall survive the termination of your employment regardless of the
reasons therefor.
8. CONFIDENTIALITY: You acknowledge that your duties as described in Section 6
of this Agreement will give you access to trade secrets and other confidential
information of Nabi and/or its affiliates, including but not limited to
information concerning production and marketing of their respective products,
customer lists, and other information relating to their present or future
operations (all of the foregoing, whether or not it qualifies as a "trade
secret" under applicable law, is collectively called "Confidential
19
<PAGE> 4
Information"). You recognize that Confidential Information is proprietary to
each such entity and gives each of them significant competitive advantage.
Accordingly, you shall not use or disclose any of the Confidential Information
during or after the Employment Period, except for the sole and exclusive benefit
of the relevant company. Upon any termination of the Employment Period, you will
return to the relevant company's office all documents, computer tapes, and other
tangible embodiments of any Confidential Information. You agree that Nabi would
be irreparably injured by any breach of your confidentiality agreement, that
such injury would not be adequately compensable by monetary damages, and that,
accordingly, the offended company may specifically enforce the provisions of
this Section by injunction or similar remedy by any court of competent
jurisdiction without affecting any claim for damages.
9. NON-COMPETITION:
(A) You acknowledge that your services to be rendered are of a special and
unusual character and have a unique value to Nabi the loss of which cannot
adequately be compensated by damages in an action at law. In view of the unique
value of the services, and because of the Confidential Information to be
obtained by or disclosed to you, and as a material inducement to Nabi to enter
into this Agreement and to pay to you the compensation referred to above and
other consideration provided, you covenant and agree that you will not, during
the term of your employment by Nabi and for a period of one (1) year after
termination of such employment for any reason whatsoever, you will not, directly
or indirectly, (a) engage or become interested, as owner, employee, consultant,
partner, through stock ownership (except ownership of less than five percent of
any class of securities which are publicly traded), investment of capital,
lending of money or property, rendering of services, or otherwise, either alone
or in association with others, in the operations, management or supervision of
any type of business or enterprise engaged in any business which is competitive
with any business of Nabi (a "Competitive Business"), (b) solicit or accept
orders from any current or past customer of Nabi for products or services
offered or sold by, or competitive with products or services offered or sold by,
Nabi, (c) induce or attempt to induce any such customer to reduce such
customer's purchase of products or services from Nabi, (d) disclose or use for
the benefit of any Competitive Business the name and/or requirements of any such
customer or (e) solicit any of Nabi's employees to leave the employ of Nabi or
hire or negotiate for the employment of any employee of Nabi.
(B) You have carefully read and considered the provisions of this Section and
Section 8 and having done so, agree that the restrictions set forth (including
but not limited to the time period of restriction and the world wide areas of
restriction) are fair and reasonable (even if termination is at our request and
without cause) and are reasonably required for the protection of the interest of
Nabi, its officers, directors, and other employees. You acknowledge that upon
termination of this Agreement for any reason, it may be necessary for you to
relocate to another area, and you agree that this restriction is fair and
reasonable and is reasonably required for the protection of the interests of
Nabi, their officers, directors, and other employees.
(C) In the event that, notwithstanding the foregoing, any of the provisions of
this Section or Section 8 shall be held to be invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid and
enforceable as though invalid or unenforceable parts had not been included
therein. In the event that any provision of this Section relating to time period
and/or areas of restriction shall be declared by a court of competent
jurisdiction to exceed the maximum time period or areas such court deems
reasonable and enforceable, said time period and/or areas of restriction shall
be deemed to become, and thereafter be, the maximum time period and/or area
which such court deems reasonable and enforceable.
(D) With respect to the provisions of this Section, you agree that damages, by
themselves, are an inadequate remedy at law, that a material breach of the
provisions of this Section would cause irreparable injury to the aggrieved
party, and that provisions of this Section 9 may be specifically enforced by
injunction or similar remedy in any court of competent jurisdiction without
affecting any claim for damages.
20
<PAGE> 5
10. MISCELLANEOUS: This Agreement and the rights and obligations of the parties
pursuant to it and any other instruments or documents issued pursuant to it
shall be construed, interpreted and enforced in accordance with the laws of the
State of Florida, exclusive of its choice-of-law principles. This Agreement
shall be binding upon and inure to the benefit of the parties hereto, and their
respective successors and assigns. The provisions of this Agreement shall be
severable and the illegality, unenforceability or invalidity of any provision of
this Agreement shall not affect or impair the remaining provisions hereof, and
each provision of this Agreement shall be construed to be valid and enforceable
to the full extent permitted by law. In any suit, action or proceeding arising
out of or in connection with this Agreement, the prevailing party shall be
entitled to receive an award of the reasonable related amount of attorneys' fees
and disbursements incurred by such party, including fees and disbursements on
appeal. This Agreement is a complete expression of all agreements of the parties
relating to the subject matter hereof, and all prior or contemporaneous oral or
written understandings or agreements shall be null and void except to the extent
set forth in this Agreement.
This Agreement cannot be amended orally, or by any course of conduct or dealing,
but only by a written agreement signed by the party to be charged therewith. All
notices required and allowed hereunder shall be in writing, and shall be deemed
given upon deposit in the Certified Mail, Return Receipt Requested, first-class
postage and registration fees prepaid, and correctly addressed to the party for
whom intended at its address set forth under its name below, or to such other
address as has been most recently specified by a party by one or more
counterparts, each of which shall constitute one and the same agreement. All
references to genders or number in this Agreement shall be deemed
interchangeably to have a masculine, feminine, neuter, singular or plural
meaning, as the sense of the context required.
If the foregoing confirms your understanding of our agreements, please so
indicate by signing in the space provided below and returning a signed copy to
us.
Nabi(R)
5800 Park of Commerce Boulevard, N.W.
Boca Raton, Florida 33487
By: /s/ David J. Gury
-------------------------------
David J. Gury
Chief Executive Officer
Accepted and agreed:
/s/ David D. Muth
- ----------------------------------
David D. Muth
1535 SW 6th Terrace
Boca Raton, Florida 33486
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1999 (UNAUDITED) AND THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1999 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 593
<SECURITIES> 0
<RECEIVABLES> 28,059<F1>
<ALLOWANCES> 0
<INVENTORY> 35,280<F1>
<CURRENT-ASSETS> 70,014
<PP&E> 105,791<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 203,139
<CURRENT-LIABILITIES> 45,533
<BONDS> 100,178
0
0
<COMMON> 3,496
<OTHER-SE> 52,571
<TOTAL-LIABILITY-AND-EQUITY> 203,139
<SALES> 174,402
<TOTAL-REVENUES> 174,402
<CGS> 125,487
<TOTAL-COSTS> 125,487
<OTHER-EXPENSES> 43,511
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 3,303
<INCOME-PRETAX> 2,103
<INCOME-TAX> 115
<INCOME-CONTINUING> 1,988
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,988
<EPS-BASIC> 0.06
<EPS-DILUTED> 0.06
<FN>
<F1>RECEIVABLES, INVENTORY AND PP&E REPRESENT NET AMOUNTS.
<F2>LOSS PROVISION INCLUDED IN OTHER EXPENSES.
</FN>
</TABLE>
