<PAGE> 1
UNITED STATES
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 March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-15701
NATURAL ALTERNATIVES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1007839
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1185 LINDA VISTA DRIVE, SAN MARCOS, CALIFORNIA 92069
(Address of principal executive offices)
(Zip Code)
(760) 744-7340
(Registrant's telephone number, including area code)
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
5,724,542
(Number of shares of common stock of the registrant outstanding as of
April 30,1998)
1
<PAGE> 2
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31 June 30
1998 1997
----------- -----------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,399,360 $ 3,469,739
Accounts receivable - less allowance for doubtful
accounts of $1,234,000 at March 31, 1998 and
$1,006,000 at June 30, 1997 10,010,074 6,990,121
Inventories 8,724,835 5,690,850
Tax refund receivable -- 842,209
Notes receivable - current portion 392,573 235,613
Prepaid expenses 599,995 404,899
Deferred income taxes 1,616,000 851,000
Deposits 273,371 322,269
Other current assets 243,794 51,279
----------- -----------
Total Current Assets 25,260,002 18,857,979
----------- -----------
Property and equipment, net 9,844,611 8,259,705
----------- -----------
Other Assets:
Investments 58,862 58,862
Notes receivable, less current portion 77,348 261,697
Other noncurrent assets, net 349,062 290,932
----------- -----------
Total Other Assets 485,272 611,491
----------- -----------
TOTAL ASSETS $35,589,885 $27,729,175
=========== ===========
</TABLE>
2
<PAGE> 3
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31 June 30
1998 1997
------------ ------------
(unaudited)
<S> <C> <C>
Current Liabilities:
Accounts payable $ 8,292,952 $ 6,907,998
Current installments of long-term debt 45,705 164,266
Current installments of capital lease obligations 7,583 25,189
Income taxes payable 323,749 --
Accrued compensation and employee benefits 316,646 321,337
------------ ------------
Total Current Liabilities 8,986,635 7,418,790
Deferred income taxes 431,000 487,000
Long-term debt, less current installments 1,011,842 1,100,285
Capital lease obligations, less current installments -- 23,613
------------ ------------
Total Liabilities 10,429,477 9,029,688
------------ ------------
Stockholders' Equity:
Preferred stock; $.01 par value; 500,000 shares
authorized; none issued or outstanding -- --
Common stock; $.01 par value; 8,000,000 shares
authorized; issued and outstanding 5,723,986 at
March 31, 1998 and 5,429,764 at June 30, 1997 57,240 54,298
Additional paid-in capital 9,348,233 6,675,426
Retained earnings 15,806,185 12,021,013
Net unrealized losses on investments (51,250) (51,250)
------------ ------------
Total Stockholders' Equity 25,160,408 18,699,487
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 35,589,885 $ 27,729,175
============ ============
</TABLE>
3
<PAGE> 4
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Three Months Ended
March 31 March 31
--------------------------------- ---------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 47,290,172 $ 35,473,581 $ 18,960,255 $ 11,406,325
Cost of goods sold 34,463,007 26,130,920 13,737,005 8,540,258
------------ ------------ ------------ ------------
GROSS PROFIT 12,827,165 9,342,661 5,223,250 2,866,067
Selling, general &
administrative expenses 6,638,910 5,508,856 2,246,932 1,937,328
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 6,188,255 3,833,805 2,976,318 928,739
------------ ------------ ------------ ------------
Other income (expense):
Interest income 141,693 127,334 50,625 42,788
Interest expense (85,347) (111,992) (26,961) (34,890)
Other, net (44,429) (8,845) 7,747 --
------------ ------------ ------------ ------------
11,917 6,497 31,411 7,898
------------ ------------ ------------ ------------
EARNINGS BEFORE
INCOME TAXES 6,200,172 3,840,302 3,007,729 936,637
Income taxes 2,415,000 1,530,000 1,184,000 376,000
------------ ------------ ------------ ------------
NET EARNINGS $ 3,785,172 $ 2,310,302 $ 1,823,729 $ 560,637
============ ============ ============ ============
NET EARNINGS PER COMMON SHARE:
Basic $ 0.69 $ 0.43 $ 0.33 $ 0.10
============ ============ ============ ============
Diluted $ 0.66 $ 0.41 $ 0.31 $ 0.10
============ ============ ============ ============
</TABLE>
4
<PAGE> 5
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
Additional Gains
Common Stock Paid-in Retained (Losses) on
Shares Amount Capital Earnings Investments Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1997 5,429,764 $ 54,298 $ 6,675,426 $12,021,013 ($ 51,250) $18,699,487
Issuance of common
stock upon exercise
of employee stock
options 294,222 2,942 1,432,307 -- -- 1,435,249
Income tax benefit
from stock options -- -- 1,240,500 -- -- 1,240,500
Net earnings -- -- -- 3,785,172 -- 3,785,172
----------- ----------- ----------- ----------- ----------- -----------
Balance at March 31, 1998 5,723,986 $ 57,240 $ 9,348,233 $15,806,185 ($ 51,250) $25,160,408
=========== =========== =========== =========== =========== ===========
</TABLE>
5
<PAGE> 6
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended March 31
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 3,785,172 $ 2,310,302
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Bad debt expense 270,000 141,621
Tax benefit on option exercise 1,240,500 85,600
Depreciation and amortization 1,117,273 942,429
Deferred income taxes (821,000) (95,000)
(Gain) Loss on disposal of assets 52,177 (9,099)
Other (20,943) (19,713)
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (3,289,953) 1,038,821
Inventories (3,033,985) (2,564,024)
Prepaid expenses (195,096) 0
Deposits 48,898 (152,341)
Tax refund receivable 842,209 --
Prepaid income taxes (51,845) 0
Other assets (198,799) (159,838)
(Decrease) increase in:
Accounts payable 1,325,245 1,671,532
Accrued compensation and employee benefits (4,691) (33,875)
Income taxes payable 323,749 (380,647)
----------- -----------
Net Cash Provided by Operating
Activities 1,440,756 2,775,768
----------- -----------
</TABLE>
6
<PAGE> 7
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART 1 - FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended March 31
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and
equipment $ 65,000 $ --
Receivable from affiliated company -- (200,000)
Capital expenditures (2,819,355) (1,586,063)
Issuance of notes receivable (4,625) (82,409)
Repayment of notes receivable 55,942 88,948
Other 4,879 (47,716)
----------- -----------
Net Cash Used in Investing Activities (2,698,159) (1,827,240)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and
capital leases (248,225) (178,536)
Issuance of common stock 1,435,249 273,575
Borrowings on line of credit -- 350,000
----------- -----------
Net Cash Provided by
Financing Activities 1,187,024 445,039
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents (70,379) 1,393,567
Cash and Cash Equivalents at
Beginning of Period 3,469,739 1,887,427
----------- -----------
Cash and Cash Equivalents at End of
Period $ 3,399,360 $ 3,280,994
=========== ===========
</TABLE>
7
<PAGE> 8
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting of a normal recurring
nature considered necessary for a fair presentation, have been included. It is
suggested that these consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's annual
report on Form 10-K for the year ended June 30, 1997. The results of operations
for the periods ended March 31, 1998 and 1997 are not necessarily indicative of
the operating results for the full year.
Certain amounts in prior period financial statements have been reclassified to
conform to the current period financial statements.
NOTE 2 - PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Millennium Health International, Inc. (formerly
Pro-Lean, Inc. and prior to that Sonergy, Inc.), CellLife International, Inc.
and CellLife Pharmaceuticals International, Inc. all of which had been
administered and operated out of the Company's facilities. During fiscal 1997,
the assets and liabilities of each of the subsidiaries were transferred to the
Company and the Company assumed their operations. All significant intercompany
accounts and transactions have been eliminated.
NOTE 3 - INVENTORIES
<TABLE>
<CAPTION>
March 31 June 30
1998 1997
---------- ----------
<S> <C> <C>
Raw materials $3,901,218 $2,747,451
Work in progress 4,427,071 2,598,430
Finished goods 396,546 344,969
---------- ----------
$8,724,835 $5,690,850
========== ==========
</TABLE>
8
<PAGE> 9
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - NET EARNINGS PER SHARE
Pursuant to Statement of Financial Accounting Standards No. 128 ("SFAS No.
128"), financial statements for periods ending after December 15, 1997 must
reflect basic earnings per share and diluted earnings per share as defined.
Accordingly, basic earnings per share has been computed based upon the weighted
average number of shares outstanding during the period and diluted earnings per
share has been computed based upon the weighted average number of shares
outstanding during the period plus the dilutive effects of common shares
contingently issuable from stock options. Prior period amounts have been
restated to conform to SFAS No. 128. Common stock options are excluded from the
computation of net earnings per share if their effect is anti-dilutive. Basic
and diluted earnings per share have been calculated as follows:
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
March 31, 1998 March 31, 1998
-------------------------------------- ---------------------------------------
Weighted Weighted
Average Per Average Per
Earnings Shares Share Earnings Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ---------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE
Net earnings $1,823,729 5,566,956 $ 0.33 $3,785,172 5,481,539 $ 0.69
EFFECT OF DILUTIVE SECURITIES
Stock options 352,963 270,877
---------- ---------- ---------- ---------- ---------- ----------
DILUTED EARNINGS PER SHARE $1,823,729 5,919,919 $ 0.31 $3,785,172 5,752,416 $ 0.66
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
March 31, 1997 March 31, 1997
-------------------------------------- ---------------------------------------
Weighted Weighted
Average Per Average Per
Earnings Shares Share Earnings Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ---------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE
Net earnings $ 560,637 5,398,925 $ 0.10 $2,310,302 5,385,224 $ 0.43
EFFECT OF DILUTIVE SECURITIES
Stock options 267,388 260,882
---------- ---------- ---------- ---------- ---------- ----------
DILUTED EARNINGS PER SHARE $ 560,637 5,666,313 $ 0.10 $2,310,302 5,646,106 $ 0.41
========== ========== ========== ========== ========== ==========
</TABLE>
9
<PAGE> 10
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - STOCKHOLDERS' EQUITY
Effective June 5, 1992, the Company adopted the 1992 Incentive Stock Option Plan
for which 500,000 common shares have been reserved for issuance to officers,
directors, and key employees of the Company. The plan provides that no option
may be granted at an exercise price less than the fair market value of the
common stock of the Company on the date of grant. On September 9, 1993, 200,000
options were granted at the fair market value price of $4.875 per share. On
March 10, 1998, 300,000 options were granted at the fair market value price of
$10.50 per share.
Also effective June 5, 1992, the Company adopted the 1992 Nonqualified Stock
Option Plan and reserved a total of 250,000 common shares for issuance to
officers, employees, and consultants of the Company. On September 9, 1993,
250,000 options were granted at the fair market value price of $4.875 per share.
Effective December 9, 1994, the Board of Directors approved the 1994
Nonqualified Stock Option Plan for which 500,000 common shares were reserved for
issuance to officers, employees, and consultants of the Company. On January 24,
1995, 500,000 options were granted at the fair market value price of $4.625 per
share.
All stock options under each of the plans have five-year terms and all options
became fully vested one year after their grant date. On March 10, 1998, the
Board of Directors extended the term within which to exercise options under the
1992 Incentive Stock Option Plan by two years.
Stock option activity during the periods indicated is summarized below:
<TABLE>
<CAPTION>
1992 1992 1994
Incentive Nonqualified Nonqualified
Plan Plan Plan
------------- ------------- -------------
<S> <C> <C> <C>
Outstanding and exercisable at June 30, 1997 96,169 220,942 451,500
Granted 300,000 -- --
Exercised 38,332 139,556 116,334
------- ------- -------
Outstanding and exercisable at March 31, 1998 357,837 81,386 335,166
======= ======= =======
Weighted-average exercise price-
June 30, 1997 $ 4.875 $ 4.875 $ 4.625
March 31, 1998 $ 9.591 $ 4.875 $ 4.625
Weighted-average remaining contractual life Five Years One Year Three Years
Available for grant at March 31, 1998 -- -- --
======= ======= =======
</TABLE>
Effective January 24, 1995, 100,000 options were granted pursuant to a
consulting agreement at the fair market value price of $4.625 per share. On
September 20, 1996, 45,000 options were granted pursuant to a consulting
agreement at prices ranging from $9.00 to $15.00 per share. None of these
options had been exercised as of March 31, 1998.
10
<PAGE> 11
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - PENSION PLAN
Effective January 1, 1997, the Company adopted a defined benefit pension plan
(the "Plan") covering substantially all of its employees. The benefits are based
on years of service and the employee's compensation during the five years before
retirement. The Company will make annual contributions to the Plan equal to the
maximum amount that can be deducted for income tax purposes. For the three
months and nine months ended March 31, 1998, the estimated current service cost
(normal cost) and the amortized portion of the unfunded estimated accrued
liability for prior service cost, using a 30-year funding period, amounted to
$78,000 and $312,000, respectively. This amount has been accrued in the current
period.
NOTE 7 - MAJOR CUSTOMERS
The Company had substantial sales to five separate customers during one or more
of the periods shown in the following table. The loss of any of these customers
could have an adverse impact on the Company's revenues and earnings in the
short-term. Sales by customer, representing 10% or more of the respective
period's total sales, are shown below by industry segment.
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997
------------------------- ------------------------- -------------------------- -------------------------
Industry Segment Sales by Customer %(a) Sales by Customer %(a) Sales by Customer %(a) Sales by Customer %(a)
- ------------------------- ----------------- ------ ----------------- ------ ----------------- ------ ----------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Multi-level Distribution:
Customer 1 $7,667,015 40% $5,527,135 48% $18,634,260 39% $12,873,152 36%
Customer 2 2,575,031 14% 1,280,611 11% 8,001,753 17% 6,158,760 17%
Customer 3 (b) 1,708,915 15% (b) (b)
Customer 4 (b) (b) (b) 3,581,245 10%
---------------- ------ ---------------- ------- ---------------- ------- ---------------- -------
10,242,046 54% 8,516,661 74% 26,636,013 56% 22,613,157 63%
Retail:
Customer 5 2,127,283 11% (b) (b) (b)
---------------- ------ ---------------- ------- ---------------- ------- ---------------- -------
$12,369,329 65% $8,516,661 74% $26,636,013 56% $22,613,157 63%
================ ====== ================ ======= ================ ======= ================ =======
</TABLE>
(a) Percent of total sales
(b) Sales for the period were less than 10% of total sales.
11
<PAGE> 12
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those projected in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this section and
those discussed in the Company's Annual Report on Form 10-K.
RESULTS OF OPERATIONS
THIRD QUARTER OF FISCAL 1998 AND 1997
The Company's consolidated net sales for the quarter ended March 31, 1998,
amounted to $19.0 million, an increase of $7.6 million over the $11.4 million
generated during the quarter ended March 31, 1997. Approximately two-thirds of
the 66% increase in sales came from sales to new customers and the balance from
existing customers. International sales for the quarter ended March 31, 1998,
amounted to $2.6 million compared to $.5 million for the quarter ended March 31,
1997. The increase in international sales is primarily from expansion into
foreign markets by existing customers.
Gross profit margins were 27.5% for the quarter ended March 31, 1998, compared
to 25.1% for the quarter ended March 31, 1997. The increase in margins was due
to purchasing cost efficiencies.
Selling, general and administrative expenses decreased as a percentage of
revenues to 11.9% for the quarter ended March 31, 1998 from 17.0% for the
quarter ended March 31, 1997. This decrease is due to the 66% increase in sales
noted above while selling, general and administrative expenses, which for the
most part, are fixed, increased by 16% from $1.9 million in 1997 to $2.2 million
in 1998.
Net earnings for the quarter ended March 31, 1998, amounted to $1.8 million, a
$1.2 million increase from the $.6 million in net earnings produced for the
quarter ended March 31, 1997. The increase in net earnings was due primarily to
increased sales and improved gross profit margins partially offset by the
increase in selling, general and administrative expenses discussed above.
Diluted earnings per share for the quarter ended March 31, 1998, was $.31
compared to $.10 for the quarter ended March 31, 1997. The increase was due to
the reasons discussed above.
NINE MONTHS ENDED MARCH 31, 1998 AND 1997
The Company's consolidated net sales for the nine months ended March 31, 1998,
amounted to $47.3 million, an increase of $11.8 million over the $35.5 million
generated during the nine months ended March 31, 1997. Approximately
three-fourths of the 33% increase in sales came from sales to new customers and
the balance from existing customers. International sales for the nine months
ended March 31, 1998, amounted to $10.6 million compared to $1.3 million for the
nine months ended March 31, 1997. The increase in international sales is
primarily from expansion into foreign markets by existing customers.
Gross profit margins were 27.1% for the nine months ended March 31, 1998,
compared to 26.3% for the nine months ended March 31, 1997. The increase in
margins was due to manufacturing cost efficiencies.
12
<PAGE> 13
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
NINE MONTHS ENDED MARCH 31, 1998 AND 1997 (continued)
Selling, general and administrative expenses decreased as a percentage of
revenues to 14.0% for the nine months ended March 31, 1998 from 15.5% for the
nine months ended March 31, 1997. Selling, general and administrative expenses
increased to $6.6 million in 1998 from $5.5 million in 1997. The increase was
primarily due to expenses associated with the employee pension plan, which was
adopted on January 1, 1997, and increased costs for research and development and
clinical studies.
Net earnings for the nine months ended March 31, 1998, amounted to $3.8 million,
a $1.5 million increase from the $2.3 million in net earnings produced for the
nine months ended March 31, 1997. The increase in net earnings was due primarily
to increased sales and improved gross profit margins partially offset by the
increase in selling, general and administrative expenses discussed above.
Diluted earnings per share for the nine months ended March 31, 1998, was $.66
compared to $.41 for the nine months ended March 31, 1997. The increase was due
to the reasons discussed above.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had working capital of $16,273,000 compared to
$11,439,000 as of June 30, 1997. An increase in inventories and accounts
receivable was offset by an increase in accounts payable. Inventory levels at
March 31, 1998, compared to sales, are in line with historic levels.
The Company has purchase commitments approximating $450,000 for additional
production equipment that is expected to be placed in service in the fourth
quarter. These expenditures are expected to be funded from cash flow from
operating activities.
The Company believes it has sufficient sources of funds to finance its ongoing
operations and meet its capital asset purchases, as well as future growth
through a combination of internally generated cash flow, revolving lines of
credit and equipment financing. The Company has revolving line of credit
agreements permitting borrowings up to $3,000,000, which are secured by the
Company's receivables, inventory, equipment, and vehicles and bear interest at
the bank's prime rate. The bank's prime rate at March 31, 1998 was 8.5%. The
lines of credit expire in January 1999. The company had no borrowings at March
31, 1998, or at June 30, 1997, under these credit lines.
13
<PAGE> 14
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, based in part on the
advice of counsel, the ultimate disposition of these matters will not have a
material adverse impact on the Company's consolidated financial position,
operations or cash flows.
ITEM 2. CHANGES IN SECURITIES
During the quarter ending March 31, 1998, 294,222 common shares were issued
pursuant to employee stock option exercises.
ITEM 3. DEFAULTS BY THE COMPANY ON ITS SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are filed herewith:
27.0. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended March 31, 1998.
14
<PAGE> 15
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.
NATURAL ALTERNATIVES INTERNATIONAL, INC.
MARK A. LE DOUX Date: May 13, 1998
- ------------------------
Mark A. Le Doux
Chief Executive Officer
WILLIAM P. SPENCER Date: May 13, 1998
- ------------------------
William P. Spencer
President
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 3,399,360
<SECURITIES> 0
<RECEIVABLES> 10,010,074
<ALLOWANCES> 1,056,000
<INVENTORY> 8,724,835
<CURRENT-ASSETS> 25,260,002
<PP&E> 16,666,914
<DEPRECIATION> 6,822,303
<TOTAL-ASSETS> 35,589,885
<CURRENT-LIABILITIES> 8,986,635
<BONDS> 1,011,842
0
0
<COMMON> 57,240
<OTHER-SE> 25,103,168
<TOTAL-LIABILITY-AND-EQUITY> 35,589,885
<SALES> 47,290,172
<TOTAL-REVENUES> 47,290,172
<CGS> 34,463,007
<TOTAL-COSTS> 41,101,917
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 270,000
<INTEREST-EXPENSE> 85,347
<INCOME-PRETAX> 6,200,172
<INCOME-TAX> 2,415,000
<INCOME-CONTINUING> 3,785,172
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,785,172
<EPS-PRIMARY> 0.69
<EPS-DILUTED> 0.66
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,006,149
<SECURITIES> 0
<RECEIVABLES> 6,669,922
<ALLOWANCES> 1,007,000
<INVENTORY> 7,071,082
<CURRENT-ASSETS> 16,892,123
<PP&E> 15,312,236
<DEPRECIATION> 6,191,773
<TOTAL-ASSETS> 26,617,931
<CURRENT-LIABILITIES> 5,760,709
<BONDS> 1,047,565
0
0
<COMMON> 54,318
<OTHER-SE> 19,253,339
<TOTAL-LIABILITY-AND-EQUITY> 26,617,931
<SALES> 12,032,576
<TOTAL-REVENUES> 12,032,576
<CGS> 8,871,222
<TOTAL-COSTS> 11,077,866
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 90,000
<INTEREST-EXPENSE> 30,090
<INCOME-PRETAX> 960,420
<INCOME-TAX> 362,000
<INCOME-CONTINUING> 598,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 598,420
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 3,469,739
<SECURITIES> 0
<RECEIVABLES> 6,990,121
<ALLOWANCES> 1,006,000
<INVENTORY> 5,690,850
<CURRENT-ASSETS> 18,857,979
<PP&E> 14,105,243
<DEPRECIATION> 5,845,538
<TOTAL-ASSETS> 27,729,175
<CURRENT-LIABILITIES> 7,418,790
<BONDS> 1,100,285
0
0
<COMMON> 54,298
<OTHER-SE> 18,699,487
<TOTAL-LIABILITY-AND-EQUITY> 27,729,175
<SALES> 49,444,221
<TOTAL-REVENUES> 49,444,221
<CGS> 39,019,224
<TOTAL-COSTS> 8,609,925
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 725,000
<INTEREST-EXPENSE> 147,373
<INCOME-PRETAX> 1,839,920
<INCOME-TAX> 720,000
<INCOME-CONTINUING> 1,119,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,119,920
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.20
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MARCH 31,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 3,280,994
<SECURITIES> 0
<RECEIVABLES> 5,254,316
<ALLOWANCES> 436,000
<INVENTORY> 8,963,616
<CURRENT-ASSETS> 18,789,276
<PP&E> 13,487,896
<DEPRECIATION> 5,547,040
<TOTAL-ASSETS> 27,632,989
<CURRENT-LIABILITIES> 6,304,024
<BONDS> 1,139,633
0
0
<COMMON> 54,089
<OTHER-SE> 19,748,821
<TOTAL-LIABILITY-AND-EQUITY> 27,632,989
<SALES> 35,473,581
<TOTAL-REVENUES> 35,473,581
<CGS> 26,130,920
<TOTAL-COSTS> 5,508,856
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 127,334
<INCOME-PRETAX> 3,840,302
<INCOME-TAX> 1,530,000
<INCOME-CONTINUING> 2,310,302
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,310,302
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.41
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED DECEMBER
31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,483,474
<SECURITIES> 0
<RECEIVABLES> 5,950,909
<ALLOWANCES> 408,000
<INVENTORY> 6,924,523
<CURRENT-ASSETS> 18,079,579
<PP&E> 12,914,656
<DEPRECIATION> 5,229,348
<TOTAL-ASSETS> 26,642,601
<CURRENT-LIABILITIES> 5,935,518
<BONDS> 1,177,748
0
0
<COMMON> 53,919
<OTHER-SE> 19,081,804
<TOTAL-LIABILITY-AND-EQUITY> 26,642,601
<SALES> 24,067,255
<TOTAL-REVENUES> 24,067,255
<CGS> 17,590,661
<TOTAL-COSTS> 3,571,529
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 30,000
<INTEREST-EXPENSE> 77,102
<INCOME-PRETAX> 2,903,665
<INCOME-TAX> 1,154,000
<INCOME-CONTINUING> 1,749,665
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,749,665
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.31
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,935,533
<SECURITIES> 0
<RECEIVABLES> 5,681,327
<ALLOWANCES> 410,000
<INVENTORY> 8,347,449
<CURRENT-ASSETS> 18,109,685
<PP&E> 12,149,685
<DEPRECIATION> 4,928,000
<TOTAL-ASSETS> 25,887,634
<CURRENT-LIABILITIES> 6,056,517
<BONDS> 1,208,953
0
0
<COMMON> 53,759
<OTHER-SE> 18,168,600
<TOTAL-LIABILITY-AND-EQUITY> 25,887,634
<SALES> 11,437,022
<TOTAL-REVENUES> 11,437,022
<CGS> 8,176,382
<TOTAL-COSTS> 1,747,915
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 90,000
<INTEREST-EXPENSE> 42,543
<INCOME-PRETAX> 1,518,373
<INCOME-TAX> 618,000
<INCOME-CONTINUING> 900,373
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 900,373
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.16
</TABLE>
