FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended: 09/30/00 Commission file number: 0-22818
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THE HAIN CELESTIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 22-3240619
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Charles Lindbergh Boulevard, Uniondale, New York 11553
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 237-6200
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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
requirement for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
32,987,159 shares of Common Stock $.01 par value, as of November 10, 2000.
<PAGE>
THE HAIN CELESTIAL GROUP, INC.
INDEX
Page
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 2000
(unaudited) and June 30, 2000 2
Consolidated Statements of Operations - Three months
ended September 30, 2000 and 1999 (unaudited) 3
Consolidated Statements of Cash Flows - Three months
ended September 30, 2000 and 1999 (unaudited) 4
Consolidated Statement of Stockholders' Equity -
Three months ended September 30, 2000 (unaudited) 5
Notes to Consolidated Financial Statements 6 to 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 to 12
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 12
Part II Other Information
Items 1 and 3 to 5 are not applicable
Item 2 - Change in Securities 13
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures 14
1
<PAGE>
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share and share amounts)
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
----------------- ---------------
ASSETS (Unaudited) (Note)
<S> <C> <C>
Current assets:
Cash $ 49,476 $ 38,308
Accounts receivable, less allowance for doubtful 46,391 36,120
accounts of $1,049 and $929
Inventories 49,835 48,139
Recoverable income taxes 3,504 7,982
Deferred income taxes 8,724 8,724
Other current assets 3,990 3,611
----------------- ---------------
Total current assets 161,920 142,884
Property, plant and equipment, net of accumulated 39,089 39,340
depreciation and amortization of $20,953 and $19,471
Goodwill, net of accumulated amortization of $14,367 186,954 188,212
and $13,109
Trademarks and other intangible assets, net of 39,018 39,086
accumulated amortization of $5,897 and $5,594
Deferred financing costs, net of accumulated 236 238
amortization of $330 and $328
Other assets 6,262 6,257
----------------- ---------------
Total assets $ 433,479 $ 416,017
================= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 46,577 $ 43,039
Accrued merger related charges 8,339 9,414
Current portion of long-term debt 711 681
----------------- ---------------
Total current liabilities 55,627 53,134
Long-term debt, less current portion 5,497 5,622
Deferred income taxes 5,537 5,537
----------------- ---------------
Total liabilities 66,661 64,293
Commitments and contingencies
Stockholders' equity:
Preferred stock - $.01 par value, authorized 5,000,000 - -
shares, no shares issued
Common stock - $.01 par value, authorized 100,000,000 330 321
shares, issued 32,969,068 and 32,147,261 shares
Additional paid-in capital 335,321 326,641
Retained earnings 31,442 25,037
----------------- ---------------
367,093 351,999
Less: 100,000 shares of treasury stock, at cost (275) (275)
----------------- ---------------
-----------------
Total stockholders' equity 366,818 351,724
----------------- ---------------
Total liabilities and stockholders' equity $ 433,479 $ 416,017
================= ===============
</TABLE>
Note: The balance sheet at June 30, 2000 has been derived from the audited
financial statements at that date.
See notes to consoldiated financial statements.
2
<PAGE>
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
2000 1999
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(Unaudited)
<S> <C> <C>
Net Sales $ 93,653 $ 87,940
Cost of sales 53,245 54,609
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Gross profit 40,408 33,331
Selling, general & administrative expenses 27,285 31,116
Merger costs 1,032 -
Amortization of goodwill and other intangible assets 1,574 1,570
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Operating income 10,517 645
Other income, net 597 -
Interest and financing costs (71) (2,945)
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Income (loss) before income taxes and 11,043 (2,300)
cumulative change in accounting principle
Provision/(benefit) for income taxes 4,638 (1,088)
------------- -------------
Income (loss) before cumulative change in 6,405 (1,212)
accounting principle
Cumulative change in accounting principle, net of - (3,754)
income tax benefit of $2,547
------------- -------------
Net income (loss) $ 6,405 $ (4,966)
============= =============
Basic earnings per common share:
Income (loss) before cumulative change in $ 0.20 $ (0.05)
accounting principle
Cumulative change in accounting principle - (0.15)
------------- -------------
Net income (loss) $ 0.20 $ (0.20)
============= =============
Diluted earnings per common share:
Income (loss) before cumulative change in $ 0.19 $ (0.05)
accounting principle
Cumulative change in accounting principle - (0.15)
------------- -------------
Net income (loss) $ 0.19 $ (0.20)
============= =============
Weigted average common shares outstanding:
Basic 32,095 24,873
============= =============
Diluted 34,019 24,873
============= =============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended September 30,
------------------------------------
2000 1999
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES (Unaudited)
<S> <C> <C>
Net income (loss) $ 6,405 $ (4,966)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Cumulative change in accounting principle - 3,754
Depreciation and amortization of property and equipment 1,495 1,200
Amortization of goodwill and other intangible assets 1,574 1,570
Amorization of deferred financing costs 2 208
Provision for doubtful accounts 120 185
Deferred income taxes - (3,477)
Other 12 12
Increase (decrease) in cash attributable to changes in
assets and liabilities, net of amounts applicable to
acquired businesses:
Accounts receivable (10,391) (5,941)
Inventories (1,696) 6,587
Other current assets (379) (53)
Other assets (18) (810)
Accounts payable and accrued expenses 2,313 2,226
Recoverable taxes, net of income tax payable 4,478 1,569
------------- --------------
Net cash provided by operating activities 3,915 2,064
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses - (4,625)
Purchases of property and equipment and other (1,329) (4,624)
intangible assets
Proceeds from sale of assets - 212
------------- --------------
Net cash used in investing activities (1,329) (9,037)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayments)/proceeds from bank revolving credit facility, net - 4,665
Repayment of term loan facilities - (78,300)
Payments on economic development revenue bonds (66) (75)
Costs in connection with bank financing - (7)
Proceeds from private equity offering, net of expenses - 80,589
Proceeds from exercise of warrants and options, net of 8,677 641
related expenses
Payment of other long-term debt and other liabilities (29) (86)
------------- --------------
Net cash provided by financing activities 8,582 7,427
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Net increase in cash and cash equivalents 11,168 454
Cash and cash equivalents at beginning of period 38,308 712
------------- --------------
Cash and cash equivalents at end of period $ 49,476 $ 1,166
============= ==============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
(In thousands, except per share and share data)
<TABLE>
<CAPTION>
Common Stock
---------------------------------
Additional Treasury Stock
Amount Paid-in Retained -----------------------
Shares at $.01 Capital Earnings Shares Amount Total
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as June 30, 2000 32,147,261 $ 321 $ 326,641 $ 25,037 100,000 $ (275) $ 351,724
Exercise of common stock 3,500 11 11
warrants, net of related
expenses
Exercise of stock options 818,307 9 8,657 8,666
Non-cash compensation charge 12 12
Net income for the period 6,405 6,405
------------------------------------------------------------------------------------------
Balance at September 30, 2000 32,969,068 $ 330 $ 335,321 $ 31,442 100,000 $ (275) $ 366,818
==========================================================================================
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL:
The Hain Celestial Group, Inc. (formerly known as The Hain Food Group,
Inc. or "Hain"), headquartered in Uniondale, NY, is a natural, specialty and
snack food company. The Company is a leader in many of the top natural food
categories, with such well-known natural food brands as Celestial Seasonings (R)
teas, Hain Pure Foods(R), Westbrae(R), Westsoy(R), Arrowhead Mills(R), Health
Valley(R), Breadshop's(R), Casbah(R), Garden of Eatin(R), Terra Chips(R),
DeBoles(R), Earth's Best(R), and Nile Spice(R). The Company's principal
specialty product lines include Hollywood(R) cooking oils, Estee(R) sugar-free
products, Weight Watchers(R) dry products, Kineret(R) kosher foods, Boston
Better Snacks(R), and Alba Foods(R).
The Company and its subsidiaries operate in one business segment: the
sale of natural, organic and other food and beverage products. Since fiscal
2000, approximately 55% of the Company's revenues were derived from products
which are manufactured within its own facilities with 45% produced by various
co-packers. There are no co-packers who manufactured 10% or more of the
Company's products.
Certain reclassifications have been made in the consolidated financial
statements to conform to current year's presentation.
2. BASIS OF PRESENTATION:
All amounts in the consolidated financial statements have been rounded
to the nearest thousand dollars, except share and per share amounts.
The accompanying consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles. In the opinion
of management, all adjustments (including normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three months ended September 30, 2000 are not necessarily indicative of the
results that may be expected for the year ending June 30, 2001. Reference is
made to the footnotes to the audited consolidated financial statements of the
Company and subsidiaries as at June 30, 2000 and for the year then ended
included in the Company's Annual Report on Form 10-K for information not
included in these condensed footnotes.
3. Celestial Merger
On May 30, 2000, Hain completed a merger (the "Merger") with Celestial
Seasonings, Inc. ("Celestial") by issuing 10.3 million shares of Hain common
stock in exchange for all of the outstanding common stock of Celestial. Each
share of Celestial common stock was exchanged for 1.265 shares of Hain common
stock. In addition, Hain assumed all Celestial stock options previously granted
by Celestial. As part of the Merger, Hain changed its name to The Hain Celestial
Group, Inc.. Celestial, the common stock of which was previously publicly
traded, is the market leader in speciality teas.
The Merger was accounted for as a pooling-of-interests and,
accordingly, all prior period consolidated financial statements of Hain have
been restated to include the results of operations, financial position and cash
flows of Celestial. Information concerning common stock, employee stock plans
and per share data has been restated on an equivalent share basis.
During the three months ended September 30, 2000, the Company incurred
$1 million of merger related employee costs.
6
<PAGE>
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
4. RESTRUCTURING AND OTHER NON-RECURRING CHARGES
During the fourth quarter of fiscal 2000, the Company approved a plan
to streamline and restructure certain non-core businesses and consolidate
warehouses and information systems within the Company's distribution and
operating network which resulted in a pre-tax charge of $3.7 million. At June
30, 2000 the Company had accrued approximately $2 million of future costs
associated with this restructuring charge. During the three months ended
September 30, 2000, approximately $.2 million was charged to the accrual,
bringing the remaining balance to $1.8 million which has been included in
accounts payable and accrued expenses on the Consolidated Balance Sheet at
September 30, 2000.
In addition, during the three months ended September 30, 1999,
Celestial decided to cease production of its 30-count supplements product line
and focus it efforts on its 60-count product line. In conjunction with the
discontinuance of the 30-count products, Celestial decided to offer a return
program to its customers. Accordingly, Celestial reversed sales ($5.1 million)
and recorded additional cost of sales ($4.0 million) for the estimated 30-count
products still with customers and an estimated write-down of inventory on hand
and expected to be returned.
Additionally in September 1999, Celestial entered into a settlement
agreement relating to a shareholder lawsuit resulting in a one-time charge of
$1.2 million which has been included in selling, general and administrative
expenses.
5. CUMULATIVE CHANGE IN ACCOUNTING PRINCIPLE:
In April 1998, the American Institute of Certified Public Accountants
issued SOP 98-5, "Reporting Costs of Start-up Activities" ("SOP 98-5"). SOP 98-5
was adopted by the Company effective July 1, 1999, and requires start-up costs
capitalized prior to such date be written-off as a cumulative effect of an
accounting change as of July 1, 1999, and any future start-up costs to be
expensed as incurred. Start-up activities are defined broadly as those one-time
activities related to introducing a new product or service, conducting business
in a new territory, conducting business with a new class of customer or
commencing some new operations. In accordance with SOP 98-5, the Company
recorded a one-time non-cash charge in the first quarter of fiscal 2000
reflecting the cumulative effect of a change in accounting principle, in the
amount of $3.8 million, net of tax benefit, representing start-up costs
capitalized as of the beginning of fiscal year 2000.
6. INVENTORIES:
Inventories consist of the following:
September 30, 2000 June 30, 2000
------------------ -------------
Finished goods $ 29,205 $ 28,730
Raw materials and packaging 20,630 19,409
---------- ----------
$ 49,835 $ 48,139
========== ==========
7
<PAGE>
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
7. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following:
September 30, June 30,
2000 2000
--------- ------
Land $ 6,049 $ 6,049
Building and improvements 10,583 10,579
Machinery & equipment 33,628 33,890
Assets held for sale - 197
Furniture and fixtures 2,585 2,580
Leasehold improvements 5,115 5,014
Construction in progress 2,082 502
---------- ---------
60,042 58,811
Less:
Accumulated depreciation and
amortization 20,953 19,471
---------- ---------
$ 39,089 $ 39,340
========== =========
8
<PAGE>
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
8. EARNINGS PER SHARE:
The Company reports basic and diluted earnings per share in accordance with FASB
Statement No. 128, "Earnings Per Share" ("SFAS 128"). Basic earnings per share
excludes any dilutive effects of options and warrants. Diluted earnings per
share includes all dilutive common stock equivalents such as stock options and
warrants.
The following table sets forth the computation of basic and diluted earnings per
share pursuant to SFAS 128:
Three Months Ended
September 30
--------------
2000 1999
---------- ---------
Numerator:
Numerator for basic and diluted
earnings (loss) per share -
Income (loss) before cumulative change in
accounting principle $ 6,405 $ (1,212)
Cumulative change in accounting principle - (3,754)
--------- ---------
Net income (loss) $ 6,405 $ (4,966)
========= =========
Denominator:
Denominator for basic earnings (loss) per
share - weighted average shares
outstanding during the period 32,095 24,873
--------- ---------
Effect of dilutive securities (a):
Stock options 1,649 -
Warrants 275 -
--------- ---------
1,924 -
--------- ---------
Denominator for diluted earnings (loss)
per share - adjusted weighted average
shares and assumed conversions 34,019 24,873
========= =========
Basic earnings (loss) per share:
Income (loss) before cumulative change in
accounting principle $ 0.20 $ (0.05)
Cumulative change in accounting principle - (0.15)
--------- ---------
Net income (loss) $ 0.20 $ (0.20)
========= =========
Diluted earnings (loss) per share:
Income (loss) before cumulative change in
accounting principle $ 0.19 $ (0.05)
Cumulative change in accounting principle - (0.15)
--------- ---------
Net income (loss) $ 0.19 $ (0.20)
========= =========
(a) As a result of the net loss, the dilutive effects of options and
warrants are not shown as the results would be antidilutive.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Three months ended September 30, 2000
Net sales for the three months ended September 30, 2000 were $93.7
million, an increase of $5.8 million or 6.5% over net sales of $87.9 million in
the quarter ended September 30, 1999. In the September 1999 period, Celestial
recorded sales returns of $5.1 million related to the returns of its 30-count
supplements product line.
Gross profit for the three months ended September 30, 2000 increased by
approximately $7.1 million to $40.4 million (43.1% of net sales) as compared to
$33.3 million (37.9% of net sales) in the corresponding 1999 period. The
increase in gross profit dollars was a direct result of the increased sales
level in 2000 along with reductions in gross profit dollars of $4 million in the
September 30, 1999 period resulting also from the inventory write-down Celestial
recorded related to its 30-count supplement line. Gross profit percentage
decreased 2.5% (exclusive of the supplement sales returns and inventory write-
downs in the 1999 period) primarily from higher costs associated with the Health
Valley brand as a result of intensive preparations for a potential labor action
at the Health Valley plant, previously discussed in the Company's Form 10-K
which the Company continues to work to resolve, the mix of products sold and
additional warehousing and freight costs, principally due to the opening of the
new Ontario, California distribution center and fuel surcharges.
Selling, general and administrative expenses decreased by $3.8 million
to $27.3 million for the three months ended September 30, 2000 as compared to
$31.1 million in the September 30, 1999 quarter. Such expenses as a percentage
of net sales amounted to 29.1% for the three months ended September 30, 2000
compared with 35.4% in the September 30, 1999 quarter. The dollar decrease is a
combination of $1 million of synergies realized in the September 2000 period
resulting from the Celestial merger, a $1.2 million nonrecurring charge incurred
in the September 1999 period as a result of a shareholder lawsuit settled by
Celestial and $1 million of lower other selling, general and administrative
expense components. To date, a substantial portion of synergies from the
Celestial merger have been identified and it is expected that the integration
process will be substantially completed by the end of fiscal 2001.
Merger related charges amounted to $1 million for the three months
ended September 30, 2000. There were no merger related charges in the
corresponding period. Merger related charges incurred relate to certain employee
costs associated with the Celestial merger.
Amortization of goodwill and other intangible assets was both $1.6
million for the September 2000 and 1999 periods. Amortization expense in total
amounted to 1.7% and 1.8% of net sales for the three months ended September 30,
2000 and 1999, respectively.
Operating income increased by $9.9 million compared to the 1999 period.
Operating income as a percentage of net sales amounted to 11.2%, compared with
.7% in the September 1999 quarter. The dollar and percentage increase resulted
principally from higher gross profit, lower selling, general, administrative and
amortization expenses, offset by higher merger related costs.
10
<PAGE>
Interest and other income amounted to $.6 million for the three months
ended September 30, 2000 compared with no other income in the corresponding
period. This increase is a direct result of the interest earned on the increased
cash balance of $49.5 million at September 30, 2000.
Interest and financing costs for the three months ended September 30,
2000 amounted to approximately $.07 million, compared to $2.9 million in the
1999 period. This decrease is a result of significantly reduced debt levels
($6.2 million outstanding at September 30, 2000 compared with $65.9 million at
September 30, 1999). The average interest rate was 5.5% in the September 2000
period compared with approximately 8.5% in the September 1999 period.
Income (loss) before income taxes and cumulative change in accounting
principle for the three months ended September 30, 2000 increased to $11 million
(11.7% of net sales) from a $2.3 million pretax loss in the corresponding 1999
period. This $13.3 million improvement in profitability was attributable to the
aforementioned increase in operating income, as well as the other income
generated.
Income taxes increased to $4.6 million for the three months ended
September 30, 2000 compared to a $1.1 million income tax benefit in the
corresponding 1999 period. The effective tax rate was 42% in the 2000 period
compared with a tax benefit of 47.3% in the corresponding 1999 period. The tax
benefit in 1999 was a result of the loss for the period and additional tax
deductions generated from Celestial's contributions of its 30-count supplements
to a qualified organization. The Company expects its pre-tax earnings will be
taxed at a 42% effective rate for the remainder of this fiscal year.
Income (loss) before cumulative change in accounting principle for the
three months ended September 30, 2000 increased to $6.4 million (6.8% of net
sales) from a loss of $1.2 million in the corresponding 1999 period. This $7.6
million improvement in earnings was primarily attributable to the aforementioned
increase in income before income taxes and cumulative change in accounting
principle.
Change in Accounting Principle:
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting Costs of Start-up Activities"
("SOP 98-5"). SOP 98-5 was effective beginning on July 1, 1999, and required
that start-up costs capitalized prior to such date be written-off as a
cumulative effect of an accounting change as of July 1, 1999. Any future
start-up costs are being expensed as incurred. Start up activities are broadly
defined as those one time activities related to introducing a new product or
service, conducting business in a new territory, conducting business with a new
class of customer or commencing some new operation. In accordance with SOP 98-5,
the Company recorded a one-time non-cash charge in the first quarter of fiscal
2000 reflecting the cumulative effect of a change in accounting principle, in
the amount of $3.8 million, net of tax benefit, representing such start-up costs
capitalized as of the beginning of fiscal year 2000.
Liquidity and Capital Resources
The Company requires liquidity for working capital needs and debt service
requirements.
The Company had working capital and a current ratio of $106.3 million and
2.91 to 1, respectively, at September 30, 2000 as compared to $89.8 million and
11
<PAGE>
2.69 to 1, respectively, at June 30, 2000. The increase in working capital and
the current ratio is primarily attributable to cash flows from operations and
financing activities. The cash flow from financing activities is attributable to
the exercise of stock options and warrants during the first quarter of fiscal
2000.
The Company believes that its cash on hand of $49.5 million at
September 30, 2000, as well as cash flows from operations are sufficient to fund
its working capital needs, anticipated capital expenditures, other operating
expenses, as well as provide liquidity to pay down the remaining merger related
and restructuring accruals (aggregating approximately $8.4 million of accrued
merger costs and $1.8 million of restructuring accruals) existing at September
30, 2000 for the remainder of fiscal 2001. Of the $10.2 million of these
accruals, approximately $9 will be utilized during the remainder of fiscal 2001.
The Company is currently investing its cash on hand in highly liquid short-term
investments yielding approximately 6% interest.
In addition, in July 2000, the Company entered into a short-term revolving
credit facility with a bank providing the Company with $50 million of revolving
credit to fund operations. No borrowings existed on this facility at September
30, 2000 nor as at November 10, 2000.
Seasonality
Sales of food and beverage products consumed generally decline to some
degree during the Summer months (the first quarter of the Company's fiscal
year). However, the Company believes that such seasonality has a limited effect
on operations.
Inflation
The Company does not believe that inflation had a significant impact on
the Company's results of operations for the periods presented.
Note Regarding Forward Looking Information
Certain statements contained in this Quarterly Report constitute
"forward- looking statements" within the meaning of Section 27A of the
Securities Act and Sections 21E of the Exchange Act. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, levels of activity, performance or
achievements of the Company, or industry results, to be materially different
from any future results, levels of activity, performance or achievements
expressed or implied by such forward- looking statements. Such factors include,
among others, the following: general economic and business conditions, the
ability of the Company to implement its business and acquisition strategy; the
ability to effectively integrate its acquisitions; the ability of the Company to
obtain financing for general corporate purposes; competition; availability of
key personnel, and changes in, or the failure to comply with governments
regulations. As a result of the foregoing and other factors, no assurance can be
given as to the future results, levels of activity and achievements and neither
the Company nor any person assumes responsibility for the accuracy and
completeness of these statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has not entered into market risk sensitive transactions
required to be disclosed under this item.
12
<PAGE>
Part II - OTHER INFORMATION
Item 2. - Changes in Securities and Use of Proceeds
As previously disclosed in the Company's filings on September 27, 1999, the
Company announced that it had entered into a global strategic alliance with
Heinz related to the production and distribution of natural products
domestically and internationally. In connection with the alliance, the Company
issued 2,837,343 shares of its common stock, par value $.01 per share to a
wholly-owned subsidiary of Heinz, for an aggregate purchase price of $82,383,843
under a Securities Purchase Agreement dated September 24, 1999 between the
Company and the Heinz Subsidiary. In addition, as part of the consideration paid
by the Company to the Heinz Subsidiary in connection with the Company's
acquisition of the Earth's Best trademarks, the Company issued 670,234 shares of
its common stock to Earth's Best.
On June 19, 2000, the Heinz Subsidiary executed its preemptive right under the
aforementioned Security Purchase Agreement to purchase additional shares of the
Company's common stock. The Company issued 2,582,774 additional shares to the
Heinz Subsidiary for an aggregate purchase price of $79,743,147.
The issuance of the above securities were deemed to be exempt from registration
under the Securities Act in reliance on Section 4(2) of Securities Act for
transactions by an issuer not involving any public offering.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Form of Change In Control Agreement
10.2 Employment Agreement for Chief Executive Officer
27.1 Financial Data Schedule for the three months ended
September 30, 2000
27.2 Financial Data Schedule for the three months ended
September 30, 1999 (restated)
(b) Reports on Form 8-K
On September 19, 2000, the Company filed a report on Form 8-K whereby
the Company announced earnings for the fiscal quarter and fiscal year ended June
30, 2000.
In accordance with Rules 100(a) and 101(e) of Regulation FD under the
Securities Exchange Act of 1934, the Company hosted a conference call regarding
its results for the fiscal quarter and fiscal year ended June 30, 2000 at 8:30
a.m. EST on September 19, 2000.
13
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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.
THE HAIN CELESTIAL GROUP, INC.
Date: November 14, 2000 /s/ Irwin D. Simon
-----------------------------
Irwin D. Simon,
President and Chief
Executive Officer
Date: November 14, 2000 /s/ Gary M. Jacobs
-----------------------------
Gary M. Jacobs,
Executive Vice President, Finance
and Chief Financial Officer
