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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 April 30, 2000
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 13(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the period from _______________ to ____________________
Commission file number 0-23624
IVC INDUSTRIES, INC.
(exact name of Registrant as specified in its charter)
DELAWARE 22-1567481
(State of Incorporation) (I.R.S. Employer Identification No.)
500 HALLS MILL ROAD, FREEHOLD, NEW JERSEY 07728
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (732) 308-3000
NOT APPLICABLE
(former name, address and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 |_|
Registrant had 2,088,092 shares of common stock outstanding as of June 1, 2000
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<PAGE>
IVC INDUSTRIES, INC.
Table of Contents
Part I. Financial Information Page No.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as at
April 30, 2000 (unaudited) and July 31, 1999 ................... 3
Condensed Consolidated Statements of Income
For The Three and Nine Months Ended April 30, 2000 and
1999 (unaudited) ............................................... 4
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended April 30, 2000 and 1999 (unaudited) .. 5
Notes to Condensed Consolidated Financial Statements ........... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .................. 9
Item 3. Quantitative and Qualitative Disclosures About Market
Risk ........................................................... 14
Part II. Other Information, Reports on Form 8-K and Exhibits .............. 15
Signature Page ............................................................ 17
<PAGE>
Item 1. Financial Statements.
IVC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
--------------------------
<TABLE>
<CAPTION>
April 30, July 31,
ASSETS 2000 1999
-------- --------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 958 $ 287
Accounts receivable 4,278 7,296
Inventories 34,154 27,374
Deferred taxes 3,944 4,673
Prepaid expenses 1,539 671
Refundable income taxes -- 2,117
Other current assets 307 483
-------- --------
Total Current Assets 45,180 42,901
Property, Plant and Equipment - Net 20,865 19,839
Due from related parties 483 1,339
Other Assets 920 1,162
-------- --------
Total Assets $ 67,448 $ 65,241
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt 2,393 2,697
Current portion of capital lease payable 217 180
Current portion of deferred gain on building 110 104
Accounts payable 13,214 14,785
Income taxes payable 1,826 --
Accrued expenses 4,706 4,896
-------- --------
Total Current Liabilities 22,466 22,662
-------- --------
Long-term debt - Less current portion 22,867 27,898
Capital lease obligation 2,966 3,136
Deferred gain on building sale 921 1,005
-------- --------
Total Liabilities 49,220 54,701
-------- --------
Shareholders' Equity:
Preferred stock, $.01 par value, 2,000,000 shares authorized:
none issued -- --
Common stock, $.08 par value, 25,000,000 shares authorized:
2,088,092 shares issued 167 167
Additional paid-in capital 11,578 11,499
Foreign currency translation adjustment (258) (202)
Retained earnings 6,741 (924)
-------- --------
Total Shareholders' Equity 18,228 10,540
-------- --------
Total Liabilities and Shareholders' Equity $ 67,448 $ 65,241
======== ========
</TABLE>
See notes to condensed financial statements
3
<PAGE>
IVC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Information)
(unaudited)
-----------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 17,234 $ 25,558 $ 68,271 $ 85,459
Cost of sales 12,652 18,544 49,248 62,946
----------- ----------- ----------- -----------
Gross profit 4,582 7,014 19,023 22,513
Selling, general and administrative expenses 6,444 5,731 20,701 18,731
----------- ----------- ----------- -----------
Income (loss) from operations (1,862) 1,283 (1,678) 3,782
Recovery, price fixing settlement 6,305 -- 16,305 --
Other expenses - net 705 638 1,764 1,887
----------- ----------- ----------- -----------
Income before income taxes 3,738 645 12,863 1,895
Income tax provision 1,507 186 5,198 688
----------- ----------- ----------- -----------
Net income $ 2,231 $ 459 $ 7,665 $ 1,207
=========== =========== =========== ===========
Basic earnings per share $ 1.07 $ 0.24 $ 3.67 $ 0.56
=========== =========== =========== ===========
Diluted earnings per share $ 1.07 $ 0.24 $ 3.67 $ 0.56
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic 2,088,092 2,151,443 2,088,092 2,151,443
=========== =========== =========== ===========
Diluted 2,090,003 2,152,414 2,091,270 2,151,808
=========== =========== =========== ===========
</TABLE>
See notes to condensed financial statements
4
<PAGE>
IVC INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(unaudited)
---------------------------
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
---------
2000 1999
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 7,665 $ 1,207
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,951 2,235
Deferred income taxes 729 --
Stock options issued to non-employee directors 79 45
Changes in assets - (increase) decrease:
Accounts receivable 3,044 (1,685)
Inventories (6,780) 11,144
Prepaid expenses and other current assets 1,425 1,507
Other assets 1,000 (976)
Changes in liabilities - increase (decrease):
Accounts payable and accrued expenses (1,761) (12,664)
Other 1,826 (172)
-------- --------
Total adjustments 1,513 (566)
-------- --------
Net Cash Provided by Operating Activities 9,178 641
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (2,983) (1,214)
-------- --------
Net Cash Used In Investment Activities (2,983) (1,214)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 5,154 6,975
Payments on borrowings (10,489) (7,118)
Payments on capital lease obligations (133) (100)
-------- --------
Net Cash (Used In) Financing Activities (5,468) (243)
-------- --------
Foreign currency translation adjustment (56) 25
-------- --------
NET INCREASE (DECREASE) IN CASH 671 (791)
CASH AND CASH EQUIVALENTS - BEGINNING 287 1,604
-------- --------
CASH AND CASH EQUIVALENTS - ENDING $ 958 $ 813
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 1,827 $ 1,781
======== ========
Taxes $ 633 $ 940
======== ========
</TABLE>
See notes to condensed financial statements
5
<PAGE>
IVC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(unaudited)
--------------------------
Note 1 - Basis of Presentation and Other Matters:
The accompanying unaudited consolidated financial statements, which are
for interim periods, do not include all disclosures provided in the annual
consolidated financial statements. These unaudited consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the footnotes thereto contained in the IVC Industries, Inc. (the
"Company") Annual Report on Form 10-K for the year ended July 31, 1999, as filed
with the Securities and Exchange Commission.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (which are of a normal recurring
nature) necessary for a fair presentation of the financial statements. The
results of operations for the interim periods are not necessarily indicative of
the results to be expected for the full year.
Certain amounts have been reclassified to conform with the current period
presentation.
Note 2 - Inventories:
Inventories consist of the following:
April 30, July 31,
2000 1999
------- -------
Finished Goods $ 9,693 $ 9,427
Bulk and Work in Process 15,371 9,789
Raw Materials and Packaging Components 9,090 8,158
------- -------
Total Inventory $34,154 $27,374
======= =======
6
<PAGE>
Note 3 - Long-Term Debt:
Effective September 24, 1999, the Company entered into an amended and
restated credit agreement with Chase Manhattan Bank, and Citizens Business
Credit Company, a subsidiary of the Royal Bank of Scotland to replace the
previously existing credit agreement. The agreement matures on July 31, 2002. On
June 13, 2000 certain terms of the agreement were amended which are reflected
below. The Company can borrow up to $22 million ($18 million effective June 13,
2000) under a revolving credit commitment (as of April 30, 2000, the amount
borrowed was $13.6 million) subject to borrowing base limitations, and $5.2
million under a term loan commitment (as of April 30, 2000 $4.6 million was
outstanding). Borrowings under the revolving credit commitment bear interest at
Chase's Alternative Base Rate (which is the greater of the Prime Rate, the
Federal Funds Rate plus .05% and the Base CD Rate plus 1%) plus a spread ranging
from 0% to .50% (0% to 1.00% effective June 13, 2000) based on the Company's
consolidated leverage ratio (the ratio of consolidated funded debt to
consolidated EBITDA or "CLR"), or, alternatively, at LIBOR plus a spread ranging
from 2.0% to 2.75% (2.0% to 3.00% effective June 13, 2000) based on the
Company's CLR. Borrowings under the term loan commitment bear interest at
Chase's Alternative Base Rate plus a spread ranging from .25% to .75% (.25% to
1.25% effective June 13, 2000) based on the Company's CLR, or, alternatively, at
LIBOR plus a spread ranging from 2.25% to 3.0% (2.25% to 3.25% effective June
13, 2000) based on the Company's CLR. The term loan requires quarterly payments
of $258 at the end of each quarter with the balance due on the maturity date.
The agreement includes a facility fee ranging from .25% to .50%, based on the
Company's CLR, of the average daily unused portion of the overall borrowing
commitment. The notes are collateralized by substantially all of the Company's
assets. The credit agreement requires the Company to maintain certain financial
ratios, a minimum net worth and contains various restrictions customary in such
a financial arrangement, including limitations on capital expenditures and
payment of cash dividends.
Note 4 - Earnings Per Share (EPS):
Basic earnings per share is computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding
during the period. Diluted earnings per share is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding during the period increased to include the number of additional
common shares that would have been outstanding if the dilutive potential common
shares had been issued.
7
<PAGE>
Note 5 - Comprehensive Income:
As of August 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for the reporting and
displaying of comprehensive income. The following table presents the Company's
comprehensive income for the three and nine month periods ended April 30, 2000
and 1999.
Three Months Ended Nine Months Ended
April 30, April 30, April 30, April 30,
2000 1999 2000 1999
------- ------- ------- -------
Net income $ 2,231 $ 459 $ 7,665 $ 1,207
Other comprehensive income (loss),
net of tax:
Foreign exchange translation
adjustments (23) 23 (56) 25
------- ------- ------- -------
Comprehensive income $ 2,208 $ 482 $ 7,609 $ 1,232
======= ======= ======= =======
Note 6 - Recovery, price fixing settlement:
On September 24, 1999, the Company received $12,700 as part of a
price-fixing settlement with a supplier. Of this amount, $10,000 was included in
the Company's statement of income during the quarter ended October 31, 1999 as
an uncontested portion of the settlement. During the quarter ended April 30,
2000, the advance deposit of $2,700 along with an additional $872 received from
the same supplier and $2,733 received from two other suppliers, or a total of
$6,305, was included in the statement of income.
Note 7 - Employment Agreements
On April 12, 2000 the Company entered into employment contacts with three
of its officers. The contracts are for a period of three years and provide for
compensation of approximately $1,500 in the aggregate over the terms of the
contracts.
Note 8 - Shareholders' Rights Plan
On May 15, 2000, the Board of Directors of the Company adopted a
shareholders' rights plan (the "Rights Plan") purusant to which a dividend
consisting of one preferred stock purchase right (a "Right") was distributed for
each outstanding share of the Company's common stock. The dividend is payable to
the shareholders of record on May 24, 2000, and with respect to commons stock
issued thereafter until the distribution date. The Rights Plan is designed to
deter coercive takeover tactics and to prevent an acquirer from gaining control
of the Company without offering fair value to the company's stockholders.
A complete description of the Rights Plan is hereby incorporated by reference
from the information appearing in the Current Report on Form 8-K of the company
filed on May 22, 2000.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations. ( Dollars in Thousands, Except Per Share Information)
Three Months Ended April 30, 2000 Compared to the Three Months Ended April 30,
1999
Results of operations.
For the quarter ended April 30, 2000, net income was $2,231, equivalent to basic
and diluted earnings of $1.07 per share, versus $459, or $.24 per share, in the
prior year's quarter. These results include an after-tax gain of $3,783, or
$1.81 per share, related to price fixing settlements with various suppliers.
Excluding this one-time gain the Company incurred a net loss of $1,552, or
($.74) per share.
Net sales for the quarter ended April 30, 2000 were $17,234 as compared to
$25,558 in the prior year, a decrease of $8,324 or 32.6%. This reduction was
related to sales contracts with a number of customers, which were cancelled
because they did not meet the Company's gross margin targets, resulting in lower
branded and private brand sales. Sales of certain vitamins and minerals were
also lower as a result of being discontinued at a major account. In addition the
market for vitamins, herbs and supplements softened, leading to lower sales in
various accounts and it is expected that this softness will continue into the
next quarter. Sales during the current year were also lower as the prior year
included sales of the Vitamin Specialties business, which was sold in July 1999.
Cost of sales for the three months ended April 30, 2000 was $12,652, 73.4% of
sales, compared to $18,544, or 72.6% of sales, for the three months ended April
30, 1999, an increase of .8%. This increase was primarily related to the
under-absorption of fixed costs at the plants as production was cut back in
response to lower than anticipated sales levels. Offsetting this increase during
the current year was the elimination of amortization of long-term contracts.
Selling, general and administrative expenses for the three months ended April
30, 2000 were $6,444, an increase of $713 or 12.4% as compared to the prior
year's quarter. This is primarily attributable to: (i) shifting to higher
promotional costs, simultaneously with a decrease in amortization of contract
costs, as a result of renegotiating long-term contracts, (ii) increased sales
and marketing staff, (iii) increased advertising, and (iv) higher freight and
delivery costs. These were offset in part by a reduction of general and
administrative expenses as the prior year included severance accruals related to
the reorganization of the management group and administrative expenses at
Portland, which has since been shut down. In addition selling, general and
administrative costs were lower in the current year due to the absence of
Vitamin Specialties Corp. which was sold at the end of the last fiscal year.
9
<PAGE>
Other expenses, net for the three months ended April 30, 2000 were $705. This
principally represents interest expense of $681. Other expenses, net for the
three months ended April 30, 1999, were $638. This primarily included interest
of $744. Interest expense was lower during the current year due to the lower
amount of long-term debt outstanding as compared to last year, although interest
rates were higher.
Nine Months Ended April 30, 2000 Compared to Nine Months Ended April 30, 1999
Results of operations.
For the nine months ended April 30, 2000, net income was $7,665, equivalent to
basic and diluted earnings of $3.67 per share, versus $1,207, or $.56 per share,
in the same period last year. The results for the current year include an
after-tax gain of $9,783, or $4.69 per share from price-fixing settlements with
a number of suppliers. Excluding this one-time gain, the Company incurred a net
loss of $2,118, or ($1.01) per diluted share. The prior year included an
after-tax charge of $276, or $.13 per share for anticipated expenses for the
shutdown of the Portland manufacturing facility. Excluding this charge the
Company would have earned $1,483.
Net sales for the nine months ended April 30, 2000 were $68,271 as compared to
$85,459 in the prior year, a decrease of $17,188, or 20.1%. This reduction was
related to sales contracts with a number of customers, which were cancelled,
because they did not meet the Company's gross margin targets, resulting in lower
branded and private brand sales, in addition to weaker private label sales at
some major accounts during the first quarter of the current year. Sales of
certain vitamins and minerals were also lower as a result of being discontinued
at a major account, and the market for vitamins, herbs and supplements softened
during the third quarter, leading to lower sales. Sales during the current year
were also lower because the prior year included sales of the Vitamin Specialties
business, which was sold in July 1999.
Cost of sales for the nine months ended April 30, 2000 was $49,248, 72.1% of
sales, compared to $62,946, or 73.7% of sales for the nine months ended April
30, 1999, a decrease of 1.6%. Cost of sales decreased as a percentage of sales
versus the prior year's period primarily as a result of increased efficiency and
reduced raw material costs at the Freehold, New Jersey manufacturing facility
during the first six months. In addition, the prior year included a charge for
anticipated expenses for the shutdown of the Portland manufacturing facility.
Also, during the current year the amortization of long-term contracts was
reduced as various contracts were renegotiated. These were offset by the
under-absorption of fixed costs during the current quarter as production was cut
back to reduce inventory levels, and the increased costs incurred at the
Portland packaging facility during the second quarter as production at the plant
was being phased out.
10
<PAGE>
Selling, general and administrative expenses for the nine months ended April 30,
2000 were $20,701, an increase $1,970, or 10.5% as compared to the same period
of the prior year. This is primarily attributable to higher selling and
marketing costs due to: (i) shifting to higher promotional costs, simultaneously
with a decrease in amortization of contract costs, as a result of renegotiating
long-term contracts, (ii) increased sales and marketing staff along with
increased travel expenses and (iii) increased advertising costs. These costs
were offset by lower commissions and a lower provision for bad debts. In
addition, freight and delivery costs were higher in the current year. These
increases were offset by lower, general and administrative costs in the current
year as the prior year included severance accruals related to the reorganization
of the management group and administration expenses at Portland, which was shut
down at the end of the second quarter of the current year. In addition, Vitamin
Specialties Corp. was sold at the end of the last fiscal year, reducing selling,
general and administrative expenses during the current year.
Other expenses, net for the nine months ended April 30, 2000 were $1,764. This
principally represents interest expense of $1,880. Other expenses, net for the
nine months ended April 30, 1999, were $1,887. This included interest of $2,034.
Interest expense for the period was lower during the current year because of
reduced borrowings as a result of the cash received from the price fixing
settlements, offset by higher interest rates.
Liquidity and Capital Resources
Operating activities provided $9,178 in cash for the nine months ended April 30,
2000, versus $641 for the comparable period in 1999. Approximately $10,345 was
generated from net income, which included the proceeds from the price fixing
settlements, plus non-cash depreciation and amortization and deferred taxes. In
addition, cash was generated by collections of accounts receivable and related
party receivables of $3,874, an increase in prepaid expenses of $1,038 and an
increase in income taxes payable of $1,826. Cash was utilized to fund increased
inventory levels in the amount of $6,780 and to reduce accounts payable and
accruals by $1,761.
Offsetting the cash provided from operating activities, cash was utilized for
additions to property, plant and equipment of $2,983 and to reduce outstanding
long-term debt.
The Company believes that its existing cash balance, internally generated funds
from operations and available financing will provide the liquidity required to
satisfy the Company's working capital needs and anticipated capital expenditures
for the next twelve months.
11
<PAGE>
On September 17, 1999, the Company entered into a settlement agreement with a
key supplier in connection with the supplier's alleged participation in an
unlawful conspiracy related to pricing of vitamins in the United States and
elsewhere in violation of Section 1 of the Sherman Antitrust Act and other
wrongful anti-competitive conduct in violation of various federal and state
laws.
Pursuant to the terms of the settlement agreement, the Company agreed to release
all claims it may have against the supplier based on the Company's purchases of
various vitamins from the supplier since 1990 and to opt out of any settlement
in connection with a pending class action suit.
In exchange for the Company's release and agreement to opt out of any settlement
in the pending class action suit, the Company received a settlement compensation
package comprised of the following: (i) a $10 million cash payment; (ii) a price
discount of 5% on future purchases up to $1 million per year over three years;
and (iii) an advance, refundable in cash or stock, of $2.7 million on any
payments that may be due to the Company under a most favored nations clause
contained in the settlement agreement. Under this clause, in the event that the
pending class action suit is settled and the settlement amount that would have
been received thereunder exceeds $12.7 million, the supplier agrees to make
additional payments to the Company based on, and subject to certain adjustments
to, the amounts recovered by the plaintiffs in the pending class action suit.
The Company received a cash payment of $12.7 million on September 24, 1999. The
class action suit was completed during the quarter ended April 30, 2000. As a
result, the company received an additional $.9 million and will retain the $2.7
million advanced, under the most favored nations clause contained in the
settlement agreement.
During the quarter, the Company also received an additional $2.7 million in
settlement with two other suppliers. Effective September 24, 1999, the Company
entered into an amended and restated credit agreement with Chase Manhattan Bank,
and Citizens Business Credit Company, a subsidiary of the Royal Bank of Scotland
to replace the previously existing credit agreement. The agreement matures on
July 31, 2002. On June 13, 2000 certain terms of the agreement were amended
which are reflected below. The Company can borrow up to $22 million ($18 million
effective June 13, 2000) under a revolving credit commitment (as of April 30,
2000, the amount borrowed was $13.6 million) subject to borrowing base
limitations, as defined and $5.2 million under a term loan commitment (as of
April 30, 2000, $4.6 million was outstanding). Borrowings under the revolving
credit commitment bear interest at Chase's Alternative Base Rate (which is the
greater of the Prime Rate, the Federal Funds Rate plus .05% and the Base CD Rate
plus 1%) plus a spread ranging from 0% to .50% (0% to 1.00% effective June 13,
2000) based on the Company's consolidated leverage ratio (the ratio of
consolidated funded debt to consolidated EBITDA or "CLR"), or, alternatively, at
LIBOR plus a spread ranging from 2.0% to 2.75% (2.0% to 3.0% effective June 13,
2000) based on the Company's CLR. Borrowings under the term loan commitment bear
interest at Chase's Alternative Base Rate plus a spread ranging from .25% to
.75% (.25% to 1.25% effective June 13, 2000) based on the Company's CLR, or,
alternatively, at LIBOR plus a spread ranging from 2.25% to 3.0% (2.25% to 3.25%
effective June 13, 2000) based on the Company's CLR. The term loan requires
quarterly payments of $258 at the end of each quarter with the balance due on
the
12
<PAGE>
maturity date. The agreement includes a facility fee ranging from .25% to .50%,
based on the Company's CLR, of the average daily unused portion of the overall
borrowing commitment. The notes are collateralized by substantially all of the
Company's assets.
The credit agreement requires the Company to maintain certain financial ratios,
a minimum net worth and contains various restrictions customary in such a
financial arrangement, including limitations on capital expenditures and payment
of cash dividends.
Year 2000
The Company did not experience any disruptions to its normal operations or any
interruptions from its suppliers as a result of the transition into calendar
year 2000. The Company continued to monitor its business processes and third
parties for potential problems that could arise in the first few months of
calendar year 2000. Based on the absence of any problems to date, no significant
disruptions are anticipated.
Subsequent Event
On May 15, 2000 the Board of Directors of the Company adopted a Shareholder's
Rights Plan, as described in the Company's current report on Form 8-K filed with
the Securities and Exchange Commission on May 22, 2000.
Forward Looking Statements
This report, including Management's Discussion and Analysis, contains
certain "forward-looking statements", within the meaning of Section 27A of the
Securities Act of 1933, which represent the Company's expectations or beliefs,
including, but not limited to, statements concerning industry performance, the
Company's operations, performance, financial condition, growth and acquisition
strategies, margins and growth in sales of the Company's products. For this
purpose, any statements contained in this Report that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the generality of the foregoing, words such as "may", "will", "expect",
"believe", "anticipate", "intend", "could", "estimate" or "continue" or the
negative or other variations thereof or comparable terminology are intended to
identify forward-looking statements. These statements by their nature involve
substantial risks and uncertainties, certain of which are beyond the Company's
control, and actual results may differ materially depending on a variety of
important factors, including beneficial or adverse trends in the domestic market
for vitamins and nutritional supplements, the gain or loss of significant
customers for the Company's products, the competitive environment in the vitamin
and nutritional supplement industry, and the enactment or promulgation of new
government legislation or regulation, as well as other risks and uncertainties
that may be detailed from time to time in the Company's reports filed with the
Securities and Exchange Commission.
13
<PAGE>
Item 3 Quantitative and Qualitative Disclosure about Market Risk
The Company has no market risk sensitive instruments that subject the
Company to material market risk exposures.
14
<PAGE>
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Description of
Number Exhibit
------ -------
10 Employment contracts
10.1 Employment contract - Domenic N. Golato
10.2 Employment contract - Michael Durso
10.3 Employment contract - William Lederman
11 Computation of earnings per share
27 Financial Data Schedule
(b) No reports on Form 8-K were filed for the three months ended April 30,
2000.
15
<PAGE>
IVC INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 11
CONSOLIDATED STATEMENTS OF EARNINGS PER SHARE
(Dollars in Thousands, Except Per Share Information)
(unaudited)
--------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic:
Net income $ 2,231 $ 459 $ 7,665 $ 1,207
Weighted average shares outstanding $2,088,092 2,151,443 $2,088,092 2,151,443
========== ========== ========== ==========
Basic earnings per share $ 1.07 $ 0.24 $ 3.67 $ 0.56
========== ========== ========== ==========
Diluted:
Net Income $ 2,231 $ 459 $ 7,665 $ 1,207
Weighted average shares outstanding 2,088,092 2,151,443 2,088,092 2,151,443
Incremental shares under Stock Option Plan 1,911 971 3,178 365
---------- ---------- ---------- ----------
Adjusted weighted average shares outstanding 2,090,003 2,152,414 2,091,270 2,151,808
========== ========== ========== ==========
Diluted earnings per share $ 1.07 $ 0.24 $ 3.67 $ 0.56
========== ========== ========== ==========
</TABLE>
16
<PAGE>
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.
Dated: June 14, 2000 By: /s/ E. Joseph Edell
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Chairman and
Chief Executive Officer
Dated: June 14, 2000 By: /s/ Domenic N. Golato
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Vice President and
Chief Financial Officer
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