BOHEMIA, N.Y., Jul 22, 2003 -- NBTY, Inc. (Nasdaq: NBTY) (www.NBTY.com), a leading manufacturer and marketer of nutritional supplements, today announced results for the fiscal third quarter and nine months ended June 30, 2003.
For the fiscal third quarter ended June 30, 2003, net sales increased 22% to $308 million compared to net sales of $252 million for the fiscal third quarter last year. Net income for the fiscal third quarter was $29 million, or $0.43 per diluted share, compared to reported net income of $30 million, or $0.44 per diluted share for the fiscal third quarter of 2002. Included in the results for the current quarter is a $4 million after-tax benefit to record available foreign tax credits. Results for the fiscal third quarter of 2002 include a $15 million pre-tax settlement payment received from price fixing litigation in which the Company was a plaintiff. Excluding this one-time payment, net income would have been $20 million or $0.30 per diluted share for the fiscal third quarter last year.
For the nine months ended June 30, 2003, net sales increased 15% to $828 million compared to $719 million for the same period last fiscal year. Net income for the nine-month period was $66 million, or $0.96 per diluted share, compared with reported net income of $66 million, or $0.98 per diluted share. Included in the results for the current nine-month period is a $4 million after-tax benefit to record available foreign tax credits. Results for the fiscal nine-month period of 2002 include a total of $21 million in pre-tax settlement payments in the aforementioned price fixing litigation. Excluding these one-time payments, net income for the nine months ended June 30, 2002 would have been $54 million, or $0.79 per diluted share for the comparable period last year.
NBTY continues to enhance its financial strength. At June 30, 2003, total assets were $846 million and working capital was $218 million compared with total assets of $725 million and working capital of $153 million at June 30, 2002.
OPERATIONS FOR THE FISCAL THIRD QUARTER ENDED JUNE 30, 2003
Sales for the Nature's Bounty wholesale division increased 17% to $94 million from $80 million for the comparable period of fiscal 2002. The increase reflects greater sales of core products and strong sales response to new product introductions and promotions.
NBTY remains focused on increasing market share in the wholesale arena and expanding its presence in the nutritional supplement marketplace. The Nature's Bounty brand continues to be recognized for its ability to generate greater sales than competing brands. By utilizing consumer sales information received from its Vitamin World and direct-response/e-commerce operations, the Company has been able to provide its mass-market customers with tools to drive sales. The Company continues to respond to consumer preferences and to monitor the market for trends and ideas, and these efforts have translated into increased sales.
Vitamin World third quarter sales were $54 million compared to $51 million a year ago, an increase of 6%. Same store sales increased 5% for the quarter. Vitamin World operations continued to generate profitability with pre-tax income of $902 thousand compared to a loss of $94 thousand for the comparable quarter last year. Vitamin World currently has 536 stores in operation nationwide.
Total sales from NBTY's European retail operations increased 39% to $99 million from $71 million a year ago. Of this increase, $15 million is attributed to Health & Diet Group Ltd., with 56 GNC stores in the United Kingdom, and the De Tuinen chain of health food stores, with 63 stores in the Netherlands. The integration of these two strategic acquisitions is on schedule and profitability is anticipated within the next two quarters. Holland & Barrett continues to be a leader in the UK and Ireland. Same store sales for this operation increased 18% for the fiscal third quarter. The total European division currently operates 586 stores in the UK, Ireland, and the Netherlands.
Revenues from Puritan's Pride direct response/e-commerce operations for the fiscal third quarter increased 23% to $61 million from $49 million for the comparable prior period. The increase in sales reflects the success of key investments made in the second quarter in additional advertising, sales promotions and faster product delivery to customers.
ACQUISITION OF REXALL SUNDOWN
As part of its strategic effort to expand the Company's wholesale operation, NBTY agreed to acquire Rexall Sundown, Inc. ("Rexall") from Royal Numico, N.V. for $250 million in cash. NBTY has obtained regulatory approval for this acquisition and expects to close the transaction on July 24, 2003. To finance this transaction the Company will enter into a new senior credit facility consisting of $275 million in term loans and $100 million in a revolving credit agreement.
Rexall, a prominent nutritional supplement company, had sales for the last twelve months ended March 31, 2003 of $434 million with pro forma EBITDA of $39 million. Rexall's portfolio of nutritional supplement brands includes Rexall, Sundown, Osteo Bi-Flex, CarbSolutions, MET-Rx and WORLDWIDE Sports Nutrition.
NBTY Chairman and CEO, Scott Rudolph, said: "Once again, we have recorded another strong quarter. The Rexall acquisition is indicative of our commitment to the wholesale segment. We anticipate this acquisition to provide substantial synergies and further solidify the Company's position as the dominant force in the worldwide nutritional supplement market. It will provide NBTY with an enhanced sales infrastructure, additional manufacturing capacity, and the opportunity to offer a greater number and variety of products to our growing customer base. We are confident in the long-term outlook for the Company and in NBTY's ability to further capitalize on market opportunities."
NBTY is a leading vertically integrated U.S. manufacturer and distributor of a broad line of high-quality, value-priced nutritional supplements in the United States and throughout the world. The Company markets more than 1,100 products under several brands, including Nature's Bounty(R), Vitamin World(R), Puritan's Pride(R), Holland & Barrett(R), Nutrition Headquarters(R), American Health(R), Nutrition Warehouse(R) and GNC (UK)(R).
This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. All of these forward-looking statements, which can be identified by the use of terminology such as "subject to," "believe," "expects," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy which, although believed to be reasonable, are inherently uncertain. Factors which may materially affect such forward-looking statements include: (i) slow or negative growth in the nutritional supplement industry; (ii) interruption of business or negative impact on sales and earnings due to acts of war, terrorism, bio-terrorism, civil unrest or disruption of mail service; (iii) adverse publicity regarding the consumption of nutritional supplements; (iv) inability to retain customers of companies (or mailing lists) recently acquired; (v) increased competition; (vi) increased costs; (vii) loss or retirement of key members of management; (viii) increases in the cost of borrowings and unavailability of additional debt or equity capital; (ix) unavailability of, or inability to consummate, advantageous acquisitions in the future, including those that may be subject to bankruptcy approval or the inability of the Company (as defined below) to integrate acquisitions into the mainstream of its business; (x) changes in general worldwide economic and political conditions in the markets in which the Company may compete from time to time; (xi) the inability of the Company to gain and/or hold market share of its wholesale and retail customers; (xii) loss or reduction in ephedra sales; (xiii) unavailability of electricity in certain geographical areas; (xiv) exposure to and expense of defending and resolving, product liability claims and other litigation; (xv) the ability of the Company to successfully implement its business strategy; (xvi) the inability of the Company to manage its retail, wholesale, manufacturing and other operations efficiently; (xvii) consumer acceptance of the Company's products; (xviii) the inability of the Company to renew leases on its retail locations; (xix) inability of the Company's retail stores to attain or maintain profitability; (xx) the absence of clinical trials for many of the Company's products; (xxi) sales and earnings volatility and/or trends; (xxii) the effect on Company sales of the rapidly changing nature of the Internet and on-line commerce; (xxiii) fluctuations in foreign currencies, and more particularly the British Pound; (xxiv) import-export controls on sales to foreign countries; (xxv) the inability of the Company to secure favorable new sites for, and delays in opening, new retail locations; (xxvi) introduction of new federal, state, local or foreign legislation or regulation or adverse determinations by regulators, and more particularly the Food Supplements Directive and the Traditional Herbal Medicinal Products Directive in Europe; (xxvii) the mix of the Company's products and the profit margins thereon; (xxviii) the availability and pricing of raw materials; (xxix) risk factors discussed in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"); and (xxx) other factors beyond the Company's control.
Readers are cautioned not to place undue reliance on forward-looking statements. The Company cannot guarantee future results, trends, events, levels of activity, performance or achievements. The Company does not undertake and specifically declines any obligation to update, republish or revise forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events.