NTY Nbty Inc.

BOHEMIA, N.Y., July 26 /PRNewswire-FirstCall/ -- NBTY, Inc. (NYSE:NTY) (http://www.nbty.com/), a leading global manufacturer and marketer of nutritional supplements, today announced results for the fiscal third quarter ended June 30, 2007. For the fiscal third quarter ended June 30, 2007, net sales were $503 million compared to net sales of $475 million for the fiscal third quarter ended June 30, 2006, an increase of $28 million, or 6%. Net income for the fiscal third quarter ended June 30, 2007 was $51 million, or $0.74 per diluted share, compared to net income of $30 million, or $0.43 per diluted share for the fiscal third quarter ended June 30, 2006. For the nine months ended June 30, 2007, net sales were $1.5 billion, compared to net sales of $1.4 billion for the prior like period, an increase of $106 million, or 7%. Net income for the nine months ended June 30, 2007 was $159 million, or $2.29 per diluted share, compared to $74 million, or $1.07 per diluted share, for the prior like period. Net income for the nine months ended June 30, 2006 included non-cash charges of $14 million or $0.15 per diluted share primarily related to a trademark impairment charge. Without these non-cash charges, earnings for the nine months ended June 30, 2006 would have been $1.22 per diluted share. At June 30, 2007, NBTY had working capital of $552 million and total assets of $1.5 billion. Included in working capital is $204 million of cash and short term investments, which gives the Company flexibility to respond to opportunities. OPERATIONS FOR THE FISCAL THIRD QUARTER ENDED JUNE 30, 2007 The Wholesale/US Nutrition division continues to generate solid sales and profit margins and significantly contributes to NBTY's overall strong performance. Net sales for the Wholesale/US Nutrition division, which markets Nature's Bounty, Solgar, Osteo Bi-Flex, Rexall and other brands, increased $21 million, or 9%, to $248 million from $227 million for the prior like quarter. Gross profit for the Wholesale operation increased to 42% compared to 31% for the prior like quarter. The increase in gross profit reflects the Company's ability to generate greater efficiencies in manufacturing and supply chain management resulting from economies of scale. The Wholesale/US Nutrition division utilizes valuable consumer preference sales data generated by the Company's Vitamin World retail stores and Puritan's Pride Direct Response/E-Commerce operations to empower its wholesale customers with this latest data. The Vitamin World stores are used as a laboratory for new ideas and are an effective tool in determining and monitoring consumer preferences. This information, as well as scanned sales data from the Vitamin World stores, is shared on a real time basis with our wholesale customers to give them a competitive advantage. Sales for the North American Retail division decreased $2 million, or 4%, to $56 million from $58 million for the fiscal third quarter ended June 30, 2006. Vitamin World was profitable for the current fiscal quarter. However, LeNaturiste, the Company's Canadian retail chain, operated at a loss during this period. This resulted in an overall loss for the North American Retail division. Same store sales for Vitamin World were unchanged from the prior like quarter. The North American Retail division is focused on improving its performance by rationalizing SKU's and enhancing visual merchandising. During the fiscal third quarter of 2007, Vitamin World closed 2 under-performing stores, for a total of 17 closures for the current fiscal year to date. Vitamin World anticipates closing an additional 3 stores by the fiscal year-end. Le Naturiste closed 3 stores during the fiscal third quarter, for a total of 11 closures for the fiscal year to date. At the end of the fiscal third quarter, the North American Retail division operated a total of 545 stores, with 460 in the US and 85 in Canada. European Retail sales for the fiscal third quarter ended June 30, 2007 increased 9% to $153 million from $140 million for the fiscal third quarter ended June 30, 2006. These results represent a decrease of 1% in local currency from the prior like period. Same store sales for this division increased 8% for the current fiscal quarter, but were unchanged in local currency from the prior like period. The European Retail business continues to leverage its premier status, high street locations and brand awareness. As of June 30, 2007, the European Retail business operated a total of 623 stores, comprised of 504 Holland & Barrett stores and 31 GNC stores in the UK, 19 Nature's Way stores in Ireland, and 69 DeTuinen stores in the Netherlands. During the fiscal third quarter ended June 30, 2007, the European Retail division opened 3 stores. Net sales from Direct Response/E-Commerce operations for the fiscal third quarter of 2007 decreased 5% to $47 million from $49 million for the fiscal third quarter of 2006. While more orders were received than in the prior like period, the average order size at Puritan's Pride decreased to $68 from $77. However, gross profit for this division increased to 59% from 57% in the prior like quarter, reflecting changes in product mix and manufacturing efficiencies. Since Puritan's Pride varies its promotional strategy throughout the fiscal year, the results for this division should be viewed on an annual and not quarterly basis. Online sales grew to represent 38% of total Direct Response/E-Commerce sales for this fiscal quarter. This increase reflects our on-going efforts to garner greater online consumer sales and capitalize on the continuing surge in shopping via the web. Puritan's Pride views the Internet as the driver of future growth and continues to incorporate new technologies to expand this business. Puritan's Pride remains the leader in the direct response and e- commerce sectors and continues to increase the number of products available via its catalog and web sites. NBTY Chairman and CEO, Scott Rudolph, said: "We are pleased to report another quarter of increased revenue and profitability. These increases reflect ongoing initiatives to drive sales, increase market share and expand our premier position as the leading nutritional supplement company in the world. We remain confident in our long-term outlook for NBTY and are firmly committed to generating future growth and increasing long-term shareholder value." ABOUT NBTY NBTY is a leading global vertically integrated manufacturer, marketer and distributor of a broad line of high-quality, value-priced nutritional supplements in the United States and throughout the world. Under a number of NBTY and third party brands, the Company offers over 22,000 products, including products marketed by the Company's Nature's Bounty(R) (http://www.naturesbounty.com/), Vitamin World(R) (http://www.vitaminworld.com/), Puritan's Pride(R) (http://www.puritan.com/), Holland & Barrett(R) (http://www.hollandandbarrett.com/), Rexall(R) (http://www.rexallsundown.com/), Sundown(R) (http://www.rexallsundown.com/), MET-Rx(R) (http://www.metrx.com/), WORLDWIDE Sport Nutrition(R) (http://www.sportnutrition.com/), American Health(R) (http://www.americanhealthus.com/), GNC (UK)(R) (http://www.gnc.co.uk/), DeTuinen(R) (http://www.detuinen.nl/), LeNaturiste(TM) (http://www.lenaturiste.com/), SISU(R) (http://www.sisu.com/), Osteo Bi-Flex(R) (http://www.osteobiflex.com/), PureProtein(R) (http://www.pureprotein.net/), Solgar(R) (http://www.solgar.com/) and Ester-C(R) (http://www.ester-c.com/) brands. This release refers to non-GAAP financial measures, such as Adjusted EBITDA. "ADJUSTED EBITDA" is defined as net income, excluding the aggregate amount of all non-cash losses reducing net income, plus interest, taxes, depreciation and amortization. This non-GAAP financial measure is not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation of the non-GAAP measure to the comparable GAAP measure is included in the attached financial tables. Management believes the presentation of Adjusted EBITDA is relevant and useful because Adjusted EBITDA is a measurement industry analysts utilize when evaluating NBTY's operating performance. Management also believes Adjusted EBITDA enhances an investor's understanding of NBTY's results of operations because it measures NBTY's operating performance exclusive of interest and non-cash charges for depreciation and amortization. Management also provides this non-GAAP measurement as a way to help investors better understand its core operating performance, enhance comparisons of NBTY's core operating performance from period to period and to allow better comparisons of NBTY's operating performance to that of its competitors. 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. These forward-looking statements can be identified by the use of terminology such as "subject to," "believe," "expects," "plan," "project," "estimate," "intend," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy. Although all of these forward looking statements are believed to be reasonable, they 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 God, acts of war, terrorism, bio-terrorism, civil unrest or disruption of mail service; (iii) adverse publicity regarding 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/or 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 NBTY to integrate acquisitions into the mainstream of its business; (x) changes in general worldwide economic and political conditions in the markets in which NBTY may compete from time to time; (xi) the inability of NBTY to gain and/or hold market share of its wholesale and/or retail customers anywhere in the world; (xii) unavailability of electricity in certain geographical areas; (xiii) the inability of NBTY to obtain and/or renew insurance and/or the costs of the same; (xiv) exposure to and expense of defending and resolving product liability and intellectual property claims and other litigation; (xv) the ability of NBTY to successfully implement its business strategy; (xvi) the inability of NBTY to manage its retail, wholesale, manufacturing and other operations efficiently; (xvii) consumer acceptance of NBTY's products; (xviii) the inability of NBTY to renew leases for its retail locations; (xix) the inability of NBTY's retail stores to attain or maintain profitability; (xx) the absence of clinical trials for many of NBTY's products; (xxi) sales and earnings volatility and/or trends for the Company and its market segments; (xxii) the efficacy of NBTY's Internet and on-line sales and marketing strategies; (xxiii) fluctuations in foreign currencies, including the British Pound, the Euro and the Canadian dollar; (xxiv) import-export controls on sales to foreign countries; (xxv) the inability of NBTY to secure favorable new sites for, and delays in opening, new retail locations; (xxvi) introduction of and compliance with new federal, state, local or foreign legislation or regulation or adverse determinations by regulators anywhere in the world (including the banning of products) and more particularly Good Manufacturing Practices in the United States, the Food Supplements Directive and Traditional Herbal Medicinal Products Directive in Europe and Section 404 requirements of the Sarbanes-Oxley Act of 2002; (xxvii) the mix of NBTY's products and the profit margins thereon; (xxviii) the availability and pricing of raw materials; (xxix) risk factors discussed in NBTY's filings with the U.S. Securities and Exchange Commission; (xxx) adverse effects on NBTY as a result of increased gasoline prices and potentially reduced traffic flow to NBTY's retail locations; (xxxi) adverse tax determinations; (xxxii) the loss of a significant customer of the Company; and (xxxiii) other factors beyond the Company's control. Readers are cautioned not to place undue reliance on forward-looking statements. NBTY cannot guarantee future results, trends, events, levels of activity, performance or achievements. NBTY 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. Consequently, such forward-looking statements should be regarded solely as NBTY's current plans, estimates and beliefs. Contact: Harvey Kamil Carl Hymans NBTY, Inc. G.S. Schwartz & Co. President & Chief Financial Officer 212-725-4500 631-200-2020 (TABLES FOLLOW) NBTY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amounts) For the three months ended June 30, 2007 2006 Net sales $503,368 $475,297 Costs and expenses: Cost of sales 240,597 256,594 Advertising, promotion and catalog 28,268 28,112 Selling, general and administrative 157,484 143,955 426,349 428,661 Income from operations 77,019 46,636 Other income (expense): Interest (3,819) (5,458) Miscellaneous, net 3,822 (218) 3 (5,676) Income before provision for income taxes 77,022 40,960 Provision for income taxes 25,796 11,059 Net income $51,226 $29,901 Net income per share: Basic $0.76 $0.44 Diluted $0.74 $0.43 Weighted average common shares outstanding: Basic 67,353 67,204 Diluted 69,600 69,152 NBTY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amounts) For the nine months ended June 30, 2007 2006 Net sales $1,518,065 $1,412,310 Costs and expenses: Cost of sales 727,174 753,674 Advertising, promotion and catalog 89,472 80,338 Selling, general and administrative 461,387 446,832 Trademark impairment -- 10,450 1,278,033 1,291,294 Income from operations 240,032 121,016 Other income (expense): Interest (13,036) (21,408) Miscellaneous, net 7,468 1,928 (5,568) (19,480) Income before provision for income taxes 234,464 101,536 Provision for income taxes 75,029 27,414 Net income $159,435 $74,122 Net income per share: Basic $2.37 $1.10 Diluted $2.29 $1.07 Weighted average common shares outstanding: Basic 67,279 67,197 Diluted 69,554 69,081 SALES (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED JUNE 30, JUNE 30, Percentage Percentage (In thousands) 2007 2006 Change 2007 2006 Change Wholesale / US Nutrition $248,177 $227,361 9% $739,874 $667,662 11% North American Retail 55,666 57,987 -4% 166,403 178,110 -7% European Retail 152,688 140,453 9% 465,208 423,045 10% Direct Response / E-Commerce 46,837 49,496 -5% 146,580 143,493 2% Total $503,368 $475,297 6% $1,518,065 $1,412,310 7% GROSS PROFIT PERCENTAGES (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED JUNE 30, JUNE 30, % % 2007 2006 Increase 2007 2006 Increase Wholesale / US Nutrition 42% 31% 11% 42% 31% 11% North American Retail 59% 59% 0% 59% 58% 1% European Retail 64% 62% 2% 64% 62% 2% Direct Response/ E-Commerce 59% 57% 2% 61% 60% 1% Total 52% 46% 6% 52% 47% 5% ADJUSTED EBITDA** Reconciliation of GAAP Measures to Non-GAAP Measures ** (Unaudited) (In thousands) THREE MONTHS ENDED JUNE 30, 2007 Pretax Depreciation Income and Non-cash Adjusted (Loss) amortization Interest charges EBITDA** Wholesale / US Nutrition $ 54,581 $ 2,772 $ -- $ -- $ 57,353 North American Retail (45) 895 -- 550 1,400 European Retail 36,562 2,768 -- -- 39,330 Direct Response / E-Commerce 11,787 1,254 -- -- 13,041 Segment Results 102,885 7,689 -- 550 111,124 Corporate / Manufacturing (25,863) 5,602 3,819 -- (16,442) Total $ 77,022 $ 13,291 $ 3,819 $ 550 $ 94,682 THREE MONTHS ENDED JUNE 30, 2006 Pretax Depreciation Income and Non-cash Adjusted (Loss) amortization Interest charges EBITDA** Wholesale / US Nutrition $ 23,176 $ 2,479 $ -- $ (387) $ 25,268 North American Retail 2,114 1,098 -- 135 3,347 European Retail 32,769 3,037 -- -- 35,806 Direct Response / E-Commerce 12,112 1,254 -- -- 13,366 Segment Results 70,171 7,868 -- (252) 77,787 Corporate / Manufacturing (29,211) 6,072 5,458 -- (17,681) Total $ 40,960 $ 13,940 $ 5,458 $ (252) $ 60,106 ** SINCE ADJUSTED EBITDA IS NOT A MEASURE OF PERFORMANCE CALCULATED IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"), IT SHOULD NOT BE CONSIDERED IN ISOLATION OF, OR AS A SUBSTITUTE FOR OR SUPERIOR TO, OTHER MEASURES OF FINANCIAL PERFORMANCE PREPARED IN ACCORDANCE WITH GAAP, SUCH AS OPERATING INCOME, NET INCOME AND CASH FLOWS FROM OPERATING ACTIVITIES. IN ADDITION, THE COMPANY'S DEFINITION OF ADJUSTED EBITDA IS NOT NECESSARILY COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES. ADJUSTED EBITDA** Reconciliation of GAAP Measures to Non-GAAP Measures** (Unaudited) (In thousands) NINE MONTHS ENDED JUNE 30, 2007 Pretax Depreciation Income and Non-cash Adjusted (Loss) amortization Interest charges EBITDA** Wholesale / US Nutrition $152,918 $ 8,331 $ -- $ -- $161,249 North American Retail 2,026 3,029 -- 1,134 6,189 European Retail 119,091 8,333 -- -- 127,424 Direct Response / E-Commerce 39,878 3,782 -- -- 43,660 Segment Results 313,913 23,475 -- 1,134 338,522 Corporate / Manufacturing (79,449) 18,562 13,036 -- (47,851) Total $234,464 $ 42,037 $ 13,036 $ 1,134 $290,671 NINE MONTHS ENDED JUNE 30, 2006 Pretax Depreciation Income and Non-cash Adjusted (Loss) amortization Interest charges EBITDA** Wholesale / US Nutrition $ 48,161 $ 7,609 $ -- $ 11,498 $ 67,268 North American Retail 132 3,696 -- 2,405 6,233 European Retail 109,173 8,331 -- -- 117,504 Direct Response / E-Commerce 38,546 3,790 -- -- 42,336 Segment Results 196,012 23,426 -- 13,903 233,341 Corporate / Manufacturing (94,476) 18,558 21,408 -- (54,510) Total $101,536 $ 41,984 $ 21,408 $ 13,903 $178,831 ** SINCE ADJUSTED EBITDA IS NOT A MEASURE OF PERFORMANCE CALCULATED IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"), IT SHOULD NOT BE CONSIDERED IN ISOLATION OF, OR AS A SUBSTITUTE FOR OR SUPERIOR TO, OTHER MEASURES OF FINANCIAL PERFORMANCE PREPARED IN ACCORDANCE WITH GAAP, SUCH AS OPERATING INCOME, NET INCOME AND CASH FLOWS FROM OPERATING ACTIVITIES. IN ADDITION, THE COMPANY'S DEFINITION OF ADJUSTED EBITDA IS NOT NECESSARILY COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES. NBTY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars and shares in thousands, except per share amounts) June 30, September 30, 2007 2006 Current assets: Cash and cash equivalents $ 68,752 $ 89,805 Investments 135,266 -- Accounts receivable, net 96,919 89,154 Inventories 384,888 354,496 Deferred income taxes 26,690 26,636 Prepaid expenses and other current assets 55,842 42,261 Total current assets 768,357 602,352 Property, plant and equipment, net 321,373 309,437 Goodwill 249,967 235,959 Intangible assets, net 159,527 146,169 Other assets 28,998 10,393 Total assets $1,528,222 $1,304,310 Current liabilities: Current portion of long-term debt $ 946 $ 18,660 Accounts payable 82,162 64,211 Accrued expenses and other current liabilities 133,734 127,768 Total current liabilities 216,842 210,639 Long-term debt, net of current portion 209,984 191,045 Deferred income taxes 75,328 55,276 Other liabilities 10,230 7,918 Total liabilities 512,384 464,878 Commitments and contingencies Stockholders' equity: Common stock, $0.008 par; authorized 175,000 shares; issued and outstanding 67,369 shares and 67,212 shares at June 30, 2007 and September 30, 2006, respectively 539 538 Capital in excess of par 142,024 138,777 Retained earnings 830,495 671,060 Accumulated other comprehensive income 42,780 29,057 Total stockholders' equity 1,015,838 839,432 Total liabilities and stockholders' equity $1,528,222 $1,304,310 NBTY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) For the nine months ended June 30, 2007 2006 Cash flows from operating activities: Net income $159,435 $74,122 Adjustments to reconcile net income to cash and cash equivalents provided by operating activities: Impairments and disposals of property, plant and equipment 1,716 3,683 Depreciation and amortization 42,037 41,984 Foreign currency transaction (gain) loss (2,012) 2,013 Amortization and write-off of deferred charges 1,698 3,919 Gain on extinguishment of debt -- (425) Gain on settlement of interest rate swap -- (353) Trademark impairment -- 10,450 (Recovery of) provision for doubtful accounts (500) 949 Inventory reserves 5,866 248 Deferred income taxes 11,087 4,112 Excess income tax benefit from exercise of stock options (2,356) (15) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (4,455) (8,762) Inventories (24,694) 119,429 Prepaid expenses and other current assets 16,725 17,267 Other assets (433) 344 Accounts payable 13,675 2,619 Accrued expenses and other liabilities (11,374) (3,125) Net cash provided by operating activities 206,415 268,459 Cash flows from investing activities: Purchase of property, plant and equipment (41,927) (26,797) Proceeds from sale of property, plant, and equipment 97 102 Purchase of available-for-sale investments (374,869) -- Proceeds from sale of available-for-sale investments 239,603 39,900 Cash paid for acquisitions, net of cash acquired (37,005) -- Restricted cash (18,698) -- Purchase price settlements, net -- 1,845 Purchase of intangible assets -- (433) Net cash (used in) provided by investing activities (232,799) 14,617 Cash flows from financing activities: Principal payments under long-term debt agreements and capital leases (652) (276,494) Principal Facility -- (11,000) Proceeds from borrowings under the Revolving Credit Facility -- 5,000 Proceeds from settlement of interest rate swap -- 353 Payments for financing fees (1,649) -- Excess income tax benefit from exercise of stock options 2,356 15 Proceeds from stock options exercised 892 65 Net cash provided by (used in) financing activities 947 (282,061) Effect of exchange rate changes on cash and cash equivalents 4,384 1,402 Net (decrease) increase in cash and cash equivalents (21,053) 2,417 Cash and cash equivalents at beginning of period 89,805 67,282 Cash and cash equivalents at end of period $68,752 $69,699 DATASOURCE: NBTY, Inc. CONTACT: Harvey Kamil, President & Chief Financial Officer of NBTY, Inc., +1-631-200-2020; or Carl Hymans of G.S. Schwartz & Co., +1-212-725-4500, , for NBTY, Inc. Web site: http://www.nbty.com/

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