Schiff Nutrition International Inc. (WNI) filed Quarterly Report for the period ended 2009-08-31.
Schiff Nutrition International Inc. develops manufactures markets and sells branded and private label vitamins nutritional supplements and sports nutrition products in the United States and throughout the world. The company has a track record of developing first-to-market products. To continue to seize these opportunities the R&D and marketing teams are working closely together to develop and carefully test highly-targeted products. Each new product has anticipated measurable return on investment goals. It has always perceived its customer relationships as huge resources and growth contributors. Therefore the company modeled its successful marketing programs to enhance communications and responsiveness to relationships with greater potential. Schiff Nutrition International Inc. has a market cap of $152.2 million; its shares were traded at around $5.53 with a P/E ratio of 13.9 and P/S ratio of 0.8. Schiff Nutrition International Inc. had an annual average earning growth of 2.5% over the past 5 years.
Highlight of Business Operations:
Aggregate branded net sales increased approximately 10.4% to $35.8 million for the fiscal 2010 first quarter, from $32.5 million for the fiscal 2009 first quarter. An increase in sales volume of approximately $3.5 million, or 7.5%, together with approximately $0.6 million in aggregate sales price increases and an approximate $0.9 million decrease in sales return allowances, was offset by an increase in sales promotional incentives classified as sales price reductions. Classification of promotional costs as a sales reduction is required when the promotion effectively represents a price reduction. While our overall joint care category net sales reflected an approximate 4.0% quarter over quarter sales volume increase, the increase in branded sales volume was primarily attributable to an increase in MegaRed sales. Move Free net sales were $17.5 million and $19.4 million, respectively, for the fiscal 2010 and 2009 first quarters. We believe the decrease in Move Free net sales, along with the increase in other joint care category net sales, primarily resulted from promotional timing considerations.
Private label sales decreased approximately 17.0% to $12.8 million for the fiscal 2010 first quarter, from $15.3 million for the fiscal 2009 first quarter, primarily due to the discontinuation of certain unprofitable private label products in the second half of fiscal 2009. With respect to our on going private label business, an approximate $0.7 million sales volume decrease was more than offset by approximately $1.0 million in certain sales price increases instituted in the fiscal 2009 fourth quarter.
General and administrative expenses increased to approximately $4.3 million for the fiscal 2010 first quarter, from approximately $3.7 million for the fiscal 2009 first quarter, primarily resulting from increases in accrued long-term and annual management incentive program costs totaling approximately $0.9 million, partially offset by a decrease in legal and other professional fees.
Working capital decreased approximately $9.8 million to $82.4 million at August 31, 2009, from $92.2 million at May 31, 2009, reflecting an approximate $3.7 million reduction in cash and cash equivalents and available-for-sale securities, an approximate $3.5 million reduction in net receivables and an approximate $3.0 million increase in current liabilities. The decrease in cash and cash equivalents and available-for-sale securities reflects the special dividend payment of approximately $14.4 million and capital expenditures of approximately $0.6 million, which more than offset the approximately $11.6 million in cash flows provided by operating activities. The decrease in net receivables reflects an approximate $1.8 million decrease in net trade accounts receivable primarily due to a decrease in net sales for August of fiscal 2010, as compared to May of fiscal 2009, together with an approximate $1.6 million reduction in refundable income taxes. The overall $2.7 million change in income taxes receivable/payable was primarily due to income tax expense recognized as a result of the fiscal 2010 first quarter operating results. The approximate $0.7 million increase in accrued expenses primarily results from an increase in accrued annual management incentive costs.
At August 31, 2009, we held approximately $5.2 million in available-for-sale securities, consisting of approximately $4.5 million in certificates of deposit and approximately $0.7 million in debt securities; including approximately $0.5 million in illiquid ARS which are fully insured, state agency issued securities. Although we have experienced failed auctions with these ARS, and will therefore not be able to access our funds invested in these ARS until future auctions of these investments are successful, or the securities are called by the issuer; we believe we will be able to successfully liquidate these investments. However, we believe the unsuccessful liquidation of some, or all, of these securities over the next twelve months will not significantly impact our current liquidity needs.
On August 18, 2009, we entered into, through SNG, a new $80.0 million revolving credit facility (the “New Credit Facility”) with U.S. Bank National Association, as Agent. The New Credit Facility, which replaces our previous $25.0 million credit facility which expired on June 30, 2009, contains customary terms and conditions, including, among others, financial covenants that may limit our ability to pay dividends on our common stock and certain other restrictions. SNG s obligations under the New Credit Facility are guaranteed by us and SNG s domestic subsidiaries and secured by a first priority security interest in all of the capital stock of SNG and its current and future subsidiaries, as well as a first priority security interest in substantially all of our domestic assets. Borrowings under the New Credit Facility bear interest at floating rates based on U.S. Bank s prime rate, the Federal Funds rate, or the LIBOR rate. The New Credit Facility, which matures on August 18, 2012, can be used to fund our normal working capital and capital expenditure requirements, with availability to fund certain permitted strategic transactions. We incurred approximately $0.5 million in debt issue costs related to the New Credit Facility, which will be amortized over its three-year term. In addition, we are obligated to pay certain commitment fees on any unused amounts based on rates ranging from 0.25% to 0.50%. At August 31, 2009, there were no amounts outstanding and $80.0 million was available for borrowing under the New Credit Facility.
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