Schiff Nutrition International Inc. (WNI, Financial) filed Quarterly Report for the period ended 2012-08-31.
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Working capital increased $8.4 million to $62.0 million at August 31, 2012, from $53.6 million at May 31, 2012. Cash and cash equivalents and short-term available-for-sale securities, in aggregate, increased $6.2 million at August 31, 2012, as compared to May 31, 2012, primarily due to $9.2 million in positive cash flows from operations, partially offset by $2.4 million in cash outlays for principal debt payments and $0.4 million in capital expenditures. Net receivables increased by $9.1 million at August 31, 2012, as compared to May 31, 2012, primarily resulting from an increase in net sales during the fiscal 2013 first quarter, as compared to the fiscal 2012 fourth quarter. Inventories decreased $6.6 million at August 31, 2012, as compared to May 31, 2012, primarily due to supply chain and operational efficiencies. Accrued expenses decreased by $2.6 million at August 31, 2012, as compared to May 31, 2012, primarily resulting from a decrease in accrued annual bonuses, partially offset by an increase in accrued interest and promotional expenses.
We provide for valuation adjustments for changes in the fair values of our available-for-sale securities. Fair values are based upon quoted market prices and/or other considerations, including fair values determined by the respective financial institutions, current credit rating of the debt securities and insurance provisions, as deemed appropriate. Changes in valuation adjustments for declines in the fair values of our available-for-sales securities did not impact net income for the fiscal 2013 and 2012 first quarters. At both August 31, 2012 and May 31, 2012, unrealized losses resulting from fair market adjustments to our available-for-sale securities totaled $0.1 million.
We provide for inventory valuation adjustments for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand, market conditions and/or liquidation value. For the fiscal 2013 and 2012 first quarters, inventory valuation adjustments resulted in a decrease in our gross profit and operating income of $0.4 million and $0.2 million, respectively. If actual demand and/or market conditions are less favorable than those projected by management, additional inventory write-downs would be required.
We maintain allowances for doubtful accounts, sales returns and discounts for estimated losses resulting from customer exposures, including among others, product returns, inability to make payments and expected utilization of offered discounts. For both the fiscal 2013 and 2012 first quarters, changes in our allowances for doubtful accounts, sales returns and discounts resulted in a decrease in our gross profit and operating income of $0.5 million. At August 31, 2012 and May 31, 2012, our allowances for doubtful accounts, sales returns and discounts amounted to $4.6 million and $4.1 million, respectively. Actual results may differ from our current estimates, resulting in adjustment of the respective allowance(s).
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Highlight of Business Operations:
Our gross profit and operating margins for the fiscal 2013 first quarter, compared to the fiscal 2012 first quarter, were positively impacted by a higher mix of branded sales, including Airborne sales, together with operational efficiencies, partially offset by a $1.6 million purchase accounting inventory charge related to the Airborne Acquisition. Allocation of the Airborne Acquisition purchase price resulted in a $3.0 million increase in acquired inventories which is charged to cost of goods sold as the inventory is sold. Approximately $2.0 million of the inventory valuation adjustment has been recognized through August 31, 2012. The remaining $1.0 million will be recognized in the fiscal 2013 second quarter.Working capital increased $8.4 million to $62.0 million at August 31, 2012, from $53.6 million at May 31, 2012. Cash and cash equivalents and short-term available-for-sale securities, in aggregate, increased $6.2 million at August 31, 2012, as compared to May 31, 2012, primarily due to $9.2 million in positive cash flows from operations, partially offset by $2.4 million in cash outlays for principal debt payments and $0.4 million in capital expenditures. Net receivables increased by $9.1 million at August 31, 2012, as compared to May 31, 2012, primarily resulting from an increase in net sales during the fiscal 2013 first quarter, as compared to the fiscal 2012 fourth quarter. Inventories decreased $6.6 million at August 31, 2012, as compared to May 31, 2012, primarily due to supply chain and operational efficiencies. Accrued expenses decreased by $2.6 million at August 31, 2012, as compared to May 31, 2012, primarily resulting from a decrease in accrued annual bonuses, partially offset by an increase in accrued interest and promotional expenses.
We provide for valuation adjustments for changes in the fair values of our available-for-sale securities. Fair values are based upon quoted market prices and/or other considerations, including fair values determined by the respective financial institutions, current credit rating of the debt securities and insurance provisions, as deemed appropriate. Changes in valuation adjustments for declines in the fair values of our available-for-sales securities did not impact net income for the fiscal 2013 and 2012 first quarters. At both August 31, 2012 and May 31, 2012, unrealized losses resulting from fair market adjustments to our available-for-sale securities totaled $0.1 million.
We provide for inventory valuation adjustments for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand, market conditions and/or liquidation value. For the fiscal 2013 and 2012 first quarters, inventory valuation adjustments resulted in a decrease in our gross profit and operating income of $0.4 million and $0.2 million, respectively. If actual demand and/or market conditions are less favorable than those projected by management, additional inventory write-downs would be required.
We maintain allowances for doubtful accounts, sales returns and discounts for estimated losses resulting from customer exposures, including among others, product returns, inability to make payments and expected utilization of offered discounts. For both the fiscal 2013 and 2012 first quarters, changes in our allowances for doubtful accounts, sales returns and discounts resulted in a decrease in our gross profit and operating income of $0.5 million. At August 31, 2012 and May 31, 2012, our allowances for doubtful accounts, sales returns and discounts amounted to $4.6 million and $4.1 million, respectively. Actual results may differ from our current estimates, resulting in adjustment of the respective allowance(s).
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