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PURCHASE, NY, September 9, 2008 – Nutrition 21, Inc. (Nasdaq: NXXI), the developer
and marketer of nutritional supplements under the Iceland Health®
Chromax®, and Diabetes Essentials™ brands that help
consumers manage blood sugar levels, improve cardiovascular health, enhance memory
and reduce chronic joint pain, today announced preliminary and unaudited financial
results for the fourth quarter and fiscal year ended June 30, 2008.
Revenues for the fourth quarter ended June 30, 2008 were $11.0 million, up 2% from
$10.8 million in the preceding quarter but down 5% versus the corresponding period
a year ago. Earnings before interest, taxes, depreciation and amortization (EBITDA)
- a non-GAAP financial measure - were $0.8 million for the fourth quarter of fiscal
year 2008; representing the first positive EBITDA quarter since the second quarter
of fiscal year 2005. The Company generated positive cash flow from operations of
$0.6 million during the quarter. Net loss for the fourth quarter was $0.9 million,
or $(0.01) loss per diluted share; a considerable improvement compared to $8.2 million,
or $(0.13) loss per diluted share, in the 2007 period. Cash and cash equivalents
at the end of the quarter and fiscal year were $4.8 million.
For the fiscal year ended June 30, 2008, Nutrition 21 reported total revenues of
$47.1 million compared to $41.2 million in fiscal year 2007. Net loss for fiscal
year 2008 was $16.9 million or ($0.27) loss per diluted share, compared to a net
loss of $19.1 million or ($0.33) loss per diluted share for the prior fiscal year.
Michael Zeher, Nutrition 21's President and Chief Executive Officer, said, "The
dramatic improvement in the operating results for the quarter reflects the considerable
traction that is ongoing in the execution of our new business plan. We have struck
a new direction in this Company in recent months and we are beginning to benefit
from a more fiscally responsible business model. By re-branding our products under
the respected Iceland Health name we no longer need to incur elevated media expenses
to build awareness and to support multiple brands. As we continue to launch new
products in the most cost-effective manner possible - through our direct response
unit - we expect to leverage the benefits of lower expenses and drive revenues toward
consistent profitability."
"On a personal note," Mr. Zeher continued, "I am pleased to be working with such
a highly motivated management team and professional staff. I also appreciate the
unwavering support of the Board of Directors in helping move this company towards
becoming one of the emerging leaders in the branded nutritional supplements segment.
Nutrition 21 has a history of combining high quality science and ground-breaking
technology to develop superior products, and we expect to continue to do so aggressively,
efficiently and profitably in the coming years. I am excited by the opportunities
ahead."
Mr. Zeher concluded his remarks saying "Looking forward, there is still much to
be done, obstacles still to be overcome, and opportunities still to be realized.
I am happy to report that, with the foundation for growth that the Company has laid,
the management team is ready to move the business to the next level. For the upcoming
fiscal year we expect that revenues will be in the same general range as in fiscal
2008, and we also expect that every quarter will show positive EBITDA."
Conference Call
The Company will host an investor earnings conference call to review the results
on Tuesday, September 9, 2008 at 10:00AM ET. Participants can dial (866) 562-9910
or (706) 679-5064 to access the conference call, or can listen via a live Internet
web cast, which can be found at http://www.nutrition21.com. A replay of the call
is available by visiting http://www.nutrition21.com for the next 30 days or by calling
(800) 642-1687 or (706) 645-9291, access code 60279465, through September 12, 2008.
About Nutrition 21
Nutrition 21, Inc. (NASDAQ: NXXI), headquartered in Purchase, NY, is a nutritional
bioscience company and the maker of chromium picolinate-based and omega-3 fish oil-based
supplements with health benefits substantiated by clinical research. Nutrition 21
holds more than 30 patents for nutrition products and uses. Nutrition 21’s portfolio
of health and wellness products include: Iceland Health Chromax®, Iceland Health
Life Advanced Memory Formula™, Diabetes Essentials™, Iceland Health® Maximum Strength
Omega-3 and Iceland Health® Joint Relief. The company also manufactures private
label supplements and ingredients for third parties. Nutrition 21 distributes its
products nationally through more than 29,000 major food, drug and super center stores
throughout the U.S. and internationally. For more information please visit
http://www.nutrition21.com.
# # #
Safe Harbor Provision
This press release may contain certain forward-looking statements. The words "believe,"
"expect," "anticipate" and other similar expressions generally
identify forward-looking statements. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of their dates. These forward-looking
statements are based largely on the company's current expectations and are subject
to a number of risks and uncertainties, including without limitation: the effect
of the expiration of patents; regulatory issues; uncertainty in the outcomes of
clinical trials; changes in external market factors; changes in the Company's business
or growth strategy or an inability to execute its strategy due to changes in its
industry or the economy generally; the emergence of new or growing competitors;
various other competitive factors; and other risks and uncertainties indicated from
time to time in the company's filings with the Securities and Exchange Commission,
including its Form 10-K/A for the year ended June 30, 2007. Actual results could
differ materially from the results referred to in the forward-looking statements.
In light of these risks and uncertainties, there can be no assurance that the results
referred to in the forward-looking statements contained in this press release will
in fact occur. Additionally, the company makes no commitment to disclose any revisions
to forward-looking statements, or any facts, events or circumstances after the date
hereof that may bear upon forward-looking statements.
NUTRITION 21, INC.
Condensed Consolidated Balance Sheets (in thousands) (unaudited)
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Assets
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June 30, 2008
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June 30, 2007
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|
Current assets:
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Cash, cash equivalents
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$4,817
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$2,417
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|
Short-term investments
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-
|
1,000
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Restricted cash
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1,000
|
---
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Accounts receivable, net
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2,922
|
1,918
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Other receivables
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286
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344
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Inventories, net
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1,014
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3,945
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Other current assets
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1,483
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1,369
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Property and equipment, net
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69
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64
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Patents, trademarks, and other intangibles, net
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6,919
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8,650
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Goodwill
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15,395
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14,715
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Other assets
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1,981
|
272
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Investments
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3,740
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---
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Total Assets
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$39,626
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$34,694
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Short-term borrowings
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$3,000
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$ ---
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Accounts payable
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4,221
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7,085
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Accrued expenses
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2,575
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1,411
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Deferred income
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1,228
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2,929
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Other long-term debt
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4,185
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2,342
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Deferred income taxes
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2,152
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2,152
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6% Series I Convertible preferred stock subject to mandatory redemption
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3,270
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2,838
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8% Series J Convertible preferred stock subject to mandatory redemption
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11,594
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---
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Total Liabilities
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32,225
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18,757
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|
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Stockholders’ Equity
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7,401
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15,937
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Total Liabilities and Stockholders’ Equity
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$39,626
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$34,694
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NUTRITION 21, INC.
Condensed Consolidated Statements of Operations (in thousands, except share and
per share data) (unaudited)
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Quarter Ended
June 30,
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Year Ended
June 30,
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|
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2008
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2007
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2008
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2007
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Net sales
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$10,906
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$11,480
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$46,363
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$40,651
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Other revenues
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139
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146
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708
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526
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TOTAL REVENUES
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11,045
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11,626
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47,071
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41,177
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COSTS AND EXPENSES
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Cost of revenues
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3,415
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4,424
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17,609
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13,718
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Advertising and promotion expenses
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5,339
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11,615
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33,478
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33,448
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General and administrative expenses
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1,429
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1,805
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6,197
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6,274
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Research and development expenses
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110
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292
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954
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1,241
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Depreciation and amortization
|
551
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664
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2,259
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3,257
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Impairment charge for intangible assets
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---
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678
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---
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678
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OPERATING PROFIT (LOSS)
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201
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(7,852)
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(13,426)
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(17,439)
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Interest income (expense), net
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(1,095)
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(305)
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(3,502)
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(1,695)
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LOSS BEFORE INCOME TAXES
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(894)
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(8,157)
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(16,928)
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(19,134)
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Income taxes
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3
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4
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14
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14
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NET LOSS
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$(897)
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$(8,161)
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$(16,942)
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$(19,148)
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Basic and diluted loss per common share
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$(0.01)
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$(0.13)
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$(0.27)
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$(0.33)
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Weighted average number of common shares – basic and diluted
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63,151
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60,010
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61,797
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57,463
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NUTRITION 21, INC.
Consolidated Statement of Cash Flows (in thousands) (unaudited)
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Quarter Ended
June 30,
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Year Ended
June 30,
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|
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2008
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2007
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2008
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2007
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|
Cash flows from operating activities:
|
|
Net loss from operations
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$(897)
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$(8,161)
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$(16,942)
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$(19,148)
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities
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1,699
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2,232
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5,369
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6,946
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|
Changes in operating assets and liabilities, net of effects from acquisition of Iceland Health, Inc.
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(173)
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2,298
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(2,245)
|
1,915
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|
Net cash provided by (used in) operating activities
|
629
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(3,631)
|
(13,818)
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(10,287)
|
|
Cash flows from investing activities:
|
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(Purchase)/redemption of investments available for sale
|
---
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3,000
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(4,000)
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10,500
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Other
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(357)
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(579)
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(1,203)
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(1,354)
|
|
Net cash provided by (used in) investing activities
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(357)
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2,421
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(5,203)
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9,146
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Cash flows from financing activities:
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Proceeds from private placement of convertible preferred stock
|
---
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---
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16,603
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---
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|
Proceeds from long-term debt
|
(36)
|
---
|
1,770
|
---
|
|
Proceeds from short-term borrowings
|
3,000
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---
|
3,000
|
---
|
|
Other
|
---
|
229
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48
|
1,144
|
|
Net cash provided by financing activities
|
2,964
|
229
|
21,421
|
1,144
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|
Net increase (decrease) in cash and cash equivalents
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3,236
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(981)
|
2,400
|
3
|
|
Cash and cash equivalents at beginning of period
|
1,581
|
3,398
|
2,417
|
2,414
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Cash and cash equivalents at end of period
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$4,817
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$2,417
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$4,817
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$2,417
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