NTOL Natrol (MM)

Natrol, Inc. (Nasdaq:NTOL), a premier manufacturer and distributor of nationally branded nutritional products, announced that it recorded operating income of $0.2 million and net income of $0.04 million on net sales of $15.7 million for the third quarter ending September 30, 2006. Net sales for the third quarter increased 1.8% compared to net sales of $15.4 million in the third quarter of 2005. In the third quarter of 2005, the Company recorded an operating loss of $1.0 million and a net loss of $0.7 million. Gross margin increased to 42.7% for the third quarter compared to 35.8% in the same quarter of 2005. For the nine months ended September 30, 2006, the Company recorded operating income of $0.4 million and net income of $0.2 million on net sales of $49.2 million, compared to an operating loss of $1.3 million and a net loss of $1.0 million on net sales of $52.7 million for the nine months ended September 30, 2005. Gross margin increased to 42.3% for the nine months ended September 30, 2006 compared to 36.6% for the same period in 2005. �We are pleased with the achievement of our third consecutive quarter of positive financial results,� stated Wayne M. Bos, Natrol�s President and Chief Executive Officer. �Our third quarter net sales reflected gains of $2.0 million (18.1%) in Natrol� and Laci Le Beau� product sales compared to 2005. However, this increase was offset by a $1.2 million decline in Prolab� product sales. We are taking action to address this situation. The newly-established Natrol UK subsidiary has already made a positive contribution to Prolab sales.� Mr. Bos added, �During the third quarter, we successfully reduced materials costs and improved efficiencies within our manufacturing, planning, and procurement areas. Our improvement in gross margins compared to last year reflects the impact of these efforts. Additionally, since quarter end, we successfully completed strategic acquisitions of the Nu Hair� and Shen Min� brands, acquired U.S. licensing rights to the Promensil� and Trinovin� brands, and entered into an exclusive manufacturing and distribution arrangement for H57� Hoodia, all of which will strengthen Natrol�s position within the natural products industry.� About Natrol Founded in 1980, Natrol, Inc. (Nasdaq:NTOL) is a diversified nutrition company that manufactures and distributes premium-branded nutritional supplements, herbal teas and sports nutrition products under the Natrol�, Laci Le Beau� and Prolab� brands, respectively. Natrol markets approximately 50 product categories with more than 500 stock-keeping units (SKU�s) designed to meet a wide range of consumer needs. The products are available at thousands of food, drug, mass market and independent health food stores, catalogs and Internet sites, gyms and specialty stores nationally and in select foreign countries. For more information, visit www.natrol.com. The statements made in this press release which are not historical facts including statements regarding expectations for future growth of revenue and profits and trends concerning net sales, are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. As a result of a number of factors, the Company's actual results could differ materially from those set forth in the forward looking statements. Certain factors that might cause the Company�s actual results to differ materially from those set forth in the forward looking statements, including without limitation: (i) the Company�s ability to develop and execute its business plans, (ii) the Company�s ability to manage its growth and changing market conditions, (iii) the Company�s ability to consummate and integrate acquisitions, (iv) adverse trends in the dietary supplements industry, (v) increased competition, (vi) adverse effects of unfavorable publicity regarding particular certain products of the Company or the dietary supplement industry, (vii) the introduction of successful new products, (viii) the Company�s ability to gain market share and shelf space in its distribution channels, (ix) the Company�s ability to continue to obtain raw materials for its Ester-C� line of products, (x) the dependence upon certain large customers, and (xi) the Company�s ability to retain and attract talented management and key employees, as well as those factors set forth under the heading �Risk Factors� in the Company's annual report on Form 10-K for the year ended December 31, 2005, the Company�s quarterly report on Form 10-Q for the quarter ended September 30, 2006 and in the Company�s other filings with the Securities and Exchange Commission. Natrol,�Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share data) � September 30, December 31, 2006� 2005� (unaudited) Assets Current assets: Cash $ 5,101� $ 3,097� Accounts receivable, net of allowances of $197 and $247 at September 30, 2006 and December 31, 2005, respectively 6,681� 6,723� Inventory 10,047� 11,797� Income taxes receivable 196� 439� Deferred income taxes 2,021� 2,021� Prepaid expenses and other current assets 1,160� 726� Total current assets 25,206� 24,803� Property and equipment: Building and improvements 14,939� 14,930� Machinery and equipment 5,771� 5,754� Furniture and office equipment 3,074� 2,900� 23,784� 23,584� Accumulated depreciation and amortization (9,657) (8,684) Property and equipment, net 14,127� 14,900� � Property held for sale, net �� 761� � Restricted cash 5,000� 5,000� Deferred income taxes 4,072� 3,905� Goodwill, net of accumulated amortization and impairment charge of $37,381 2,026� 2,026� Other assets 170� 67� Total assets $ 50,601� $ 51,462� Liabilities and stockholders� equity Current liabilities: Accounts payable $ 2,716� $ 4,647� Accrued expenses 3,481� 2,888� Accrued payroll and related liabilities 1,351� 826� Current portion of long-term debt 406� 532� Total current liabilities 7,954� 8,893� Long-term debt, less current portion 6,408� 7,165� Commitments and contingencies Stockholders� equity: Preferred stock, par value of $0.01 per share: Authorized shares�2,000,000; Issued and outstanding shares�none �� �� Common stock, par value of $0.01 per share: Authorized shares�50,000,000; Issued and outstanding shares�13,639,148 and 13,535,837 at September 30, 2006 and December 31, 2005, respectively 136� 135� Additional paid-in capital 60,729� 60,113� Accumulated deficit (24,631) (24,844) Accumulated other comprehensive income 5� �� Total stockholders� equity 36,239� 35,404� Total liabilities and stockholders� equity $ 50,601� $ 51,462� Natrol,�Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except share and per share data) (unaudited) � Three months endedSeptember 30, Nine months endedSeptember 30, 2006� 2005� 2006� 2005� � Net sales $ 15,660� $ 15,390� $ 49,171� $ 52,663� Cost of goods sold 8,972� 9,884� 28,395� 33,365� Gross profit 6,688� 5,506� 20,776� 19,298� � Selling and marketing expenses 3,848� 4,360� 12,031� 13,405� General and administrative expenses 2,688� 2,226� 8,337� 7,228� Total operating expenses 6,536� 6,586� 20,368� 20,633� Operating income (loss) 152� (1,080) 408� (1,335) � Interest income 70� 49� 186� 140� Interest expense (149) (159) (456) (480) Gain on sale of property �� �� 230� �� Income (loss) before taxes 73� (1,190) 368� (1,675) Income tax provision (benefit) 33� (448) 155� (632) Net Income (loss) $ 40� $ (742) $ 213� $ (1,043) � Other comprehensive income Foreign currency translation adjustment 5� �� 5� �� Comprehensive income $ 45� $ (742) $ 218� $ (1,043) � Net Income (loss) per share: Basic $ .00� $ (.05) $ .02� $ (.08) Diluted $ .00� $ (.05) $ .02� $ (.08) � Weighted-average shares outstanding�basic and diluted Basic 13,604,572� 13,519,317� 13,573,108� 13,452,794� Diluted 13,711,047� 13,519,317� 13,931,927� 13,452,794� Natrol, Inc. (Nasdaq:NTOL), a premier manufacturer and distributor of nationally branded nutritional products, announced that it recorded operating income of $0.2 million and net income of $0.04 million on net sales of $15.7 million for the third quarter ending September 30, 2006. Net sales for the third quarter increased 1.8% compared to net sales of $15.4 million in the third quarter of 2005. In the third quarter of 2005, the Company recorded an operating loss of $1.0 million and a net loss of $0.7 million. Gross margin increased to 42.7% for the third quarter compared to 35.8% in the same quarter of 2005. For the nine months ended September 30, 2006, the Company recorded operating income of $0.4 million and net income of $0.2 million on net sales of $49.2 million, compared to an operating loss of $1.3 million and a net loss of $1.0 million on net sales of $52.7 million for the nine months ended September 30, 2005. Gross margin increased to 42.3% for the nine months ended September 30, 2006 compared to 36.6% for the same period in 2005. "We are pleased with the achievement of our third consecutive quarter of positive financial results," stated Wayne M. Bos, Natrol's President and Chief Executive Officer. "Our third quarter net sales reflected gains of $2.0 million (18.1%) in Natrol(R) and Laci Le Beau(R) product sales compared to 2005. However, this increase was offset by a $1.2 million decline in Prolab(R) product sales. We are taking action to address this situation. The newly-established Natrol UK subsidiary has already made a positive contribution to Prolab sales." Mr. Bos added, "During the third quarter, we successfully reduced materials costs and improved efficiencies within our manufacturing, planning, and procurement areas. Our improvement in gross margins compared to last year reflects the impact of these efforts. Additionally, since quarter end, we successfully completed strategic acquisitions of the Nu Hair(R) and Shen Min(R) brands, acquired U.S. licensing rights to the Promensil(R) and Trinovin(R) brands, and entered into an exclusive manufacturing and distribution arrangement for H57(TM) Hoodia, all of which will strengthen Natrol's position within the natural products industry." About Natrol Founded in 1980, Natrol, Inc. (Nasdaq:NTOL) is a diversified nutrition company that manufactures and distributes premium-branded nutritional supplements, herbal teas and sports nutrition products under the Natrol(R), Laci Le Beau(R) and Prolab(R) brands, respectively. Natrol markets approximately 50 product categories with more than 500 stock-keeping units (SKU's) designed to meet a wide range of consumer needs. The products are available at thousands of food, drug, mass market and independent health food stores, catalogs and Internet sites, gyms and specialty stores nationally and in select foreign countries. For more information, visit www.natrol.com. The statements made in this press release which are not historical facts including statements regarding expectations for future growth of revenue and profits and trends concerning net sales, are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. As a result of a number of factors, the Company's actual results could differ materially from those set forth in the forward looking statements. Certain factors that might cause the Company's actual results to differ materially from those set forth in the forward looking statements, including without limitation: (i) the Company's ability to develop and execute its business plans, (ii) the Company's ability to manage its growth and changing market conditions, (iii) the Company's ability to consummate and integrate acquisitions, (iv) adverse trends in the dietary supplements industry, (v) increased competition, (vi) adverse effects of unfavorable publicity regarding particular certain products of the Company or the dietary supplement industry, (vii) the introduction of successful new products, (viii) the Company's ability to gain market share and shelf space in its distribution channels, (ix) the Company's ability to continue to obtain raw materials for its Ester-C(R) line of products, (x) the dependence upon certain large customers, and (xi) the Company's ability to retain and attract talented management and key employees, as well as those factors set forth under the heading "Risk Factors" in the Company's annual report on Form 10-K for the year ended December 31, 2005, the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2006 and in the Company's other filings with the Securities and Exchange Commission. -0- *T Natrol, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share and per share data) September 30, December 31, 2006 2005 ------------- ------------ (unaudited) Assets Current assets: Cash $5,101 $3,097 Accounts receivable, net of allowances of $197 and $247 at September 30, 2006 and December 31, 2005, respectively 6,681 6,723 Inventory 10,047 11,797 Income taxes receivable 196 439 Deferred income taxes 2,021 2,021 Prepaid expenses and other current assets 1,160 726 ------------- ------------ Total current assets 25,206 24,803 ------------- ------------ Property and equipment: Building and improvements 14,939 14,930 Machinery and equipment 5,771 5,754 Furniture and office equipment 3,074 2,900 ------------- ------------ 23,784 23,584 Accumulated depreciation and amortization (9,657) (8,684) ------------- ------------ Property and equipment, net 14,127 14,900 Property held for sale, net -- 761 Restricted cash 5,000 5,000 Deferred income taxes 4,072 3,905 Goodwill, net of accumulated amortization and impairment charge of $37,381 2,026 2,026 Other assets 170 67 ------------- ------------ Total assets $50,601 $51,462 ============= ============ Liabilities and stockholders' equity Current liabilities: Accounts payable $2,716 $4,647 Accrued expenses 3,481 2,888 Accrued payroll and related liabilities 1,351 826 Current portion of long-term debt 406 532 ------------- ------------ Total current liabilities 7,954 8,893 ------------- ------------ Long-term debt, less current portion 6,408 7,165 Commitments and contingencies Stockholders' equity: Preferred stock, par value of $0.01 per share: Authorized shares--2,000,000; Issued and outstanding shares--none -- -- Common stock, par value of $0.01 per share: Authorized shares--50,000,000; Issued and outstanding shares--13,639,148 and 13,535,837 at September 30, 2006 and December 31, 2005, respectively 136 135 Additional paid-in capital 60,729 60,113 Accumulated deficit (24,631) (24,844) Accumulated other comprehensive income 5 -- ============= ============ Total stockholders' equity 36,239 35,404 ============= ============ Total liabilities and stockholders' equity $50,601 $51,462 ============= ============ *T -0- *T Natrol, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except share and per share data) (unaudited) Three months ended Nine months ended September 30, September 30, ----------------------- ----------------------- 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Net sales $15,660 $15,390 $49,171 $52,663 Cost of goods sold 8,972 9,884 28,395 33,365 ----------- ----------- ----------- ----------- Gross profit 6,688 5,506 20,776 19,298 ----------- ----------- ----------- ----------- Selling and marketing expenses 3,848 4,360 12,031 13,405 General and administrative expenses 2,688 2,226 8,337 7,228 ----------- ----------- ----------- ----------- Total operating expenses 6,536 6,586 20,368 20,633 ----------- ----------- ----------- ----------- Operating income (loss) 152 (1,080) 408 (1,335) Interest income 70 49 186 140 Interest expense (149) (159) (456) (480) Gain on sale of property -- -- 230 -- ----------- ----------- ----------- ----------- Income (loss) before taxes 73 (1,190) 368 (1,675) Income tax provision (benefit) 33 (448) 155 (632) ----------- ----------- ----------- ----------- Net Income (loss) $ 40 $ (742) $ 213 $(1,043) =========== =========== =========== =========== Other comprehensive income Foreign currency translation adjustment 5 -- 5 -- ----------- ----------- ----------- ----------- Comprehensive income $45 $(742) $218 $(1,043) Net Income (loss) per share: Basic $ .00 $ (.05) $ .02 $ (.08) =========== =========== =========== =========== Diluted $ .00 $ (.05) $ .02 $ (.08) =========== =========== =========== =========== Weighted-average shares outstanding-- basic and diluted Basic 13,604,572 13,519,317 13,573,108 13,452,794 Diluted 13,711,047 13,519,317 13,931,927 13,452,794 *T