Nutraceutical 10K/Annual Report
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NUTRACEUTICAL INTERNATIONAL CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ፤ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 for the Fiscal Year Ended September 30, 2012 or អ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to Commission file number: 000-23731 26APR201021562918 NUTRACEUTICAL INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 87-0515089 (State or other jurisdiction of incorporation) (I.R.S. Employer Identification Number) 1400 Kearns Boulevard, 2nd Floor Park City, Utah 84060 (Address of principal executive offices including zip code) Registrant’s telephone number, including area code: (435) 655-6106 Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $.01 per share The NASDAQ Stock Market LLC (Title of class) (Name of exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes អ No ፤ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes អ No ፤ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ፤ No អ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ፤ No អ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. អ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act. Large Accelerated Filer អ Accelerated Filer ፤ Non-accelerated Filer អ Smaller reporting company អ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes អ No ፤ The aggregate market value of voting stock held by non-affiliates of the Registrant as of March 31, 2012 at a closing sale price of $14.56 as reported by the NASDAQ Stock Market was approximately $127.3 million. Shares of common stock held by each officer and director and by each person who owns or may be deemed to own 10% or more of the outstanding common stock have been excluded since such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of November 15, 2012, the Registrant had 9,780,128 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant’s Proxy Statement to be used in connection with the solicitation of proxies for the Registrant’s 2013 Annual Meeting of Stockholders are incorporated by reference in Part III of this Annual Report on Form 10-K. Special Note Regarding Forward-Looking Statements This Annual Report on Form 10-K contains 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 terms such as ‘‘believe,’’ ‘‘expects,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘can’’ or ‘‘anticipates,’’ or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy. Important factors that may cause our results to differ from these forward-looking statements include, but are not limited to: • changes in or new government regulations or increased enforcement of the same, • unavailability of desirable acquisitions or inability to complete them, • increased costs, including from increased raw material or energy prices, • changes in general worldwide economic or political conditions, • adverse publicity or negative consumer perception regarding nutritional supplements, • issues with obtaining raw materials of adequate quality or quantity, • litigation and claims, including product liability, intellectual property and other types, • disruptions from or following acquisitions including the loss of customers, • increased competition, • slow or negative growth in the nutritional supplement industry or the healthy foods channel, • the loss of key personnel or the inability to manage our operations efficiently, • problems with information management systems, manufacturing efficiencies and operations, • insurance coverage issues, • the volatility of the stock market generally and of our stock specifically, • increases in the cost of borrowings or unavailability of additional debt or equity capital, or both, or fluctuations in foreign currencies and • interruption of business or negative impact on sales and earnings due to acts of God, acts of war, terrorism, bio-terrorism, civil unrest and other factors outside of our control. These statements involve known and unknown risks, uncertainties and other factors that may cause industry trends or our actual results to be materially different from any future results expressed or implied by these statements. For a detailed discussion of these risks and uncertainties, see ‘‘Risk Factors’’ in Item 1A of this Annual Report on Form 10-K. We undertake no obligation to update or revise publicly any forward- looking statements to reflect new information, events or circumstances occurring after the date of this Annual Report on Form 10-K. Industry data used throughout this report was obtained from industry publications and internal company estimates. While we believe such information to be reliable, its accuracy has not been independently verified and cannot be guaranteed. NUTRACEUTICAL INTERNATIONAL CORPORATION ANNUAL REPORT ON FORM 10-K For The Fiscal Year Ended September 30, 2012 TABLE OF CONTENTS PART I Item 1 Business .......................................................... 1 Item 1A Risk Factors ....................................................... 11 Item 1B Unresolved Staff Comments ........................................... 17 Item 2 Properties ........................................................ 18 Item 3 Legal Proceedings .................................................. 18 Item 4 Mine Safety Disclosures .............................................. 18 PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ........................................ 19 Item 6 Selected Financial Data .............................................. 20 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...................................................... 23 Item 7A Quantitative and Qualitative Disclosures About Market Risk ................... 31 Item 8 Financial Statements and Supplementary Data .............................. 31 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...................................................... 31 Item 9A Controls and Procedures .............................................. 31 Item 9B Other Information .................................................. 33 PART III Item 10 Directors, Executive Officers and Corporate Governance ...................... 33 Item 11 Executive Compensation .............................................. 33 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ............................................... 33 Item 13 Certain Relationships, Related Transactions and Director Independence ........... 33 Item 14 Principal Accounting Fees and Services ................................... 33 PART IV Item 15 Exhibits and Financial Statement Schedules ................................ 34 PART I Item 1. Business We were incorporated in Delaware in 1993 and maintain our principal executive offices at 1400 Kearns Boulevard, 2nd Floor, Park City, Utah, 84060. For convenience in this report, the terms ‘‘Company,’’ ‘‘Nutraceutical,’’ ‘‘we’’ and ‘‘us’’ may be used to refer to Nutraceutical International Corporation and/or its subsidiaries, except where indicated otherwise. Our telephone number is (435) 655-6106. General We are an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products sold primarily to and through domestic health and natural food stores. Internationally, we market and distribute branded