1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _________________.
COMMISSION FILE #0-4829-03
NABI
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 59-1212264
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5800 Park of Commerce Boulevard N.W., Boca Raton, FL 33487
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (407) 989-5800
--------------------------
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES (X) NO ( )
The number of shares outstanding of registrant's common stock at May 13, 1996
was 34,216,934 shares.
2
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
NABI
================================================================================
INDEX
PAGE #
PART I. FINANCIAL INFORMATION ------
ITEM 1. FINANCIAL STATEMENTS.................................................................. 3
Consolidated Balance Sheet, March 31, 1996 and December 31, 1995............................... 3
Consolidated Statement of Operations for the three month periods ended
March 31, 1996 and 1995.................................................................... 4
Consolidated Statement of Cash Flows for the three month periods ended
March 31, 1996 and 1995.................................................................... 5
Notes to Consolidated Financial Statements..................................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS........................................................................ 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.................................................................... 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................................................... 11
Exhibit 10.24 - Amendment No. 5 to Third Amended and Restated Revolving Credit Term Loan
and Reimbursement Agreement between NationsBank and NABI dated March 31, 1996................. 14
Exhibit 11 - Calculation of Earnings per Share................................................ 23
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PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
NABI
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
March 31, December 31,
1996 1995
=========== ============
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 22,267 $ 3,991
Investments 16,240 --
Trade accounts receivable, net 37,081 28,213
Inventories, net 21,756 22,646
Prepaid expenses and other assets 1,698 2,380
-------- --------
TOTAL CURRENT ASSETS 99,042 57,230
PROPERTY AND EQUIPMENT, NET 45,351 42,697
OTHER ASSETS:
Excess of acquisition cost over net assets acquired, net 18,654 18,882
Intangible assets, net 10,743 11,048
Other, net 10,239 8,118
-------- --------
TOTAL ASSETS $184,029 $137,975
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 5,046 $ 6,758
Accrued expenses 18,129 18,618
Notes payable 8,689 17,164
-------- --------
TOTAL CURRENT LIABILITIES 31,864 42,540
NOTES PAYABLE 81,370 25,730
OTHER 281 263
-------- --------
TOTAL LIABILITIES 113,515 68,533
-------- --------
STOCKHOLDERS' EQUITY:
Convertible preferred stock, par value $.10 per share:
5,000 shares authorized; no shares outstanding
Common stock, par value $.10 per share: 75,000 shares authorized,
34,126 and 33,942 shares issued and outstanding, respectively 3,413 3,394
Capital in excess of par value 133,668 133,100
Accumulated deficit (66,567) (67,052)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 70,514 69,442
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $184,029 $137,975
======== ========
The accompanying Notes are an integral part of these Financial Statements.
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4
NABI
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
------- -------
SALES $59,495 $48,128
COSTS AND EXPENSES:
Costs of products sold 44,839 37,010
Research and development expense 5,333 5,518
Selling, general and administrative expense 5,131 4,549
Royalty expense 1,248 449
Other operating expense, principally freight and amortization 903 644
------- -------
OPERATING INCOME (LOSS) 2,041 (42)
INTEREST AND OTHER INCOME 326 459
INTEREST AND OTHER EXPENSE (891) (374)
------- -------
INCOME BEFORE PROVISION FOR INCOME TAXES
AND EXTRAORDINARY CHARGE 1,476 43
PROVISION FOR INCOME TAXES (59) (1,873)
------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE 1,417 (1,830)
EXTRAORDINARY CHARGE (932) ---
------- -------
NET INCOME (LOSS) $ 485 $(1,830)
======= =======
EARNINGS (LOSS) PER SHARE:
Income (loss) before extraordinary charge $ 0.04 $ (0.05)
Extraordinary charge (0.03) ---
------- -------
Net income (loss) $ 0.01 $ (0.05)
======= =======
WEIGHTED AVERAGE NUMBER OF SHARES AND
COMMON SHARE EQUIVALENTS 35,710 33,393
======= =======
The accompanying Notes are an integral part of these Financial Statements.
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5
NABI
CONSOLIDATED STATEMENT OF CASH FLOWS
($ IN THOUSANDS)
(UNAUDITED)
THREE MONTHS END
MARCH 31,
-----------------------
1996 1995
------- -------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ 485 $(1,830)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 1,955 1,558
Gain on market value of trading securities -- (93)
Provision for doubtful accounts 60 (5)
Purchase of trading securities -- (4,036)
Sales and redemptions of trading securities -- 6,912
Extraordinary charge 932 --
Other 21 28
Change in assets and liabilities:
Decrease (increase) in accounts receivable (8,928) (1,385)
Decrease (increase) in inventories 890 434
Decrease (increase) in prepaid expenses and other assets 679 (1,187)
Decrease (increase) in other assets (793) (472)
Increase (decrease) in accounts payable and accrued liabilities (2,090) (832)
------- -------
Total adjustments (7,274) 922
------- -------
NET CASH USED BY OPERATING ACTIVITIES (6,789) (908)
------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
Net purchase of investments held to maturity (16,217) --
Collection on note receivable from stockholder -- 126
Capital expenditures (3,732) (4,032)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (19,949) (3,906)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
Net proceeds from issuance of convertible subordinated
debentures 77,884 --
Repayments of flexible term notes (14,500) --
Repayments of term debt (10,172) (702)
Repayments under line of credit, net (6,760) (585)
Other debt (1,894) 1,589
Proceeds from the exercise of options and warrants 456 84
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 45,014 386
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 18,276 (4,428)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,991 12,132
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $22,267 $ 7,704
======= =======
The accompanying Notes are an integral part of these Financial Statements.
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NABI
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- GENERAL
NABI (formerly North American Biologicals, Inc.) is a vertically integrated
biopharmaceutical company that supplies human blood plasma and develops and
commercializes therapeutic products for the prevention and treatment of
infectious diseases and immunological disorders.
On November 29, 1995, Univax Biologics, Inc. ("Univax"), a publicly traded
biopharmaceutical company, was merged with and into NABI. Under the terms of
the agreement and plan of merger, Univax's common stockholders received .79 of
NABI common stock for each Univax share. Additionally, Univax's preferred
stockholders received 1.047 shares of NABI common stock for each preferred
share. NABI issued an aggregate of 14,173,508 shares of its common stock for
the outstanding shares of Univax common and preferred stock. The merger was
accounted for as a pooling of interests and accordingly, the prior period
financial statements have been combined.
The consolidated financial statements include the accounts of NABI (formerly
North American Biologicals, Inc.) (the "Company") and its subsidiaries. All
significant intercompany accounts and transactions are eliminated in
consolidation. These statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report to Stockholders for the year ended December 31, 1995.
In the opinion of management, the unaudited consolidated financial statements
include all adjustments necessary to present fairly the Company's consolidated
financial position at March 31, 1996 and the consolidated results of its
operations for the three months ended March 31, 1996 and 1995. The interim
results of operations are not necessarily indicative of the results which may
occur for the fiscal year.
NOTE 2 -- INVESTMENTS
At March 31, 1996, the Company had approximately $16.2 million in investments.
The investments consist of securities issued or guaranteed by the U.S. Treasury
and debt instruments including US Government Agency securities and high-quality
commercial paper.
All the investments are classified as held to maturity and are stated at
amortized cost. The carrying value of these investments approximates fair
value.
(In Thousands) MARCH 31, DECEMBER 31,
1996 1995
========= ============
U.S. Treasury Bill $ 4,761 --
U.S. agencies 9,524 --
Corporate debt securities 1,955 --
------- ------
Total $16,240 --
======= ======
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NOTE 3 -- INVENTORIES
The components of inventories, stated at the lower of cost (FIFO) or market,
are as follows:
MARCH 31, DECEMBER 31,
(In Thousands) 1996 1995
--------- ------------
Finished goods $18,849 $19,054
Work in process 1,562 1,255
Raw materials 6,685 6,405
------- -------
27,096 26,714
Less: valuation allowance (5,340) (4,068)
------- -------
$21,756 $22,646
======= =======
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment and related allowances for depreciation and amortization
are summarized below:
MARCH 31, DECEMBER 31,
(In Thousands) 1996 1995
========== ============
Land and buildings $ 5,573 $ 5,551
Furniture and fixtures 3,802 3,691
Machinery and equipment 20,290 19,443
Leasehold improvements 12,137 12,055
Construction in progress 20,890 18,311
------- -------
Total property and equipment 62,692 59,051
Less: accumulated depreciation and
amortization (17,341) (16,354)
------- -------
$45,351 $42,697
======= =======
Interest capitalized in connection with construction of NABI's
biopharmaceutical facility was $1,463 and $932 at March 31, 1996 and December
31, 1995, respectively.
NOTE 5 -- SUBORDINATED CONVERTIBLE NOTES
During the first quarter of 1996, NABI issued $80.5 million of 6.5% convertible
subordinated notes due February 1, 2003 ("Notes") in a private placement. The
Notes are convertible into NABI common stock at a conversion price of $14 per
share at any time after 60 days following the date of original issuance and
prior to maturity, unless previously redeemed or repurchased. At any time on
or after February 4, 1999, the Notes may be redeemed at NABI's option without
premium. A total of 5,750,000 shares of common stock have been reserved for
issuance upon conversion of the Notes. NABI utilized a portion of the net
proceeds of the offering to repay a $10 million term loan, approximately $12.2
million under a revolving credit facility and $14.5 million of an $18 million
flexible term notes facility.
In connection with the early extinguishment of the bank debt through the
application of the net proceeds of the Notes, NABI incurred an extraordinary
charge of approximately $932,000 in the first quarter of 1996.
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NOTE 6 -- INCOME TAXES
For the quarter ended March 31, 1996, the provision for income taxes is
comprised solely of state income taxes since NABI has recognized net deferred
tax benefits equal to its current federal income tax provision.
NOTE 7 -- RECLASSIFICATIONS
Certain items in the consolidated financial statements for the 1995 periods
have been reclassified for comparative purposes.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The following is a discussion and analysis of the major factors contributing to
the Company's financial condition and results of operations for the three month
periods ended March 31, 1996 and 1995. The discussion and analysis should be
read in conjunction with the condensed consolidated financial statements and
notes thereto. All amounts are expressed in thousands of dollars, except per
share amounts.
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations expressed as
a percentage of sales:
THREE MONTHS ENDED
MARCH 31,
------------------------
1996 1995
------ ------
Sales 100.0% 100.0%
Cost of products sold 75.4 76.9
----- -----
Gross profit margin 24.6 23.1
Research and development expense 9.0 11.5
Selling, general and administrative expense 8.6 9.5
Royalty expense 2.1 0.9
Other operating expense 1.5 1.3
----- -----
Operating income (loss) 3.4 (0.1)
Interest and other income 0.6 1.0
Interest and other expense (1.5) (0.8)
----- -----
Income before provision for income taxes and
extraordinary charge 2.5 0.1
Provision for income taxes (0.1) (3.9)
----- -----
Income (loss) before extraordinary charge 2.4 (3.8)
Extraordinary charge (1.6) ---
----- -----
Net income (loss) 0.8% (3.8)%
===== =====
Information concerning NABI's sales by industry segment, for the respective
periods, is set forth in the following table. All dollar amounts set forth in
the table are expressed in thousands.
THREE MONTHS ENDED MARCH 31,
---------------------------------------------
1996 % 1995 %
------- ----- ------- -----
Segment
- -------
Plasma -Source $30,627 51.5% $28,271 58.7%
-Specialty 21,661 36.4 13,661 28.4
------- ----- ------- -----
52,288 87.9 41,932 87.1
Immunotherapeutic products 4,797 8.1 2,601 5.4
Diagnostic products and services 1,467 2.4 1,770 3.7
Research and development 943 1.6 1,825 3.8
------- ----- ------- -----
Total $59,495 100.0% $48,128 100.0%
======= ===== ======= =====
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THREE MONTHS ENDED MARCH 31, 1996 AND 1995
The Company achieved record sales for the quarter ended March 31, 1996.
Operating income rose to $2 million in the first quarter of 1996 compared to an
operating loss of $42,000 in the comparable 1995 quarter. Net income for the
first quarter of 1996 was approximately $.5 million or $0.01 per share, versus
a net loss of $1.8 million or $0.05 per share in the first quarter of 1995.
Sales. Sales for the first quarter of 1996 rose 24% to $59.5 million compared
to $48.1 million for the first quarter of 1995. The increase was primarily
attributable to increased volume of plasma shipments, primarily specialty
plasmas.
Gross profit margin. Gross profit and related margin for the first quarter of
1996 was $14.7 million, or 24.6% of sales, compared to $11.1 million, or 23.1%
of sales, in the first quarter of 1995. An improved sales mix, primarily from
increased sales of higher margin specialty plasmas, and increased
immunotherapeutic sales, accounted for the improved profitability.
Selling, general and administrative expense. Selling, general and
administrative expense was $5.1 million, or 8.6% of sales, for the first
quarter of 1996 compared to $4.5 million, or 9.5% of sales, in the first
quarter of 1995. While expenses decreased as a percentage of sales, the dollar
increase resulted primarily from additional personnel and sales and marketing
expenses related to the product launch of WinRho SD in mid 1995.
Royalty expense. Royalty expense for the first quarter of 1996 was $1.2
million, or 2.1% of sales, compared to $.4 million or .9% of sales, in the
first quarter of 1995. The increase resulted primarily from royalties
associated with sales of WinRho SD in the first quarter of 1996.
Interest and other expense. Interest and other expense for the first quarter
of 1996 was $.9 million, or 1.5% of sales, compared to $.4 million, or .8% of
sales, in the first quarter of 1995. The increase was primarily attributable
to interest expense associated with the convertible subordinated notes issued
during the first quarter of 1996.
Other factors. Provision for income taxes was $59,000 or an effective rate of
4% in the first quarter of 1996, compared to $1.9 million in the first quarter
of 1995. The effective tax rate differs from the statutory rate of 35%
primarily due to the reversal of a portion of the valuation allowance
associated with NOL carryforwards. The provision for income taxes in the first
quarter of 1995 reflects income taxes on NABI's stand-alone pre-tax income
which could not be offset by pre-merger losses.
The first quarter of 1996 reflects an extraordinary charge of $.9 million, or
$.03 per share, due to the immediate recognition and expense of debt issue
costs associated with NABI's early extinguishment of its bank debt through the
application of a portion of the net proceeds of the convertible subordinated
notes issued during the first quarter of 1996.
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LIQUIDITY AND CAPITAL RESOURCES
During the first quarter of 1996, NABI issued $80.5 million of 6.5% convertible
subordinated notes due 2003 ("Notes") in a private placement. A portion of the
net proceeds was used to repay a majority of NABI's outstanding bank
indebtedness aggregating approximately $22.2 million. NABI also intends to use
the net proceeds for the repayment and cancellation of $18 million of flexible
term notes as they mature at varying dates through May 15, 1996. As of March
31, 1996, $14.5 million of flexible term notes have been repaid.
As of March 31, 1996, the Company's current assets exceeded current liabilities
by $67.2 million as compared to a net working capital position of $14.7 million
at December 31, 1995. The increase in working capital was principally due to
the net proceeds from the issuance of the Notes. In addition, NABI's bank
credit agreement, as amended through March 31, 1996, provides for a $20 million
revolving credit facility. At March 31, 1996, NABI had no amounts outstanding
under this credit facility.
The Company believes that cash on hand, available bank line of credit and cash
flow from operations will be sufficient to meet its anticipated cash needs for
the remainder of fiscal 1996.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NABI is a party to litigation in the ordinary course of business. NABI does
not believe that any such litigation will have a material adverse effect on its
business, financial position or results of operations.
In addition, NABI is a co-defendant with various other parties in numerous
suits filed in the U.S. and Canada brought by individuals or their
representatives who claim to have been infected with HIV as a result of either
using HIV-contaminated products made by the defendants other than NABI or
having familial relations with those so infected. The claims against NABI
generally are based on either or both negligence and strict liability. One of
the suits, filed in the Circuit Court for the Eleventh Judicial Circuit of Dade
County, Florida on May 23, 1995 (Case No. 95-10489 CA 02), purports to be a
class action. The defendants in this suit, other than NABI, include Bayer,
Armour Pharmaceutical Company, Rhone-Poulenc Rorer, Inc., Baxter, Alpha
Therapeutic Corporation and The National Hemophilia Foundation. The suits
filed in Canada seek to impose liability on NABI as the successor to a company
acquired by NABI in 1986.
NABI denies all claims against it in these suits and intends to vigorously
defend the cases. Although NABI does not believe that any such litigation will
have a material adverse effect on its business, financial position or results
of operations, the defense of these lawsuits can be expensive and
time-consuming, regardless of the outcome, and an adverse result in one or more
of these lawsuits could have a material adverse effect on NABI's business,
financial condition and results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
10.24 Amendment No. 5 to Third Amended and Restated Revolving Credit Term Loan
and Reimbursement Agreement between NationsBank and NABI dated March 31, 1996.... 14
11 Calculation of Earnings Per Share................................................ 23
27 Financial Data Schedule (For SEC use only)
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b. Reports on Form 8-K:
On January 22, 1996, NABI filed a current report on Form 8-K, reporting under
Item 5 thereof, the proposed issuance of convertible subordinated notes and the
announcement of the Company name change and trading symbol.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NABI
DATE: May 13, 1996 By: /s/ Alfred J. Fernandez
----------------------------------------
ALFRED J. FERNANDEZ
Senior Vice President and
Chief Financial Officer
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EXHIBIT 10.24
AMENDMENT NO. 5
TO THIRD AMENDED AND RESTATED REVOLVING CREDIT,
TERM LOAN AND REIMBURSEMENT AGREEMENT
AND
AMENDMENT TO
LC ACCOUNT AGREEMENT
AND
SECURITY AGREEMENT
THIS AMENDMENT NO. 5 TO THIRD AMENDED AND RESTATED REVOLVING CREDIT, TERM
LOAN AND REIMBURSEMENT AGREEMENT AND AMENDMENT TO LC ACCOUNT AGREEMENT AND
SECURITY AGREEMENT (this "Amendment Agreement") is made and entered into as of
the 31st day of March, 1996 among:
NABI (f/k/a North American Biologicals, Inc.), a Delaware corporation
("Borrower"); and
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) (f/k/a NationsBank of Florida,
National Association), a national banking association, in its capacity as a
lender (the "Lender") and as agent for the Lender (s) (the "Agent");
W I T N E S S E T H :
WHEREAS, the Borrower, the Lender and the Agent have entered into a Third
Amended and Restated Revolving Credit, Term Loan and Reimbursement Agreement
dated as of December 1, 1994, as amended hereby and as amended prior to the
date hereto, (the "Agreement") pursuant to which the Lender agreed to make a
revolving credit loan and a term loan to the Borrower and to issue certain
letters of credit on behalf of the Borrower (the "Loans");
WHEREAS, the Borrower has issued $80,500,000 in convertible subordinated
debentures (the "Convertible Subordinated Debentures"), the net proceeds of
which have been or will be used, among other things, to retire the Flexible
Term Notes, repay certain Revolving Loans and to prepay the Term Loan;
WHEREAS, the Borrower has requested that the Lender and the Agent amend
certain provisions of the Agreement and the Lender and the Agent have agreed to
do so in the manner set forth in this Amendment Agreement;
WHEREAS, the Loans have been secured by the Borrower's granting a security
interest to the Agent in certain collateral pursuant to the Security Agreement,
which the Borrower, the Lender and the Agent have agreed to amend in the manner
set forth in this Amendment Agreement; and
WHEREAS, the parties entered into a certain LC Account Agreement dated as
of December 1, 1994 in connection with the Agreement, which the Borrower, the
Lender and the Agent have agreed to amend in the manner set forth in this
Amendment Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and the
fulfillment of the conditions set forth herein, the parties hereto do hereby
agree as follows:
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2
1. DEFINITIONS. Any capitalized terms used herein without definition shall
have the meaning set forth in the Agreement. The term "Agreement" as used
herein and in the Agreement and other Loan Documents shall mean the
Agreement as hereby amended.
2. AMENDMENTS. Subject to the terms and conditions set forth herein, the
Agreement is hereby amended as follows:
(a) the definition of Applicable Interest Addition is amended and
restated as follows:
"Applicable Interest Addition" means for each Floating Rate Loan or LIBOR
Loan that percent per annum set forth below:
INTEREST ADDITION
-----------------
FLOATING RATE LOAN LIBOR LOAN
------------------ ----------
1.00% 2.25%
Beginning with the fiscal quarter ending on June 30, 1996, the Applicable
Interest Addition shall be adjusted based on the Borrower's Consolidated
Interest Coverage Ratio and its Consolidated Leverage Ratio as of the last
day of each fiscal quarter (each such date, an "Effective Date") as
follows:
RATIOS INTEREST ADDITION
- ---------------------------------------------------------------------------------------------
CONSOLIDATED CONSOLIDATED INTEREST LIBOR FLOATING RATE
LEVERAGE RATIO COVERAGE RATIO LOAN LOAN
=============================================================================================
Less than or equal to Greater than or equal to 1.50% .25%
1.50 to 1.00 4.75 to 1.00
Greater than 1.50 to Greater than or equal to 2.00% .75%
1.00 but less than 2.00 4.00 to 1.00 but less
to 1.00 than 4.75 to 1.00
Greater than or equal to Greater than or equal to 2.25% 1.00%
2.00 to 1.00 but less 3.25 to 1.00 but less
than 3.50 to 1.00 than 4.0 to 1.00
Greater than or equal to Greater than or equal to 2.50% 1.25%
3.50 to 1.00 but less 2.50 to 1.00 but less
than 5.50 to 1.00 than 3.25 to 1.00
Such adjustments shall be effective as to any Loan as of the first day
next following each date on which the Borrower delivers its Compliance
Certificate in accordance with the terms of the Agreement.
In the event that the calculation of the ratios stated above place the
Borrower on separate tiers or levels for purposes of determining the
Interest Addition, the tier resulting in the higher Interest Addition
shall be used.
(b) The definition of "Consolidated Fixed Charges" is amended and
restated as follows:
"Consolidated Fixed Charges" means, with respect to the Borrower and its
Subsidiaries, for any Four-Quarter Period indicated, the sum of, without
duplication, (i) Consolidated Net Interest Expense less Consolidated
Imputed Interest, (ii) dividends or distributions and (iii) as of the
last day of such Four Quarter Period current maturities of Consolidated
Funded Indebtedness.
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(c) The definition of "Consolidated Fixed Charge Ratio" is amended and
restated as follows:
"Consolidated Fixed Charge Ratio" means, with respect to the Borrower and
its Subsidiaries, the ratio of (i) Consolidated EBITDA minus Maintenance
Capital Expenditures to (ii) Consolidated Fixed Charges; which ratio
shall be calculated (i) for each fiscal quarter ending on March 31, 1996,
June 30, 1996, September 30, 1996 and December 31, 1996 based on the
annualized operations of the Borrower and its Subsidiaries for the period
beginning January 1, 1996 and ending as of the end of each first, second,
third and fourth quarter period, as the case may be, and (ii) after
December 31, 1996 for the Four-Quarter Period ending on the date of
computation.
(d) The definition of "Consolidated Interest Coverage Ratio" is amended
and restated as follows:
"Consolidated Interest Coverage Ratio" means, with respect to the
Borrower and its Subsidiaries, the ratio of (a) Consolidated Net Income
plus to the extent deducted in determining consolidated Net Income (i)
taxes based on income, and (ii) Consolidated Interest Expense to (b)
Consolidated Net Interest Expense less Consolidated Imputed Interest;
which ratio shall be calculated (i) for each fiscal quarter ending on
March 31, 1996, June 30, 1996, September 30, 1996 and December 31, 1996
based on the annualized operations of the Borrower and its Subsidiaries
for the period beginning January 1, 1996 and ending as of the end of each
first, second, third and fourth quarter period, as the case may be, and
(ii) after December 31, 1996 for the Four-Quarter Period ending on the
date of computation.
(e) The definition of "Consolidated Leverage Ratio" is amended and
restated as follows:
"Consolidated Leverage Ratio" means, with respect to the Borrower and its
Subsidiaries, the ratio of (x) Consolidated Indebtedness minus cash on
hand greater than $4,000,000 to (y) Consolidated EBITDA (i) for each
fiscal quarter ending on March 31, 1996, June 30, 1996, September 30,
1996 and December 31, 1996 based on the annualized operations of the
Borrower and its Subsidiaries for the period beginning January 1, 1996
and ending as of the end of each first, second, third and fourth quarter
period, as the case may be, and (ii) after December 31, 1996 for the
Four-Quarter Period ending on the date of computation.
(f) A new definition of "Consolidated Net Interest Expense" is added as
follows:
"Consolidated Net Interest Expense" means, with respect to any period of
computation thereof, Consolidated Interest Expense minus interest income.
(g) The definition of "Eligible Inventory" is hereby amended by deleting
the phrase, "work in process" from each place that it appears.
(h) The definition of "Eligible Securities" is hereby amended by (i)
deleting the figure "92" from paragraph (d) thereof and inserting, in
lieu thereof, the figure "270", (ii) adding, in paragraph (h) thereof,
before the phrase "mutual funds" the phrase "money market" and (iii)
deleting from paragraph (h) thereof the phrase, "the shares of which
mutual funds are at all times rated "AAA" by S&P".
(i) The definition of "Letter of Credit" is amended and restated as
follows:
"Letter of Credit" means, as of the date of final payment of the Flexible
Term Notes, any Commercial LC.
(j) The definition of "Revolving Credit Termination Date" is hereby
amended by changing the date "January 31, 1996" to "December 31, 1998".
(k) The definition of "Total Revolving Credit Commitment" is hereby
amended and restated as follows:
16
4
"Total Revolving Credit Commitment" means an amount equal to $20,000,000,
as reduced from time to time in accordance with Section 2.09.
(l) Section 2.11 is amended by adding the following phrase to the end of
the first sentence "in the event such Revolving Credit Debit Balance,
Swing Line Outstandings and Outstanding Letters of Credit are equal to or
greater than 50% of the Total Revolving Credit Commitment and three
eighths percent (3/8%) per annum in the event such Revolving Credit Debit
Balance, Swing Line Outstandings and Outstanding Letters of Credit are
less than 50% of the Total Revolving Credit Commitment."
(m) Sections 8.01 through 8.05 are hereby amended and restated as
follows:
8.01 Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
Worth to be less than $31,000,000, such amount to be increased at the end
of each fiscal quarter, beginning with the fiscal quarter ending March
31, 1996 by at least 50% of Consolidated Net Income greater than zero for
the immediately preceding fiscal quarter.
8.02 Consolidated Interest Coverage Ratio. Permit as at the end of the
quarters ending on the dates set forth below the Consolidated Interest
Coverage Ratio to be less than the ratio set forth opposite such date,
respectively.
PERIOD RATIO
============================== ============
March 31, 1996 1.20 to 1.00
June 30, 1996 1.75 to 1.00
September 30, 1996 2.00 to 1.00
December 31, 1996 and
each fiscal quarter in 1997 2.25 to 1.00
Each fiscal quarter thereafter 2.50 to 1.00
8.03 Consolidated Fixed Charge Ratio. Permit as at the quarters ending
on the dates set forth below the Consolidated Fixed Charge Coverage Ratio
to be less than the ratio set forth opposite such date, respectively.
PERIOD RATIO
============================== ============
June 30, 1996 1.40 to 1.00
September 30, 1996 1.50 to 1.00
December 31, 1996 2.00 to 1.00
and each fiscal quarter thereafter
8.04 Consolidated Leverage Ratio. Permit as at the quarters ending on
the dates set forth below the Consolidated Leverage Ratio to be more than
the ratios set forth opposite such date, respectively:
PERIOD RATIO
============================== ============
March 31, 1996 5.25 to 1.00
June 30, 1996 4.25 to 1.00
September 30, 1996 4.25 to 1.00
December 31, 1996 3.75 to 1.00
March 31 1997 3.50 to 1.00
June 30, 1997 and 3.00 to 1.00
each fiscal quarter thereafter
17
5
8.05 Consolidated Current Ratio. Permit as at the end of any fiscal
quarter the Consolidated Current Ratio to be less than 1.25 to 1.00.
(n) Section 8.06 (d) is amended by replacing the amount "$500,000" with
the amount "$1,500,000."
(o) Section 8.06 (g) is amended and restated as follows:
"(g) Indebtedness in connection with the Convertible Subordinated
Debentures."
(p) Section 8.08 (d) is amended by replacing the amount "$100,000" with
the amount "$500,000".
(q) Section 8.09 (b) is amended by replacing the amount "$500,000" in
paragraph (ii) with the amount "$1,000,000."
(r) Section 8.09 (f) is amended and restated as follows:
"(f) Loans and advances to Cangene Corporation in connection with
improvements to its manufacturing plant not to exceed $3,000,000."
(s) The existing Sections 8.17 through 8.19 are hereby deleted, and new
Sections 8.17, 8.18 and 8.19 are hereby added in lieu thereof to the end
of Article VIII as follows:
8.17 Use of Convertible Subordinated Debenture Proceeds. Permit the net
proceeds of the Convertible Subordinated Debt Offering to be used for any
purpose, other than
(a) to repay the Revolving Loans;
(b) to repay permanently the Term Loans in full;
(c) to fund the LC Account to the extent required by the Agreement and
the LC Account Agreement; and
(d) to fund Capital Expenditures, research and development costs and for
working capital purposes.
8.18 Negative Pledge. Agree, for the benefit of any third party to whom
the Borrower or its Subsidiaries have any Indebtedness, to allow the
incurrence, creation, assumption of or permit to exist any Liens with
respect to any of its property now owned or hereafter acquired by the
Borrower or any of its Subsidiaries.
8.19 Interest on Convertible Subordinated Debentures. Upon an Event of
Default, pay any interest due on the Convertible Subordinated Debentures.
3. Universal Amendments to Loan Documents.
(A) All references in the Loan Documents to the "Junior Capital
Facility" are hereby deleted.
(B) All references in the Loan Documents to "North American Biologicals,
Inc." are hereby deleted and "NABI" inserted in lieu thereof.
(C) All references in the Loan Documents to the "Term Loan", the "Term
Loan Commitment", the "Term Loan Maturity Date" and the "Term Note" are
hereby deleted, and the Term Loan Commitment is hereby terminated.
(D) All references in the Loan Documents to the "Mortgages", the
"Mortgaged Property" and the "Immunoglobulin Facility Mortgage" are
hereby deleted.
18
6
4. Amendment to LC Account Agreement. As collateral for the reimbursement
obligations resulting from drawings under the Direct Pay LC, the Borrower
has agreed to deposit certain proceeds of the Convertible Subordinated
Debentures in an amount at least equal to the stated amount of the Direct
Pay LC. Notwithstanding any language to the contrary in the LC Account
Agreement, the Agent may apply all amounts deposited in the LC Account to
reimburse the Lender for the amount of any drawings under the Letters of
Credit. The parties hereto understand and agree that the Borrower has
given notice of redemption to the Trustee of the Flexible Term Notes, such
redemption to occur on the dates set forth in such redemption notice and
in the manner as described in the Note Agreement. The parties further
understand and agree that the Trustee will make drawings on the Letter of
Credit in order to make such redemptions. The parties confirm that any
amounts maintained in the LC Account may be applied toward the
reimbursement of the Lender of any such drawings as contemplated by the LC
Account Agreement. The LC Account Agreement shall otherwise remain in
full force and effect.
5. Security Agreement. The Borrower and the Agent agree that the Security
Agreement is hereby amended by releasing all Collateral thereunder related
to the Immunoglobulin Facility. The Agent agrees to execute and deliver to
the Borrower any further documentation required to effectuate such
release.
The Borrower agrees to provide the Agent with financing statements and
other documentation as may be required to evidence the Borrower's change
of name to maintain perfection of the Agent's and the Lender's security
interests.
6. Release of Immunoglobulin Facility Mortgage. The Agent hereby releases
the security interests granted to it pursuant to the Mortgages and agrees
to execute and deliver to the Borrower any further documentation required
to effectuate such release. All releases, discharges, reassignments and
transfers made pursuant hereto shall be made without representation,
warranty or recourse, express or implied, by the Bank. Notwithstanding
anything herein to the contrary, any indemnities or reinstatement
obligations expressly stated in the Mortgages to survive termination of
the Mortgages shall survive and continue.
7. Representations and Warranties. In order to induce the Agent and the
Lender to enter into this Agreement, the Borrower represents and warrants
to the Agent and the Lender as follows:
(a) The representations and warranties made by Borrower in Article VI of
the Agreement are true in all material respects on and as of the date
hereof;
(b) There has been no material adverse change in the condition, financial
or otherwise, of the Borrower and its Subsidiaries, taken as a whole,
since the date of the most recent financial reports of the Borrower
received by the Agent and the Lender under Section 6.01 (f) of the
Agreement, other than changes in the ordinary course of business;
(c) The business and properties of the Borrower and its Subsidiaries,
taken as a whole, are not, and since the date of the most recent
financial report of the Borrower and its Subsidiaries received by the
Agent and the Lender under Section 6.01 (f) of the Agreement, have not
been adversely affected in any substantial way as the result of any fire,
explosion, earthquake, accident, strike, lockout combination of workers,
flood, embargo, riot, activities of armed forces, war or acts of God or
the public enemy, or cancellation or loss of any major contracts; and
(d) No event has occurred and no condition exists which, upon the
consummation of the transaction contemplated hereby, constituted a
Default or an Event of Default on the part of the Borrower under the
Agreement either immediately or with the lapse of time or the giving of
notice, or both.
8. Condition Precedent. The Borrower shall deliver, or cause to be
delivered to the Agent, the following:
(i) an executed copy of this Amendment Agreement;
19
7
(ii) Resolutions of the Board of Directors of Borrower and each
Subsidiary with respect to the approval of this Amendment Agreement and
the transactions contemplated hereby;
(iii) a certificate of the Secretary or Assistant Secretary of the
Borrower as to Charter, Bylaws, Resolutions and incumbency of officers
executing this Amendment Agreement;
(iv) such other instruments and documents as the Agent may reasonably
request;
9. Miscellaneous.
(a) All instruments and documents incident to the consummation of the
transactions contemplated hereby shall be reasonably satisfactory in form
and substance to the Agent and its counsel.
(b) This Amendment Agreement sets forth the entire understanding and
agreement of the parties hereto in relation to the subject matter hereof
and supersedes any prior negotiations and agreements among the parties
relative to such subject matter. No promise, conditions, representation
or warranty, express or implied, not herein set forth shall bind any
party hereto, and no one of them has relied on any such promise,
condition, representation or warranty. Each of the parties hereto
acknowledges that, except as in this Agreement otherwise expressly
stated, no representations, warranties or commitments, express or
implied, have been made by any other party to the other. None of the
terms or conditions of this Amendment Agreement may be changed, modified,
waived or canceled orally or otherwise, except by writing, signed by all
the parties hereto, specifying such change, modification, waiver or
cancellation of such terms or conditions, or of any preceding or
succeeding breach thereof.
(c) Except as hereby specifically amended, modified or supplemented, the
terms of the Agreement and all of the other Loan Documents are hereby
confirmed and ratified in all respects and shall remain in full force and
effect according to their respective terms.
[SIGNATURE PAGES FOLLOW]
20
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
BORROWER:
WITNESS: NABI
/s/ Dianne Hobbs By: /s/ Alfred J. Fernandez
/s/ Lorraine Breece ----------------------------------------------
Name: Alfred J. Fernandez
----------------------------------------------
Title: Senior Vice President
----------------------------------------------
LENDER:
WITNESS: NATIONSBANK, NATIONAL ASSOCIATION (SOUTH)
/s/ Caridad Garmendia By: /s/ Allison Freeland
/s/ S. Manchanda ----------------------------------------------
Name: Allison Freeland
----------------------------------------------
Title: Vice President
----------------------------------------------
AGENT:
WITNESS: NATIONSBANK, NATIONAL ASSOCIATION (SOUTH)
/s/ Caridad Garmendia By: /s/ Allison Freeland
/s/ S. Manchanda ----------------------------------------------
Name: Allison Freeland
----------------------------------------------
Title: Vice President
----------------------------------------------
21
9
Each of the Guarantors have joined in this Agreement for the purpose of
consenting hereto.
GUARANTORS:
WITNESS: PREMIER BIORESOURCES, INC.
/s/ Dianne Hobbs By: /s/ Alfred J. Fernandez
/s/ Lorraine Breece ----------------------------------------------
Name: Alfred J. Fernandez
Title:
WITNESS: NABI FOREIGN SALES, LTD.
/s/ Dianne Hobbs By: /s/ Alfred J. Fernandez
/s/ Lorraine Breece ----------------------------------------------
Name: Alfred J. Fernandez
Title:
WITNESS: BIOMUNE CORPORATION
/s/ Dianne Hobbs By: /s/ Alfred J. Fernandez
/s/ Lorraine Breece ----------------------------------------------
Name: Alfred J. Fernandez
Title:
WITNESS: BIOPLAS GMBH
/s/ Dianne Hobbs By: /s/ Alfred J. Fernandez
/s/ Lorraine Breece ----------------------------------------------
Name: Alfred J. Fernandez
Title:
WITNESS: NABI FINANCE, INC.
/s/ Dianne Hobbs By: /s/ Alfred J. Fernandez
/s/ Lorraine Breece ----------------------------------------------
Name: Alfred J. Fernandez
Title:
WITNESS: NORTH AMERICAN BIOLOGICALS GMBH
/s/ Dianne Hobbs By: /s/ Alfred J. Fernandez
/s/ Lorraine Breece ----------------------------------------------
Name: Alfred J. Fernandez
Title:
WITNESS: N.A.B.I. BIOMEDICAL GMBH
/s/ Dianne Hobbs By: /s/ Alfred J. Fernandez
/s/ Lorraine Breece ----------------------------------------------
Name: Alfred J. Fernandez
Title:
WITNESS: UNIVAX PLASMA, INC.
/s/ Dianne Hobbs By: /s/ Alfred J. Fernandez
/s/ Lorraine Breece ----------------------------------------------
Name: Alfred J. Fernandez
Title:
22
1
EXHIBIT 11
NABI
CALCULATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
======================
1996 1995
======= =======
Net income (loss) $ 485 $(1,830)
======= =======
Weighted average number of common shares
outstanding during the period 34,033 33,393
Add dilutive effect of common stock equivalents:
Stock options and warrants (as determined by the
application of the treasury stock method) 1,677 --
------- -------
Weighted average number of shares and common
share equivalents used in primary earnings
per share computations 35,710 33,393
======= =======
Earnings (loss) per share $ 0.01 $ (0.05)
======= =======
23
5
1,000
U.S. DOLLARS
3-MOS
DEC-31-1996
JAN-01-1996
MAR-31-1996
1
22,267
16,240
37,081
0
21,756
99,042
45,351
0
184,029
31,864
90,059
0
0
3,413
67,101
184,029
59,495
59,495
44,839
44,839
12,615
0
891
1,476
59
1,417
0
932
0
485
0.01
0
RECEIVABLES, INVENTORY AND PP&E REPRESENT NET AMOUNTS.
LOSS PROVISION INCLUDED IN OTHER EXPENSES.
