UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2005
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 number: 0-22818
THE HAIN CELESTIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3240619
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
58 South Service Road, Melville, New York 11747
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (631) 730-2200
-------------------
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
requirement for the past 90 days.
Yes X No ____
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No ____
As of May 4, 2005, there were 36,649,042 shares outstanding of the Registrant's
Common Stock, par value $.01 per share.
THE HAIN CELESTIAL GROUP, INC.
INDEX
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 2005
(unaudited) and June 30, 2004 2
Consolidated Statements of Income - Three months and nine
months ended March 31, 2005
and 2004 (unaudited) 3
Consolidated Statement of Stockholders' Equity -
Nine months ended March 31, 2005 (unaudited) 4
Consolidated Statements of Cash Flows -
Nine months ended March 31, 2005 and 2004 (unaudited) 5
Notes to Consolidated Financial Statements 6-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
Item 4. Controls and Procedures 16
Part II Other Information
Items 1 and 3 through 5 are not applicable
Item 2 - Unregistered Sales of Equity Securities
and Use of Proceeds. 16
Item 6 - Exhibits 17
Signatures 18
1
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share and share amounts)
March 31, June 30,
2005 2004
--------------------- --------------------
ASSETS (Unaudited) (Note)
Current assets:
Cash and cash equivalents $ 17,117 $ 27,489
Accounts receivable, less allowance for doubtful
accounts of $2,016 and $2,185 72,982 69,392
Inventories 83,928 86,873
Deferred income taxes 3,111 3,111
Other current assets 19,163 11,449
--------------------- --------------------
Total current assets 196,301 198,314
Property, plant and equipment, net of accumulated
depreciation and amortization of $47,842 and $40,799 87,407 87,002
Goodwill 345,220 333,218
Trademarks and other intangible assets, net of
accumulated amortization of $8,925 and $8,349 55,567 55,793
Other assets 12,253 9,904
--------------------- --------------------
Total assets $ 696,748 $ 684,231
===================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 61,445 $ 59,031
Current portion of long-term debt 3,152 6,845
Income taxes payable 3,071 2,489
--------------------- --------------------
Total current liabilities 67,668 68,365
Long-term debt, less current portion 85,533 104,294
Deferred income taxes 13,542 14,807
--------------------- --------------------
Total liabilities 166,743 187,466
Stockholders' equity:
Preferred stock - $.01 par value, authorized 5,000,000
shares, no shares issued - -
Common stock - $.01 par value, authorized 100,000,000
shares, issued 37,410,598 and 37,064,648 shares 374 371
Additional paid-in capital 399,066 394,740
Deferred compensation (2,106) (2,809)
Retained earnings 130,655 106,097
Foreign currency translation adjustment 12,991 7,651
--------------------- --------------------
540,980 506,050
Less: 761,556 and 671,556 shares of treasury stock, at cost (10,975) (9,285)
--------------------- --------------------
Total stockholders' equity 530,005 496,765
--------------------- --------------------
Total liabilities and stockholders' equity $ 696,748 $ 684,231
===================== ====================
Note: The balance sheet at June 30, 2004 has been derived from the audited
financial statements at that date.
See notes to consolidated financial statements.
2
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------------------------- ---------------------------------------
2005 2004 2005 2004
----------------- ------------------ ----------------- ------------------
(Unaudited) (Unaudited)
Net sales $ 161,261 $ 136,862 $ 468,618 $ 406,707
Cost of sales 115,793 98,316 330,944 283,900
----------------- ------------------ ----------------- ------------------
Gross profit 45,468 38,546 137,674 122,807
Selling, general and
administrative expenses 33,740 29,527 97,098 85,393
----------------- ------------------ ----------------- ------------------
Operating income 11,728 9,019 40,576 37,414
Interest expense and other
expenses, net 1,182 932 2,390 2,073
----------------- ------------------ ----------------- ------------------
Income before income taxes 10,546 8,087 38,186 35,341
Provision for income taxes 2,848 3,073 13,628 13,413
----------------- ------------------ ----------------- ------------------
Net income $ 7,698 $ 5,014 $ 24,558 $ 21,928
================= ================== ================= ==================
Net income per share:
Basic $ 0.21 $ 0.14 $ 0.68 $ 0.63
================= ================== ================= ==================
Diluted $ 0.21 $ 0.14 $ 0.66 $ 0.61
================= ================== ================= ==================
Weighted average common shares outstanding:
Basic 36,440 35,694 36,368 34,943
================= ================== ================= ==================
Diluted 37,308 36,804 37,124 36,098
================= ================== ================= ==================
See notes to consolidated financial statements.
3
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED MARCH 31, 2005 (In thousands, except per share and
share amounts)
Foreign
Un- Currency
amortized Trans-
Common Stock Additional Non- Treasury lation Compre-
Amount Paid-in Cash Com- Retained Stock Adjust- hensive
Shares at $.01 Capital pensation Earnings Shares Amount ment Total Income
-------------------------------------------------------------------------------------------------------------
Balance at
June 30, 2004 37,064,648 $ 371 $ 394,740 $ (2,809) $ 106,097 671,556 $ (9,285) $ 7,651 $ 496,765
Exercise of
stock options 345,950 3 4,291 4,294
Purchase of
Treasury Shares 90,000 (1,690) (1,690)
Non-cash
compensation
charge 35 703 738
Comprehensive
income:
Net income
for the period 24,558 24,558 24,558
Translation
adjustments 5,340 5,340 5,340
-------
Total comprehen-
sive income $29,898
----------------------------------------------------------------------------------------------------=========
Balance at
March 31, 2005 37,410,598 $ 374 $ 399,066 $ (2,106) $ 130,655 761,556 $ (10,975) $ 12,991 $ 530,005
See notes to consolidated financial statements.
4
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Nine Months Ended
March 31,
------------------------------------------
2005 2004
------------------ -------------------
CASH FLOWS FROM OPERATING ACTIVITIES (Unaudited)
Net income $ 24,558 $ 21,928
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,176 7,900
Provision for doubtful accounts (8) 57
Increase (decrease) in cash attributable to changes in
operating assets and liabilities, net of amounts
applicable to acquired businesses:
Accounts receivable (2,364) (7,999)
Inventories 2,734 (8,405)
Other current assets (7,149) (2,589)
Other assets (2,604) 1,828
Accounts payable and accrued expenses 150 (6,577)
Income taxes, net (864) 10,205
------------------ -------------------
Net cash provided by operating activities 24,629 16,348
------------------ -------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (7,026) (6,145)
Acquisitions of businesses, net of cash acquired (6,478) (4,480)
------------------ -------------------
Net cash used in investing activities (13,504) (10,625)
------------------ -------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of bank revolving
credit facility, net (16,500) (7,650)
Payments on economic development revenue bonds (3,550) (408)
Purchase of treasury stock (1,690) (279)
Costs in connecting with bank financing (34) (25)
Proceeds from exercise of warrants and options, net of
related expenses 4,294 17,606
Repayments of other long-term debt, net (1,559) (2,891)
------------------ -------------------
Net cash (used in) provided by financing activities (19,039) 6,353
------------------ -------------------
Effect of exchange rate changes on cash (2,458) (1,959)
------------------ -------------------
Net (decrease) increase in cash and cash equivalents (10,372) 10,117
Cash and cash equivalents at beginning of period 27,489 10,984
------------------ -------------------
Cash and cash equivalents at end of period $ 17,117 $ 21,101
================== ===================
See notes to consolidated financial statements.
5
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
The Hain Celestial Group, Inc., a Delaware corporation, and its
subsidiaries (collectively, the "Company", and herein referred to as "we", "us",
and "our") manufacture, market, distribute and sell natural, organic, specialty
and snack food products and natural and organic personal care products under
brand names which are sold as "better-for-you" products. We are a leader in many
of the top natural food categories, with such well-known food brands as
Celestial Seasonings(R) teas, Hain Pure Foods(R), Westbrae(R), Westsoy(R), Rice
Dream(R), Soy Dream(R), Imagine(R), Walnut Acres Organic(R), Ethnic Gourmet(R),
Rosetto(R), Little Bear Organic Foods(R), Bearitos(R), Arrowhead Mills(R),
Health Valley(R), Breadshop's(R), Casbah(R), Garden of Eatin'(R), Terra
Chips(R), Harry's Premium Snacks(R), Boston's(R), Lima(R), Biomarche(R), Grains
Noirs(R), Natumi(R), Milkfree, Yves Veggie Cuisine(R), DeBoles(R), Earth's
Best(R), and Nile Spice(R). The Company's principal specialty product lines
include Hollywood(R) cooking oils, Estee(R) sugar-free products, Kineret(R)
kosher foods, Boston Better Snacks(R), and Alba Foods(R). Our natural and
organic personal care product line is marketed under the JASON(R), Orjene(R),
Shaman Earthly Organics(TM), and Heather's(R) brands.
We operate in one business segment: the sale of natural, organic and other
food and beverage and personal care products. In our 2004 fiscal year,
approximately 39% of our revenues were derived from products that were
manufactured within our own facilities with 61% produced by various co-packers.
All dollar amounts in our consolidated financial statements and notes have
been rounded to the nearest thousand dollars, except per share amounts. Share
amounts in the notes to consolidated financial statements are presented in
thousands.
2. BASIS OF PRESENTATION
Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States. The consolidated financial statements reflect all normal recurring
adjustments which, in management's opinion, are necessary for a fair
presentation for interim periods. Operating results for the three months and
nine months ended March 31, 2005 are not necessarily indicative of the results
that may be expected for the year ending June 30, 2005. Please refer to the
footnotes to our consolidated financial statements as of June 30, 2004 and for
the year then ended included in our Annual Report on Form 10-K for information
not included in these condensed footnotes.
3. EARNINGS PER SHARE
We report basic and diluted earnings per share in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" ("SFAS
No. 128"). Basic earnings per share excludes the dilutive effects of options and
warrants. Diluted earnings per share includes only the dilutive effects of
common stock equivalents such as stock options and warrants.
6
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-Continued
The following table sets forth the computation of basic and diluted
earnings per share pursuant to SFAS No. 128:
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------------------------------------------------------
2005 2004 2005 2004
--------------- ----------------- ---------------- -----------------
Numerator:
Net income $ 7,698 $ 5,014 $ 24,558 $ 21,928
=============== ================= ================ =================
Denominator (in thousands):
Denominator for basic earnings per
share - weighted average shares
outstanding during the period 36,440 35,694 36,368 34,943
--------------- ----------------- ---------------- -----------------
Effect of dilutive securities:
Stock options 868 1,059 754 1,031
Warrants - 51 2 124
--------------- ----------------- ---------------- -----------------
868 1,110 756 1,155
--------------- ----------------- ---------------- -----------------
Denominator for diluted earnings per
share - adjusted weighted average
shares and assumed conversions 37,308 36,804 37,124 36,098
=============== ================= ================ =================
Basic net income per share $ 0.21 $ 0.14 $ 0.68 $ 0.63
=============== ================= ================ =================
Diluted net income per share $ 0.21 $ 0.14 $ 0.66 $ 0.61
=============== ================= ================ =================
4. INVENTORIES
Inventories consisted of the following:
March 31, June 30,
2005 2004
-------------------- -----------------
Finished goods $53,121 $56,132
Raw materials, work-in-progress
and packaging 30,807 30,741
-------------------- -----------------
$ 83,928 $86,873
==================== =================
7
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-Continued
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
March 31, June 30,
2005 2004
-------------------------------------
Land $ 8,181 $ 8,113
Buildings and improvements 30,665 29,867
Machinery and equipment 83,551 79,275
Furniture and fixtures 2,600 2,527
Leasehold improvements 3,876 3,478
Construction in progress 6,376 4,541
-------------------------------------
135,249 127,801
Less: Accumulated depreciation
and amortization 47,842 40,799
-------------------------------------
$ 87,407 $ 87,002
=====================================
6. ACQUISITIONS
On June 3, 2004, we acquired 100% of the stock of privately-held Jason
Natural Products, Inc., a California-based manufacturer and marketer of natural
and organic personal care products. In recent years, Jason Natural Products has
expanded its lines of natural and organic personal care products by integrating
a series of brands including Orjene(R), Shaman Earthly Organics(TM), and
Heather's(R) into its portfolio. The purchase price consisted of approximately
$23.9 million in cash, plus the assumption of certain liabilities. At March 31,
2005, goodwill (not deductible for tax purposes) from this transaction was
estimated to be $24.7 million.
On May 27, 2004, we acquired substantially all of the assets and assumed
certain liabilities of the Rosetto(R) and Ethnic Gourmet(R) businesses of H.J.
Heinz Company, LP, which owned approximately 16.7% of our common stock at the
time of the transaction. These businesses produce and market frozen pasta and
natural ethnic frozen meals, respectively. The purchase price consisted of
approximately $22.8 million in cash, plus the assumption of certain liabilities.
At March 31, 2005, goodwill (deductible for tax purposes) from this transaction
was estimated to be $8.4 million.
The following table summarizes the estimated fair values of assets acquired
and liabilities assumed of Jason Natural Products, Rosetto, and Ethnic Gourmet
at the dates of the acquisitions:
Current assets $ 12,369
Property and equipment 12,871
Other assets 102
---------
Total assets 25,342
Liabilities assumed 4,364
---------
Net assets acquired $ 20,978
=========
The balance sheet at March 31, 2005, includes the assets acquired and
liabilities assumed valued at fair market value at the date of purchase. We are
in the process of performing the procedures required to finalize the purchase
price allocation for the above fiscal 2004 acquisitions. We expect these
procedures to be completed by the end of fiscal 2005.
The results of operations for the three months and nine months ended March
31, 2005 include the results of the above described acquisitions for the
complete period. The following table presents information about sales and net
income had the operations of the acquired businesses been combined with our
business as of the first day of the periods shown. This information has not been
adjusted to reflect any changes in the operations of these businesses subsequent
to their
8
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-Continued
acquisition by us. Changes in operations of these acquired businesses include,
but are not limited to, integration of systems and personnel, discontinuation of
products (including discontinuation resulting from the integration of acquired
and existing brands with similar products, and discontinuation of sales of
private label products), changes in trade practices, application of our credit
policies, changes in manufacturing processes or locations, and changes in
marketing and advertising programs. Had any of these changes been implemented by
the former management of the businesses acquired prior to acquisition by us, the
sales and net income information might have been materially different than the
actual results achieved and from the pro forma information provided below.
Three Months Ended Nine Months Ended
March 31, 2004 March 31, 2004
----------------------- ------------------------
Net sales $ 152,676 $ 449,518
================================================
Net income $ 5,525 $ 22,386
================================================
Earnings per share:
Basic $ 0.15 $ 0.64
================================================
Diluted $ 0.15 $ 0.62
================================================
Weighted average shares:
Basic 35,694 34,943
================================================
Diluted 36,804 36,098
================================================
In management's opinion, the unaudited pro forma results of operations is
not indicative of the actual results that would have occurred had the JASON(R),
Rosetto(R) and Ethnic Gourmet(R) acquisitions been consummated at the beginning
of the periods presented or of future operations of the combined companies under
our management.
On February 25, 2004, our subsidiary in Belgium acquired Natumi, AG, a
German producer of non-dairy beverages and desserts marketed principally in
retail channels in Europe. The purchase price consisted of approximately $1.75
million in cash as well as the assumption of certain liabilities. The purchase
price excludes the amount of contingency payments we are obligated to pay the
former owner of Natumi. The contingency payments are based on the achievement by
Natumi of certain financial targets over an approximate 3.5 year period
following the date of acquisition. Such payments, which could total
approximately 9.0 million euros, will be charged to goodwill if and when paid.
No such contingency payments have been made since the acquisition. The net
assets acquired, as well as the sales and operations of Natumi, are not material
to the Company's consolidated financial position or results of operations and,
therefore, have not been included in the detailed information about our
acquisitions.
7. CREDIT FACILITY
On April 22, 2004, we entered into a new $300 million credit facility (the
"Credit Facility") with a bank group led by our existing bank agents for a
five-year term expiring in April 2009. The Credit Facility provides for an
uncommitted $50 million accordion feature, under which the facility may be
increased to $350 million. The Credit Facility is secured only by a pledge of
shares of certain of our foreign subsidiaries and is guaranteed by all of our
current and future direct and indirect domestic subsidiaries. We are required to
comply with customary affirmative and negative covenants for facilities of this
nature. Revolving credit loans under this facility bear interest at a base rate
(greater of the applicable prime rate or Federal Funds Rate plus and applicable
margin) or, at our option, the reserve adjusted LIBOR rate plus an applicable
margin. As of March 31, 2005, $82.7 million was borrowed under the Credit
Facility at an interest rate of 4.2%. On April 4, 2005, we borrowed an
additional $11.0 million in conjunction with our acquisition of Zia Cosmetics,
Inc. On May 9, 2005, we made a repayment of $4.0 million bringing our borrowings
under the Credit Facility to $89.7 million.
9
THE HAIN CELESTIAL GROUP, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)-Continued
8. STOCK-BASED COMPENSATION
The Company accounts for its stock-based compensation plans using the
intrinsic value method under APB Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25") and related Interpretations. Under APB 25, when the
exercise price of our employee stock options at least equals the market price of
the underlying stock on the date of grant, no compensation expense is
recognized.
If compensation cost for the Company's stock-based compensation plans had
been determined based on the fair value at the grant dates consistent with the
method prescribed by SFAS No. 123, "Accounting For Stock-Based Compensation,"
net earnings and earnings per share for the three months and nine months ended
March 31, 2005 and 2004 would have been the pro forma amounts that follow:
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------------- --------------------------------
2005 2004 2005 2004
-------------- ------------- ------------- ---------------
Net income, as reported $ 7,698 $ 5,014 $ 24,558 $ 21,928
Non-cash compensation charge, net of
related tax effects 179 65 479 79
Stock-based employee compensation
expense determined under fair value
method, net of related tax effects (1,537) (2,413) (6,392) (4,350)
-------------- ------------- ------------- ---------------
Pro forma net income $ 6,340 $ 2,666 $ 18,645 $ 17,657
============== ============= ============= ===============
Basic net income per share:
As reported $ 0.21 $ 0.14 $ 0.68 $ 0.63
======= ======= ======== ========
Pro forma $ 0.17 $ 0.07 $ 0.51 $ 0.51
======= ======= ======== ========
Diluted net income per share:
As reported $ 0.21 $ 0.14 $ 0.66 $ 0.61
======= ======= ======== ========
Pro forma $ 0.17 $ 0.07 $ 0.50 $ 0.49
======= ======= ======== ========
On December 16, 2004, the Financial Accounting Standards Board issued
Statement No. 123 (revised 2004), "Share-Based Payment," which is a revision of
SFAS No. 123. SFAS No. 123(R) supersedes APB 25 and amends SFAS No. 95,
"Statement of Cash Flows." Generally, the approach in SFAS No. 123(R) is similar
to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all
share-based payments to employees, including grants of employee stock options,
to be recognized in the income statement based on their fair values. Pro forma
disclosure is no longer an alternative. SFAS No. 123(R) must be adopted no later
than July 1, 2005. Early adoption will be permitted in periods in which
financial statements have not yet been issued. We will adopt SFAS No. 123(R) on
July 1, 2005.
9. SUBSEQUENT EVENTS
On April 4, 2005, the Company acquired 100% of the stock of privately-held
Zia Cosmetics, Inc., including the Zia Natural Skincare brand, a respected
leader in therapeutic products for healthy, beautiful skin sold mainly through
natural food retailers. Zia Natural Skincare complements Hain Celestial's
Jason(R) personal care line of pure natural and organic products acquired in
June 2004 and expands the premium skin care offerings of the Company in the
fast-growing natural health and personal care product category. The purchase
price consisted of approximately $10.8 million in cash, plus the assumption of
certain liabilities.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
We manufacture, market, distribute and sell natural, organic, specialty and
snack food products and natural and organic personal care products under brand
names which are sold as "better-for-you" products. We are a leader in many of
the top natural food categories, with such well-known food brands as Celestial
Seasonings(R) teas, Hain Pure Foods(R), Westbrae(R), Westsoy(R), Rice Dream(R),
Soy Dream(R), Imagine(R), Walnut Acres Organic(R), Ethnic Gourmet(R),
Rosetto(R), Little Bear Organic Foods(R), Bearitos(R), Arrowhead Mills(R),
Health Valley(R), Breadshop's(R), Casbah(R), Garden of Eatin'(R), Terra
Chips(R), Harry's Premium Snacks(R), Boston's(R), Lima(R), Biomarche(R), Grains
Noirs(R), Natumi(R), Milkfree, Yves Veggie Cuisine(R), DeBoles(R), Earth's
Best(R), and Nile Spice(R). The Company's principal specialty product lines
include Hollywood(R) cooking oils, Estee(R) sugar-free products, Kineret(R)
kosher foods, Boston Better Snacks(R), and Alba Foods(R). Our natural and
organic personal care product line is marketed under the JASON(R), Orjene(R),
Shaman Earthly Organics(TM), and Heather's(R) brands. Our website can be found
at www.hain-celestial.com.
Our products are sold primarily to specialty and natural food distributors,
supermarkets, natural food stores, and other retail classes of trade including
mass-market stores, drug stores, food service channels and club stores.
Our brand names are well recognized in the various market categories they
serve. We have acquired numerous brands and we will seek future growth through
internal expansion as well as the acquisition of additional complementary
brands.
Our overall mission is to be a leading marketer and seller of natural,
organic, beverage, snack and specialty food and personal care products by
integrating all of our brands under one management team and employing a uniform
marketing, sales and distribution program. Our business strategy is to
capitalize on the brand equity and the distribution previously achieved by each
of our acquired product lines and to enhance revenues by strategic introductions
of new product lines that complement existing products.
Results of Operations
Three months ended March 31, 2005
Net sales for the three months ended March 31, 2005 were $161.3 million, an
increase of $24.4 million or 17.8% over net sales of $136.9 million for the
three months ended March 31, 2004. The increase came from increases in sales
across our Company, including increases in sales of our branded products such as
a 6% increase in our Celestial Seasonings tea brand, a 15% increase in our Terra
Chips brand, a 23% increase in our Garden of Eatin' tortilla chips brand, and a
74% increase in our Earth's Best baby food brand including sales of its new
Sesame Street products. We also saw an increase of 20% in our European business.
Partially offsetting these increases were lower volumes from our
low-carbohydrate products which declined parallel with trends in the consumer
markets, and a decline in our business in Canada. During the March 31, 2005
quarter, sales benefited from sales generated by businesses acquired that we did
not own during the comparable quarter of the prior year.
Gross profit for the three months ended March 31, 2005 and for the three
months ended March 31, 2004 was 28.2% of net sales. In the current quarter,
gross profit was impacted by higher costs of ingredients, increased
transportation costs resulting from higher fuel costs and the cost effects of
regulations issued in 2004 on the U.S. trucking industry. In addition, the
Company has incurred charges of approximately $1.2 million for its stock keeping
unit rationalization program. These higher costs increased the costs of our
products which were in part offset by the price increase we put in place at the
beginning of the fiscal year.
Selling, general and administrative expenses increased by $4.2 million to
$33.7 million for the three months ended March 31, 2005 as compared to $29.5
million for the three months ended March 31, 2004. Such expenses amounted to
20.9% of net sales for the three months ended March 31, 2005 compared with 21.6%
in the March 31, 2004 quarter. Selling, general and administrative expenses have
increased in overall dollars, primarily as a result of costs brought on by
businesses acquired in 2004, increased consumer marketing expenses needed to
support our increased sales as well as increases across all levels of general
and administrative expenses to support our growing business.
11
General and administrative expenses for the three months ended March 31, 2005
includes approximately $0.4 million for the cost of terminated employees, for
non-cash compensation charges and for Sarbanes-Oxley compliance costs.
Operating income was $11.7 million for the three months ended March 31,
2005 compared to $9.0 million for the three months ended March 31, 2004.
Operating income as a percentage of net sales was 7.3% in the March 31, 2005
quarter, compared with 6.6% in the March 31, 2004 quarter. The increase resulted
principally from higher sales and selling, general, and administrative expenses
being lower as a percentage of sales.
Interest and other expenses, net amounted to $1.2 million for the three
months ended March 31, 2005 compared to $.9 million for the three months ended
March 31, 2004. Our interest expense was $0.6 million higher this quarter as
compared to the prior year quarter, principally as a result of the higher
average borrowings we carry this year after our recent acquisitions. We also had
$.1 million in net currency exchange losses this quarter as compared to $0.4
million in the prior year quarter.
Income before income taxes for the three months ended March 31, 2005
amounted to $10.5 million compared to $8.1 million in the comparable period of
the prior year. This increase was attributable to the increase in operating
income.
Our effective income tax rate approximated 27% of pre-tax income for the
three months ended March 31, 2005 compared to 38% for the three months ended
March 31, 2004. This decrease was attributable to a $1.3 million reduction in
tax liabilities resulting from the termination of certain outstanding tax
matters and is equal to the amount charged against the Company's earnings when
these arose in prior years. We expect our effective tax rate to approximate 37%
during the remainder of fiscal 2005.
Net income for the three months ended March 31, 2005 was $7.7 million
compared to $5.0 million for the three months ended March 31, 2004. The increase
of $2.7 million in earnings was primarily attributable to the aforementioned
increase in income before income taxes as well as the decrease in our effective
tax rate.
Nine Months Ended March 31, 2005
Net sales for the nine months ended March 31, 2005 were $468.6 million, an
increase of $61.9 million or 15.2% over net sales of $406.7 million for the nine
months ended March 31, 2004. The increase came from volume increases and from
the phasing in of price increases and from sales generated by businesses
acquired in 2004. Sales were impacted by declines of our low-carbohydrate
products which declined parallel with trends in the consumer markets; however,
these sales were replaced by strong sales gains in our Earth's Best(R), Terra
Chips(R), Garden of Eatin'(R) and Celestial Seasonings(R) brands.
Gross profit for the nine months ended March 31, 2005 was 29.4% of net
sales as compared to 30.2% of net sales for the nine months ended March 31,
2004. The decline in gross profit percentage was the result of a change in the
mix of products sold whereby our higher margin tea sales became a lower
proportion of our consolidated sales; increases in transportation costs
resulting from higher fuel costs; the cost effects of new regulations on the
U.S. trucking industry; and an increase in the percentage of our shipments that
are delivered by us. Also, we incurred higher cost of ingredients and higher
personnel and benefits costs this period as compared to the prior year period.
These higher costs were offset in part by the effect of the price increase that
we phased in beginning July 1, 2004.
Selling, general and administrative expenses increased by $11.7 million to
$97.1 million for the nine months ended March 31, 2005 as compared to $85.4
million for the nine months ended March 31, 2004. Such expenses amounted to
20.7% of net sales for the nine months ended March 31, 2005 compared with 21.0%
for the nine months ended March 31, 2004. Selling, general and administrative
expenses have increased in overall dollars, primarily as a result of costs
brought on by businesses acquired in 2004, increased consumer marketing expenses
needed to support our increased sales as well as increases across all levels of
general and administrative expenses to support our growing business. General and
administrative expenses for the nine months ended March 31, 2005 includes
approximately $2.2 million for the cost of terminated employees, for non-cash
compensation charges and for Sarbanes-Oxley compliance costs.
Operating income was $40.6 million for the nine months ended March 31, 2005
compared to $37.4 million for the nine months ended March 31, 2004. Operating
income as a percentage of net sales was 8.7% for the current year period,
compared with 9.2% for the prior year period.
12
The dollar increase resulted principally from higher sales, while the percentage
decrease resulted principally from lower gross profit as a percentage of sales.
Interest and other expenses, net amounted to $2.4 million for the nine
months ended March 31, 2005 compared to $2.1 million for the nine months ended
March 31, 2004. Our interest expense was $1.3 million higher the current year
period as compared to the prior year period, principally as a result of the
higher average borrowings we carry this year after our recent acquisitions. We
had $.7 million in net currency exchange gains in the current year period as
compared to less than $.1 million in net currency exchange losses in the prior
year period, which partially offset the additional interest costs.
Income before income taxes for the nine months ended March 31, 2005
amounted to $38.2 million compared to $35.3 million in the comparable period of
the prior year. This increase was attributable to the increase in operating
income.
Our effective income tax rate approximated 35.7% of pre-tax income for the
nine months ended March 31, 2005 compared to 38% for the nine months ended March
31, 2004. This decrease was attributable to a $1.3 million reduction in tax
liabilities in the current quarter resulting from the termination of certain
outstanding tax matters and is equal to the amount charged against the Company's
earnings when these arose in prior years. We expect our effective tax rate to
approximate 37% during the remainder of fiscal 2005.
Net income for the nine months ended March 31, 2005 was $24.6 million
compared to $21.9 million for the nine months ended March 31, 2004. The increase
of $2.7 million in earnings was primarily attributable to the aforementioned
increase in income before income taxes as well as the decrease in our effective
tax rate.
Liquidity and Capital Resources
We finance our operations and growth primarily with the cash flows we
generate from our operations and from borrowings under our Credit Facility.
We have available to us a $300 million Credit Facility through April 22,
2009. The Credit Facility is secured only by a pledge of shares of certain of
our foreign subsidiaries and is guaranteed by all of our direct and indirect
domestic subsidiaries. We are required to comply with customary affirmative and
negative covenants for facilities of this nature. As of March 31, 2005, we had
$82.7 million outstanding under the Credit Facility. On April 4, 2005, we
borrowed an additional $11.0 million in conjunction with our acquisition of Zia
Cosmetics, Inc. On May 9, 2005, we made a repayment of $4.0 million bringing our
borrowings under the Credit Facility to $89.7 million.
This access to capital provides us with flexible working capital in the
ordinary course of business, the opportunity to grow our business through
acquisitions and the ability to develop our existing infrastructure through
capital investment.
Net cash provided by operations was $24.6 million and $16.3 million for the
nine months ended March 31, 2005 and 2004, respectively. Our working capital and
current ratio was $128.6 million and 2.9 to 1, respectively, at March 31, 2005
compared with $129.9 million and 2.9 to 1 respectively, at June 30, 2004. The
decrease in our working capital resulted principally from the net effects of our
earnings offset by a decrease in inventories and the use of cash in financing
activities.
Net cash (used in) provided by financing activities was $(19.0) million and
$6.4 million for the nine months ended March 31, 2005 and 2004, respectively.
The change was due principally to our pay down of approximately $21.6 million of
debt and the purchase of treasury shares for $1.7 million, offset by proceeds
from the exercise of warrants and options of approximately $4.3 million during
the first nine months of fiscal 2005, as compared to our pay down of
approximately $10.9 million of debt and the purchase of treasury shares of $.3
million, offset by proceeds from the exercise of warrants and options of
approximately $17.6 million during the first nine months of fiscal 2004.
We believe that cash on hand of $17.1 million at March 31, 2005, projected
remaining fiscal 2005 cash flows from operations, and availability under our
Credit Facility are sufficient to fund our working capital needs, anticipated
capital expenditures of approximately $4 million, and scheduled debt and lease
payments of approximately $7.9 million for the remainder of fiscal 2005. We
currently invest our cash on hand in highly liquid short-term investments
yielding approximately 2% interest.
13
Critical Accounting Policies
Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States. The accounting principles we
use require us to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
amounts of income and expenses during the reporting periods presented. We
believe in the quality and reasonableness of our critical accounting policies;
however, it is likely that materially different amounts would be reported under
different conditions or using assumptions different from those that we have
consistently applied. We believe our critical accounting policies are as
follows, including our methodology for estimates made and assumptions used:
Valuation of Accounts and Chargebacks Receivables
We perform ongoing credit evaluations on existing and new customers daily.
We apply reserves for delinquent or uncollectible trade receivables based on a
specific identification methodology and also apply an additional reserve based
on the experience we have with our trade receivables aging categories. Credit
losses have been within our expectations over the last few years. While two of
our customers represent approximately 28% of our trade receivable balance on an
ongoing basis, we believe there is no credit exposure at this time.
Based on cash collection history and other statistical analysis, we
estimate the amount of unauthorized deductions that our customers have taken to
be repaid and collectible in the near future in the form of a chargeback
receivable. While our estimate of this receivable balance could be different had
we used different assumptions and judgments, historically our cash collections
of this type of receivable have generally been within our expectations. Our
chargebacks receivable balance was approximately $5.5 million and $6.2 million
at March 31, 2005 and June 30, 2004, respectively.
There can be no assurance that we would have the same experience with our
receivables during different economic conditions, or with changes in business
conditions, such as consolidation within the food industry and/or a change in
the way we market and sell our products.
Inventory
Our inventory is valued at the lower of actual cost or market, utilizing
the first-in, first-out method. We provide write-downs for finished goods
expected to become non-saleable due to age and specifically identify and provide
for slow moving or obsolete raw ingredients and packaging.
Property, Plant and Equipment
Our property, plant and equipment is carried at cost and depreciated or
amortized on a straight-line basis over the lesser of the estimated useful lives
or lease life, whichever is shorter. We believe the asset lives assigned to our
property, plant and equipment are within ranges/guidelines generally used in
food manufacturing and distribution businesses. Our manufacturing plants and
distribution centers, and their related assets, are periodically reviewed to
determine if any impairment exists by analyzing underlying cash flow
projections. At this time, we believe no impairment exists on the carrying value
of such assets. Ordinary repairs and maintenance are expensed as incurred.
Intangibles
Goodwill is no longer amortized and the value of an identifiable intangible
asset is amortized over its useful life unless the asset is determined to have
an indefinite useful life. The carrying values of goodwill and other intangible
assets with indefinite useful lives are tested annually for impairment.
14
Revenue Recognition and Sales Incentives
Sales are recognized when the earnings process is complete, which occurs
when products are shipped in accordance with terms of agreements, title and risk
of loss transfer to customers, collection is probable and pricing is fixed or
determinable. Sales are reported net of sales incentives, which include trade
discounts and promotions and certain coupon costs. Shipping and handling costs
billed to customers are included in reported sales. Allowances for cash
discounts are recorded in the period in which the related sale is recognized.
Seasonality
Our tea business consists primarily of manufacturing and marketing hot tea
products and, as a result, its quarterly results of operations reflect seasonal
trends resulting from increased demand for its hot tea products in the cooler
months of the year. This is also true for our soups and hot cereals businesses,
but to a lesser extent. Quarterly fluctuations in our sales volume and operating
results are due to a number of factors relating to our business, including the
timing of trade promotions, advertising and consumer promotions and other
factors, such as seasonality, abnormal and inclement weather patterns and
unanticipated increases in labor, commodity, energy, insurance or other
operating costs. The impact on sales volume and operating results, due to the
timing and extent of these factors, can significantly impact our business. For
these reasons, you should not rely on our quarterly operating results as
indications of future performance. In some future periods, our operating results
may fall below the expectations of securities analysts and investors, which
could harm our business.
Inflation
The Company does not believe that inflation had a significant impact on the
Company's results of operations for the periods presented.
Note Regarding Forward Looking Information
Certain statements contained in this Quarterly Report constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1934 and Sections 21E of the Securities Exchange Act of 1934. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, levels of activity, performance
or achievements of the Company, or industry results, to be materially different
from any future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions; our
ability to implement our business and acquisition strategy; the ability to
effectively integrate our acquisitions; our ability to obtain financing for
general corporate purposes; competition; availability of key personnel; changes
in, or the failure to comply with government regulations; and other risks
detailed from time-to-time in the Company's reports filed with the Securities
and Exchange Commission, including the report on Form 10-K for the fiscal year
ended June 30, 2004. As a result of the foregoing and other factors, no
assurance can be given as to future results, levels of activity and achievements
and neither the Company nor any person assumes responsibility for the accuracy
and completeness of these statements.
15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the reported market risks since the end
of the most recent fiscal year.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
Our Chief Executive Officer and Chief Financial Officer have reviewed our
disclosure controls and procedures as of the end of the period covered by this
report. Based upon this review, the Chief Executive Officer and Chief Financial
Officer concluded that, as of the end of the period covered by this report, the
Company's disclosure controls and procedures are adequately designed to ensure
that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time period specified in applicable rules and forms.
(b) Changes in Internal Controls.
There were no significant changes in our internal controls over financial
reporting during the fiscal quarter covered by this report that have materially
affected, or are reasonably likely to materially affect, those controls.
Part II - OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
- --------------------------- -------------------- ----------------------- ---------------------- ----------------------
Total Number of
Shares Purchased as Maximum Number of
Part of Publicly Shares that May Yet
Total Number of Average Price Paid Announced Plans or Be Purchased Under
Period Shares Purchased per Share Programs(a) the Plans or Programs
- --------------------------- -------------------- ----------------------- ---------------------- ----------------------
January 1-31, 2005 635,361
- --------------------------- -------------------- ----------------------- ---------------------- ----------------------
February 1-29, 2005 80,000 $ 18.82 80,000 555,361
- --------------------------- -------------------- ----------------------- ---------------------- ----------------------
March 1-31, 2005 10,000 $ 18.40 10,000 545,361
- --------------------------- -------------------- ----------------------- ---------------------- ----------------------
Total 90,000 $ 18.77 90,000 545,361
- --------------------------- -------------------- ----------------------- ---------------------- ----------------------
(a) The Company's plan to repurchase up to one million shares of its common
stock was first announced publicly on a conference call on August 29, 2002.
(b) On April 18, 2005, the Company announced that the Board of Directors
authorized the repurchase of up to one million shares of common stock. This
authorization increases the remaining shares above from 545,361 by 454,639
shares to the one million shares.
16
ITEM 6. EXHIBITS
EXHIBTS
Exhibit Number Description
- -------------- -----------
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and
Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and
Rule 15d-14(a) of the Securities Exchange Act, as amended.
32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification by Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
17
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.
THE HAIN CELESTIAL GROUP, INC.
Date: May 10, 2005 /s/ Irwin D Simon
------------------------------
Irwin D. Simon,
Chairman, President and Chief
Executive Officer
Date: May 10, 2005 /s/ Ira J. Lamel
------------------------------
Ira J. Lamel,
Executive Vice President and
Chief Financial Officer
18
EXHIBIT 31.1
CERTIFICATION
I, Irwin D. Simon, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Hain
Celestial Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 10, 2005
/s/ Irwin D. Simon
- -------------------------------------
Irwin D. Simon
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION
I, Ira J. Lamel, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Hain
Celestial Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 10, 2005
/s/ Ira J. Lamel
- ----------------------------
Ira J. Lamel
Executive Vice President and
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION FURNISHED
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the period ended
March 31, 2005 (the "Report") filed by The Hain Celestial Group, Inc. (the
"Company") with the Securities and Exchange Commission, I, Irwin D. Simon, Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: May 10, 2005
/s/ Irwin D. Simon
- -------------------------------------
Irwin D. Simon
President and Chief Executive Officer
A signed original of this written statement required by Section 906 has been
provided to The Hain Celestial Group, Inc. and will be retained by The Hain
Celestial Group, Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.
EXHIBIT 32.2
CERTIFICATION FURNISHED
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q for the period ended
March 31, 2005 (the "Report") filed by The Hain Celestial Group, Inc. (the
"Company") with the Securities and Exchange Commission, I, Ira J. Lamel, Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: May 10, 2005
/s/ Ira J. Lamel
- ------------------------------
Ira J. Lamel
Executive Vice President and
Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to The Hain Celestial Group, Inc. and will be retained by The Hain
Celestial Group, Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.