Twinlab Sells Changes Int'l., PR*Nutrition for $5 Million

HAUPPAUGE, N.Y.--Amid a substantial restructuring effort, Twinlab Corp. (NASDAQ:TWLB) has sold its direct selling division Changes International and its sports performance subsidiary PR*Nutrition to United Kingdom-based Goldshield Group PLC, which sells pharmaceutical and healthcare products. The divisions sold for a total of $5 million in cash. Assets of Changes International include warehouses in Virginia and Arizona. PR*Nutrition has similar facilities in San Diego.

On the surface, the PR*Nutrition sale makes sense, as net sales in that division have declined steadily since Twinlab acquired the company in August 1998. PR*Nutrition net sales in fiscal 1998 were $20.9 million but fell to $12.6 million in fiscal 1999 and further to $3.7 million in the recently reported fiscal 2000. Twinlab acquired PR*Nutrition for 1.15 million shares, which at the time of purchase were worth almost $40 million. The acquisition cost Twinlab another $4 million after the sale, as part of a settlement of litigation brought by shareholders of PR*Nutrition.

Changes International, acquired in November 1997, has also charted steady declines in the past few years, though not as drastic as those of PR*Nutrition. Net sales for Changes were $51.3 million in fiscal 1998, $47.0 million in fiscal 1999 and $38.1 million in fiscal 2000. Twinlab bought this division for $7.8 million and .31 million shares, which were worth about $6 million at the time of the acquisition.

It is not known whether the cost in running Changes outweighed the still decent revenue stream the division provided. When pressed for comment, John Bolt, Twinlab's chief financial officer, stated, "The real key was that we are trying to refocus on our core competencies. Changes is a direct selling company and, despite its net sales, just doesn't fit into the long term corporate strategy." He also noted that the sale of these two divisions offered Twinlab a decent return on those two businesses. Although many shareholders expressed concern over the fate of Twinlab's Bronson division, Holt reported that there are no immediate plans to sell off that subsidiary. Twinlab had previously announced in financial reports that it was evaluating its options with regards to Changes.

The purchase by Goldshield extends that company's recent infiltration into the United States, especially the direct selling nutritional market. Goldshield bought the direct selling business and distributor base of Golden Pride, a Florida company, in July 2000 for $8.5 million up front and a maximum of $12.5 million in future payments. Shortly thereafter, it purchased Women's Health Products, another direct selling nutritional business, for $9.3 million in mostly deferred, performance-dependent payments. Officials at Goldshield could not be reached for comment.

The restructuring efforts seem to be paying off for TWLB. On April 5 after releasing its FY00 results, the company's stock hit a 52-week low of $0.938; at market close on April 18, it was trading at $2.10. For more information, contact Bill Rizzardi at (631) 761-7111.