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 JUNE 30, 1998 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) <TABLE> <CAPTION> <S> <C> DELAWARE 59-1212264 - --------------------------------------------- ------------------------------------ (State or other jurisdiction of incorporation (I.R.S. Employer Identification No.) or organization) </TABLE> 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): (561) 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 August 10, 1998 was 34,897,420 shares.
2 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) Nabi [GRAPHIC OMITTED] INDEX ----- <TABLE> <CAPTION> PART I. FINANCIAL INFORMATION PAGE ---- <S> <C> ITEM 1. FINANCIAL STATEMENTS.............................................................................3 Consolidated Balance Sheets, June 30, 1998 and December 31, 1997..........................................3 Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 1998 and 1997...............................................................................4 Consolidated Statements of Cash Flows for the six-month periods ended June 30, 1998 and 1997...............................................................................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...............................................................................12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................13 10.30 Employment Agreement dated June 1, 1998 between Thomas H. McLain and Nabi.................................................................. 15 10.31 Addendum to Employment Agreement dated August 19, 1996 between David D. Muth and Nabi..................................................................... 22 27 Financial Data Schedule (for S.E.C. use only).............................................. 24 </TABLE> 2
3 NABI PART I Financial Information Item 1 Financial Statements - -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> (UNAUDITED) JUNE 30, DECEMBER 31, ------------------------- (DOLLARS IN THOUSANDS) 1998 1997 - ----------------------------------------------------------------------------------------------------- <S> <C> <C> ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 1,802 $ 3,397 Trade accounts receivable, net 33,590 36,060 Inventories, net 36,552 43,387 Prepaid expenses and other assets 13,556 16,128 --------- --------- Total current assets 85,500 98,972 Property and equipment, net 94,123 89,187 Other assets: Excess of acquisition cost over net assets acquired, net 16,625 17,123 Intangible assets, net 7,565 8,104 Other, net 12,020 12,520 --------- --------- TOTAL ASSETS $ 215,833 $ 225,906 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES: Trade accounts payable $ 9,966 $ 15,989 Accrued expenses 18,226 17,396 Notes payable 5,825 1,654 --------- --------- TOTAL CURRENT LIABILITIES 34,017 35,039 NOTES PAYABLE 108,100 114,828 OTHER 384 376 --------- --------- TOTAL LIABILITIES 142,501 150,243 --------- --------- 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; 34,889 and 34,801 shares issued and outstanding, respectively 3,489 3,480 Capital in excess of par value 137,884 137,780 Accumulated deficit (67,412) (64,977) Accumulated other comprehensive income (loss) (629) (620) --------- --------- TOTAL STOCKHOLDERS' EQUITY 73,332 75,663 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 215,833 $ 225,906 ========= ========= </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 3
4 Nabi - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS <TABLE> <CAPTION> (UNAUDITED) (UNAUDITED) THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, --------------------------- -------------------------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1998 1997 1998 1997 - --------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> SALES $ 61,178 $ 57,915 $ 119,792 $ 114,292 COSTS AND EXPENSES: Costs of products sold 43,542 42,946 88,131 86,131 Selling, general and administrative expense 8,178 5,838 16,173 10,238 Research and development expense 5,621 4,045 10,388 7,843 Royalty expense 3,118 1,188 5,863 2,397 Other operating expense, principally freight and amortization 577 686 1,159 1,620 --------- --------- --------- --------- OPERATING INCOME (LOSS) 142 3,212 (1,922) 6,063 INTEREST INCOME 3 27 12 212 INTEREST EXPENSE (1,401) (992) (3,177) (1,968) OTHER, NET 187 (16) 47 (25) --------- --------- --------- --------- INCOME (LOSS) BEFORE BENEFIT (PROVISION) FOR INCOME TAXES (1,069) 2,231 (5,040) 4,282 BENEFIT (PROVISION) FOR INCOME TAXES 552 (218) 2,605 (919) --------- --------- --------- --------- NET INCOME (LOSS) ($ 517) $ 2,013 ($ 2,435) $ 3,363 ========= ========= ========= ========= BASIC AND DILUTED EARNINGS (LOSS) PER SHARE ($ 0.01) $ 0.06 ($ 0.07) $ 0.10 ========= ========= ========= ========= </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 4
5 NABI - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> (UNAUDITED) SIX MONTHS ENDED JUNE 30, -------------------------- (DOLLARS IN THOUSANDS) 1998 1997 - --------------------------------------------------------------------------------------------------- <S> <C> <C> CASH FLOW FROM OPERATING ACTIVITIES: Net income (loss) ($ 2,435) $ 3,363 Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 5,640 4,491 Provision for doubtful accounts (75) 35 Other 136 8 Deferred income taxes (2,605) -- Change in assets and liabilities: Decrease (increase) in trade accounts receivable 2,544 295 Decrease (increase) in inventories 6,835 (13,679) Decrease (increase) in prepaid expenses and other assets 5,178 149 Decrease (increase) in other assets 79 (3,408) Increase (decrease) in accounts payable and accrued liabilities (5,194) (10,846) -------- -------- Total adjustments 12,538 (22,955) -------- -------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 10,103 (19,592) -------- -------- CASH FLOW FROM INVESTING ACTIVITIES: Proceeds from maturity of short-term investments -- 8,850 Capital expenditures (9,227) (20,092) -------- -------- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (9,227) (11,242) -------- -------- CASH FLOW FROM FINANCING ACTIVITIES: Borrowing (repayments) under line of credit, net (6,646) 13,700 Borrowings under term loan 5,000 -- Other debt (938) 3,600 Proceeds from the exercise of options and warrants 113 379 -------- -------- NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (2,471) 17,679 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,595) (13,155) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,397 18,513 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,802 $ 5,358 ======== ======== </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 5
6 NABI - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 GENERAL Nabi is a fully integrated research and development driven biopharmaceutical company that develops and commercializes products for the prevention and treatment of infectious diseases and immunological disorders, and supplies human-blood plasma. The consolidated financial statements include the accounts of Nabi 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 Nabi's Annual Report to Stockholders for the year ended December 31, 1997. In the opinion of management, the unaudited consolidated financial statements include all adjustments necessary to present fairly Nabi's consolidated financial position at June 30, 1998 and the consolidated results of its operations for the three and six months ended June 30, 1998 and 1997. The interim results of operations are not necessarily indicative of the results which may occur for the fiscal year. NOTE 2 INVENTORIES The components of inventories, stated at the lower of cost (FIFO) or market, are as follows: JUNE 30, DECEMBER 31, ------------------------------------------ DOLLARS IN THOUSANDS 1998 1997 - ----------------------------------------------------------------------------- Finished goods $35,283 $40,029 Work in process 516 212 Raw materials 3,694 3,787 ------------------ -------------------- 39,493 44,028 Less: reserves (2,941) (641) ================== ==================== TOTAL $36,552 $43,387 ================== ==================== 6
7 NOTE 3 PROPERTY AND EQUIPMENT Property and equipment and related allowances for depreciation and amortization are summarized below: JUNE 30, DECEMBER 31, ------------------------------------ DOLLARS IN THOUSANDS 1998 1997 - -------------------------------------------------------------------------------- Information systems $19,934 $19,066 Leasehold improvements 19,535 18,077 Machinery and equipment 17,385 16,882 Land and buildings 8,722 8,634 Furniture and fixtures 4,884 4,568 Construction in progress 51,939 46,776 ------------------ -------------- Total property and equipment 122,399 114,003 Less: accumulated depreciation and amortization (28,276) (24,816) ================== ============== TOTAL $94,123 $89,187 ================== ============== Construction in progress consists primarily of costs incurred in connection with construction of Nabi's biopharmaceutical facility and includes capitalized interest of $6,737 and $5,149 at June 30, 1998 and December 31, 1997, respectively. NOTE 4 EARNINGS PER SHARE The following is a reconciliation between basic and diluted earnings per share for the three and six months ending June 30, 1998 and 1997: <TABLE> <CAPTION> EFFECT OF BASIC DILUTIVE SECURITIES: DILUTED EPS STOCK OPTIONS EPS - --------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> THREE MONTHS ENDED JUNE 30, 1998 Net loss ($517) -- ($517) Shares 34,889 -- 34,889 (1) Per share ($0.01) ($0.01) THREE MONTHS ENDED JUNE 30, 1997 Net income $2,013 -- $2,013 Shares 34,747 301 35,048 Per share $0.06 $0.06 - --------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED JUNE 30, 1998 Net loss ($2,435) -- ($2,435) Shares 34,870 -- 34,870 (1) Per share ($0.07) ($0.07) SIX MONTHS ENDED JUNE 30, 1997 Net income $3,363 -- $3,363 Shares 34,712 507 35,219 Per share $0.10 $0.10 =============================================================================================================== </TABLE> (1) AT JUNE 30, 1998, STOCK OPTIONS FOR SHARES OF COMMON STOCK WERE NOT INCLUDED IN THE CALCULATION OF DILUTED EARNINGS PER SHARE BECAUSE THE EFFECTS WERE ANTI-DILUTIVE. 7
8 NOTE 5 COMPREHENSIVE INCOME Effective January 1, 1998, Nabi adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income" which establishes new rules for the reporting of comprehensive income. The components of comprehensive income for the three and six months ended June 30, 1998 and 1997 are as follows: <TABLE> <CAPTION> THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------------ ------------------------------------ DOLLARS IN THOUSANDS 1998 1997 1998 1997 - ---------------------------------------------------------------------------- ------------------- ----------------- <S> <C> <C> <C> <C> Net income (loss) ($517) $2,013 ($2,435) $3,363 Other comprehensive income (loss) 35 (56) (9) (392) ==================================== ================== ================= TOTAL ($482) $1,957 ($2,444) $2,971 ==================================== ================== ================= </TABLE> NOTE 6 RECENT PRONOUNCEMENTS In April 1998, Statement of Position ("SOP") No. 98-5, "Reporting on the Costs of Start-Up Activities" was issued. This SOP requires that all start-up or pre-operating costs be expensed as incurred and is effective for fiscal years beginning after December 15, 1998. Management believes that the adoption of the SOP will not have a material impact on the financial statements. NOTE 7 RECLASSIFICATIONS Certain items in the consolidated financial statements for the 1997 period have been reclassified for comparative purposes. 8
9 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 Nabi's financial condition and results of operations for the three and six month periods ended June 30, 1998 and 1997. The discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto. All dollar amounts are expressed in thousands, except per share amounts. RESULTS OF OPERATIONS The following table sets forth Nabi's results of operations expressed as a percentage of sales: <TABLE> <CAPTION> THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, --------------------------- ------------------------- 1998 1997 1998 1997 - ----------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Sales 100.0 % 100.0 % 100.0 % 100.0 % Costs of products sold 71.2 % 74.2 % 73.6 % 75.4 % ------- ------- ------- ------- Gross profit margin 28.8 % 25.8 % 26.4 % 24.6 % Selling, general and administrative expense 13.4 % 10.1 % 13.5 % 9.0 % Research and development expense 9.2 % 7.0 % 8.7 % 6.8 % Royalty expense 5.1 % 2.0 % 4.9 % 2.1 % Other operating expense, principally freight and amortization 0.9 % 1.2 % 0.9 % 1.4 % ------- ------- ------- ------- Operating income (loss) 0.2 % 5.5 % (1.6)% 5.3 % Interest income 0.0 % 0.0 % 0.0 % 0.1 % Interest expense (2.2)% (1.7)% (2.6)% (1.7)% Other, net 0.3 % (0.0)% 0.0 % (0.0)% ------- ------- ------- ------- Income (loss) before benefit (provision) for income taxes (1.7)% 3.8 % (4.2)% 3.7 % Benefit (provision) for income taxes 0.9 % (0.3)% 2.2 % (0.8)% ------- ------- ------- ------- Net income (loss) (0.8)% 3.5 % (2.0)% 2.9 % ======= ======= ======= ======= </TABLE> Information concerning Nabi's sales by operating segments for the respective periods, is set forth in the following table: <TABLE> <CAPTION> THREE MONTHS ENDED JUNE 30, ------------------------------------------------------------ DOLLARS IN THOUSANDS 1998 1997 - --------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Segment Plasma - Source $32,686 53.4% $34,923 60.3% - Specialty 10,639 17.4% 14,296 24.7% - Other (includes diagnostic products and services) 2,293 3.8% 1,113 1.9% ---------------------------- -------------- -------------- 45,618 74.6% 50,332 86.9% Drugs 15,560 25.4% 7,583 13.1% ============================ ============== ============== TOTAL $61,178 100.0% $57,915 100.0% ============================ ============== ============== </TABLE> 9
10 <TABLE> <CAPTION> SIX MONTHS ENDED JUNE 30, ------------------------------------------------------------ DOLLARS IN THOUSANDS 1998 1997 - --------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Segment Plasma - Source $66,694 55.7% $68,819 60.2% - Specialty 21,339 17.8% 30,552 26.7% - Other (includes diagnostic products and services 3,547 3.0% 2,430 2.1% ------------- -------------- -------------- -------------- 91,580 76.5% 101,801 89.0% Drugs 28,212 23.5% 12,491 11.0% ============= ============== ============== ============== TOTAL $119,792 100.0% $114,292 100.0% ============= ============== ============== ============== </TABLE> THREE MONTHS ENDED JUNE 30, 1998 AND 1997 SALES. Sales for the second quarter of 1998 increased by $3.3 million to $61.2 million compared to $57.9 million for the second quarter of 1997. The increase was primarily attributable to a substantial increase in the sales of drug products based on a strong demand for all three of Nabi's marketed therapeutics. This significant increase was partially offset by a decline in plasma product sales. GROSS PROFIT MARGIN. Gross profit and related margin for the second quarter of 1998 was $17.6 million, or 28.8% of sales, compared to $15 million, or 25.8% of sales, in the second quarter of 1997. The increase in gross profit and related margin resulted from increased sales of high-margin drug products, offset by the effects of reduced margins on plasma product sales. Gross profits and related margins on plasma product sales were adversely affected by under absorption of fixed overhead as a result of reduced production levels in response to the general disruption in the plasma industry as well as by certain expenses associated with process improvement initiatives within plasma operations. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative expense was $8.2 million or 13.4% of sales for the second quarter of 1998 compared to $5.8 million, or 10.1% of sales, in the second quarter of 1997. The increase resulted primarily from sales and marketing expenses associated with increased drug product sales, costs associated with Nabi's restructuring measures and expenses associated with the implementation and ongoing support of new information systems. RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense was $5.6 million, or 9.2% of sales, for the second quarter of 1998 compared to $4 million, or 7% of sales, in the second quarter of 1997. The increase in expense related primarily to costs associated with the advancement of clinical trials for Nabi-StaphVAX(TM) and Nabi-H-BIG(R). INTEREST EXPENSE. Interest expense for the second quarter of 1998 was $1.4 million, or 2.2% of sales, compared to $1 million, or 1.7% of sales, in the second quarter of 1997. The increase was primarily attributable to interest expense associated with higher average outstanding borrowings in 1998 as compared to 1997. OTHER FACTORS. Benefit for income taxes was $0.6 million or an effective rate of 52%, in the second quarter of 1998 compared to a $0.2 million provision, or an effective rate of 9.8%, in the second quarter of 1997. The effective tax rate for the second quarter of 1998 differs from the statutory rate of 35% primarily due to foreign losses, non-deductible goodwill and alternative minimum taxes. The effective rate for the second quarter of 1997 reflects a cumulative adjustment reducing the Company's expected effective tax rate for 1997, principally due to foreign trade income and a reduction in tax reserves established in prior periods. 10
11 SIX MONTHS ENDED JUNE 30, 1998 AND 1997 SALES. Sales for the first half of 1998 increased by $5.5 million to $119.8 million compared to $114.3 million for the first half of 1997. The increase was primarily attributable to a substantial increase in the sales of drug products based on a strong demand for all three of Nabi's marketed therapeutics. This significant increase was partially offset by a decline in plasma product sales. GROSS PROFIT MARGIN. Gross profit and related margin for the first half of 1998 was $31.7 million, or 26.4% of sales, compared to $28.2 million, or 24.6% of sales, in the first half of 1997. The increase in gross profit and related margin resulted from increased sales of high-margin drug products, offset by the effects of reduced margins on plasma product sales. Gross profits and related margins on plasma product sales were adversely affected by under absorption of fixed overhead as a result of reduced production levels in response to the general disruption in the plasma industry as well as by certain expenses associated with process improvement initiatives within plasma operations. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative expense was $16.2 million, or 13.5% of sales, for the first half of 1998 compared to $10.2 million, or 9% of sales, in the first half of 1997. The increase resulted primarily from sales and marketing expenses associated with increased drug product sales, costs associated with Nabi's restructuring measures and expenses associated with the implementation and ongoing support of new information systems. RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense was $10.4 million, or 8.7% of sales, for the first half of 1998 compared to $7.8 million, or 6.8% of sales, in the first half of 1997. The increase in expenses related primarily to costs associated with the advancement of clinical trials for Nabi-H-BIG(R), Nabi-StaphVAX(TM) and Nabi-Altastaph(TM). INTEREST EXPENSE. Interest expense for the first half of 1998 was $3.1 million, or 2.6% of sales, compared to $2 million, or 1.7% of sales, in the first half of 1997. The increase was primarily attributable to interest expense associated with higher average outstanding borrowings in the first half of 1998 when compared to 1997. OTHER FACTORS. Benefit for income taxes was $2.6 million or an effective rate of 52%, in the first half of 1998 compared to a $0.9 million provision, or an effective rate of 21.5%, in the first half of 1997. The effective tax rate for the first half of 1998 differs from the statutory rate of 35% primarily due to foreign losses, non-deductible goodwill and alternative minimum taxes. The effective tax rate for the first half of 1997 reflects a cumulative adjustment reducing the Company's expected tax rate for 1997, principally due to foreign trade income and a reduction in tax reserves established in prior periods. 11
12 LIQUIDITY AND CAPITAL RESOURCES At June 30, 1998, Nabi's credit agreement provided for a $45 million revolving credit facility subject to certain borrowing base restrictions as defined in the agreement which matures in September 2002, and a $5 million term loan due March 1999. Borrowings under the agreement were $32.6 million and additional availability was approximately $8.8 million at June 30, 1998. The credit agreement is secured by substantially all of Nabi's assets, contains covenants requiring the maintenance of certain financial covenants and prohibits the payment of dividends. As of June 30, 1998, Nabi's current assets exceeded current liabilities by $51.5 million as compared to a net working capital position of $63.9 million at December 31, 1997. Projected capital expenditures for 1998 include deferred validation costs, including capitalized interest for manufacturing facilities, development of information systems, and plasma center renovations. Nabi believes that cash flow from operations and its available bank credit facilities will be sufficient to meet its anticipated cash requirements for the remainder of 1998. YEAR 2000 Nabi is conducting an assessment of the extent to which the Company's software, equipment and other systems are Year 2000 compliant. This assessment is ongoing, but at this time, based on the work to date, the Company has no reason to believe either that its software, equipment and other systems is not Year 2000 compliant or that it will not be able to modify or replace, in a timely manner, any software equipment or other system which, if not Year 2000 compliant, could be expected to affect adversely the Company's delivery of products and related services in a significant manner. FACTORS TO BE CONSIDERED The parts of this Quarterly Report on Form 10-Q captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Legal Proceedings" contain certain forward-looking statements which involve risks and uncertainties. Readers should refer to a discussion under "Factors to be Considered" contained in Nabi's Annual Report on Form 10-K for the year ended December 31, 1997 concerning certain factors that could adversely affect Nabi's future operating performance or cause Nabi's actual results to differ materially from the results anticipated in such forward-looking statements, including in particular the risks described under the caption, "Dependence Upon Third Parties to Manufacture Products." Said discussion is hereby incorporated by reference into this Quarterly Report. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Nabi is a party to litigation in the ordinary course of business. There have been no material developments in any of the legal proceedings reported in Nabi's Annual Report on Form 10-K for the year ended December 31, 1997. Nabi does not believe that any such litigation will have a material adverse effect on its business, financial position or results of operations. 12
13 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The following matter was approved at Nabi's annual stockholders' meeting, which was held on May 29, 1998: a) Election of the following Board of Directors: <TABLE> <CAPTION> VOTES ---------------------------------------------------- For Withheld - ------------------------------------------------------------------------------------------------- <S> <C> <C> John C. Carlisle 30,975,386 315,561 David L. Castaldi 30,995,869 295,078 Joseph C. Cook, Jr. 30,995,536 295,411 Brian H. Dovey 30,996,482 294,465 George W. Ebright 30,991,368 299,579 David J. Gury 30,896,273 394,674 Richard A. Harvey, Jr. 30,987,610 303,337 Linda Jenckes 30,983,310 307,637 David A. Thompson 30,993,947 297,000 </TABLE> ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K <TABLE> <CAPTION> a. Exhibit <S> <C> <C> <C> 10.30 Employment Agreement dated June 1, 1998 between Thomas H. McLain and Nabi............................................................ 15 10.31 Addendum to Employment Agreement dated August 19, 1996 between David D. Muth and Nabi............................................................... 22 27 Financial Data Schedule (for S.E.C. use only)........................................ 24 b. Reports on Form 8-K: None </TABLE> 13
14 NABI - -------------------------------------------------------------------------------- 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: August 13, 1998 By: /s/ Thomas H. Mclain ------------------------- THOMAS H. MCLAIN Senior Vice President, Corporate Services and Chief Financial Officer 14