PROVO, Utah--(BUSINESS WIRE)--
Nature's Sunshine Products, Inc. (NASDAQ:NATR), a leading manufacturer
and marketer of encapsulated herbs and vitamins, today reported
financial operating results for the three and nine month periods ended
September 30, 2009.
For the quarter, net sales revenue totaled $85.8 million, compared to
$92.7 million for the same three-month period in 2008, a 7.4 percent
decline, primarily attributable to the global economic downturn and the
adverse effect of foreign currency fluctuations. Operating income
increased to $6.2 million in the third quarter of 2009, as compared to
$2.1 million in the third quarter of 2008. Net income totaled $2.1
million, compared to a net loss of $0.2 million in the third quarter of
last year. Earnings per share were $0.13, compared to a loss of $0.01
per share for the same period last year. These improvements in operating
and net income were principally due to reduced expenses and volume
incentives.
Total operating expenses were $79.6 million, as compared to $90.6
million in the third quarter of 2008, a 12.1 percent improvement.
Selling, general and administrative expenses decreased to $31.2 million
from $38.9 million for the same period in the prior year, a 19.8 percent
improvement. The Company's balance sheet remained strong, with cash and
cash equivalents of $36.3 million and stockholders' equity of $52.7
million as of September 30, 2009. The Company has no long-term debt.
Net sales revenue for the nine months ended September 30, 2009, totaled
$253.1 million, compared to $285.0 million for the same period in the
prior year, principally due to the global economic downturn and the
adverse effect of foreign currency fluctuations. Total operating
expenses decreased to $247.7 million compared to $278.7 million for the
same period in the prior year primarily as a result of the decrease in
net sales. Selling, general and administrative expenses decreased to
$103.8 million from $117.9 million in the prior year. Operating income
for the nine month period decreased to $5.4 million from $6.3 million
year over year, primarily as a result of the decline in net sales.
However, net income increased to $2.2 million, or $0.14 per share, from
a net loss of $1.3 million, or a loss of $0.08 per share, for the same
period in 2008, primarily due to foreign exchange gains in certain
markets as well as a decrease in the effective tax rate.
"Despite the recent economic challenges, Nature's Sunshine continues to
make progress," said Douglas Faggioli, President and CEO. "Nature's
Sunshine Product's domestic sales increased during the current quarter
compared to the same quarter last year. Also, we are very encouraged
that the number of sales leaders increased over last year. Our annual
U.S. convention this year was very successful, with the introduction of
a number of exciting new products that have been very well received.
Importantly, selling, general and administrative expenses declined as a
percentage of net sales revenue, reflecting reduced professional fees
and our increased emphasis on cost containment. However, key markets,
such as Japan, Russia, Ukraine and Mexico, experienced lower volume, due
both to adverse business conditions and unfavorable currency
fluctuations related to the strength of the dollar. Finally, the return
of our Company's common shares to the NASDAQ Capital Market is another
indication of the progress we are making."
Segment Results
In the third quarter, Nature's Sunshine Products US had net sales
revenue of $37.6 million, as compared to net sales revenue of $37.3
million during the same period in the prior year. For the nine months
ending September 30, 2009, net sales revenue was $113.6 million,
compared to $115.4 million for the same period a year ago. This decrease
was primarily the result of a generally weaker economy earlier this year
compared to the same period a year ago. Selling, general and
administrative expenses were $2.4 million lower year over year for the
quarter, and declined $2.0 million year over year for the nine-month
period. As a result, domestic operating income increased to $2.4 million
for the quarter, versus $0.2 million a year ago, and to $5.0 million for
the nine-month period, compared to $1.5 million for the same period in
2008.
Nature's Sunshine Products International net sales revenue declined in
the quarter to $33.2 million from $41.4 million for the same quarter in
the previous year. For the nine-month period, net sales revenue was
$98.4 million as compared to $126.7 million for the same period in 2008.
The decline in sales revenue was principally the result of the
strengthening of the U.S. dollar against foreign currencies in most
markets in which NSP International operates, including against the
Russian ruble and the Ukrainian hryvnia as compared to the previous
year. Operating income for the quarter increased to $3.8 million from
$3.0 for the same quarter in 2008. For the nine month period, operating
income decreased to $4.9 million from $9.3 million in the same period in
the previous year.
Synergy Worldwide net sales revenue for the quarter increased 7.1
percent over the previous year, to $15.0 million from $14.0 million. For
the nine-month period, net sales revenue was $41.1 million as compared
to $43.0 million in the previous year. The improved sales for the
quarter reflected growth in the US, Indonesia and Europe, offset by
weaker economic conditions in Japan, as well as the effect of
unfavorable foreign currency fluctuations for the quarter and the
nine-month period of $0.9 million and $2.1 million, respectively.
Synergy had a small operating income for the third quarter, a $1.1
million improvement from an operating loss for the same period a year
ago. The operating income in the third quarter reflected the growth in
sales in the US, Indonesia and Europe, as well as tighter cost controls.
For the nine-month period, Synergy posted an operating loss of $4.4
million, which was unchanged from the same period for the prior year.
As of September 30, 2009, active distributors totaled approximately
695,000, compared to 713,200 as of September 30, 2008, and active
managers totaled approximately 28,400, compared to 26,200 a year earlier.
Finally, the Company also announced the preliminary approval of the
settlement of its securities class action. As previously disclosed, the
Company and certain of its present and former officers and directors are
defendants in a consolidated class action filed in the United States
District Court for the District of Utah in which the plaintiffs allege
violations of federal securities laws. On September 14, 2009, the
parties and the Company's directors' and officers' liability insurer
signed a Stipulation of Settlement ("Stipulation"). The Stipulation sets
forth the complete terms of the parties' proposed settlement. The basic
terms of the settlement are that the Company's insurer will pay the
settlement class, which is defined as all persons (except for defendants
and specified related persons and entities) who purchased the Company's
common stock during the period from April 23, 2002 through April 5,
2006, $6 million in exchange for a dismissal with prejudice of the
lawsuit and a release of all claims held by members of the settlement
class. On October 8, 2009, the Court granted preliminary approval of the
Stipulation. Notification of the settlement to class members is now
underway. The Court has set a hearing date of February 9, 2010 to
determine if the Stipulation should receive final approval.
About Nature's Sunshine Products
Nature's Sunshine Products manufactures and markets through direct sales
encapsulated and tableted herbal products, high quality natural
vitamins, and other complementary products. In addition to the United
States, the Company has operations in Japan, Mexico, Central America,
South Korea, Canada, Dominican Republic, Venezuela, Ecuador, Peru, the
United Kingdom, Columbia, Brazil, Thailand, Israel, Singapore, Malaysia,
Indonesia, the Philippines, Australia, Hong Kong, Taiwan, Russia,
Ukraine, Latvia, Lithuania, Kazakhstan, Mongolia, Belarus, China,
Poland, Germany, Austria, Norway, Sweden, the Czech Republic and the
Netherlands. The Company also has exclusive distribution agreements with
selected companies in Argentina, Australia, Chile, New Zealand, and
Norway. Additional information can be obtained at the Company's website, www.natr.com.
Cautionary Statement Regarding Forward-Looking Statements
In addition to historical information, this release contains
forward-looking statements. Nature's Sunshine may, from time to time,
make written or oral forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements
encompass Nature's Sunshine's beliefs, expectations, hopes, or
intentions regarding future events. Words such as "expects," "intends,"
"believes," "anticipates," "should," "likely," and similar expressions
identify forward-looking statements. All forward-looking statements
included in this release are made as of the date hereof and are based on
information available to the Company as of such date. Nature's Sunshine
assumes no obligation to update any forward-looking statement. Actual
results will vary, and may vary materially, from those anticipated,
estimated, projected or expected for a number of reasons, including,
among others: further reviews of the Company's financial statements by
the Company and its Audit Committee; modification of the Company's
accounting practices; foreign business risks; industry cyclicality;
fluctuations in customer demand and order pattern; changes in pricing
and general economic conditions; as well as other risks detailed in the
Company's previous filings with the SEC.
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share information)
(Unaudited)
Three Months Ended
September 30,
2009 2008
Net Sales Revenue (net of the rebate portion of volume
incentives
of $11,466 and $12,267, respectively) $ 85,777 $ 92,661
Cost and Expenses:
Cost of goods sold 17,299 17,146
Volume incentives 31,068 34,580
Selling, general and administrative 31,203 38,864
79,570 90,590
Operating Income 6,207 2,071
Other Income (Expense), Net 1,300 (448 )
Income Before Provision for Income Taxes 7,507 1,623
Provision for Income Taxes 5,427 1,789
Net Income (Loss) $ 2,080 $ (166 )
Basic Net Income (Loss) Per Common Share $ 0.13 $ (0.01 )
Diluted Net Income (Loss) Per Common Share $ 0.13 $ (0.01 )
Weighted Average Basic Common Shares Outstanding 15,510 15,510
Weighted Average Diluted Common Shares Outstanding 15,510 15,510
Nine Months Ended
September 30,
2009 2008
Net Sales Revenue (net of the rebate portion of volume
incentives
of $34,920 and $38,799, respectively) $ 253,102 $ 285,023
Cost and Expenses:
Cost of goods sold 50,633 53,159
Volume incentives 93,281 107,634
Selling, general and administrative 103,769 117,882
247,683 278,675
Operating Income 5,419 6,348
Other Income (Expense), Net 3,048 (495 )
Income Before Provision for Income Taxes 8,467 5,853
Provision for Income Taxes 6,315 7,163
Net Income (Loss) $ 2,152 $ (1,310 )
Basic Net Income (Loss) Per Common Share $ 0.14 $ (0.08 )
Diluted Net Income (Loss) Per Common Share $ 0.14 $ (0.08 )
Weighted Average Basic Common Shares Outstanding 15,510 15,510
Weighted Average Diluted Common Shares Outstanding 15,510 15,510
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
September 30, December 31,
2009 2008
Assets
Current Assets:
Cash and cash equivalents $ 36,263 $ 34,853
Accounts receivable, net of allowance for
doubtful accounts
of $1,779 and $1,472, respectively 11,921 10,786
Investments available for sale 3,370 3,858
Restricted investments -- 2,050
Inventories, net 40,640 39,558
Deferred income tax assets 9,568 9,080
Prepaid expenses and other current assets 8,205 7,935
Total current assets 109,967 108,120
Property, plant and equipment, net 28,945 30,224
Investment securities 1,646 1,394
Intangible assets 1,450 1,538
Deferred income tax assets 6,558 6,412
Other assets 16,431 16,588
$ 164,997 $ 164,276
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 7,498 $ 8,777
Accrued volume incentives 18,272 15,753
Accrued liabilities 41,690 45,475
Deferred revenue 4,249 5,167
Income taxes payable 3,999 2,748
Total current liabilities 75,708 77,920
Liability related to unrecognized tax benefits 31,676 30,952
Deferred compensation payable 1,646 1,394
Other liabilities 3,219 333
Total long-term liabilities 36,541 32,679
Shareholders' Equity:
Common Stock, no par value; 20,000 shares
authorized, 15,510
shares issued and outstanding as of September
30, 2009 and
December 31, 2008 66,705 66,705
Retained earnings 5,548 4,172
Accumulated other comprehensive loss (19,505 ) (17,200 )
Total shareholders' equity 52,748 53,677
$ 164,997 $ 164,276
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Nine Months Ended
September 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,152 $ (1,310 )
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for doubtful accounts 129 1,027
Depreciation and amortization 3,425 4,381
Share-based compensation expense -- 86
Loss on sale of property and equipment 140 62
Deferred income taxes (361 ) (531 )
Amortization of bond discount 21 29
Purchase of trading investment securities (169 ) (119 )
Proceeds from sale of trading investment securities 65 78
Realized and unrealized (gains) losses on investments (194 ) 261
Amortization of prepaid taxes related to gain on 911 942
intercompany sales
Foreign exchange gains (2,268 ) (100 )
Changes in assets and liabilities:
Accounts receivable (1,043 ) (1,207 )
Inventories (696 ) (3,523 )
Prepaid expenses and other current assets (196 ) (1,843 )
Other assets (283 ) (942 )
Accounts payable (946 ) 1,299
Accrued volume incentives 2,226 1,591
Accrued liabilities (3,239 ) 2,614
Deferred revenue (918 ) (1,773 )
Income taxes payable 1,235 2,745
Liability related to unrecognized tax positions 724 187
Deferred compensation payable 252 (137 )
Net cash provided by operating activities 967 3,817
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (2,452 ) (6,767 )
Proceeds from sale of investments available for sale 600 640
Purchases of investments available for sale (5 ) --
Proceeds from sale of restricted investments 2,050 25
Proceeds from sale of property, plant and equipment 53 79
Net cash provided by (used in) investing activities 246 (6,023 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of cash dividends (776 ) (2,327 )
Proceeds from short-term borrowings 7,900 --
Payments on short-term borrowings (7,900 ) --
Net cash used in financing activities (776 ) (2,327 )
Effect of exchange rates on cash and cash equivalents 973 (880 )
Net increase (decrease) in cash and cash equivalents 1,410 (5,413 )
Cash and cash equivalents at the beginning of the period 34,853 45,299
Cash and cash equivalents at end of the period $ 36,263 $ 39,886
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 6,004 $ 2,169
Cash paid for interest $ 69 $ 59
Source: Nature's Sunshine Products, Inc.