Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported):

August 10, 2004

 


 

MANNATECH, INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

 


 

Texas   000-24657   75-2508900

(State or other Jurisdiction of

Incorporation or Organization)

  (Commission File Number)  

(I.R.S. Employer

Identification No.)

 

600 S. Royal Lane, Suite 200

Coppell, Texas 75019

(Address of Principal Executive Offices, including Zip Code)

 

Registrant’s Telephone Number, including Area Code: (972) 471-7400

 



Item 12. Results of Operations and Financial Condition

 

On August 10, 2004, Mannatech, Incorporated, a Texas corporation, issued a press release announcing its financial results for the second quarter ended June 30, 2004. A copy of the press release is furnished as Exhibit 99.1.


SIGNATURE

 

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, hereunto duly authorized.

 

   

MANNATECH, INCORPORATED

Dated: August 10, 2004

     

/s/ Stephen D. Fenstermacher


   

Name:

 

Stephen D. Fenstermacher

   

Title:

 

Senior Vice President and

       

Chief Financial Officer


EXHIBIT INDEX

 

Exhibit
Number


 

Exhibit


99.1*   Press release dated August 10, 2004 entitled “Mannatech Announces Record Quarterly Sales, Net Income and E.P.S.”

* Filed herewith.
Press Release

Exhibit 99.1

 

Mannatech Announces Record Quarterly Sales, Net Income and E.P.S

 

Coppell, Texas–August 10, 2004 - Mannatech, Incorporated (NASDAQ: MTEX) today announced record sales and net income for its second quarter ended June 30, 2004. For the three months ended June 30, 2004, net sales reached $74.3 million, which was an increase of 59.8% from $46.5 million for the same period in 2003 and net income increased by 376.1% to $5.6 million or $0.20 earnings per share (diluted), as compared to $1.2 million or $0.04 earnings per share (diluted) for the same period in 2003. For the first six months of 2004, net sales increased by 52.5% to reach $132.7 million and net income increased to $8.7 million, or $0.32 earnings per share (diluted), compared to sales of $87.0 million and net income of $2.6 million, or $0.10 earnings per share (diluted) for the same period in 2003. Net sales by country for the three months ended June 30, 2004, in millions, and as a percentage of total net sales are as follows:

 

     United States

    Canada

    Australia

    United
Kingdom


    Japan

    New
Zealand


    Total

 

2004

   $ 49.5    66.6 %   $ 5.8    7.8 %   $ 7.4    10.0 %   $ 2.6    3.5 %   $ 5.9    7.9 %   $ 3.1    4.2 %   $ 74.3    100 %

2003

   $ 31.7    68.2 %   $ 4.2    9.0 %   $ 3.4    7.3 %   $ 1.0    2.2 %   $ 4.6    9.9 %   $ 1.6    3.4 %   $ 46.5    100 %

% increase

2004 over 2003

     56.2%       38.1%       117.6%       160.0%       28.3%       93.8%       59.8%  

 

Commenting on the results, Mannatech Chairman and CEO Sam Caster said, “Our record performance, with sales growth of 59.8% and net income increasing 376.1%, is a testament to Mannatech’s products, our Associates and the future of the Company. Along with this tremendous growth in our current markets, we are excited about introducing Mannatech products to South Korea when we plan to open for business in September 2004. Another sign of our strong trend is our increase in pack sales, which increased by 101.8% in the second quarter of 2004 as compared to 2003. Pack sales, which are regarded as a leading indicator for Mannatech, include signups, renewals, and upgrades, and our higher priced pack choices include various product selections as well as sales materials. New Associates are joining our company at a record rate, and we look forward to adding South Korea to our family of markets.”

 

The number of new and continuing Mannatech independent associates and members who purchased Mannatech’s products within the last 12 months is as follows:

 

     For the twelve months ended June 30,

 
     2003

    2004

 

New

   112,000    49.6 %   150,000    47.8 %

Continuing

   114,000    50.4 %   164,000    52.2 %
    
  

 
  

Total

   226,000    100.0 %   314,000    100.0 %
    
  

 
  

 

About Mannatech, Incorporated

 

Mannatech, based in Coppell, Texas, is a wellness solution provider that sells its products through a global network-marketing system throughout the United States and the international markets of Canada, Australia, the United Kingdom, Japan and New Zealand. Mannatech plans to open operations in South Korea in September 2004 and in Taiwan in the first quarter of 2005. For additional information about Mannatech, please visit its corporate website: www.mannatech.com.

 

Please Note: This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by use of phrases or terminology such as “may,” “believes,” and “plans” or other similar words or the negative of such terminology. Similarly, descriptions of Mannatech’s objectives, strategies, plans, goals or targets contained herein are also considered forward-looking statements. Mannatech believes this release should be read in conjunction with all of its filings with the Securities and Exchange Commission and cautions its readers that these forward-looking statements are subject to certain events, risks, uncertainties, and other factors. Some of these factors include, among others, Mannatech’s inability to attract and retain associates and members, increases in competition, litigation, regulatory changes, and its planned growth into new international markets. Although Mannatech believes that its expectations, statements, and assumptions reflected in these forward-looking statements are reasonable, it cautions its readers to always consider all of the risk factors and any other cautionary statements carefully in evaluating each forward-looking statement in this release, as well as those set forth in its latest Annual Report on Form 10-K, and other filings filed with the Securities and Exchange Commission, including its current reports on Form 8-K. All of the forward-looking statements contained herein speak only as of the date of this release.

 

(Unaudited financial schedules to follow)

 

Contact:

 

Mannatech, Incorporated

Stephen Fenstermacher, CFO

972-471-6512

IR@mannatech.com


MANNATECH, INCORPORATED

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share amounts)

 

     December 31,
2003


    June 30,
2004


 
ASSETS                 

Cash and cash equivalents

   $ 28,291     $ 35,041  

Restricted cash

     2,140       393  

Accounts receivable

     134       460  

Current portion of notes receivable from shareholders

     55       —    

Inventories

     7,861       9,134  

Prepaid expenses and other current assets

     2,084       1,475  

Deferred tax assets

     2,363       2,336  
    


 


Total current assets

     42,928       48,839  

Property and equipment, net

     5,514       5,772  

Long-term investments

     9,994       17,065  

Notes receivable from shareholders, excluding current portion

     150       155  

Deferred tax assets

     631       644  

Restricted cash

     —         549  

Other assets

     806       1,377  
    


 


Total assets

   $ 60,023     $ 74,401  
    


 


LIABILITIES AND SHAREHOLDERS’ EQUITY                 

Current portion of capital leases and notes payable

   $ 16     $ 10  

Accounts payable

     2,687       2,301  

Accrued expenses

     19,940       27,291  

Deferred revenue

     3,142       4,400  

Current portion of accrued severance related to former executives

     953       486  
    


 


Total current liabilities

     26,738       34,488  

Capital leases and notes payable, excluding current portion

     32       28  

Accrued severance related to former executives, excluding current portion

     359       169  

Long-term liabilities

     106       405  

Deferred tax liabilities

     —         12  
    


 


Total liabilities

     27,235       35,102  

Commitments and contingencies

     —         —    

Shareholders’ equity:

                

Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares Issued and outstanding

     —         —    

Common stock, $0.0001 par value, 99,000,000 shares authorized, 26,227,171 shares issued and 26,183,422 outstanding in 2003 and 26,425,671 shares issued and 26,351,356 outstanding in 2004

     3       3  

Additional paid-in capital

     24,175       25,030  

Retained earnings

     9,271       15,327  

Accumulated other comprehensive loss

     (422 )     (499 )
    


 


       33,027       39,861  

Less treasury stock, at cost, 43,749 shares in 2003 and 74,315 in 2004

     (239 )     (562 )
    


 


Total shareholders’ equity

     32,788       39,299  
    


 


Total liabilities and shareholders’ equity

   $ 60,023     $ 74,401  
    


 



MANNATECH, INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share information)

 

     Three months ended
June 30,


   

Six months ended

June 30,


 
     2003

    2004

    2003

    2004

 

Net sales

   $ 46,519     $ 74,318     $ 86,989     $ 132,705  

Cost of sales

     7,397       11,283       14,094       19,940  

Commissions and incentives

     19,590       34,139       35,932       60,005  
    


 


 


 


       26,987       45,422       50,026       79,945  
    


 


 


 


Gross profit

     19,532       28,896       36,963       52,760  
    


 


 


 


Operating expenses:

                                

Selling and administrative expenses

     9,267       11,526       19,097       23,831  

Other operating costs

     7,162       8,342       12,886       15,326  

Severance expenses

     1,417       —         1,417       —    
    


 


 


 


Total operating expenses

     17,846       19,868       33,400       39,157  
    


 


 


 


Income from operations

     1,686       9,028       3,563       13,603  

Interest income

     58       155       134       293  

Interest expense

     (2 )     (15 )     (4 )     (16 )

Other income (expense), net

     (104 )     (755 )     8       (847 )
    


 


 


 


Income before income taxes

     1,638       8,413       3,701       13,033  

Income taxes

     (467 )     (2,839 )     (1,111 )     (4,354 )
    


 


 


 


Net income

   $ 1,171     $ 5,574     $ 2,590     $ 8,679  
    


 


 


 


Earnings per common share:

                                

Basic

   $ 0.05     $ 0.21     $ 0.10     $ 0.33  
    


 


 


 


Diluted

   $ 0.04     $ 0.20     $ 0.10     $ 0.32  
    


 


 


 


Weighted-average common shares outstanding:

                                

Basic

     25,179       26,343       25,156       26,289  
    


 


 


 


Diluted

     26,526       27,389       26,618       27,380