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. |
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 | ||||||||||||