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):

November 9, 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

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Item 2.02. Results of Operations and Financial Condition.

 

On November 9, 2004, Mannatech, Incorporated issued a press release announcing its results of operations and financial condition for the third quarter of 2004. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference in this report.

 

Note: The information contained in this report (including Exhibit 99.1) is not to be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

 

Item 9.01 Financial Statements and Exhibits.

 

  (a) Financial Statements or Business Acquired.

 

None.

 

  (b) Pro Forma Financial Information.

 

None.

 

  (c) Exhibits.

 

Number


 

Exhibit


99.1*

  Press release dated November 9, 2004 entitled “Mannatech, Inc. Announces Record Quarterly Sales & Earnings.”

* Filed herewith.

 

[SIGNATURE PAGE TO FOLLOW]


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: November 9, 2004   By:  

/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 November 9, 2004 entitled “Mannatech, Inc. Announces Record Quarterly Sales & Earnings.”

* Filed herewith.
Press release

Exhibit 99.1

 

Mannatech, Inc. Announces Record Quarterly Sales & Earnings

 

Coppell, TX – November 9, 2004, Mannatech, Incorporated (NASDAQ – MTEX) today announced record sales and earnings for its third quarter ended September 30, 2004 as compared to the same period in 2003. For the three month period ended September 30, 2004, sales reached $77.6 million, a new quarterly sales record for Mannatech, which was an increase of $27.8 million, or 56.1%, as compared to the prior year. Net income rose to $6.8 million, which more than doubled versus the same period in 2003. Net income as a percentage of net sales increased to 8.8% of net sales as compared to 5.8% for the same period in 2003. Earnings per share (diluted) for the third quarter of 2004 increased to $0.25 per share, which was an increase of 127.3% as compared to the prior year.

 

Sales for the nine months ended September 30, 2004 were $210.2 million, up 53.8% versus 2003. Net Income reached $15.5 million, which was an increase of $10.0 million or 183.4% over last year, while earnings per share (diluted) for the nine months ended September 30, 2004 was $0.57, again of 171.4% as compared to the same period in 2003.

 

The third quarter results represented a new quarterly record and marks Mannatech’s eighth consecutive quarter of successive sales increases, during which time sales have more than doubled. Net sales by country for the three months ended September 30, 2004, in millions, and as a percentage of total net sales, as well as the number of new and continuing Mannatech independent Associates and members who purchased Mannatech’s products within the last 12 months were as follows:

 

Three months ended September 30,

 

   

United

States


    Canada

    Australia

   

United

Kingdom


    Japan

   

New

Zealand


   

South

Korea


    Total

 
2004   $ 51.3     $ 5.6     $ 8.0     $ 2.6     $ 6.5     $ 3.4     $ 0.2     $ 77.6  
      66.1 %     7.2 %     10.3 %     3.3 %     8.4 %     4.4 %     0.3 %     100.0 %
2003   $ 33.4     $ 4.1     $ 4.2     $ 1.3     $ 4.9     $ 1.8       —       $ 49.7  
      67.2 %     8.2 %     8.5 %     2.6 %     9.9 %     3.6 %     —         100.0 %

 

For the twelve months ended

 

Associates

& Members


  September 30, 2003

    December 31, 2003

    March 31, 2004

    June 30, 2004

    September 30, 2004

 
New   125,000   51.4 %   134,000   50.8 %   141,000   49.1 %   150,000   47.8 %   162,000   47.3 %
Continuing   118,000   48.6 %   130,000   49.2 %   146,000   50.9 %   164,000   52.2 %   180,000   52.7 %
   
 

 
 

 
 

 
 

 
 

Total   243,000   100.0 %   264,000   100.0 %   287,000   100.0 %   314,000   100.0 %   342,000   100.0 %
   
 

 
 

 
 

 
 

 
 

 

Sam Caster, Chairman and CEO of Mannatech, commented on the records setting results. “We have seen our business grow rapidly and successfully for the past eight quarters, through the tremendous labors of our Associates around the world in concert with the highly focused and motivated activities of our corporate staff. We have also seen our sales double since the string of successive quarterly increases began in the fourth quarter of 2002. This strong trend is rewarding to us, and yet we believe that we have just begun to realize the potential of the products Mannatech brings to the world. We intend to continue our growth into new markets around the globe, and we welcome into the Mannatech family the Associates in our newest market in South Korea, which opened in September, 2004.”

 

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, New Zealand, and South Korea. For additional information about Mannatech, please visit its corporate website.

 

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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,” “estimates,” “projects,” 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

 

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MANNATECH, INCORPORATED

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

     December 31,
2003


    September 30,
2004


 
ASSETS                 

Cash and cash equivalents

   $ 28,291     $ 28,598  

Restricted cash

     2,140       392  

Accounts receivable

     134       709  

Current portion of notes receivable from shareholders

     55       —    

Inventories

     7,861       12,857  

Prepaid expenses and other current assets

     2,084       3,678  

Deferred tax assets

     2,363       3,958  
    


 


Total current assets

     42,928       50,192  

Property and equipment, net

     5,514       8,360  

Long-term investments

     9,994       17,088  

Notes receivable from shareholders, excluding current portion

     150       157  

Deferred tax assets

     631       632  

Restricted cash

     —         959  

Other assets

     806       1,388  
    


 


Total assets

   $ 60,023     $ 78,776  
    


 


LIABILITIES AND SHAREHOLDERS’ EQUITY                 

Current portion of capital leases and notes payable

   $ 16     $ 9  

Accounts payable

     2,687       1,684  

Accrued expenses

     19,940       27,942  

Deferred revenue

     3,142       3,498  

Current portion of accrued severance related to former executives

     953       420  
    


 


Total current liabilities

     26,738       33,553  

Capital leases and notes payable, excluding current portion

     32       26  

Accrued severance related to former executives, excluding current portion

     359       67  

Long-term liabilities

     106       1,083  

Deferred tax liabilities

     —         15  
    


 


Total liabilities

     27,235       34,744  

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 26,489,170 shares issued and 26,414,855 outstanding in 2004

     3       3  

Additional paid-in capital

     24,175       25,704  

Retained earnings

     9,271       19,516  

Accumulated other comprehensive loss

     (422 )     (629 )
    


 


       33,027       44,594  

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

     (239 )     (562 )
    


 


Total shareholders’ equity

     32,788       44,032  
    


 


Total liabilities and shareholders’ equity

   $ 60,023     $ 78,776  
    


 


 

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MANNATECH, INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

 

     Three months ended
September 30,


    Nine months ended
September 30,


 
     2003

    2004

    2003

    2004

 

Net sales

   $ 49,738     $ 77,577     $ 136,727     $ 210,282  

Cost of sales

     8,187       11,931       22,282       31,871  

Commissions and incentives

     20,981       34,702       56,912       94,707  
    


 


 


 


       29,168       46,633       79,194       126,578  
    


 


 


 


Gross profit

     20,570       30,944       57,533       83,704  

Operating expenses:

                                

Selling and administrative expenses

     10,131       12,279       29,228       36,110  

Other operating costs

     6,096       9,588       18,982       24,915  

Severance expenses

     425       —         1,841       —    
    


 


 


 


Total operating expenses

     16,652       21,867       50,051       61,025  
    


 


 


 


Income from operations

     3,918       9,077       7,482       22,679  

Interest income

     81       136       214       430  

Interest expense

     (17 )     0       (21 )     (16 )

Other income (expense), net

     223       (191 )     232       (1,038 )
    


 


 


 


Income before income taxes

     4,205       9,022       7,907       22,055  

Income taxes

     (1,323 )     (2,193 )     (2,435 )     (6,547 )
    


 


 


 


Net income

   $ 2,882     $ 6,829     $ 5,472     $ 15,508  
    


 


 


 


Earnings per common share:

                                

Basic

   $ 0.11     $ 0.26     $ 0.22     $ 0.59  
    


 


 


 


Diluted

   $ 0.11     $ 0.25     $ 0.21     $ 0.57  
    


 


 


 


Weighted-average common shares outstanding:

                                

Basic

     25,655       26,393       25,325       26,324  

Diluted

     26,213       27,460       26,000       27,407  

 

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