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, 2005
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
(Former name or former address, if change since last report.)
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 (17CFR 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, 2005, Mannatech, Incorporated issued a press release announcing its results of operations and financial condition for the three and nine months ended September 30, 2005. A copy of this press release is attached hereto as Exhibit 99.1.
The information disclosed under this Item 2.02 (including Exhibit 99.1) shall not be deemed to be “filed” for the purposes of Section 18, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, (“the Exchange Act”), 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. |
| Exhibit Number |
Exhibit | |
| 99.1* | Press release dated November 9, 2005 entitled “MannatechAnnounces Record Quarterly Net Income and E.P.S.”. |
| * | 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 10, 2005 | 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, 2005 entitled “Mannatech Announces Record Quarterly Net Income and E.P.S.”. |
| * | Filed herewith. |
Exhibit 99.1
Mannatech Announces Record Quarterly Net Income and E.P.S.
Net sales exceeded $100 million for the second consecutive quarter
Coppell, TX – November 9, 2005 (NASDAQ – MTEX) Mannatech, Inc. today announced financial results for the three months ending September 30, 2005, which included reporting record net income of $8.7 million and record earnings per share (diluted) of $0.32. Consolidated net sales for the 2005 quarter as compared to the same quarter in 2004 increased by 29%, or $22.6 million, to $100.2 million and exceeded the $100 million mark for the second consecutive quarter. Consolidated net income increased by 28% as compared to the prior period in 2004 and earnings per share (diluted) increased 28%. In addition, income before tax increased by 44% to $13.0 million as compared to the same quarter in 2004.
Consolidated net sales for the nine months ended September 30, 2005, increased 37%, or $77.7 million to $287.9 million as comparable to 2004. In addition, income before tax increased by 38% to $30.3 million as compared to 2004, consolidated net income increased by 23.9% to $19.2 million, and earnings per share (diluted) increased 21% to $0.69 as compared to 2004. Mannatech believes the increase in its operations for both the three months and the nine months is the result of increasing the number of independent associates and members by 37%, who purchase our products and/or packs, a successful launch of its new product Advanced Ambrotose™ continued international expansion such as opening operations in Taiwan, as well as selling its packs and products in Denmark.
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||||||||||
| 2004 |
2005 |
2004 |
2005 |
|||||||||||||||||||||
| (in millions) | (in millions) | |||||||||||||||||||||||
| United States |
$ | 51.3 | 66.1 | % | $ | 66.5 | 66.3 | % | $ | 137.6 | 65.4 | % | $ | 192.3 | 66.8 | % | ||||||||
| Canada |
5.6 | 7.2 | % | 7.0 | 7.0 | % | 16.1 | 7.7 | % | 20.9 | 7.3 | % | ||||||||||||
| Australia |
8.0 | 10.3 | % | 9.3 | 9.3 | % | 21.8 | 10.4 | % | 26.3 | 9.1 | % | ||||||||||||
| United Kingdom |
2.6 | 3.3 | % | 2.1 | 2.1 | % | 8.0 | 3.8 | % | 6.9 | 2.4 | % | ||||||||||||
| Japan |
6.5 | 8.4 | % | 9.1 | 9.1 | % | 17.4 | 8.3 | % | 25.9 | 9.0 | % | ||||||||||||
| New Zealand |
3.4 | 4.4 | % | 3.7 | 3.7 | % | 9.1 | 4.3 | % | 11.3 | 3.9 | % | ||||||||||||
| Republic of Korea |
0.2 | 0.3 | % | 1.5 | 1.5 | % | 0.2 | 0.1 | % | 2.9 | 1.0 | % | ||||||||||||
| Taiwan* |
— | — | % | 0.9 | 0.9 | % | — | — | % | 1.3 | 0.5 | % | ||||||||||||
| Denmark** |
— | — | % | 0.1 | 0.1 | % | — | — | % | 0.1 | 0.0 | % | ||||||||||||
| Totals |
$ | 77.6 | 100 | % | $ | 100.2 | 100 | % | $ | 210.2 | 100 | % | $ | 287.9 | 100 | % | ||||||||
Sam Caster, Chairman and C.E.O. of Mannatech, stated “We believe our record earnings and income for the quarter reflect the ongoing strength of our U.S. business combined with aggressive international expansion and continue the successful sales and profit momentum shown by Mannatech for the past several years. Once again we exceeded the sales level of $100 million for the quarter, and this notable achievement was accompanied by record profit and earnings as well. For the quarter, our income before tax of $13.0 million increased by more than 43% compared to the same period in 2004, which more than matched our continued sales trend. We are proud of the efforts of our independent Associates around the world to grow this company, and of the support provided by our staff to allow this growth trend to continue.”
| For the twelve months ended September 30, |
||||||||||
| Independent Associates and Members |
2004 |
2005 |
||||||||
| New |
162,000 | 47.3 | % | 219,000 | 46.6 | % | ||||
| Continuing |
180,000 | 52.7 | % | 251,000 | 53.4 | % | ||||
| Total |
342,000 | 100.0 | % | 470,000 | 100.0 | % | ||||
About Mannatech
Based in Coppell, Texas, Mannatech, Incorporated is a wellness solutions provider that develops innovative, high-quality, proprietary nutritional supplements, topical products and weight management products, which are sold through a global network-marketing system operating throughout the United States and the international markets of Canada, Australia, the United Kingdom, Japan, New Zealand, the Republic of Korea, Taiwan, and Denmark.
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”,” well positioned,” “feels,” 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.
Contact Information:
Steve Fenstermacher, CFO
Investor Relations
972-471-6512
ir@mannatech.com
MANNATECH, INCORPORATED
CONSOLIDATED BALANCE SHEETS – (UNAUDITED)
(in thousands, except share amounts)
| December 31, 2004 |
September 30, 2005 |
|||||||
| ASSETS | ||||||||
| Cash and cash equivalents |
$ | 44,198 | $ | 49,015 | ||||
| Short-term investments |
— | 3,956 | ||||||
| Restricted cash |
393 | 293 | ||||||
| Income tax receivable |
4,161 | — | ||||||
| Accounts receivable |
392 | 1,021 | ||||||
| Inventories, net |
13,157 | 20,351 | ||||||
| Prepaid expenses and other current assets |
3,188 | 3,794 | ||||||
| Deferred tax assets |
1,850 | 1,476 | ||||||
| Note receivable from affiliate |
144 | 151 | ||||||
| Total current assets |
67,483 | 80,057 | ||||||
| Long-term investments |
17,073 | 13,375 | ||||||
| Property and equipment, net |
6,469 | 11,325 | ||||||
| Construction in progress |
3,544 | 4,980 | ||||||
| Restricted cash |
1,571 | 3,790 | ||||||
| Other assets |
1,203 | 1,140 | ||||||
| Deferred tax assets |
1,003 | 94 | ||||||
| Total assets |
$ | 98,346 | $ | 114,761 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Accounts payable |
$ | 2,227 | $ | 3,895 | ||||
| Accrued expenses |
20,389 | 17,545 | ||||||
| Commissions payable |
12,718 | 13,449 | ||||||
| Taxes payable |
1,930 | 5,676 | ||||||
| Deferred revenue |
2,256 | 4,763 | ||||||
| Accrued severance related to former executives |
375 | 175 | ||||||
| Current portion of capital leases |
8 | 27 | ||||||
| Total current liabilities |
39,903 | 45,530 | ||||||
| Long-term royalties due to an affiliate |
1,658 | 3,456 | ||||||
| Long-term liabilities |
530 | 523 | ||||||
| Capital leases, excluding current portion |
26 | — | ||||||
| Deferred tax liabilities |
4 | 200 | ||||||
| Total liabilities |
42,121 | 49,709 | ||||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Common stock, $0.0001 par value, 99,000,000 shares authorized, 27,115,440 shares issued and 27,041,125 shares outstanding in 2004 and 27,352,963 shares issued and 26,913,837 shares outstanding in 2005 |
3 | 3 | ||||||
| Additional paid-in capital |
34,917 | 36,416 | ||||||
| Retained earnings |
21,672 | 35,212 | ||||||
| Accumulated other comprehensive income (loss) |
195 | (788 | ) | |||||
| 56,787 | 70,843 | |||||||
| Less treasury stock, at cost, 74,315 shares in 2004 and 459,126 shares in 2005 |
(562 | ) | (5,791 | ) | ||||
| Total shareholders’ equity |
56,225 | 65,052 | ||||||
| Total liabilities and shareholders’ equity |
$ | 98,346 | $ | 114,761 | ||||
MANNATECH, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED)
(in thousands, except per share information)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2004 |
2005 |
2004 |
2005 |
|||||||||||||
| Net sales |
$ | 77,577 | $ | 100,216 | $ | 210,282 | $ | 287,960 | ||||||||
| Cost of sales |
11,931 | 14,478 | 31,871 | 43,186 | ||||||||||||
| Commissions and incentives |
34,702 | 44,403 | 94,707 | 129,326 | ||||||||||||
| 46,633 | 58,881 | 126,578 | 172,512 | |||||||||||||
| Gross profit |
30,944 | 41,335 | 83,704 | 115,448 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling and administrative expenses |
12,279 | 16,136 | 36,110 | 48,595 | ||||||||||||
| Other operating costs |
9,588 | 12,415 | 24,915 | 36,587 | ||||||||||||
| Total operating expenses |
21,867 | 28,551 | 61,025 | 85,182 | ||||||||||||
| Income from operations |
9,077 | 12,784 | 22,679 | 30,266 | ||||||||||||
| Interest income |
136 | 469 | 430 | 1,254 | ||||||||||||
| Interest expense |
— | — | (16 | ) | — | |||||||||||
| Other expense, net |
(191 | ) | (288 | ) | (1,038 | ) | (1,188 | ) | ||||||||
| Income before income taxes |
9,022 | 12,965 | 22,055 | 30,332 | ||||||||||||
| Income taxes |
(2,193 | ) | (4,232 | ) | (6,547 | ) | (11,120 | ) | ||||||||
| Net income |
$ | 6,829 | $ | 8,733 | $ | 15,508 | $ | 19,212 | ||||||||
| Earnings per common share: |
||||||||||||||||
| Basic |
$ | 0.26 | $ | 0.32 | $ | 0.59 | $ | 0.71 | ||||||||
| Diluted |
$ | 0.25 | $ | 0.32 | $ | 0.57 | $ | 0.69 | ||||||||
| Weighted-average common shares outstanding: |
||||||||||||||||
| Basic |
26,393 | 27,015 | 26,324 | 27,065 | ||||||||||||
| Diluted |
27,460 | 27,738 | 27,407 | 27,899 | ||||||||||||