Exhibit 99.1

 

GRAPHIC

 

FOR IMMEDIATE RELEASE

 

MICHAEL DEAN SUCCEEDS DOUGLAS FAGGIOLI AS PRESIDENT AND CEO OF NATURE’S SUNSHINE PRODUCT’S, INC.

 


 

NATURE’S SUNSHINE PRODUCTS REPORTS SECOND QUARTER RESULTS

 

PROVO, Utah, July 30, 2010 — Nature’s Sunshine Products, Inc. (NASDAQ:NATR), a leading manufacturer and marketer of nutritional supplements and complementary products, today confirmed that effective July 1, 2010, Michael Dean assumed his new role as President and CEO of Nature’s Sunshine Products.

 

As previously reported, Mr. Dean joined the board of Nature’s Sunshine Products last year and became CEO elect on March 12, 2010. He is the former CEO of Mediaur Technologies, a position he held since 2003. Previously, he was Executive Vice President of ABC Cable Networks, Senior Vice President of Corporate Strategic Planning and Development of the Walt Disney Company, and a strategy consultant with Bain & Company. He holds an MBA from Harvard Business School.

 

Mr. Dean became the CEO after Douglas Faggioli’s departure after 27 years with the Company, in which he contributed significantly to the Company’s global growth and development. Mr. Faggioli will continue to work with the Company through a consulting arrangement.

 

Second Quarter Results

 

Nature’s Sunshine Products, Inc. reported an increase in net sales of 3.8 percent to $87.4 million for the second quarter of 2010, compared with $84.1 million for the same period in 2009. Operating income improved by 43.9% to $3.0 million, compared to $2.1 million in the second quarter of 2009. Net income totaled $1.1 million, compared with $1.5 million in the second quarter of 2009. Basic and diluted net income per share was $0.07, compared with $0.10 for the same period last year. The increase in operating income is primarily the result of sales growth, as well as the reduction of selling, general, and administrative expenses. The reduction in net income is the result of a higher effective tax rate.

 

During the quarter, the Company generated $1.9 million in cash from operations. The Company’s balance sheet remained strong with cash and cash equivalents of $40.0 million (up from $35.6 million on December 31, 2009) and shareholders’ equity of $64.1

 



 

million (up from $57.1 million on December 31, 2009). The Company has no long-term debt.

 

Active Managers worldwide grew 2.3 percent to 30,600 from the end of last quarter and active Distributors worldwide totaled 687,500 at June 30, 2010. The Company benefited from increases in the number of active Managers in all three segments — NSP US and International, and Synergy Worldwide.

 

Six-Month Results

 

For the first half of 2010, net sales increased 4.2 percent to $174.4 million, compared with $167.3 million for the same period in 2009. Operating income improved by approximately $3.8 million to $3.0 million, compared with an operating loss of $0.8 million in the first half of 2009. Net income totaled $5.2 million, compared with $0.1 million in the second half of 2009. Basic and diluted net income per share was $0.34 and $0.33, respectively, compared with $0.00 for the same period last year. The increase in operating and net income is the result of sales growth and the reduction of selling, general, and administrative expenses. In addition, the year-to-date results include a foreign exchange gain recorded in the first quarter of $3.7 million, or $0.24 per diluted share, related to the implementation of highly-inflationary accounting for Venezuela and the devaluation of the Venezuelan bolivar. During the first half of 2010, the Company generated $5.4 million in cash from operations.

 

Segment Analysis

 

Nature’s Sunshine Products U.S., which remains the Company’s largest segment, decreased net sales revenue by 5.2 percent for the quarter, to $37.5 million, compared with $39.5 million in the same quarter a year ago. With lower sales and operating expenses down 1.7 percent, operating income for the three months ended June 30, 2010 totaled $2.1 million, a decrease of $1.4 million, as compared to $3.5 million for the same period in 2009. The decrease in sales was caused, in part, by changes in our promotional programs, the timing of event qualification periods (contributing to lower sales compared to the same period a year ago), as well as continuing weakness in the U.S. economy.

 

For Nature’s Sunshine Products International, net sales revenue for the three month period ended June 30, 2010 totaled $33.3 million, an increase of approximately 5.3 percent, compared to $31.6 million in the same quarter a year ago. Net sales benefited from growth in several key markets, as well as the effect of the weakening U.S. dollar overall and its positive impact on consumer demand in many of the markets in which we operate. These improvements were partially offset by the devaluation of Venezuela’s currency in the first quarter of 2010 and its effect on reported net sales for the current quarter. Operating income for the three months ended June 30, 2010, was $0.9 million, compared to an operating loss of $0.5 million for the same period in the prior year.

 

Among NSP International’s markets:

 



 

·                  Russian markets net sales increased $1.2 million, or 10.6 percent, to $12.5 million, compared to $11.3 million for the same period a year ago. This improvement was due, in part, to improved Manager and Distributor recruiting efforts, a better local economy, and a slight weakening of the U.S. dollar in relation to the various currencies in this market, which modestly reduced the price of our products. The strength of our Russian distributor network and leaders, and the launch of new products helped maintain positive momentum in this market.

 

·                  Canada net sales increased approximately $0.6 million, or 17.6 percent, to $4.0 million, compared to $3.4 million for the same period a year ago, strongly benefiting from positive foreign currency fluctuations. Excluding the effect of foreign currency fluctuations, net sales increased $0.1 million, or 2.9 percent, compared to the same period in 2009.

 

·                  Mexico net sales increased approximately $0.5 million, or 14.3 percent, to $4.0 million, compared to $3.5 million for the same period a year ago, and were strongly impacted by positive foreign currency fluctuations. Excluding the effect of foreign currency fluctuations, net sales increased $0.3 million, or 8.6 percent, compared to the same period in 2009.

 

·                  Venezuela net sales decreased approximately $1.3 million, or 44.8 percent, to $1.6 million, compared to $2.9 million for the same period a year ago, primarily as the result of the devaluation of the bolivar. In January of this year, the official exchange rate for bolivars changed from 2.15 bolivars per U.S. dollar to 4.30 bolivars per U.S. dollar for everything other than essential goods.

 

·                  As a group, net sales for the remaining Nature’s Sunshine Products International markets improved $0.7 million, or 6.7 percent, to net sales of $11.2 million, compared to $10.5 million for the same period in 2009, with 60 percent of the $0.7 million increase stemming from currency exchange rate fluctuations.

 

For the second quarter of 2010, Synergy Worldwide net sales were $16.6 million, an increase of approximately 27.4 percent, compared to $13.0 million in the same quarter a year ago. Net sales revenues increased due to significant growth in the European, U.S, and Korean markets, as well as the opening of the Vietnam market for Synergy products. These improvements were partially offset by decreases in Japan sales due to weak economic conditions, import restrictions on certain key products, strong competition, and declines in our distributor base in Japan. Operating income from the three months ended June 30, 2010, was at break-even, compared to an operating loss of $1.0 million for the same period in the prior year.

 

Among Synergy Worldwide’s markets:

 

·                  U.S. net sales increased $2.1 million, or 116.7 percent, to $3.9 million, compared to $1.8 million for the same period a year ago. This improvement was due to strong demand for key products that fostered growth in our U.S. Distributor base.

 



 

·                  European net sales increased $1.2 million, or 75.0 percent, to $2.8 million, compared to $1.6 million for the same period a year ago.  This improvement was due to network expansion into relatively new markets.

 

·                  Korea net sales increased approximately $0.6 million, or 33.3 percent, to $2.4 million, compared to $1.8 million for the same period a year ago, and benefited from positive foreign currency fluctuations. Excluding the effect of foreign currency fluctuations, net sales increased $0.3 million, or 16.7 percent, compared to the same period in 2009 due to continued growth of our Distributor base and effective leadership and development activities in the market.

 

·                  We launched our Synergy operations in Vietnam during the second quarter, achieving net sales of $0.7 million.

 

·                  Japan net sales decreased approximately $1.2 million, or 24.5 percent, to $3.7 million, compared to $4.9 million for the same period a year ago, primarily as the result of import restrictions on several key products, strong competition, and continued economic weakness in Japan, which resulted in a decrease in the Distributor base in this market.

 

·                  As a group, net sales for the remaining Synergy Worldwide markets improved $0.2 million, or 6.9 percent, to net sales of $3.1 million, compared to $2.9 million for the same period in 2009. The increase includes positive currency fluctuations of $0.4 million.

 

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, the 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, the Netherlands, and Vietnam. 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 BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

 

 

June 30,
2010

 

December 31,
2009

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

40,010

 

$

35,538

 

Restricted cash

 

249

 

1,495

 

Accounts receivable, net of allowance for doubtful accounts of $1,742 and $1,840 respectively

 

8,166

 

8,294

 

Investments available for sale

 

3,122

 

3,167

 

Inventories, net

 

38,590

 

40,623

 

Deferred income tax assets

 

5,894

 

6,646

 

Prepaid expenses and other current assets

 

5,770

 

5,629

 

Total current assets

 

101,801

 

101,392

 

 

 

 

 

 

 

Property, plant and equipment, net

 

27,965

 

28,757

 

Investment securities

 

1,786

 

1,752

 

Intangible assets

 

1,362

 

1,421

 

Deferred income tax assets

 

12,281

 

12,228

 

Other assets

 

18,778

 

19,306

 

 

 

$

163,973

 

$

164,856

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

4,770

 

$

4,176

 

Accrued volume incentives

 

18,643

 

17,495

 

Accrued liabilities

 

34,269

 

34,143

 

Deferred revenue

 

3,679

 

4,513

 

Income taxes payable

 

5,005

 

7,542

 

Total current liabilities

 

66,366

 

67,869

 

Liability related to unrecognized tax benefits

 

29,128

 

35,028

 

Deferred compensation payable

 

1,786

 

1,752

 

Other liabilities

 

2,606

 

3,112

 

Total long-term liabilities

 

33,520

 

39,892

 

Shareholders’ Equity:

 

 

 

 

 

Common stock, no par value; 50,000 shares authorized, 15,513 and 15,510 shares issued and outstanding as of June 30, 2010 and December 31, 2009

 

67,428

 

67,183

 

Retained earnings

 

14,718

 

9,511

 

Accumulated other comprehensive loss

 

(18,059

)

(19,599

)

Total shareholders’ equity

 

64,087

 

57,095

 

 

 

$

163,973

 

$

164,856

 

 



 

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (Amounts in thousands, except per share information)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

 

 

2010

 

2009

 

 

 

 

 

 

 

Net Sales Revenue (net of the rebate portion of volume incentives of $11,104 and $12,183, respectively)

 

$

87,358

 

$

84,149

 

Cost and Expenses:

 

 

 

 

 

Cost of goods sold

 

16,845

 

15,787

 

Volume incentives

 

32,559

 

31,217

 

Selling, general and administrative

 

34,995

 

35,089

 

 

 

84,399

 

82,093

 

Operating Income

 

2,959

 

2,056

 

Other (Expense) Income, Net

 

(937

)

544

 

 

 

 

 

 

 

Income Before Income Tax Provision

 

2,022

 

2,600

 

Income Tax Provision

 

968

 

1,066

 

Net Income

 

$

1,054

 

$

1,534

 

 

 

 

 

 

 

Basic Net Income Per Common Share

 

$

0.07

 

$

0.10

 

Diluted Net Income Per Common Share

 

$

0.07

 

$

0.10

 

Weighted Average Basic Common Shares Outstanding

 

15,512

 

15,510

 

Weighted Average Diluted Common Shares Outstanding

 

15,602

 

15,510

 

 



 

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (Amounts in thousands, except per share information)

(Unaudited)

 

 

 

Six Months Ended
June 30,

 

 

 

2010

 

2009

 

 

 

 

 

 

 

Net Sales Revenue (net of the rebate portion of volume incentives of $22,357 and $23,454, respectively)

 

$

174,404

 

$

167,325

 

Cost and Expenses:

 

 

 

 

 

Cost of goods sold

 

34,846

 

33,334

 

Volume incentives

 

65,123

 

62,213

 

Selling, general and administrative

 

71,458

 

72,566

 

 

 

171,427

 

168,113

 

Operating Income (Loss)

 

2,977

 

(788

)

Other Income, Net

 

1,898

 

1,748

 

 

 

 

 

 

 

Income Before Income Tax (Benefit) Provision

 

4,875

 

960

 

Income Tax (Benefit) Provision

 

(332

)

888

 

Net Income

 

$

5,207

 

$

72

 

 

 

 

 

 

 

Basic Net Income Per Common Share

 

$

0.34

 

$

0.00

 

Diluted Net Income Per Common Share

 

$

0.33

 

$

0.00

 

Weighted Average Basic Common Shares Outstanding

 

15,511

 

15,510

 

Weighted Average Diluted Common Shares Outstanding

 

15,597

 

15,510

 

 

Contact:

 

 

Stephen M. Bunker

Steven S. Anreder

 

Chief Financial Officer

Anreder & Co.

 

Nature’s Sunshine Products, Inc.

286 Madison Avenue, Suite 907

 

Provo, Utah 84605-9005

New York, NY 10017

 

(801) 342-4370

(212) 532-3232