Exhibit 99.1

 

GRAPHIC

 

FOR IMMEDIATE RELEASE

 

NATURE’S SUNSHINE PRODUCTS REPORTS FOURTH QUARTER

 AND FULL YEAR FINANCIAL RESULTS

 

PROVO, Utah, March 11, 2011 — Nature’s Sunshine Products, Inc. (NASDAQ:NATR), a leading manufacturer and marketer of natural health products, today reported consolidated financial results for the fourth quarter and full year ended December 31, 2010.

 

For the Fourth Quarter of 2010:

 

·                  Net sales were $89.9 million, compared with $89.6 million in the same quarter a year ago, an increase of 0.3 percent.

 

·                  Operating income from continuing operations was $3.5 million, compared with $5.9 million in the same quarter a year ago, a decrease of 40.2 percent.

 

·                  EBITDA, defined as net income before taxes, depreciation and amortization, other income and share-based compensation expense, was $4.7 million, compared with $7.5 million in the same quarter a year ago, a decrease of 37.6 percent.

 

·                  Net loss from continuing operations was $0.4 million, compared with net income of $4.6 million in the same quarter a year ago, a decrease of 108.4 percent.

 

·                  Basic and diluted net loss per share from continuing operations was a loss of $0.02, compared with earnings per share of $0.30 for the same quarter a year ago.

 

·                  As of December 31, 2010, shareholders’ equity was $68.4 million, compared to $66.6 million on September 30, 2010, an increase of 2.6 percent.

 

·                  As of December 31, 2010, active Managers worldwide were 28,300, a decline of 5.7 percent from the end of the prior quarter, while active Distributors worldwide were 685,100, an increase of 0.6 percent from the end of the prior quarter.

 



 

For the Full Year 2010:

 

·                  Net sales were $349.9 million, compared with $342.1 million in the prior year, an increase of 2.3 percent.

 

·                  Operating income from continuing operations was $11.3 million, compared with $12.4 million in the prior year, a decrease of 9.4 percent.

 

·                  EBITDA from continuing operations, defined as net income before taxes, depreciation and amortization, other income and share-based compensation expense, was $15.9 million, compared with $17.4 million in the prior year, a decrease of 8.3 percent.

 

·                  Net income from continuing operations was $8.5 million, compared with $6.6 million in the prior year, an increase of 29.2 percent.

 

·                  Basic and diluted net income per share from continuing operations was $0.55 and $0.54, respectively, compared with $0.42 and $0.42, respectively, in the prior year, an increase of 31.0 and 28.6 percent, respectively.

 

·                  As of December 31, 2010, shareholders’ equity was $68.4 million, compared to $57.1 million on December 31, 2009, an increase of 19.8 percent.

 

Additional Financial Information:

 

Certain events affected the comparability of 2010 versus 2009 quarterly and annual results, as outlined below.  For a more detailed comparison of 2010 versus 2009 results, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

 

·                  During the year, the Company ceased operations in Brazil as a result of increased import restrictions. As a result, the company reported a charge of $8.2 million during the third quarter of 2010, of which $7.4 million was a non-cash write-off of accumulated currency translation adjustments.  NSP’s operations in Brazil represented less than 0.3 percent of the Company’s consolidated revenue over the past five years. The total loss from discontinued operations related to Brazil was $9.7 million, compared with $0.4 million for the prior year. Basic and diluted net losses per share from discontinued operations were a loss of $0.63 and $0.62, respectively, compared with a loss of $0.03 and $0.03, respectively, for the prior year.

 

·                  Operating income decreased quarter-over-quarter as a result of net favorable settlements of value-added tax and sales tax reserves of $2.6 million in the prior year. Operating income decreased year-over-year as a result of $4.0 million of prior year favorable non-income tax contingency reductions and current year one-time charges of $1.8 million for severance costs.

 



 

·                  Net income from continuing operations decreased as a result of a higher current quarter effective tax rate compared to the same quarter last year, which resulted primarily from the inability to utilize certain losses and tax credits.

 

NSP United States Results for the Fourth Quarter:

 

·                  Net sales were $34.9 million, compared with $38.2 million in the same quarter a year ago, a decrease of 8.6 percent.  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 continued weakness in the U.S. economy.

 

·                  Operating income was $1.2 million, compared with $1.6 million in the same quarter a year ago, a decrease of 27.1 percent.

 

NSP International Results for the Fourth Quarter:

 

·                  Net sales were $35.2 million, compared with $36.7 million in the same quarter a year ago, a decrease of 4.0 percent. In local currencies, net sales decreased by 6.6 percent compared to the same quarter a year ago. The decrease in net sales was primarily due to the devaluation of Venezuela’s currency in the first quarter of 2010 and its effect on reported net sales for the current quarter, as well as the impact of collecting VAT taxes on all of our products sold in Mexico. These decreases were offset by growth in several key markets, as well as the effect of the weakening U.S. dollar in relation to the relative currencies used in our markets and the positive impact of that weakening on consumer demand in many of the markets in which the Company operates.

 

·                  Net sales in the Company’s Russian markets were $15.7 million, compared with $14.7 million in the same quarter a year ago, an increase of 6.8 percent.  This improvement was due, in part, to improved Manager and Distributor recruiting efforts, an improving 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 (in local currency) of our products.

 

·                  Net sales in Venezuela were $1.4 million, compared with $3.0 million in the same period a year ago, a decrease of 54.5 percent as the result of the devaluation of the bolivar.  In January of this year, the official exchange rate for the bolivar changed from 2.15 bolivars per U.S. dollar to 4.30 bolivars per U.S. dollar for all products other than essential goods.

 

·                  Net sales in Mexico were $3.0 million, compared with $3.8 million in the same quarter a year ago, a decrease of 20.3 percent. In local currency, net sales decreased 25.1 percent due to a tax law interpretation by the Mexican taxing authority requiring the collection of VAT tax on all of our products sold in Mexico.

 

·                  Operating income was $0.9 million, compared with an operating loss of $1.7 million in the same quarter a year ago, an increase of 150.6 percent. This increase was the result of

 



 

current year cost reduction efforts, as well as the impact of a prior year increase in VAT charges in our Mexico business.

 

Synergy Worldwide Results for the Fourth Quarter:

 

·                  Net sales were $19.8 million, compared with $14.7 million in the same quarter a year ago, an increase of 34.0 percent. In local currencies, net sales increased 36.5 percent compared to the same quarter a year ago. Net sales revenue increased due to significant growth in the U.S., European 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.

 

·                  Net sales in the United States were $4.6 million, compared with $2.0 million for the same quarter a year ago, an increase of 135.6 percent.  This improvement was due to strong demand for key products that fostered growth in our U.S. Distributor base.

 

·                  Net sales in Europe were $3.8 million, compared with $2.3 million for the same quarter a year ago, an increase of 64.7 percent.  This improvement was due to continued expansion of our relatively new operations, primarily within Norway and Sweden.

 

·                  Net sales in Korea were $3.8 million, compared with $2.0 million for the same quarter a year ago, an increase of 85.2 percent.  Excluding the effect of foreign currency fluctuations, net sales increased 79.3 percent compared to the same quarter a year ago due to continued growth of our Distributor base and effective leadership and development activities in the market.

 

·                  Net sales in Japan were $4.1 million, compared with $5.5 million for the same quarter a year ago, a decrease of 26.8 percent, 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.

 

·                  Synergy launched operations in Vietnam during the second quarter of 2010 and reported net sales of $0.7 million for the fourth quarter.

 

·                  Operating income was $1.5 million, compared with $6.0 million for the same quarter in the prior year, a decrease of 74.6 percent. Prior year operating income included $5.7 million favorable non-income tax contingency reductions. Excluding this prior year one time settlement, operating income improved 411.0 percent due to net sales revenue growth and current year cost reduction efforts.

 

Non-GAAP Financial Measures

 

The Company has included information concerning EBITDA because management utilizes this information in the evaluation of its operations and believes that this measure is a useful indicator of the Company’s ability to fund its business.  EBITDA has not been prepared in accordance with generally accepted accounting principles (GAAP).  This non-GAAP financial measure

 



 

should not be considered as an alternative to, or more meaningful than, net income as an indicator of the Company’s operating performance.  Further, this non-GAAP financial measure, as presented by the Company, may not be comparable to similarly titled measures reported by other companies.  The Company has included a reconciliation of EBITDA to reported earnings under GAAP in the attached financial tables.

 

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 Australia, Austria, Belarus, Canada, the Czech Republic, China, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Germany, Guatemala, Honduras, Hong Kong, Indonesia, Israel, Japan, Kazakhstan, Latvia, Lithuania, Malaysia, Mexico, Mongolia, the Netherlands, Nicaragua, Norway, Panama, Peru, the Philippines, Poland, Russia, Singapore, South Korea, Sweden, Thailand, Taiwan, Ukraine, the United Kingdom, Venezuela, 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)

 

 

 

December 31,
2010

 

December 31,
 2009

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

47,604

 

$

35,538

 

Restricted cash

 

 

1,495

 

Accounts receivable, net of allowance for doubtful accounts of $918 and $1,840, respectively

 

5,947

 

8,294

 

Investments available for sale

 

6,470

 

3,167

 

Inventories, net

 

36,235

 

40,623

 

Deferred income tax assets

 

4,582

 

6,646

 

Prepaid expenses and other current assets

 

5,700

 

5,629

 

Total current assets

 

106,538

 

101,392

 

 

 

 

 

 

 

Property, plant and equipment, net

 

27,391

 

28,757

 

Investment securities

 

1,778

 

1,752

 

Intangible assets

 

1,303

 

1,421

 

Deferred income tax assets

 

12,916

 

12,228

 

Other assets

 

9,489

 

10,589

 

 

 

$

159,415

 

$

156,139

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

4,855

 

$

4,176

 

Accrued volume incentives

 

18,619

 

17,495

 

Accrued liabilities

 

34,601

 

34,143

 

Deferred revenue

 

3,385

 

4,513

 

Income taxes payable

 

3,708

 

7,542

 

Total current liabilities

 

65,168

 

67,869

 

Liability related to unrecognized tax benefits

 

21,366

 

26,311

 

Deferred compensation payable

 

1,778

 

1,752

 

Other liabilities

 

2,721

 

3,112

 

Total long-term liabilities

 

25,865

 

31,175

 

Shareholders’ Equity:

 

 

 

 

 

Common stock, no par value; 50,000 shares authorized, 15,533 and 15,510 shares issued and outstanding as of December, 2010 and 2009, respectively

 

67,752

 

67,183

 

Retained earnings

 

8,278

 

9,511

 

Accumulated other comprehensive loss

 

(7,648

)

(19,599

)

Total shareholders’ equity

 

68,382

 

57,095

 

 

 

$

159,415

 

$

156,139

 

 



 

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share information)

 

 

 

Three Months Ended
December 31,

 

 

 

2010

 

2009

 

 

 

 

 

 

 

Net sales revenue (net of the rebate portion of volume incentives of $11,157 and $12,452, respectively)

 

$

89,889

 

$

89,646

 

Cost and expenses:

 

 

 

 

 

Cost of goods sold

 

17,732

 

18,073

 

Volume incentives

 

33,205

 

32,872

 

Selling, general and administrative

 

35,408

 

32,770

 

 

 

86,345

 

83,715

 

Operating income

 

3,544

 

5,931

 

Other income, net

 

353

 

405

 

 

 

 

 

 

 

Income from continuing operations before provision for income taxes

 

3,897

 

6,336

 

Provision for income taxes

 

4,283

 

1,738

 

Net income (loss) from continuing operations

 

(386

)

4,598

 

Loss from discontinued operations

 

(314

)

(635

)

Net income (loss)

 

$

(700

)

$

3,963

 

 

 

 

 

 

 

Basic and diluted net income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(0.02

)

$

0.30

 

Loss from discontinued operations

 

$

(0.02

)

$

(0.04

)

Net income (loss)

 

$

(0.04

)

$

0.26

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(0.02

)

$

0.30

 

Loss from discontinued operations

 

$

(0.02

)

$

(0.04

)

Net income (loss)

 

$

(0.04

)

$

0.26

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

15,514

 

15,510

 

Weighted average diluted common shares outstanding

 

15,514

 

15,510

 

 



 

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (Amounts in thousands, except per share information)

 

 

 

Year Ended
December 31,

 

 

 

2010

 

2009

 

 

 

 

 

 

 

Net sales revenue (net of the rebate portion of volume incentives of $44,409 and $47,231, respectively)

 

$

349,918

 

$

342,111

 

Cost and expenses:

 

 

 

 

 

Cost of goods sold

 

69,040

 

68,512

 

Volume incentives

 

130,367

 

126,105

 

Selling, general and administrative

 

139,248

 

135,061

 

 

 

338,655

 

329,678

 

Operating income

 

11,263

 

12,433

 

Other income, net

 

2,727

 

2,331

 

 

 

 

 

 

 

Income from continuing operations before provision for income taxes

 

13,990

 

14,764

 

Provision for income taxes

 

5,521

 

8,210

 

Net income from continuing operations

 

8,469

 

6,554

 

Loss from discontinued operations

 

(9,702

)

(439

)

Net income (loss)

 

$

(1,233

)

$

6,115

 

 

 

 

 

 

 

Basic and diluted net income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

Net income from continuing operations

 

$

0.55

 

$

0.42

 

Loss from discontinued operations

 

$

(0.63

)

$

(0.03

)

Net income (loss)

 

$

(0.08

)

$

0.39

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

Net income from continuing operations

 

$

0.54

 

$

0.42

 

Loss from discontinued operations

 

$

(0.62

)

$

(0.03

)

Net income (loss)

 

$

(0.08

)

$

0.39

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

15,515

 

15,510

 

Weighted average diluted common shares outstanding

 

15,605

 

15,512

 

 



 

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

RECONSILIATION OF NET INCOME (LOSS) to EBITDA

 (Amounts in thousands)

 

 

 

Three Months Ended
December 31,

 

 

 

2010

 

2009

 

 

 

 

 

 

 

Net income (loss)

 

$

(700

)

$

3,963

 

EBITDA adjustments:

 

 

 

 

 

Loss from discontinued operations

 

314

 

635

 

Depreciation and amortization

 

1,011

 

1,076

 

Share-based compensation expense

 

112

 

478

 

Other income, net**

 

(353

)

(405

)

Taxes

 

4,283

 

1,738

 

EBITDA

 

$

4,667

 

$

7,485

 

 

 

 

Year Ended
December 31,

 

 

 

2010

 

2009

 

 

 

 

 

 

 

Net income (loss)

 

$

(1,233

)

$

6,115

 

EBITDA adjustments:

 

 

 

 

 

Loss from discontinued operations

 

9,702

 

439

 

Depreciation and amortization*

 

4,222

 

4,460

 

Share-based compensation expense

 

437

 

478

 

Other income, net**

 

(2,727

)

(2,331

)

Taxes

 

5,521

 

8,210

 

EBITDA

 

$

15,922

 

$

17,371

 

 


* Excludes immaterial depreciation from Brazil discontinued operations; results in difference from cash flow statement.

 

** Other income, net is primarily comprised of foreign exchange gains (losses), interest income, and interest expense.

 

Contact:

 

Stephen M. Bunker

Chief Financial Officer

Nature’s Sunshine Products, Inc.

Provo, Utah 84605-9005

(801) 342-4370