Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

NATURE’S SUNSHINE PRODUCTS REPORTS FOURTH QUARTER AND FULL YEAR 2013 FINANCIAL RESULTS

 

·                  Fourth quarter net sales revenue growth of 5.7 percent year-over-year (6.8 percent in local currency)

·                  Significant investment spending, resulting in lower operating income

·                  Board of Directors approved a $0.10 per share quarterly dividend

·                  Repurchased 140,331 shares of common stock during 2013

 

LEHI, Utah, March 17, 2014 — Nature’s Sunshine Products, Inc. (NASDAQ:NATR), a leading natural health and wellness company engaged in the manufacture and direct selling of nutritional and personal care products, today reported its consolidated financial results for the fourth quarter and full year ended December 31, 2013, and declared a quarterly cash dividend of $0.10 per share.

 

“We’re pleased with our fourth quarter results which reflect continued progress across both our NSP and Synergy businesses,” commented Gregory L. Probert, Chairman and Chief Executive Officer.  “In addition to Synergy’s record sales quarter and NSP Russia, Central and Eastern Europe’s fifth consecutive quarter of year-over-year sales growth, we experienced double digit growth in NSP Mexico and NSP Central America.”

 

“Our performance is the early result of our incremental investments in sales and marketing personnel, R&D and new product development, Distributor training and sales incentive programs. These investments amounted to $2.2 million of additional SG&A expense in the fourth quarter, the majority of which is recurring and will negatively impact our near-term operating income margin. However, these essential investments position us to drive sales growth in all of our markets to a level that will restore our operating income margin to double digits during 2015.”

 

“In addition, we launched a $40 million Oracle ERP project to provide us with a single integrated software solution and greatly enhance our ability to integrate our people, processes and business systems in all of our markets around the world.  This capital expenditure will provide us better data and visibility into our business, facilitate delivering products to market

 

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faster and more efficiently, as well as to better serve our Managers, Distributors and customers. We will fund this project from internal cash flow and anticipate its completion by mid-2016.”

 

Mr. Probert continued, “The $0.10 quarterly cash dividend and our ongoing share repurchase program reflects the Company’s  strong cash flow generation, our confidence in its long-term growth prospects and our commitment to return excess capital to shareholders.”

 

For the Fourth Quarter of 2013:

 

·                  Net sales revenue increased 5.7 percent to $95.5 million, compared to $90.4 million in the fourth quarter of 2012. In local currencies, net sales revenue increased by 6.8 percent.

 

·                  Selling, general and administrative expenses increased 21.7 percent to $33.7 million, compared with $27.7 million in the fourth quarter of 2012. The increase was primarily due to a $2.2 million increase in the Company’s investment in sales and marketing personnel, R&D and new product development, Distributor training and sales incentive programs, as well as $1.3 million of one-time costs related to a five-year customs audit assessment in our Synergy South Korea market, and $1.1 million of one-time restructuring costs in certain markets.

 

·                  Operating income decreased 55.5 percent to $2.6 million, compared to $5.8 million in the fourth quarter of 2012. The decrease was primarily due to the increase in selling, general and administrative expenses attributable to investments in growth initiatives and one-time costs as described above.

 

·                  Adjusted EBITDA, defined here as net income before taxes, depreciation, amortization and other income adjusted to exclude share-based compensation expense, decreased 41.1 percent to $4.6 million, compared to $7.8 million in the fourth quarter of 2012.

 

·                  Net income was $1.8 million, or $0.11 per diluted common share, compared to $4.5 million, or $0.28 per diluted common share in the fourth quarter of 2012.

 

·                  Cash and cash equivalents as of December 31, 2013, were $77.2 million, compared to $79.2 million as of December 31, 2012, which reflects $24.0 million paid in a special one-time dividend, $6.4 million paid in regular quarterly dividends, and $2.5 million used to repurchase shares during 2013.

 

·                  Shareholders’ equity as of December 31, 2013, was $105.3 million, compared to $115.6 million as of December 31, 2012.  Excluding dividends paid in the year, shareholders’ equity increased by 17.3 percent. Shareholder’s equity as of December 31, 2013 was $6.51 per share, compared to $7.31 per share as of December 31, 2012.  Cash dividends in the amount of $1.90 were paid in 2013, compared to $0.15 in 2012.

 

·                  Active Managers worldwide were 16,900 and active Distributors and customers worldwide were 334,200 as of December 31, 2013, compared to 16,600 and 333,400, respectively in the fourth quarter of 2012.

 

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For the Full Year of 2013:

 

·                  Net sales revenue increased 2.9 percent to $378.1 million, compared to $367.5 million in 2012. In local currencies, net sales revenue increased by 3.7 percent.

 

·                  Selling, general and administrative expenses increased 13.0 percent to $120.7 million, compared with $106.9 million in 2012. The increase was primarily due to a $6.0 million increase in the Company’s investment in sales and marketing personnel, R&D and new product development, Distributor training and sales incentive programs, and $2.2 million of increased investments in Distributor conventions, meetings and incentive trips, as well as $1.4 million of one-time severance costs and the acceleration of stock option expense incurred related to the resignation of our former Chief Executive Officer, $1.3 million of one-time costs related to a five-year customs audit assessment in our Synergy South Korea market, and $1.1 million of one-time restructuring costs in certain markets.

 

·                  Operating income decreased 29.3 percent to $24.1 million, compared to $34.0 million in 2012. The decrease was primarily due to the increase in selling, general and administrative expenses attributable to investments in growth initiatives and one-time costs as described above.

 

·                  Adjusted EBITDA, defined here as net income before taxes, depreciation, amortization and other income adjusted to exclude share-based compensation expense, decreased 22.1 percent to $31.9 million, compared to $41.0 million in 2012.

 

·                  Net income was $17.6 million, or $1.07 per diluted common share, compared to $25.4 million, or $1.59 per diluted common share in 2012.

 

NSP Americas, Asia Pacific and Europe Results for the Fourth Quarter of 2013:

 

·                  Net sales revenue increased 0.5 percent to $49.9 million, compared to $49.7 million in the fourth quarter of 2012. In local currencies, net sales revenue increased by 2.4 percent compared to the fourth quarter of 2012. Higher net sales in Mexico, Central America and South America were partially offset by lower net sales in the United States and Japan.  In Mexico, net sales increased year-over-year for the third consecutive quarter, up 25.1 percent from the fourth quarter of 2012.  In Central American and South America net sales increased 5.0 percent and 11.7 percent, respectively, year-over-year. In the United States, net sales declined 1.7 percent year-over-year.

 

·                  Contribution margin, defined as net sales revenue less cost of sales and volume incentive expense, was $20.0 million, compared to $19.1 million in the fourth quarter of 2012, primarily reflecting higher net sales revenue.

 

·                  Active Managers within the segment were approximately 7,900 and active Distributors and customers within the segment were approximately 150,600 as of December 31, 2013, as compared to 8,100 and 153,000, respectively, as of December 31, 2012. New

 

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Managers were down 2.5 percent, and new Distributors and customers were down 1.6 percent compared to the prior year.

 

NSP Russia, Central and Eastern Europe Results for the Fourth Quarter of 2013:

 

·                  Net sales revenue increased 7.5 percent to $17.1 million, compared to $15.9 million in the fourth quarter of 2012. Net sales revenue increased year-over-year for the fifth consecutive quarter as a result of improved recruiting, Distributor leadership engagement, Distributor recognition, promotions and training, and the enhanced focus afforded by the corporate organizational realignment during 2012. In addition, NSP Russia, Central and Eastern Europe launched a new weight management program at its annual regional convention in September.

 

·                  Contribution margin decreased 4.4 percent to $5.6 million, compared to $5.9 million in the fourth quarter of 2012, primarily due to higher inventory costs associated with product mix.

 

·                  Active Managers within the segment were approximately 6,000 and active Distributors and customers within the segment were approximately 131,800 as of December 31, 2013, as compared to 5,600 and 125,800, respectively as of December 31, 2012. New Managers were up 7.1 percent, and new Distributors and customers were up 4.8 percent compared to the prior year.

 

·                  Despite the robust net sales growth experienced in 2013, the Company must caution that near-term growth will undoubtedly be impacted by the political unrest in the Ukraine and Russia. Also, the Company is currently in a contract dispute with its General Dealer that administers the marketing and distribution of the Company’s products in the region. Although the Company is negotiating with the General Dealer, failure to resolve the dispute could result in disruption to the Company’s business, which could have an adverse effect on the Company’s business and results of operations.

 

Synergy WorldWide Results for the Fourth Quarter of 2013:

 

·                  Net sales revenue increased 14.8 percent to $28.5 million, compared to $24.8 million in the fourth quarter of 2012. This marks the second consecutive record-setting sales quarter for Synergy. In local currencies, net sales revenue increased by 15.4 percent compared to the fourth quarter of 2012, driven primarily by increased sales in South Korea, Scandinavia and Central Europe and partially offset by declines in North America. The increase in net sales revenue is primarily a result of re-engaged leadership, strong execution, and momentum stemming from Synergy’s global summit and pre-launch of the SLMsmart weight management line in South Korea.

 

·                  Contribution margin increased 24.6 percent to $10.7 million, compared to $8.6 million in the fourth quarter of 2012, primarily as a result of increased net sales revenue.

 

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·                  Active Managers within the segment were approximately 3,000 and active Distributors and customers within the segment were approximately 51,800 as of December 31, 2013, as compared to 2,900 and 54,600, respectively as of December 31, 2012.   New Managers were up 3.4 percent, while new Distributors and customers were down 5.4 percent compared to the prior year.

 

Effective Income Tax Rate

 

The effective income tax rate for the fourth quarter of 2013 was 30.3 percent compared to 39.8 percent in the fourth quarter of 2012.  The current quarter’s effective tax rate was below the U.S. federal statutory tax rate of 35.0 percent which was primarily attributable to the favorable U.S. tax impact of foreign operations, offset by adjustments to foreign valuation allowances and an increase in tax liabilities associated with uncertain tax positions.

 

Quarterly Cash Dividend and Ongoing Share Repurchase Program

 

The Company’s Board of Directors approved a quarterly cash dividend of $0.10 per share, payable on April 7, 2014, to shareholders of record as of the close of business on March 28, 2014.

 

On August 8, 2013, the Board of Directors authorized a $10 million share repurchase program to be implemented over two years.  Such purchases may be made in the open market, through block trades, in privately negotiated transactions or otherwise.  The timing and amount of any shares repurchased will be determined based on the Company’s evaluation of market conditions and other factors and the program may be discontinued or suspended at any time.

 

During the three months ended December 31, 2013, the Company repurchased 32,609 shares of its common stock under the share repurchase program for $0.6 million.  At December 31, 2013, the remaining balance available for repurchases under the program was $7.5 million.

 

The quarterly dividend, in addition to the special one-time dividend that was announced and paid in August 2013, and the on-going share repurchase program, are enabled by the Company’s strong cash flow, healthy cash balance, the Board’s commitment to return capital to shareholders and its confidence in the Company’s long-term growth prospects.

 

Non-GAAP Financial Measures

 

The Company has included information which has not been prepared in accordance with generally accepted accounting principles (GAAP), such as information concerning adjusted EBITDA because management utilizes this information in the evaluation of its operations and believes that these measures are a useful indicator of the Company’s ability to fund its business. These non-GAAP financial measures should not be considered as an alternative to, or more meaningful than, U.S. GAAP net income as an indicator of the Company’s operating performance.  Moreover, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. Other companies may use the same or similarly named measures, but exclude different items, which

 

5



 

may not provide investors with a comparable view of Nature’s Sunshine Products’ performance in relation to other companies. The Company has included a reconciliation of these non-GAAP measures to reported earnings under GAAP in the attached financial tables.

 

Conference Call

 

Nature’s Sunshine Products will host a conference call to discuss its fourth quarter and full year 2013 results on March 17, 2014 at 4:30 PM Eastern Time.  The toll-free dial-in number for callers in the U.S. and Canada is 1-877-407-0789, conference ID: 13575478.  International callers can dial 1-201-689-8562, conference ID: 13575478.  A replay will be available from March 18, 2014 at 2:00 PM Eastern Time through April 1, 2014 at 11:59 PM Eastern Time at 1-877-870-5176 (U.S. and Canada) or 1-858-384-5517 (International), replay PIN: 13575478.  The call will also be webcast live and will be available on the Investing section of Nature’s Sunshine Products’ website at www.naturessunshine.com for 90 days.

 

About Nature’s Sunshine Products

 

Nature’s Sunshine Products (NASDAQ:NATR), a leading natural health and wellness company, markets and distributes nutritional and personal care products through a global direct sales force of over 330,000 active independent Managers, Distributors and customers in more than 40 countries.  Nature’s Sunshine manufactures most of its products through its own state-of-the-art facilities to ensure its products continue to set the standard for the highest quality, safety and efficacy on the market today. The Company has three reportable business segments that are divided based on the characteristics of their Distributor base, similarities in compensation plans, as well as the internal organization of NSP’s officers and their responsibilities (NSP Americas, Asia Pacific and Europe; NSP Russia, Central and Eastern Europe; and Synergy WorldWide). The Company also supports health and wellness for children around the world through its partnership with the Sunshine Heroes Foundation.  Additional information about the Company can be obtained at its website, www.naturessunshine.com.

 

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Cautionary Statement Regarding Forward-Looking Statements

 

Certain information included or incorporated herein by reference in this release may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies. All statements (other than statements of historical fact) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made by management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are more fully described in this release, but include the following:

 

·        any negative consequences resulting from the economy, including the availability of liquidity to us, our customers and our suppliers or the willingness of our customers to purchase products;

 

·        our relationship with, and our ability to influence the actions of, our Distributors;

 

·        improper action by our employees or Distributors;

 

·        negative publicity related to our products or direct selling organization;

 

·        changing consumer preferences and demands;

 

·        our reliance upon, or the loss or departure of any member of, our senior management team which could negatively impact our Distributor relations and operating results;

 

·        the competitive nature of our business;

 

·        regulatory matters governing our products, our direct selling program, or the direct selling market in which we operate;

 

·        legal challenges to our direct selling program;

 

·        risks associated with operating internationally and the effect of economic factors, including foreign exchange, inflation, disruptions or conflicts with our third party importers, pricing and currency devaluation risks, especially in countries such as Venezuela and Belarus;

 

·        uncertainties relating to the application of transfer pricing, duties, value-added taxes, and other tax regulations, and changes thereto;

 

·        our dependence on increased penetration of existing markets;

 

·        our reliance on our information technology infrastructure;

 

·        the sufficiency of trademarks and other intellectual property rights;

 

·        changes in tax laws, treaties or regulations, or their interpretation;

 

7



 

·        taxation relating to our Distributors;

 

·        product liability claims;

 

·        share price volatility related to, among other things, speculative trading.

 

Contact:

 

Steve Bunker

Chief Financial Officer

Nature’s Sunshine Products, Inc.

Lehi, Utah 84043

(801) 341-7303

 

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

 

 

December 31,
2013

 

December 31,
2012

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

77,247

 

$

79,241

 

Accounts receivable, net of allowance for doubtful accounts of $1,087 and $631, respectively

 

10,206

 

9,614

 

Investments available for sale

 

2,006

 

2,071

 

Inventories

 

41,910

 

43,280

 

Deferred income tax assets

 

5,711

 

5,307

 

Prepaid expenses and other

 

11,514

 

5,820

 

Total current assets

 

148,594

 

145,333

 

 

 

 

 

 

 

Property, plant and equipment, net

 

32,022

 

27,950

 

Investment securities

 

971

 

1,276

 

Intangible assets, net

 

853

 

1,002

 

Deferred income tax assets

 

9,928

 

11,516

 

Other assets

 

7,244

 

6,842

 

 

 

$

199,612

 

$

193,919

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

5,664

 

$

6,226

 

Accrued volume incentives

 

19,206

 

18,130

 

Accrued liabilities

 

34,893

 

27,302

 

Deferred revenue

 

4,173

 

4,311

 

Current installments of long-term debt and revolving credit facility

 

2,267

 

3,350

 

Income taxes payable

 

2,366

 

2,071

 

Total current liabilities

 

68,569

 

61,390

 

 

 

 

 

 

 

Liability related to unrecognized tax benefits

 

12,402

 

10,571

 

Long-term debt and revolving credit facility

 

10,000

 

2,270

 

Deferred compensation payable

 

971

 

1,276

 

Other liabilities

 

2,411

 

2,776

 

Total long-term liabilities

 

25,784

 

16,893

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common stock, no par value, 50,000 shares authorized, 16,179 and 15,810 shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively

 

83,122

 

77,292

 

Retained earnings

 

36,100

 

48,910

 

Accumulated other comprehensive loss

 

(13,963

)

(10,566

)

Total shareholders’ equity

 

105,259

 

115,636

 

 

 

$

199,612

 

$

193,919

 

 

9



 

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share information)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Net sales revenue

 

$

95,484

 

$

90,377

 

Cost of sales

 

(24,084

)

(23,841

)

Gross profit

 

71,400

 

66,536

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Volume incentives

 

35,062

 

32,991

 

Selling, general and administrative

 

33,747

 

27,719

 

Operating income

 

2,591

 

5,826

 

Other income, net

 

53

 

1,639

 

Income before provision for income taxes

 

2,644

 

7,465

 

Provision for income taxes

 

801

 

2,969

 

Net income

 

$

1,843

 

$

4,496

 

 

 

 

 

 

 

Basic and diluted net income per common share

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

Net income

 

$

0.11

 

$

0.28

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

Net income

 

$

0.11

 

$

0.28

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

16,196

 

15,781

 

Weighted average diluted common shares outstanding

 

16,550

 

16,064

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.10

 

$

0.05

 

 

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share information)

(Unaudited)

 

 

 

Year  Ended
December 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Net sales revenue

 

$

378,096

 

$

367,468

 

Cost of sales

 

(94,814

)

(93,324

)

Gross profit

 

283,282

 

274,144

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Volume incentives

 

138,482

 

133,267

 

Selling, general and administrative

 

120,743

 

106,861

 

Operating income

 

24,057

 

34,016

 

Other income, net

 

1,596

 

1,480

 

Income before provision for income taxes

 

25,653

 

35,496

 

Provision for income taxes

 

8,044

 

10,116

 

Net income

 

17,609

 

25,380

 

 

 

 

 

 

 

Basic and diluted net income per common share

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

Net income

 

$

1.10

 

$

1.62

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

Net income

 

$

1.07

 

$

1.59

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

15,997

 

15,648

 

Weighted average diluted common shares outstanding

 

16,390

 

15,987

 

 

 

 

 

 

 

Dividends declared per common share

 

$

1.90

 

$

0.15

 

 

11



 

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

 

 

2013

 

2012

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

17,609

 

$

25,380

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Provision for doubtful accounts

 

535

 

45

 

Depreciation and amortization

 

4,466

 

4,078

 

Tax benefit from stock option exercise

 

(653

)

(378

)

Share-based compensation expense

 

3,389

 

2,878

 

(Gain) loss on sale of property and equipment

 

(128

)

85

 

Deferred income taxes

 

1,092

 

4,270

 

Amortization of bond discount

 

1

 

9

 

Purchase of trading investment securities

 

(88

)

(92

)

Proceeds from sale of trading investment securities

 

510

 

354

 

Realized and unrealized gains on investments

 

(122

)

(90

)

Foreign exchange gains

 

(1,254

)

(290

)

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(1,358

)

266

 

Inventories

 

838

 

(1,466

)

Prepaid expenses and other current assets

 

(5,728

)

(1,155

)

Other assets

 

(303

)

(193

)

Accounts payable

 

(552

)

77

 

Accrued volume incentives

 

1,286

 

(1,279

)

Accrued liabilities

 

7,379

 

(1,289

)

Deferred revenue

 

(138

)

1,708

 

Income taxes payable

 

1,071

 

(6,259

)

Liability related to unrecognized tax benefits

 

1,831

 

145

 

Deferred compensation payable

 

(305

)

(153

)

Net cash provided by operating activities

 

29,378

 

26,651

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Purchases of property, plant and equipment

 

(8,570

)

(6,629

)

Purchase of investments available for sale

 

(442

)

(174

)

Proceeds from maturity and sale of investments available for sale

 

200

 

3,789

 

Proceeds from sale of property, plant and equipment

 

248

 

25

 

Net cash used in investing activities

 

(8,564

)

(2,989

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Dividends paid

 

(30,419

)

(2,349

)

Borrowings on long-term debt and revolving credit facility

 

10,000

 

 

Principal payments of long-term debt and revolving credit facility

 

(3,353

)

(3,570

)

Tax benefit from stock option exercise

 

653

 

378

 

Proceeds from the exercise of stock options

 

4,334

 

2,408

 

Repurchase of common stock

 

(2,546

)

 

Net cash used in financing activities

 

(21,331

)

(3,133

)

Effect of exchange rates on cash and cash equivalents

 

(1,477

)

(257

)

Net increase (decrease) in cash and cash equivalents

 

(1,994

)

20,272

 

Cash and cash equivalents at the beginning of the period

 

79,241

 

58,969

 

Cash and cash equivalents at the end of the period

 

$

77,247

 

$

79,241

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid for income taxes

 

$

10,278

 

$

12,960

 

Cash paid for interest

 

128

 

128

 

 

12



 

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(Amounts in thousands)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Net income

 

$

1,843

 

$

4,496

 

Adjustments:

 

 

 

 

 

Depreciation and amortization

 

1,187

 

1,050

 

Share-based compensation expense

 

790

 

877

 

Other income, net*

 

(53

)

(1,639

)

Taxes

 

801

 

2,969

 

Adjusted EBITDA

 

$

4,568

 

$

7,753

 

 

 

 

Year Ended
December 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Net income

 

$

17,609

 

$

25,380

 

Adjustments:

 

 

 

 

 

Depreciation and amortization

 

4,466

 

4,078

 

Share-based compensation expense

 

3,389

 

2,878

 

Other income, net*

 

(1,596

)

(1,480

)

Taxes

 

8,044

 

10,116

 

Adjusted EBITDA

 

$

31,912

 

$

40,972

 

 


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

 

13



 

Distributor Information

 

Our revenue is highly dependent upon the number and productivity of our Managers, Distributors and customers.  Growth in sales volume requires an increase in the productivity and/or growth in the total number of Managers, Distributors and customers.

 

The following table provides information concerning the number of total Managers, Distributors and customers by segment, as of the dates indicated.

 

Total Managers, Distributors and Customers by Segment as of December 31,

 

 

 

2013

 

2012

 

2011

 

 

 

Distributors
& Customers

 

Managers

 

Distributors
& Customers

 

Managers

 

Distributors
& Customers

 

Managers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NSP Americas, Asia Pacific & Europe

 

328,200

 

7,900

 

350,400

 

8,100

 

388,400

 

8,700

 

NSP Russia, Central and Eastern Europe

 

260,200

 

6,000

 

252,700

 

5,600

 

266,200

 

5,400

 

Synergy WorldWide

 

118,500

 

3,000

 

118,200

 

2,900

 

112,300

 

2,700

 

Total

 

706,900

 

16,900

 

721,300

 

16,600

 

766,900

 

16,800

 

 

“Total Managers” includes independent Managers under our various compensation plans that have achieved and maintained specified and personal groups sale volumes as of the date indicated. To maintain Manager status, an individual must continue to meet certain product sales volume levels. As such, all Managers are considered to be active Managers.

 

“Total Distributors and customers” includes our independent Distributors and customers who have purchased products directly from the Company for resale and/or personal consumption during the previous twelve months ended as of the date indicated. This includes Manager, Distributor and customer accounts that may have become inactive since such respective dates.

 

The following table provides information concerning the number of active Distributors and customers by segment, as of the dates indicated.

 

Active Distributors and Customers by Segment as of December 31,

 

 

 

2013

 

2012

 

2011

 

 

 

Distributors
& Customers

 

Distributors
& Customers

 

Distributors
& Customers

 

 

 

 

 

 

 

 

 

NSP Americas, Asia Pacific & Europe

 

150,600

 

153,000

 

165,600

 

NSP Russia, Central and Eastern Europe

 

131,800

 

125,800

 

122,800

 

Synergy WorldWide

 

51,800

 

54,600

 

51,700

 

Total

 

334,200

 

333,400

 

340,100

 

 

14



 

“Active Distributors and customers” includes our independent Distributors and customers who have purchased products directly from the Company for resale and/or personal consumption during the previous three months ended as of the date indicated. All of our Managers are active.

 

The following tables provide information concerning the number of new Managers, Distributors and customers by segment, as of the dates indicated.

 

New Managers, Distributors and Customers by Segment for the year ended December 31,

 

 

 

2013

 

2012

 

2011

 

 

 

Distributors
& Customers

 

Managers

 

Distributors
& Customers

 

Managers

 

Distributors
& Customers

 

Managers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NSP Americas, Asia Pacific & Europe

 

148,400

 

3,800

 

166,400

 

4,200

 

185,600

 

4,800

 

NSP Russia, Central and Eastern Europe

 

89,300

 

1,600

 

78,000

 

1,500

 

74,700

 

1,700

 

Synergy WorldWide

 

71,800

 

1,900

 

73,700

 

1,700

 

72,000

 

1,600

 

Total

 

309,500

 

7,300

 

318,100

 

7,400

 

332,300

 

8,100

 

 

“New Managers” includes independent Managers under our various compensation plans that first achieved the rank of Manager during the previous twelve months ended as of the date indicated.

 

“New Distributors and Customers” include our independent Distributors and customers who have made their initial product purchase directly from us for resale and/or personal consumption during the previous twelve months ended as of the date indicated.

 

15