x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2008
|
|
OR
|
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
371172197
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification Number)
|
|
incorporation
or organization)
|
136
Chesterfield Industrial Boulevard
|
||
Chesterfield, Missouri
|
63005
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title of Each Class
|
Name of Each Exchange on Which
Registered
|
|
Common
Stock, par value $0.001
|
NASDAQ
Global Select Market
|
Document
|
Part
of Form 10-K into Which
Document Is Incorporated
|
|
Sections
of the registrant’s definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on May 28, 2009, which is expected to be filed no
later than 120 days after December 31, 2008
|
Part
III
|
Part
I
|
|||
Item
No. 1
|
Business
|
1
|
|
Item
No. 1A
|
Risk
Factors
|
16
|
|
Item
No. 1B
|
Unresolved
Staff Comments
|
25
|
|
Item
No. 2
|
Properties
|
25
|
|
Item
No. 3
|
Legal
Proceedings
|
25
|
|
Item
No. 4
|
Submission
of Matters to a Vote of Security Holders
|
25
|
|
Part
II
|
|||
Item
No. 5
|
Market
for Registrant’s Common Equity, Related Stockholder
|
||
Matters
and Issuer Purchases of Equity Securities
|
26
|
||
Item
No. 6
|
Selected
Financial Data
|
28
|
|
Item
No. 7
|
Management’s
Discussion and Analysis of
|
||
Financial
Condition and Results of Operations
|
29
|
||
Item
No. 7A
|
Quantitative
and Qualitative Disclosures Regarding Market Risk
|
42
|
|
Item
No. 8
|
Financial
Statements and Supplementary Data
|
43
|
|
Item
No. 9
|
Changes
in and Disagreements with Accountants
|
||
on
Accounting and Financial Disclosure
|
43
|
||
Item
No. 9A
|
Controls
and Procedures
|
43
|
|
Item
No. 9B
|
Other
Information
|
44
|
|
Part
III
|
|||
Item
No. 10
|
Directors
and Executive Officers of the Registrant
|
44
|
|
Item
No. 11
|
Executive
Compensation
|
44
|
|
Item
No. 12
|
Security
Ownership of Certain Beneficial Owners
|
||
and
Management and Related Stockholder Matters
|
44
|
||
Item
No. 13
|
Certain
Relationships and Related Transactions
|
44
|
|
Item
No. 14
|
Principal
Accounting Fees and Services
|
44
|
|
Part
IV
|
|||
Item
No. 15
|
Exhibits
and Financial Statement Schedules
|
45
|
|
•
|
Reliv
Classic and Reliv NOW — two basic nutritional supplements containing
a full and balanced blend of vitamins, minerals, proteins and
herbs
|
|
•
|
Innergize! —
an isotonic sports supplement in three
flavors
|
|
•
|
FibRestore —
a high-fiber and antioxidant
supplement
|
|
•
|
Aging Population: The
U.S. Census Bureau projects that, by 2010, approximately 39.2% of the
U.S. population will be 45 years of age or older, up from 34.5%
in 2000. This growing population is expected to live longer, as the
average life expectancy reached an all-time high of 75.2 years for
men and 80.4 years for women in 2005 according to the Centers for
Disease Control, or CDC. We believe this growing population will
continue to focus on their nutritional needs as
they age.
|
|
•
|
Rising Healthcare Costs and
Use of Preventive Measures: The cost of healthcare in the United
States has increased rapidly, reaching approximately $2.4 trillion in
2008 and is expected to reach $4.3 trillion by 2017, according to the
National Coalition on Health Care. Since 1999, insurance premiums for
family coverage have increased by 120% compared with inflation growth of
44% according to the 2008 Employee Health Benefits Survey by the Henry J.
Kaiser Family Foundation. In order to maintain quality of life as well as
reduce medical costs, many consumers take preventative measures to improve
their general health, including the use of nutritional
supplements.
|
|
•
|
Increasing Focus on Weight
Management: A study from the CDC completed in 2006 estimated that
73% of the U.S. adult population is overweight, obese or extremely obese.
Since being overweight can lead to more serious health concerns such as
diabetes, heart disease and other chronic illnesses, we believe that the
rise in obesity will result in an increased need not only for weight loss
products but wellness products as
well.
|
Product Category
|
Product Name
|
%
of 2008
Net Sales(1)
|
Year
Introduced
|
|||||
Basic
Nutrition
|
Reliv
Classic
|
22.5 |
1988
|
|||||
Reliv
NOW
|
13.2 |
1988
|
||||||
NOW
for Kids
|
4.1 |
2000
|
||||||
Reliv
Delight
|
0.3 |
2001
|
||||||
Specific
Wellness(2)
|
FibRestore
|
16.0 |
1993
|
|||||
Arthaffect
|
7.6 |
1996
|
||||||
ReversAge
|
5.0 |
2000
|
||||||
SoySentials
|
2.5 |
1998
|
||||||
CardioSentials
|
2.3 |
2005
|
||||||
GlucAffect
|
1.9 |
2008
|
||||||
Weight
Management(3)
|
Slimplicity
Meal Replacement
|
2.5 |
2007
|
|||||
Slimplicity
Accelerator Capsule
|
1.5 |
2007
|
||||||
Reliv
Ultrim Plus
|
0.8 |
1988
|
||||||
Cellebrate
|
1.0 |
1995
|
||||||
Sports
Nutrition
|
Innergize!
|
14.0 |
1991
|
|||||
ProVantage
|
3.6 |
1997
|
||||||
Skin
Care
|
ReversAge
Skin Care
|
1.2 |
2001
|
(1)
|
This
table does not include net sales for the year ended December 31, 2008
related to freight and handling and sales of marketing materials, which
represented approximately 13.3% of net sales for the year ended
December 31, 2008.
|
(2)
|
In
November 2008, we introduced GlucAffect in the United
States.
|
(3)
|
In
February 2007, we introduced our Slimplicity Meal Replacement formula and
Slimplicity Accelerator Capsules in the United States and in January 2008,
we introduced Slimplicity in each of our European markets. Upon
introduction of our Slimplicity products in a particular market, our Reliv
Ultrim-Plus line was discontinued in that
market.
|
|
•
|
Reliv
Classic is a nutritional supplement containing a variety of vitamins and
minerals, soy and other protein sources and various herbs. It is a
vegetarian product that contains no animal compounds, artificial
preservatives, artificial flavors or added simple sugars. Reliv Classic is
available in the United States, Australia, New Zealand, Canada, Germany,
Austria, the Netherlands, the United Kingdom, Ireland, Malaysia,
Singapore, Brunei and the
Philippines.
|
|
•
|
Reliv
NOW is a nutritional supplement containing a variety of vitamins and
minerals, soy and other protein sources and various herbs. Reliv NOW is
available in every country where we
operate.
|
|
•
|
NOW
for Kids is a product designed to provide a balanced nutritional
supplement for a child’s diet and contains a variety of vitamins and
minerals. NOW for Kids is available in Australia, New Zealand, United
States, the United Kingdom, Ireland, Malaysia and the
Philippines.
|
|
•
|
Reliv
Delight is a powdered nutritional supplement sold as a milk replacement.
Reliv Delight is available in Mexico and the United
States.
|
|
•
|
ReversAge
is a patented youth-promoting nutritional supplement designed to slow down
the effects of the aging process. Three proprietary complexes form the
foundation of the supplement: longevity complex, antioxidant complex and
herbal complex. The longevity complex is restorative and designed to
replenish key hormones while creating balance within the body’s major
systems; the antioxidant complex is designed to slow aging at the cellular
level and the herbal complex delivers a variety of herbs, including Ginkgo
Biloba and Maca. ReversAge is available in every country where we operate
except Germany, the United Kingdom, Ireland and Brunei, Singapore. In
Canada, the product is marketed as
Nutriversal.
|
|
•
|
SoySentials
is a nutritional supplement containing soy as well as other vitamins,
minerals and herbs designed for use by women. SoySentials provides a woman
with key nutrients targeted to promote women’s health and ease the
symptoms of menopause and PMS. SoySentials is available in the United
States, Canada and Mexico.
|
|
•
|
CardioSentials
is a berry-flavored nutritional supplement introduced in February 2005
that promotes heart health. The product contains 1,500 mg of
phytosterols per serving, policosanol and several powerful antioxidants.
In a clinical study of this product, participants experienced meaningful
reductions in cholesterol as well as improvement in their high-density
lipoprotein, or HDL, and low-density lipoprotein, or LDL, ratios. We have
applied for a U.S. patent on CardioSentials. CardioSentials is
available only in the United
States.
|
|
•
|
Arthaffect
is a patented nutritional supplement containing Arthred, a patented form
of hydrolyzed collagen protein, which is clinically reported to support
healthy joint function. The product is available in the United States,
Australia, New Zealand, Mexico, the Philippines and Canada. The product is
marketed as A-Affect in Australia, New Zealand and Canada due to local
product regulations.
|
|
•
|
FibRestore
is a patented nutritional supplement containing fiber, vitamins, minerals
and herbs. A modified version of the FibRestore formula is marketed in
Canada under the name Herbal Harmony to comply with Canada’s nutritional
regulations. FibRestore is available in all of the countries in which we
operate.
|
|
•
|
GlucAffect
is a cinnamon cream flavored nutritional supplement launched in November
2008 as our latest product offering. GlucAffect contains
Pycnogenol® and other clinically supported active ingredients. GlucAffect
has been clinically proven to assist in healthy blood sugar management and
support weight loss. We have applied for a U.S. patent on
GlucAffect. GlucAffect is available only in the United States
at this time.
|
|
•
|
Our
Slimplicity Weight Loss System was introduced in the United States in
February 2007 and includes two products: (1) Slimplicity meal
replacement and (2) Slimplicity accelerator capsules. Our
Slimplicity Weight Loss System incorporates these new products into an
overall program that includes proper diet and exercise and is focused on
facilitating weight loss and developing healthier lifestyle
choices. Slimplicity is currently available in the United
States, Germany, Austria, the Netherlands, Ireland, the United Kingdom,
Australia and New Zealand. In our European markets, we offer
chewable tablets instead of capsules in light of local preferences and
formula modifications required to comply with product
regulations. In Australia and New Zealand, the products are
marketed as Slimsimply due to trademark
availability.
|
|
•
|
Reliv
Ultrim-Plus is designed as a meal replacement (for a maximum of two meals
per day) for use in a weight loss program. Reliv Ultrim-Plus is
sold in Canada, Malaysia, Mexico, Philippines, Brunei and
Singapore. Reliv Ultrim-Plus is no longer available in the
United States, Germany, the Netherlands, Austria, Ireland, the United
Kingdom, Australia and New Zealand due to the introduction of our
Slimplicity meal replacement product. We expect Slimplicity to
eventually replace Reliv Ultrim-Plus in all of our markets as we introduce
our Slimplicity Weight Loss System in each
market.
|
|
•
|
Cellebrate
is a patented weight loss aid designed to suppress appetite, curb the
storage of body fat, and facilitate the body’s fat burning process.
Cellebrate is available in the United States and
Canada.
|
|
•
|
Innergize!
is a patented sports supplement, containing vitamins and minerals designed
for performance enhancement. Innergize! is available in every country
where we operate. In Canada, the product is marketed as Optain due to
local product regulations.
|
|
•
|
ProVantage
is a nutritional supplement containing soy designed to enhance athletic
performance with a balance of nutrients needed to improve endurance,
muscle recovery and repair. ProVantage is designed to increase muscle
recovery, muscle mass and function, reduce fatigue and burn excess body
fat for extra energy. The product also benefits dieters and others seeking
to increase their soy intake. We have applied for a U.S. patent on
ProVantage. ProVantage is available in the United States and
Canada.
|
|
•
|
Balanced
Cleansing Gel
|
|
•
|
Total
Body Renewal Lotion
|
|
•
|
Smooth
and Lift Serum
|
|
•
|
Daily
Skin Defense
|
|
•
|
Eye
Renewal Cream
|
|
•
|
Nightly
Skin Restore
|
|
•
|
Rich
Cleansing Bar
|
Designation
|
Discount
|
|||
Retail
Distributor
|
20 | % | ||
Affiliate
|
25 | % | ||
Key
Affiliate
|
30 | % | ||
Senior
Affiliate
|
35 | % | ||
Master
Affiliate
|
40 | % (1) | ||
Director
|
40 | % (1) | ||
Key
Director
|
40 | % (1) | ||
Senior
Director
|
40 | % (1) | ||
Master
Director
|
40 | % (1) | ||
Presidential
Director
|
40 | % (1) |
(1)
|
In
addition to discounts, these levels also receive commissions based on
sales in their downline
organization.
|
|
•
|
During
2008, we sponsored approximately 45 training schools on a quarterly basis
across all of our markets for new Master
Affiliates;
|
|
•
|
For
each market in which we operate, we sponsor an annual conference for
distributors; and
|
|
•
|
In
the United States, we sponsor an annual International Conference in summer
for all worldwide distributors and a winter conference for U.S.
distributors.
|
Country
|
Year Entered
|
||
United
States
|
1988
|
||
Australia
|
1991
|
||
New
Zealand
|
1992
|
||
Canada
|
1992
|
||
Mexico
|
1993
|
||
United
Kingdom(1)
|
1995
|
||
Philippines
|
2000
|
||
Malaysia
|
2003
|
||
Ireland
|
2003
|
||
Singapore
|
2004
|
||
Germany
|
2005
|
||
Austria
|
2006
|
||
Netherlands
|
2006
|
||
Brunei
|
2009
|
(1)
|
Includes
Great Britain, Scotland, Wales and Northern
Ireland.
|
|
•
|
help
ensure that our network marketing system and products comply with all
applicable regulations;
|
|
•
|
help
establish favorable public relations in the new market by acting as an
intermediary between us and local regulatory authorities, public officials
and business people; and
|
|
•
|
explain
our products and product ingredients to appropriate regulators and, when
necessary, to arrange for local technicians to conduct required ingredient
analysis tests of the products.
|
|
•
|
the
safety and quality of our products and
ingredients;
|
|
•
|
the
safety and quality of similar products and ingredients distributed by
other companies;
|
|
•
|
regulatory
investigations of us, our competitors and our respective
products;
|
|
•
|
the
actions of our current or former
distributors;
|
|
•
|
our
network marketing program; and
|
|
•
|
network
marketing businesses generally.
|
|
•
|
accurately
anticipate customer needs;
|
|
•
|
innovate
and develop new products or product enhancements that meet these
needs;
|
|
•
|
successfully
commercialize new products or product enhancements in a timely
manner;
|
|
•
|
price
our products competitively;
|
|
•
|
manufacture
and deliver our products in sufficient volumes and in a timely manner;
and
|
|
•
|
differentiate
our product offerings from those of our
competitors.
|
|
•
|
fluctuations
in our quarterly operating and earnings per share
results;
|
|
•
|
material
developments with respect to future
acquisitions;
|
|
•
|
loss
of key personnel and key
distributors;
|
|
•
|
announcements
of technological innovations or new products by us or our
competitors;
|
|
•
|
delays
in the development and introduction of new
products;
|
|
•
|
our
failure to timely address changing customer or distributor
preferences;
|
|
•
|
legislative
or regulatory changes;
|
|
•
|
general
trends in the industry;
|
|
•
|
recommendations
and/or changes in estimates by equity and market research
analysts;
|
|
•
|
biological
or medical discoveries;
|
|
•
|
disputes
and/or developments concerning intellectual property, including patents
and litigation matters;
|
|
•
|
sales
of common stock by our existing holders, in particular, sales by
management;
|
|
•
|
securities
class action or other litigation;
|
|
•
|
developments
in our relationships with current or future distributors, customers or
suppliers; and
|
|
•
|
general
economic conditions, both in the United States and
abroad.
|
Location
|
Nature of Use
|
Square Feet
|
Owned/Leased
|
|||
Chesterfield,
MO, USA
|
corporate
headquarters/call center/manufacturing/warehouse
|
126,000
|
Owned
|
|||
Seven
Hills (Sydney), Australia
|
central
office/ warehouse/distribution
|
8,900
|
Leased
|
|||
Oakville,
Ontario, Canada
|
warehouse/distribution
|
2,100
|
Leased
|
|||
Mexico
City, Mexico
|
central
office/ warehouse/distribution
|
28,000
|
Leased
|
|||
Makati
City (Manila), Philippines
|
central
office/ warehouse/distribution
|
3,900
|
Leased
|
|||
Birmingham,
England, UK
|
central
office/ warehouse/distribution
|
2,200
|
Leased
|
|||
Petaling
Jaya, Malaysia
|
central
office/call center warehouse/distribution
|
4,000
|
Leased
|
|||
Dietzenbach
(Frankfurt), Germany
|
|
warehouse/distribution
|
|
8,300
|
|
Leased
|
High
|
Low
|
Dividend
|
||||||||||
Year
Ending December 31, 2008
|
||||||||||||
Fourth
Quarter
|
$ | 5.95 | $ | 3.85 | $ | 0.05 | ||||||
Third
Quarter
|
6.90 | 5.00 | - | |||||||||
Second
Quarter
|
7.47 | 5.45 | 0.05 | |||||||||
First
Quarter
|
8.75 | 6.03 | - | |||||||||
Year
Ending December 31, 2007
|
||||||||||||
Fourth
Quarter
|
10.07 | 7.50 | 0.05 | |||||||||
Third
Quarter
|
11.60 | 8.94 | - | |||||||||
Second
Quarter
|
11.56 | 9.53 | 0.05 | |||||||||
First
Quarter
|
11.49 | 8.57 | - |
Period
|
Total
Number
of
Shares
Purchased(1)
|
Average
Price
Paid per Share
|
Total Number of Shares
Purchased
as Part of
Publicly
Announced
Programs
|
Approximate
Dollar
Value
of Shares that
May Yet Be Purchased
Under
the Plans or
Programs(2)
|
||||||||||||
October
1-31, 2008
|
124,427 | $ | 4.73 | 49,427 | $ | 12,192,000 | ||||||||||
November
1-30, 2008
|
105,100 | $ | 5.19 | 17,600 | $ | 12,099,000 | ||||||||||
December
1-31, 2008
|
44,000 | $ | 4.91 | 19,000 | $ | 12,005,000 | ||||||||||
Total
|
273,527 | 86,027 |
(1)
|
Includes
75,000, 87,500, and 25,000 shares purchased from a significant shareholder
in October, November, and December 2008, respectively, at market price at
the time of each purchase.
|
(2)
|
In
May 2007, the Company’s Board of Directors approved a share repurchase
plan of up to $15 million through April
2010.
|
Base
Period
|
||||||||||||||||||||||||
12/03 | 12/04 | 12/05 | 12/06 | 12/07 | 12/08 | |||||||||||||||||||
Reliv'
International, Inc.
|
100.00 | 175.83 | 261.28 | 173.77 | 165.81 | 92.76 | ||||||||||||||||||
NASDAQ
Composite
|
100.00 | 110.08 | 112.88 | 126.51 | 138.13 | 80.47 | ||||||||||||||||||
Peer
Group
|
100.00 | 146.57 | 138.18 | 156.89 | 103.60 | 81.52 |
Year
Ended
December
31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Statements
of Operations Data:
|
||||||||||||||||||||
Product
sales
|
$ | 87,348,915 | $ | 99,465,246 | $ | 105,497,420 | $ | 102,045,383 | $ | 87,565,109 | ||||||||||
Handling
and freight income
|
10,845,903 | 11,592,258 | 11,969,737 | 11,519,781 | 9,417,324 | |||||||||||||||
Net
sales
|
98,194,818 | 111,057,504 | 117,467,157 | 113,565,164 | 96,982,433 | |||||||||||||||
Costs
and expenses:
|
||||||||||||||||||||
Cost
of products sold
|
17,437,133 | 19,100,527 | 19,519,904 | 19,264,347 | 16,662,935 | |||||||||||||||
Distributor
royalties and commissions
|
38,207,889 | 44,298,744 | 47,127,026 | 45,479,062 | 38,622,537 | |||||||||||||||
Selling,
general, and administrative
|
36,881,041 | 40,363,322 | 38,716,529 | 36,348,526 | 32,710,657 | |||||||||||||||
Total
costs and expenses
|
92,526,063 | 103,762,593 | 105,363,459 | 101,091,935 | 87,996,129 | |||||||||||||||
Income
from operations
|
5,668,755 | 7,294,911 | 12,103,698 | 12,473,229 | 8,986,304 | |||||||||||||||
Other
income (expense):
|
||||||||||||||||||||
Interest
income
|
328,057 | 634,446 | 692,595 | 238,473 | 118,467 | |||||||||||||||
Interest
expense
|
(37,327 | ) | (1,373 | ) | (50,156 | ) | (313,329 | ) | (243,118 | ) | ||||||||||
Gain
(loss) on limited partnership investment
|
(595,887 | ) | 52,162 | 32,320 | — | — | ||||||||||||||
Other
income
|
30,353 | 261,969 | 224,646 | 101,043 | 146,036 | |||||||||||||||
Total
other income (expense)
|
(274,804 | ) | 947,204 | 899,405 | 26,187 | 21,385 | ||||||||||||||
Income
before income taxes
|
5,393,951 | 8,242,115 | 13,003,103 | 12,499,416 | 9,007,689 | |||||||||||||||
Provision
for income taxes
|
2,513,000 | 3,201,000 | 5,105,000 | 4,978,000 | 3,621,000 | |||||||||||||||
Net
income
|
2,880,951 | 5,041,115 | 7,898,103 | 7,521,416 | 5,386,689 | |||||||||||||||
Preferred
dividends accrued and paid
|
— | — | — | — | 12,292 | |||||||||||||||
Net
income available to common shareholders
|
$ | 2,880,951 | $ | 5,041,115 | $ | 7,898,103 | $ | 7,521,416 | $ | 5,374,397 | ||||||||||
Earnings
per common share – Basic
|
$ | 0.19 | $ | 0.31 | $ | 0.48 | $ | 0.47 | $ | 0.34 | ||||||||||
Weighted
average shares
|
15,213,000 | 16,094,000 | 16,465,000 | 15,885,000 | 15,662,000 | |||||||||||||||
Earnings
per common share – Diluted
|
$ | 0.19 | $ | 0.31 | $ | 0.47 | $ | 0.46 | $ | 0.31 | ||||||||||
Weighted
average shares
|
15,223,000 | 16,303,000 | 16,727,000 | 16,388,000 | 17,137,000 | |||||||||||||||
Cash
dividends declared per common share
|
$ | 0.100 | $ | 0.100 | $ | 0.100 | $ | 0.075 | $ | 0.065 |
As
of December 31,
|
||||||||||||||||||||
Balance
Sheet Data:
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||
Cash
and cash equivalents
|
$ | 4,460,637 | $ | 11,694,699 | $ | 9,332,810 | $ | 5,653,594 | $ | 10,151,503 | ||||||||||
Working
capital
|
6,245,415 | 12,513,543 | 16,229,922 | 3,963,741 | 11,466,647 | |||||||||||||||
Total
assets
|
23,892,779 | 33,606,771 | 37,282,220 | 25,981,423 | 30,996,667 | |||||||||||||||
Long-term
debt, less current maturities
|
— | — | — | 2,211,065 | 3,357,691 | |||||||||||||||
Total
stockholders’ equity
|
16,107,590 | 23,805,201 | 27,733,851 | 12,564,828 | 18,190,753 |
Year
ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Costs
and expenses:
|
||||||||||||
Cost
of products sold
|
17.8 | 17.2 | 16.6 | |||||||||
Distributor
royalties and commissions
|
38.9 | 39.9 | 40.1 | |||||||||
Selling,
general and administrative
|
37.5 | 36.3 | 33.0 | |||||||||
Income
from operations
|
5.8 | 6.6 | 10.3 | |||||||||
Interest
income
|
0.3 | 0.5 | 0.6 | |||||||||
Interest
expense
|
(0.0 | ) | (0.0 | ) | (0.0 | ) | ||||||
Gain
(loss) on limited partnership investment
|
(0.6 | ) | 0.0 | 0.0 | ||||||||
Other
income
|
0.0 | 0.3 | 0.2 | |||||||||
Income
before income taxes
|
5.5 | 7.4 | 11.1 | |||||||||
Provision
for income taxes
|
2.6 | 2.9 | 4.4 | |||||||||
Net
income
|
2.9 | % | 4.5 | % | 6.7 | % |
Year
Ended December 31,
|
||||||||||||||||||||||||
2008
|
2007
|
Change
from prior year
|
||||||||||||||||||||||
Amount
|
%
of Net
Sales
|
Amount
|
%
of Net Sales
|
Amount
|
%
|
|||||||||||||||||||
(dollars
in thousands)
|
||||||||||||||||||||||||
United
States
|
$ | 85,382 | 87.0 | % | $ | 98,348 | 88.5 | % | $ | (12,966 | ) | (13.2 | )% | |||||||||||
Australia/New
Zealand
|
2,681 | 2.7 | 2,944 | 2.7 | (263 | ) | (8.9 | ) | ||||||||||||||||
Canada
|
1,660 | 1.7 | 1,634 | 1.5 | 26 | 1.6 | ||||||||||||||||||
Mexico
|
1,543 | 1.6 | 1,526 | 1.4 | 17 | 1.1 | ||||||||||||||||||
United
Kingdom/Ireland
|
1,023 | 1.0 | 1,062 | 1.0 | (39 | ) | (3.7 | ) | ||||||||||||||||
Philippines
|
2,709 | 2.8 | 2,942 | 2.6 | (233 | ) | (7.9 | ) | ||||||||||||||||
Malaysia/Singapore
|
2,692 | 2.7 | 1,765 | 1.5 | 927 | 52.5 | ||||||||||||||||||
Germany
|
505 | 0.5 | 837 | 0.8 | (332 | ) | (39.7 | ) | ||||||||||||||||
Consolidated
total
|
$ | 98,195 | 100.0 | % | $ | 111,058 | 100.0 | % | $ | (12,863 | ) | (11.6 | )% |
December
31, 2008
|
December
31, 2007
|
%
Change
|
||||||||||||||||||||||
Active
Distributors
|
Master
Affiliates
and
Above
|
Active
Distributors
|
Master
Affiliates
and
Above
|
Active
Distributors
|
Master
Affiliates
and
Above
|
|||||||||||||||||||
United
States
|
53,450 | 10,910 | 56,920 | 13,890 | (6.1 | )% | (21.5 | )% | ||||||||||||||||
Australia/New
Zealand
|
2,390 | 240 | 2,450 | 280 | (2.4 | ) | (14.3 | ) | ||||||||||||||||
Canada
|
1,260 | 170 | 1,140 | 180 | 10.5 | (5.6 | ) | |||||||||||||||||
Mexico
|
1,480 | 240 | 1,430 | 220 | 3.5 | 9.1 | ||||||||||||||||||
United
Kingdom/Ireland
|
760 | 120 | 780 | 120 | (2.6 | ) | 0.0 | |||||||||||||||||
Philippines
|
4,470 | 450 | 4,530 | 400 | (1.3 | ) | 12.5 | |||||||||||||||||
Malaysia/Singapore
|
3,190 | 590 | 2,170 | 350 | 47.0 | 68.6 | ||||||||||||||||||
Germany
|
340 | 80 | 550 | 150 | (38.2 | ) | (46.7 | ) | ||||||||||||||||
Consolidated
total
|
67,340 | 12,800 | 69,970 | 15,590 | (3.8 | )% | (17.9 | )% |
Year
Ended December 31,
|
||||||||||||||||||||||||
2007
|
2006
|
Change
from prior year
|
||||||||||||||||||||||
Amount
|
%
of Net
Sales
|
Amount
|
%
of Net Sales
|
Amount
|
%
|
|||||||||||||||||||
(dollars
in thousands)
|
||||||||||||||||||||||||
United
States
|
$ | 98,348 | 88.5 | % | $ | 105,784 | 90.0 | % | $ | (7,436 | ) | (7.0 | )% | |||||||||||
Australia/New
Zealand
|
2,944 | 2.7 | 2,550 | 2.2 | 394 | 15.5 | ||||||||||||||||||
Canada
|
1,634 | 1.5 | 1,638 | 1.4 | (4 | ) | (0.2 | ) | ||||||||||||||||
Mexico
|
1,526 | 1.4 | 1,433 | 1.2 | 93 | 6.5 | ||||||||||||||||||
United
Kingdom/Ireland
|
1,062 | 1.0 | 1,235 | 1.1 | (173 | ) | (14.0 | ) | ||||||||||||||||
Philippines
|
2,942 | 2.6 | 2,198 | 1.9 | 744 | 33.8 | ||||||||||||||||||
Malaysia/Singapore
|
1,765 | 1.5 | 1,805 | 1.5 | (40 | ) | (2.2 | ) | ||||||||||||||||
Germany
|
837 | 0.8 | 824 | 0.7 | 13 | 1.6 | ||||||||||||||||||
Consolidated
total
|
$ | 111,058 | 100.0 | % | $ | 117,467 | 100.0 | % | $ | (6,409 | ) | (5.5 | )% |
December
31, 2007
|
December
31, 2006
|
%
Change
|
||||||||||||||||||||||
Active
Distributors
|
Master
Affiliates
and
Above
|
Active
Distributors
|
Master
Affiliates
and
Above
|
Active
Distributors
|
Master
Affiliates
and
Above
|
|||||||||||||||||||
United
States
|
56,920 | 13,890 | 52,880 | 16,580 | 7.6 | % | (16.2 | )% | ||||||||||||||||
Australia/New
Zealand
|
2,450 | 280 | 2,460 | 300 | (0.4 | ) | (6.7 | ) | ||||||||||||||||
Canada
|
1,140 | 180 | 1,170 | 180 | (2.6 | ) | 0.0 | |||||||||||||||||
Mexico
|
1,430 | 220 | 1,130 | 240 | 26.5 | (8.3 | ) | |||||||||||||||||
United
Kingdom/Ireland
|
780 | 120 | 910 | 160 | (14.3 | ) | (25.0 | ) | ||||||||||||||||
Philippines
|
4,530 | 400 | 3,430 | 370 | 32.1 | 8.1 | ||||||||||||||||||
Malaysia/Singapore
|
2,170 | 350 | 2,560 | 410 | (15.2 | ) | (14.6 | ) | ||||||||||||||||
Germany
|
550 | 150 | 420 | 130 | 31.0 | 15.4 | ||||||||||||||||||
Consolidated
total
|
69,970 | 15,590 | 64,960 | 18,370 | 7.7 | % | (15.1 | )% |
Less
Than 1
year
|
1-3
years
|
3
- 5 years
|
More
than 5
years
|
Total
|
||||||||||||||||
Promissory
note(1)
|
$ | 578 | $ | — | $ | — | $ | — | $ | 578 | ||||||||||
Operating
leases
|
413 | 600 | 236 | 112 | 1,361 | |||||||||||||||
Total
Obligations
|
$ | 991 | $ | 600 | $ | 236 | $ | 112 | $ | 1,939 |
|
(a)
|
1.
|
The
Consolidated Financial Statements filed as part of this report on Form
10-K are listed on the accompanying Index to Consolidated Financial
Statements and Consolidated Financial Statement
Schedules.
|
|
2.
|
Financial
schedules required to be filed by Item 8 of this form, and by Item 15(d)
below:
|
|
Schedule
II
|
Valuation
and qualifying accounts
|
|
3.
|
Exhibits:
|
Exhibit
|
||
Number
|
Document
|
|
3.1
|
Second
Amended and Restated Certificate of Incorporation (incorporated by
reference to Appendix B of Schedule 14A of the Registrant filed
on April 17, 2003).
|
|
3.2
|
By-Laws
(incorporated by reference to the Registration Statement on Form S-3 of
the Registrant filed on February 21, 2006).
|
|
3.3
|
Amendment
to By-Laws dated March 22, 2001 (incorporated by reference to the
Registration Statement on Form S-3 of the Registrant filed on
February 21, 2006).
|
|
3.4
|
Certificate
of Designation to Create a Class of Series A Preferred Stock for Reliv'
International, Inc. (incorporated by reference to Exhibit 3.1
to the Form 10-Q of the Registrant for quarter ended March 31,
2003).
|
|
4.1
|
Form
of Reliv International, Inc. common stock certificate (incorporated by
reference to the Registration Statement on Form S-3 of the
Registrant filed on February 21, 2006).
|
|
10.1
|
Amended
Exclusive License Agreement with Theodore P. Kalogris dated December 1,
1991 (incorporated by reference to Exhibit 10.1 to the Form 10-K of the
Registrant for the year ended December 31, 1992).
|
|
10.2*
|
Robert
L. Montgomery Employment Agreement dated June 19, 2007 (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant
filed June 25, 2007).
|
|
10.3*
|
Carl
W. Hastings Employment Agreement dated July 26, 2007 (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant
filed July 27, 2007).
|
|
10.4
|
Letter
Agreement with Southwest Bank of St. Louis dated November 20, 2008
(incorporated by reference to Exhibit 10.1 to the Form 8-K of the
Registrant filed November 24, 2008).
|
|
10.5
|
Promissory
Note with Southwest Bank of St. Louis dated November 20, 2008
(incorporated by reference to Exhibit 10.2 to the Form 8-K of the
Registrant filed November 24, 2008).
|
|
10.6*
|
Reliv’
International, Inc. Supplemental Executive Retirement Plan dated June 1,
1998 (incorporated
by reference to Exhibit 10.19 to the Form10-K of the Registrant for year
ended December 31,
1998).
|
10.7*
|
Reliv
International, Inc. Employee Stock Ownership Plan and Trust dated August
24, 2006 (incorporated by reference to Exhibit 10.1 to the Form
8-K of the Registrant filed August
30, 2006).
|
|
10.8
|
Agreement
with Hydron Technologies, Inc. dated March 1, 2001 (incorporated by
reference to Exhibit 10.16 to the Form 10-K of the Registrant
for year ended December 31, 2001).
|
|
10.9*
|
Amended
and Restated Distributor Stock Purchase Plan (incorporated by reference to
Form S-8 Registration Statement the Registrant filed May 9,
2002).
|
|
10.10*
|
2003
Stock Option Plan (incorporated by reference to Form S-8 Registration
Statement the Registrant filed August 13,
2003).
|
|
10.11*
|
Reliv
International, Inc. Incentive Compensation Plan effective January 1, 2007
(incorporated by reference to Exhibit 10.1 to the Form 8-K of
the Registrant filed May 31, 2007).
|
|
10.12*
|
Stock
Redemption Agreement with David G. Kreher and Pamela S. Kreher dated March
14, 2005 (incorporated by reference to Exhibit 10.18 to the Form 10-K of
the Registrant for the year ended December 31, 2004).
|
|
10.13*
|
Kreher
Employment Agreement dated March 14, 2005 (incorporated by reference to
Exhibit 10.19 to the Form 10-K of the Registrant for the year ended
December 31, 2004).
|
|
10.14*
|
R.
Scott Montgomery Employment Agreement dated January 2, 2008 (incorporated
by reference to Exhibit 10.1 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.15*
|
Ryan
A. Montgomery Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.2 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.16*
|
Steven
G. Hastings Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.3 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.17*
|
Steven
D. Albright Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.4 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.18*
|
Brett
M. Hastings Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.5 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.19
|
Rule
10b5-1 Stock Repurchase Plan dated June 12, 2008 between the Registrant
and Canaccord Adams, Inc. (incorporated by reference to Exhibit 10.1 to
the Form 8-K of the Registrant filed June 13, 2008).
|
|
10.20
|
Stock
Purchase Agreement dated July 24, 2008 by and between the Paul and Jane
Meyer Family Foundation and Reliv International, Inc. (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant filed July 30,
2008).
|
|
10.21
|
Stock
Purchase Agreement dated July 24, 2008 by and between Centre Island
Properties, Ltd. and Reliv International, Inc. (incorporated by reference
to Exhibit 10.2 to the Form 8-K of the Registrant filed July 30,
2008).
|
|
10.22
|
Standstill
Letter from Paul J. Meyer to Robert L. Montgomery dated July 25, 2008.
(incorporated by reference to Exhibit 10.3 to the Form 8-K of the
Registrant filed July 30,
2008).
|
11
|
Statement
re: computation of per share earnings (incorporated by reference to Note 8
of the Consolidated Financial Statements contained in Part
IV).
|
|
21
|
Subsidiaries
of the Registrant (filed herewith).
|
|
23
|
Consent
of Ernst & Young LLP, Independent Auditors (filed
herewith).
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities
Exchange Act, as amended (filed herewith).
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities
Exchange Act, as amended (filed herewith).
|
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed
herewith).
|
RELIV'
INTERNATIONAL, INC.
|
||
By:
|
/s/
Robert L. Montgomery
|
|
Robert
L. Montgomery, Chairman of the Board of Directors, President and Chief
Executive Officer
|
||
Date:
March 13, 2009
|
||
Pursuant
to the requirements of the Securities Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
||
By:
|
/s/
Robert L. Montgomery
|
|
Robert
L. Montgomery, Chairman of the Board of Directors, President and Chief
Executive Officer
|
||
Date: March
13, 2009
|
||
By:
|
/s/
Steven D. Albright
|
|
Steven
D. Albright, Chief Financial Officer (and accounting
officer)
|
||
Date:
March 13, 2009
|
||
By:
|
/s/
Carl W. Hastings
|
|
Carl
W. Hastings, Vice Chairman, Chief Scientific Officer,
Director
|
||
Date: March
13, 2009
|
||
By:
|
/s/
Stephen M. Merrick
|
|
Stephen
M. Merrick, Senior Vice President, Secretary, Director
|
||
Date: March
13, 2009
|
||
By:
|
/s/
Donald L. McCain
|
|
Donald
L. McCain, Director
|
||
Date: March
13, 2009
|
||
By:
|
/s/
John B. Akin
|
|
John
B. Akin, Director
|
||
Date: March
13, 2009
|
||
By:
|
/s/
Robert M. Henry
|
|
Robert
M. Henry, Director
|
||
Date: March
13, 2009
|
||
By:
|
/s/
Denis St. John
|
|
Denis
St. John, Director
|
||
Date:
March 13, 2009
|
By:
|
/s/
Michael D. Smith
|
|
|
Michael
D. Smith, Director
|
|
By:
|
/s/Patrick
G. Doherty
|
|
Patrick
G. Doherty, Director
|
||
Number
|
Document
|
|
3.1
|
Second
Amended and Restated Certificate of Incorporation (incorporated by
reference to Appendix B of Schedule 14A of the Registrant filed
on April 17, 2003).
|
|
3.2
|
By-Laws
(incorporated by reference to the Registration Statement on Form S-3 of
the Registrant filed on February 21, 2006).
|
|
3.3
|
Amendment
to By-Laws dated March 22, 2001 (incorporated by reference to the
Registration Statement on Form S-3 of the Registrant filed on
February 21, 2006).
|
|
3.4
|
Certificate
of Designation to Create a Class of Series A Preferred Stock for Reliv'
International, Inc. (incorporated by reference to Exhibit 3.1
to the Form 10-Q of the Registrant for quarter ended March 31,
2003).
|
|
4.1
|
Form
of Reliv International, Inc. common stock certificate (incorporated by
reference to the Registration Statement on Form S-3 of the
Registrant filed on February 21, 2006).
|
|
10.1
|
Amended
Exclusive License Agreement with Theodore P. Kalogris dated December 1,
1991 (incorporated by reference to Exhibit 10.1 to the Form 10-K of the
Registrant for the year ended December 31, 1992).
|
|
10.2*
|
Robert
L. Montgomery Employment Agreement dated June 19, 2007 (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant
filed June 25, 2007).
|
|
10.3*
|
Carl
W. Hastings Employment Agreement dated July 26, 2007 (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant
filed July 27, 2007).
|
|
10.4
|
Letter
Agreement with Southwest Bank of St. Louis dated November 20, 2008
(incorporated by reference to Exhibit 10.1 to the Form 8-K of the
Registrant filed November 24, 2008).
|
|
10.5
|
Promissory
Note with Southwest Bank of St. Louis dated November 20, 2008
(incorporated by reference to Exhibit 10.2 to the Form 8-K of the
Registrant filed November 24, 2008).
|
|
10.6*
|
Reliv’
International, Inc. Supplemental Executive Retirement Plan dated June 1,
1998 (incorporated
by reference to Exhibit 10.19 to the Form10-K of the Registrant for year
ended December 31, 1998).
|
|
10.7*
|
Reliv
International, Inc. Employee Stock Ownership Plan and Trust dated August
24, 2006 (incorporated by reference to Exhibit 10.1 to the Form
8-K of the Registrant filed August
30, 2006).
|
10.8
|
Agreement
with Hydron Technologies, Inc. dated March 1, 2001 (incorporated by
reference to Exhibit 10.16 to the Form 10-K of the Registrant
for year ended December 31, 2001).
|
|
10.9*
|
Amended
and Restated Distributor Stock Purchase Plan (incorporated by reference to
Form S-8 Registration Statement the Registrant filed May 9,
2002).
|
|
10.10*
|
2003
Stock Option Plan (incorporated by reference to Form S-8 Registration
Statement the Registrant filed August 13,
2003).
|
|
10.11*
|
Reliv
International, Inc. Incentive Compensation Plan effective January 1, 2007
(incorporated by reference to Exhibit 10.1 to the Form 8-K of
the Registrant filed May 31, 2007).
|
|
10.12*
|
Stock
Redemption Agreement with David G. Kreher and Pamela S. Kreher dated March
14, 2005 (incorporated by reference to Exhibit 10.18 to the Form 10-K of
the Registrant for the year ended December 31, 2004).
|
|
10.13*
|
Kreher
Employment Agreement dated March 14, 2005 (incorporated by reference to
Exhibit 10.19 to the Form 10-K of the Registrant for the year ended
December 31, 2004).
|
|
10.14*
|
R.
Scott Montgomery Employment Agreement dated January 2, 2008 (incorporated
by reference to Exhibit 10.1 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.15*
|
Ryan
A. Montgomery Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.2 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.16*
|
Steven
G. Hastings Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.3 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.17*
|
Steven
D. Albright Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.4 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.18*
|
Brett
M. Hastings Employment Agreement dated January 2, 2008 (incorporated by
reference to Exhibit 10.5 to the Form 8-K of the Registrant
filed January 4, 2008).
|
|
10.19
|
Rule
10b5-1 Stock Repurchase Plan dated June 12, 2008 between the Registrant
and Canaccord Adams, Inc. (incorporated by reference to Exhibit 10.1 to
the Form 8-K of the Registrant filed June 13, 2008).
|
|
10.20
|
Stock
Purchase Agreement dated July 24, 2008 by and between the Paul and Jane
Meyer Family Foundation and Reliv International, Inc. (incorporated by
reference to Exhibit 10.1 to the Form 8-K of the Registrant filed July 30,
2008).
|
|
10.21
|
Stock
Purchase Agreement dated July 24, 2008 by and between Centre Island
Properties, Ltd. and Reliv International, Inc. (incorporated by reference
to Exhibit 10.2 to the Form 8-K of the Registrant filed July 30,
2008).
|
|
10.22
|
Standstill
Letter from Paul J. Meyer to Robert L. Montgomery dated July 25, 2008.
(incorporated by reference to Exhibit 10.3 to the Form 8-K of the
Registrant filed July 30, 2008).
|
|
11
|
Statement
re: computation of per share earnings (incorporated by reference to Note 8
of the Consolidated Financial Statements contained in Part
IV).
|
|
21
|
Subsidiaries
of the Registrant (filed herewith).
|
|
23
|
Consent
of Ernst & Young LLP, Independent Auditors (filed
herewith).
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities
Exchange Act, as amended (filed herewith).
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)
of the Securities
Exchange Act, as amended (filed herewith).
|
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed
herewith).
|
Consolidated
Financial Statements:
|
||
Reports
of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-3
|
|
Consolidated
Statements of Income for the years ended December 31, 2008, 2007, and
2006
|
F-5
|
|
Consolidated
Statements of Stockholders’ Equity for the years ended December 31, 2008,
2007, and 2006
|
F-6
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2008, 2007, and
2006
|
F-7
|
|
Notes
to Consolidated Financial Statements – December 31, 2008
|
F-9
|
|
Financial
Statement Schedule:
|
||
Schedule
II – Valuation and Qualifying Accounts for the years ended December 31,
2008, 2007, and 2006
|
F-34
|
/s/
Ernst & Young LLP
|
/s/
Ernst & Young LLP
|
December
31
|
||||||||
2008
|
2007
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 4,460,637 | $ | 11,694,699 | ||||
Short-term
investments
|
- | 398,592 | ||||||
Accounts
and notes receivable, less allowances of $10,200 in 2008 and $8,300 in
2007
|
494,689 | 811,634 | ||||||
Accounts
due from employees and distributors
|
241,532 | 204,705 | ||||||
Inventories:
|
||||||||
Finished
goods
|
3,533,371 | 3,290,114 | ||||||
Raw
materials
|
1,710,319 | 1,630,976 | ||||||
Sales
aids and promotional materials
|
978,264 | 1,258,148 | ||||||
Total
inventories
|
6,221,954 | 6,179,238 | ||||||
Refundable
income taxes
|
129,137 | 362,330 | ||||||
Prepaid
expenses and other current assets
|
1,525,665 | 862,172 | ||||||
Deferred
income taxes
|
522,000 | 574,430 | ||||||
Total
current assets
|
13,595,614 | 21,087,800 | ||||||
Other
assets
|
1,220,546 | 2,999,903 | ||||||
Accounts
due from employees and distributors
|
164,462 | 319,883 | ||||||
Property,
plant, and equipment
|
18,288,571 | 18,511,944 | ||||||
Less
accumulated depreciation
|
9,376,414 | 9,312,759 | ||||||
8,912,157 | 9,199,185 | |||||||
Total
assets
|
$ | 23,892,779 | $ | 33,606,771 |
December
31
|
||||||||
2008
|
2007
|
|||||||
Liabilities
and stockholders’ equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 6,780,824 | $ | 8,464,257 | ||||
Notes
payable
|
569,375 | - | ||||||
Income
taxes payable
|
- | 110,000 | ||||||
Total
current liabilities
|
7,350,199 | 8,574,257 | ||||||
Noncurrent
liabilities:
|
||||||||
Noncurrent
deferred income taxes
|
70,000 | - | ||||||
Other
noncurrent liabilities
|
364,990 | 1,227,313 | ||||||
Total
noncurrent liabilities
|
434,990 | 1,227,313 | ||||||
Stockholders’
equity:
|
||||||||
Preferred
stock, par value $0.001 per share; 3,000,000 shares authorized; -0- shares
issued and outstanding in 2008 and 2007
|
- | - | ||||||
Common
stock, par value $0.001 per share; 30,000,000 shares authorized,
14,425,185 shares issued and 14,302,160 shares outstanding in 2008;
15,877,179 shares issued and 15,873,754 shares outstanding in
2007
|
14,425 | 15,877 | ||||||
Additional
paid-in capital
|
30,321,066 | 33,100,351 | ||||||
Accumulated
deficit
|
(12,938,430 | ) | (8,869,332 | ) | ||||
Accumulated
other comprehensive loss:
|
||||||||
Foreign
currency translation adjustment
|
(663,478 | ) | (419,179 | ) | ||||
Treasury
stock
|
(625,993 | ) | (22,516 | ) | ||||
Total
stockholders’ equity
|
16,107,590 | 23,805,201 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 23,892,779 | $ | 33,606,771 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Product
sales
|
$ | 87,348,915 | $ | 99,465,246 | $ | 105,497,420 | ||||||
Handling
& freight income
|
10,845,903 | 11,592,258 | 11,969,737 | |||||||||
Net
sales
|
98,194,818 | 111,057,504 | 117,467,157 | |||||||||
Costs
and expenses:
|
||||||||||||
Cost
of products sold
|
17,437,133 | 19,100,527 | 19,519,904 | |||||||||
Distributor
royalties and commissions
|
38,207,889 | 44,298,744 | 47,127,026 | |||||||||
Selling,
general, and administrative
|
36,881,041 | 40,363,322 | 38,716,529 | |||||||||
Income
from operations
|
5,668,755 | 7,294,911 | 12,103,698 | |||||||||
Other
income (expense):
|
||||||||||||
Interest
income
|
328,057 | 634,446 | 692,595 | |||||||||
Interest
expense
|
(37,327 | ) | (1,373 | ) | (50,156 | ) | ||||||
Gain
(loss) on limited partnership investment
|
(595,887 | ) | 52,162 | 32,320 | ||||||||
Other
income (expense)
|
30,353 | 261,969 | 224,646 | |||||||||
Income
before income taxes
|
5,393,951 | 8,242,115 | 13,003,103 | |||||||||
Provision
for income taxes
|
2,513,000 | 3,201,000 | 5,105,000 | |||||||||
Net
income available to common shareholders
|
$ | 2,880,951 | $ | 5,041,115 | $ | 7,898,103 | ||||||
Earnings
per common share - Basic
|
$ | 0.19 | $ | 0.31 | $ | 0.48 | ||||||
Weighted
average shares
|
15,213,000 | 16,094,000 | 16,465,000 | |||||||||
Earnings
per common share - Diluted
|
$ | 0.19 | $ | 0.31 | $ | 0.47 | ||||||
Weighted
average shares
|
15,223,000 | 16,303,000 | 16,727,000 |
Accumulated
|
||||||||||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||||||||||
Common
Stock
|
Paid-In
|
Accumulated
|
Comprehensive
|
Treasury
Stock
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Shares
|
Amount
|
Total
|
|||||||||||||||||||||||||
Balance
at December 31, 2005
|
15,613,644 | $ | 15,614 | $ | 22,972,463 | $ | (9,252,413 | ) | $ | (669,346 | ) | 50,082 | $ | (501,490 | ) | $ | 12,564,828 | |||||||||||||||
Net
income
|
- | - | 7,898,103 | - | - | - | 7,898,103 | |||||||||||||||||||||||||
Other
comprehensive income:
|
||||||||||||||||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | 128,693 | - | - | 128,693 | ||||||||||||||||||||||||
Total
comprehensive income
|
8,026,796 | |||||||||||||||||||||||||||||||
Common
stock dividends paid, $0.10 per share
|
- | - | - | (1,675,582 | ) | - | - | - | (1,675,582 | ) | ||||||||||||||||||||||
Warrants
granted under DSPP
|
- | - | 102,224 | - | - | - | - | 102,224 | ||||||||||||||||||||||||
Employee
stock-based compensation
|
- | - | 62,991 | - | - | - | - | 62,991 | ||||||||||||||||||||||||
Common
stock purchased for treasury
|
- | - | - | - | - | 416,487 | (3,602,531 | ) | (3,602,531 | ) | ||||||||||||||||||||||
Retirement
of treasury stock
|
(341,627 | ) | (342 | ) | (707,608 | ) | (2,258,289 | ) | - | (341,627 | ) | 2,966,239 | - | |||||||||||||||||||
Proceeds
from issuance of common stock, net
|
1,200,000 | 1,200 | 11,917,592 | - | - | - | - | 11,918,792 | ||||||||||||||||||||||||
Options
and warrants exercised
|
258,448 | 259 | 262,451 | (48,685 | ) | - | - | - | 214,025 | |||||||||||||||||||||||
Tax
benefit from exercise of options and warrants
|
- | - | 122,308 | - | - | - | - | 122,308 | ||||||||||||||||||||||||
Balance
at December 31, 2006
|
16,730,465 | 16,731 | 34,732,421 | (5,336,866 | ) | (540,653 | ) | 124,942 | (1,137,782 | ) | 27,733,851 | |||||||||||||||||||||
Net
income
|
- | - | - | 5,041,115 | - | - | - | 5,041,115 | ||||||||||||||||||||||||
Other
comprehensive income:
|
||||||||||||||||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | 121,474 | - | - | 121,474 | ||||||||||||||||||||||||
Total
comprehensive income
|
5,162,589 | |||||||||||||||||||||||||||||||
Common
stock dividends paid, $0.10 per share
|
- | - | - | (1,600,621 | ) | - | - | - | (1,600,621 | ) | ||||||||||||||||||||||
Warrants
granted under DSPP
|
- | - | 80,026 | - | - | - | - | 80,026 | ||||||||||||||||||||||||
Employee
stock-based compensation
|
- | - | 75,151 | - | - | - | - | 75,151 | ||||||||||||||||||||||||
Common
stock purchased for treasury
|
- | - | - | - | - | 752,491 | (7,677,124 | ) | (7,677,124 | ) | ||||||||||||||||||||||
Retirement
of treasury stock
|
(874,008 | ) | (874 | ) | (1,818,556 | ) | (6,972,960 | ) | - | (874,008 | ) | 8,792,390 | - | |||||||||||||||||||
Options
and warrants exercised
|
28,722 | 28 | 83,469 | - | - | - | - | 83,497 | ||||||||||||||||||||||||
Other
|
(8,000 | ) | (8 | ) | (52,160 | ) | - | - | - | - | (52,168 | ) | ||||||||||||||||||||
Balance
at December 31, 2007
|
15,877,179 | 15,877 | 33,100,351 | (8,869,332 | ) | (419,179 | ) | 3,425 | (22,516 | ) | 23,805,201 | |||||||||||||||||||||
Net
income
|
- | - | - | 2,880,951 | - | - | - | 2,880,951 | ||||||||||||||||||||||||
Other
comprehensive income:
|
||||||||||||||||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | (244,299 | ) | - | - | (244,299 | ) | ||||||||||||||||||||||
Total
comprehensive income
|
2,636,652 | |||||||||||||||||||||||||||||||
Common
stock dividends paid, $0.10 per share
|
- | - | - | (1,514,016 | ) | - | - | - | (1,514,016 | ) | ||||||||||||||||||||||
Warrants
granted under DSPP
|
- | - | 92,229 | - | - | - | - | 92,229 | ||||||||||||||||||||||||
Employee
stock-based compensation
|
- | - | 185,635 | - | - | - | - | 185,635 | ||||||||||||||||||||||||
Contribution
of treasury shares to ESOP
|
- | - | (21,073 | ) | - | - | (53,500 | ) | 271,453 | 250,380 | ||||||||||||||||||||||
Common
stock purchased for treasury
|
- | - | - | - | - | 1,626,609 | (9,357,732 | ) | (9,357,732 | ) | ||||||||||||||||||||||
Retirement
of treasury stock
|
(1,453,509 | ) | (1,454 | ) | (3,045,315 | ) | (5,436,033 | ) | - | (1,453,509 | ) | 8,482,802 | - | |||||||||||||||||||
Options
and warrants exercised
|
1,515 | 2 | 6,967 | - | - | - | - | 6,969 | ||||||||||||||||||||||||
Other
|
- | - | 2,272 | - | - | - | - | 2,272 | ||||||||||||||||||||||||
Balance
at December 31, 2008
|
14,425,185 | $ | 14,425 | $ | 30,321,066 | $ | (12,938,430 | ) | $ | (663,478 | ) | 123,025 | $ | (625,993 | ) | $ | 16,107,590 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Operating
activities
|
||||||||||||
Net
income
|
$ | 2,880,951 | $ | 5,041,115 | $ | 7,898,103 | ||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
1,200,892 | 1,114,974 | 1,243,407 | |||||||||
Stock-based
compensation
|
277,864 | 155,177 | 165,215 | |||||||||
Contribution
of treasury shares to ESOP
|
250,380 | - | - | |||||||||
(Gain)
loss on limited partnership investment
|
595,887 | (52,162 | ) | (32,320 | ) | |||||||
Deferred
income taxes
|
140,430 | (40,000 | ) | (189,000 | ) | |||||||
Foreign
currency transaction (gain)/loss
|
72,434 | (118,718 | ) | (194,760 | ) | |||||||
(Increase)
decrease in accounts and notes receivable
|
376,277 | (50,098 | ) | 52,869 | ||||||||
(Increase)
decrease in inventories
|
(231,833 | ) | (1,286,334 | ) | 896,792 | |||||||
(Increase)
decrease in refundable income taxes
|
233,431 | (90,923 | ) | (260,035 | ) | |||||||
(Increase)
decrease in prepaid expenses and other current assets
|
(210,161 | ) | 268,442 | 154,428 | ||||||||
(Increase)
decrease in other assets
|
640,411 | (378,585 | ) | (17,357 | ) | |||||||
Increase
(decrease) in accounts payable & accrued expenses and other
non-current liabilities
|
(2,370,437 | ) | 90,397 | 63,346 | ||||||||
Increase
(decrease) in income taxes payable
|
(110,000 | ) | 110,000 | (821,571 | ) | |||||||
Net
cash provided by operating activities
|
3,746,526 | 4,763,285 | 8,959,117 | |||||||||
Investing
activities
|
||||||||||||
Proceeds
from sale of property, plant, and equipment
|
28,445 | 4,847 | 97,117 | |||||||||
Purchase
of property, plant, and equipment
|
(929,874 | ) | (841,193 | ) | (572,748 | ) | ||||||
Purchase
of investments
|
(1,521,111 | ) | (1,398,592 | ) | (8,974,000 | ) | ||||||
Proceeds
from sales or maturities of investments, at cost
|
1,919,703 | 8,864,000 | 110,000 | |||||||||
Net
cash provided by (used in) investing activities
|
(502,837 | ) | 6,629,062 | (9,339,631 | ) | |||||||
Financing
activities
|
||||||||||||
Proceeds
from line of credit borrowings
|
4,000,000 | - | - | |||||||||
Principal
payments on long-term borrowings and line of credit
|
(4,000,000 | ) | - | (3,127,344 | ) | |||||||
Net
proceeds from issuance of common stock
|
- | - | 11,918,792 | |||||||||
Common
stock dividends paid
|
(1,514,016 | ) | (1,600,621 | ) | (1,675,582 | ) | ||||||
Proceeds
from options and warrants exercised
|
6,969 | 83,497 | 214,025 | |||||||||
Excess
tax benefits from stock-based compensation
|
- | - | 103,182 | |||||||||
Purchase
of stock for treasury
|
(8,788,357 | ) | (7,677,124 | ) | (3,602,531 | ) | ||||||
Other
|
2,272 | - | - | |||||||||
Net
cash provided by (used in) financing activities
|
(10,293,132 | ) | (9,194,248 | ) | 3,830,542 | |||||||
Effect
of exchange rate changes on cash and cash equivalents
|
(184,619 | ) | 163,790 | 229,188 | ||||||||
Increase
(decrease) in cash and cash equivalents
|
(7,234,062 | ) | 2,361,889 | 3,679,216 | ||||||||
Cash
and cash equivalents at beginning of year
|
11,694,699 | 9,332,810 | 5,653,594 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 4,460,637 | $ | 11,694,699 | $ | 9,332,810 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Supplemental
disclosures of cash flow information:
|
||||||||||||
Cash
paid during the year for:
|
||||||||||||
Interest
|
$ | 33,171 | $ | 1,373 | $ | 81,156 | ||||||
Income
taxes
|
$ | 2,143,000 | $ | 3,036,000 | $ | 6,262,000 | ||||||
Noncash
investing and financing transactions:
|
||||||||||||
Issuance
of promissory notes for purchase of stock for treasury
|
$ | 569,375 | $ | - | $ | - |
2008
|
2007
|
|||||||
Land
and land improvements
|
$ | 852,147 | $ | 829,222 | ||||
Building
|
9,786,037 | 9,817,692 | ||||||
Machinery
and equipment
|
3,293,526 | 3,673,515 | ||||||
Office
equipment
|
1,452,015 | 1,525,905 | ||||||
Computer
equipment and software
|
2,904,846 | 2,665,610 | ||||||
18,288,571 | 18,511,944 | |||||||
Less
accumulated depreciation
|
9,376,414 | 9,312,759 | ||||||
$ | 8,912,157 | $ | 9,199,185 |
2008
|
2007
|
|||||||
Trade
payables
|
$ | 2,948,467 | $ | 4,288,481 | ||||
Distributors'
commissions
|
2,809,164 | 3,285,270 | ||||||
Sales
taxes
|
374,643 | 390,585 | ||||||
Payroll
and payroll taxes
|
648,550 | 499,921 | ||||||
$ | 6,780,824 | $ | 8,464,257 |
Using
Quoted
|
||||||||
Total
|
Prices
in
|
|||||||
Carrying
|
Active
Markets
|
|||||||
Description
|
Value
|
(Level
1)
|
||||||
Marketable
securities (1)
|
$ | 155,000 | $ | 155,000 |
(1)
|
Representing
assets of the Company's Supplemental Executive Retirement
Plan
|
Unrealized
|
Recorded
|
Cash
and
|
Short-term
|
|||||||||||||||||
Cost
|
gains
/ (losses)
|
basis
|
cash
equivalents
|
investments
|
||||||||||||||||
Cash
|
$ | 7,670,244 | $ | - | $ | 7,670,244 | $ | 7,670,244 | $ |
-
|
||||||||||
Certificates
of deposit
|
4,423,047 | - | 4,423,047 | 4,024,455 | 398,592 | |||||||||||||||
$ | 12,093,291 | $ | - | $ | 12,093,291 | $ | 11,694,699 | $ | 398,592 |
2008
|
2007
|
2006
|
||||||||||||||||||||||
Options
|
Weighted
Avg.
Exercise
Price
|
Options
|
Weighted
Avg.
Exercise
Price
|
Options
|
Weighted
Avg.
Exercise
Price
|
|||||||||||||||||||
Outstanding
beginning of the year
|
725,500 | $ | 8.48 | 542,321 | $ | 7.70 | 835,395 | $ | 5.46 | |||||||||||||||
Granted
|
41,500 | 5.41 | 216,000 | 9.74 | - | |||||||||||||||||||
Exercised
|
- | (27,321 | ) | 2.60 | (247,457 | ) | 0.74 | |||||||||||||||||
Forfeited
|
(4,000 | ) | 9.74 | (5,500 | ) | 9.74 | (45,617 | ) | 4.39 | |||||||||||||||
Outstanding
at end of year
|
763,000 | $ | 8.31 | 725,500 | $ | 8.48 | 542,321 | $ | 7.70 | |||||||||||||||
Exercisable
at end of year
|
515,000 | $ | 7.96 | 515,000 | $ | 7.96 | 542,321 | $ | 7.70 |
As
of December 31, 2008
|
||||||||||||||||||||||||
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||||||
Range
of
Exercise
Prices
|
Number
Outstanding
|
Weighted
Avg.
Remaining
Life
|
Weighted
Avg.
Exercise
Price
|
Number
Exercisable
|
Weighted
Avg.
Remaining
Life
|
Weighted
Avg.
Exercise
Price
|
||||||||||||||||||
$5.28
- $5.50
|
41,500 | 4.67 | $ | 5.41 | - | - | $ | - | ||||||||||||||||
$7.92
|
485,000 | 6.00 | 7.92 | 485,000 | 6.00 | 7.92 | ||||||||||||||||||
$8.68
|
30,000 | 6.79 | 8.68 | 30,000 | 6.79 | 8.68 | ||||||||||||||||||
$9.74
|
206,500 | 3.58 | 9.74 | - | - | - | ||||||||||||||||||
$5.28
- $9.74
|
763,000 | 5.30 | $ | 8.01 | 515,000 | 6.05 | $ | 7.96 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Stock
Options Exercised:
|
||||||||||||
Intrinsic
value
|
$ | - | $ | 223,000 | $ | 2,262,000 | ||||||
Actual
tax benefit realized
|
- | - | 108,000 | |||||||||
Cash
received
|
- | 71,000 | 121,000 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Expected
warrant life (years)
|
2.5 | 2.5 | 2.5 | |||||||||
Risk-free
weighted average interest rate
|
1.20 | % | 3.07 | % | 4.74 | % | ||||||
Stock
price volatility
|
0.502 | 0.431 | 0.476 | |||||||||
Dividend
yield
|
2.2 | % | 1.2 | % | 1.0 | % |
2008
|
2007
|
2006
|
||||||||||||||||||||||
Warrants
|
Weighted
Avg.
Exercise
Price
|
Warrants
|
Weighted
Avg.
Exercise
Price
|
Warrants
|
Weighted
Avg.
Exercise
Price
|
|||||||||||||||||||
Outstanding
beginning of the year
|
79,724 | $ | 9.95 | 76,142 | $ | 10.25 | 66,719 | $ | 9.47 | |||||||||||||||
Granted
|
26,134 | 4.60 | 25,891 | 8.19 | 28,995 | 8.68 | ||||||||||||||||||
Exercised
|
(1,515 | ) | 4.60 | (1,401 | ) | 8.85 | (17,528 | ) | 5.28 | |||||||||||||||
Expired
and forfeited
|
(25,303 | ) | 13.18 | (20,908 | ) | 8.94 | (2,044 | ) | 5.12 | |||||||||||||||
Outstanding
at end of year
|
79,040 | $ | 7.25 | 79,724 | $ | 9.95 | 76,142 | $ | 10.25 | |||||||||||||||
Exercisable
at end of year
|
79,040 | 79,724 | 76,142 |
As
of December 31, 2008
|
||||||||||||||||||||
Warrants
Outstanding
|
Warrants
Exercisable
|
|||||||||||||||||||
Range
of
Exercise
Prices
|
Number
Outstanding
|
Weighted
Avg.
Remaining
Life
|
Weighted
Avg.
Exercise
Price
|
Number
Exercisable
|
Weighted
Avg.
Exercise
Price
|
|||||||||||||||
$ 4.60
|
24,619 | 2.88 | $ | 4.60 | 24,619 | $ | 4.60 | |||||||||||||
$ 8.19
|
25,891 | 2.00 | 8.19 | 25,891 | 8.19 | |||||||||||||||
$ 8.68
|
28,530 | 1.00 | 8.68 | 28,530 | 8.68 | |||||||||||||||
$4.60
- $8.68
|
79,040 | 1.91 | $ | 7.25 | 79,040 | $ | 7.25 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Stock
Warrants Exercised:
|
||||||||||||
Intrinsic
value
|
$ | 1,000 | $ | 2,000 | $ | 78,000 | ||||||
Actual
tax benefit realized
|
- | 1,000 | 14,000 | |||||||||
Cash
received
|
7,000 | 12,000 | 93,000 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Numerator:
|
||||||||||||
Net
income
|
$ | 2,880,951 | $ | 5,041,115 | $ | 7,898,103 | ||||||
Denominator:
|
||||||||||||
Denominator
for basic earnings per share – weighted average shares
|
15,213,000 | 16,094,000 | 16,465,000 | |||||||||
Dilutive
effect of employee stock options and other warrants
|
10,000 | 209,000 | 262,000 | |||||||||
Denominator
for diluted earnings per share – adjusted weighted average
shares
|
15,223,000 | 16,303,000 | 16,727,000 | |||||||||
Basic
earnings per share
|
$ | 0.19 | $ | 0.31 | $ | 0.48 | ||||||
Diluted
earnings per share
|
$ | 0.19 | $ | 0.31 | $ | 0.47 |
2009
|
$ | 413,148 | ||
2010
|
344,612 | |||
2011
|
254,991 | |||
2012
|
160,381 | |||
2013
|
75,170 | |||
Thereafter
|
112,485 | |||
$ | 1,360,787 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
United
States
|
$ | 7,946,609 | $ | 11,448,135 | $ | 15,803,248 | ||||||
Foreign
|
(2,552,658 | ) | (3,206,020 | ) | (2,800,145 | ) | ||||||
$ | 5,393,951 | $ | 8,242,115 | $ | 13,003,103 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 2,010,000 | $ | 2,598,000 | $ | 4,340,000 | ||||||
State
|
313,000 | 569,000 | 924,000 | |||||||||
Foreign
|
11,000 | 74,000 | 30,000 | |||||||||
Total
current
|
2,334,000 | 3,241,000 | 5,294,000 | |||||||||
Deferred:
|
||||||||||||
Federal
|
112,000 | (34,000 | ) | (168,000 | ) | |||||||
State
|
18,000 | (6,000 | ) | (21,000 | ) | |||||||
Foreign
|
49,000 | - | - | |||||||||
Total
deferred
|
179,000 | (40,000 | ) | (189,000 | ) | |||||||
$ | 2,513,000 | $ | 3,201,000 | $ | 5,105,000 |
Year
ended December 31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Income
taxes at U.S. statutory rate
|
$ | 1,834,000 | $ | 2,802,000 | $ | 4,524,000 | ||||||
Impact
of graduated federal taxes
|
- | - | (103,000 | ) | ||||||||
State
income taxes, net of federal benefit
|
348,000 | 434,000 | 727,000 | |||||||||
Lower
effective taxes on earnings in
|
||||||||||||
other
countries
|
(20,000 | ) | (23,000 | ) | - | |||||||
Foreign
corporate income taxes
|
60,000 | 74,000 | 30,000 | |||||||||
Executive
life insurance expense
|
9,000 | (3,000 | ) | 16,000 | ||||||||
Meals
and entertainment
|
46,000 | 58,000 | 68,000 | |||||||||
Extraterritorial
income exclusion
|
- | - | (27,000 | ) | ||||||||
Qualified
production activities
|
||||||||||||
income
- American Jobs Creation Act
|
(73,000 | ) | (117,000 | ) | (99,000 | ) | ||||||
Deferred
tax asset valuation
|
||||||||||||
allowance
- investment losses
|
343,000 | - | - | |||||||||
Other
|
(34,000 | ) | (24,000 | ) | (31,000 | ) | ||||||
$ | 2,513,000 | $ | 3,201,000 | $ | 5,105,000 |
2008
|
2007
|
|||||||
Deferred
tax assets:
|
||||||||
Product
refund reserve
|
$ | 143,000 | $ | 243,000 | ||||
Inventory
obsolescence reserve
|
18,000 | 13,000 | ||||||
Vacation
accrual
|
28,000 | 27,000 | ||||||
Stock-based
compensation
|
154,000 | 94,000 | ||||||
Organization
costs
|
146,000 | 134,000 | ||||||
Deferred
compensation
|
50,000 | 361,000 | ||||||
Capital
losses on investments
|
446,000 | - | ||||||
Valuation
allowance - investment losses
|
(396,000 | ) | - | |||||
Miscellaneous
accrued expenses
|
71,000 | 27,430 | ||||||
Foreign
net operating loss carryforwards
|
4,066,000 | 3,328,000 | ||||||
Valuation
allowance - NOL carryforwards
|
(4,066,000 | ) | (3,279,000 | ) | ||||
660,000 | 948,430 | |||||||
Deferred
tax liabilities:
|
||||||||
Depreciation
|
208,000 | 356,000 | ||||||
Net
deferred tax assets (liabilities)
|
$ | 452,000 | $ | 592,430 | ||||
Reported
as:
|
||||||||
Current
deferred tax assets
|
$ | 522,000 | $ | 574,430 | ||||
Non-current
deferred tax assets 1
|
- | 18,000 | ||||||
Non-current
deferred tax liabilities
|
70,000 | - | ||||||
Net
deferred tax assets (liabilities)
|
$ | 452,000 | $ | 592,430 |
1
|
Included
within other non-current assets on the consolidated balance
sheets.
|
Beginning balance as of January
1, 2007 (date of adoption)
|
$ | 87,700 | ||
|
||||
Settlements and effective
settlements with tax authorities
|
(1,900 | ) | ||
Lapse of statute of limitations
|
- | |||
Increases
in balances related to tax positions taken during prior
periods
|
112,700 | |||
Decreases
in balances related to tax positions taken during prior
periods
|
(22,300 | ) | ||
Increases
in balances related to tax positions taken during current
period
|
44,300 | |||
|
||||
Balance as of December 31, 2007
|
$ | 220,500 | ||
|
||||
Settlements and effective
settlements with tax authorities
|
(90,100 | ) | ||
Lapse of statute of limitations
|
- | |||
Increases
in balances related to tax positions taken during prior
periods
|
43,800 | |||
Decreases
in balances related to tax positions taken during prior
periods
|
(36,500 | ) | ||
Increases
in balances related to tax positions taken during current
period
|
22,500 | |||
|
||||
Balance as of December 31, 2008
|
$ | 160,200 |
Employee
|
Lease
|
|||||||||||
Severance
|
Exit
|
Total
|
||||||||||
Original
charges and reserve balance
|
$ | 107,000 | $ | 108,000 | $ | 215,000 | ||||||
Amounts
settled in 2nd quarter 2008
|
(22,000 | ) | - | (22,000 | ) | |||||||
Reserve
balance at June 30, 2008
|
85,000 | 108,000 | 193,000 | |||||||||
Amounts
settled in 3rd quarter 2008
|
(85,000 | ) | (30,000 | ) | (115,000 | ) | ||||||
Reserve
balance at September 30, 2008
|
- | 78,000 | 78,000 | |||||||||
Additional
charges in 4th quarter 2008
|
17,500 | - | 17,500 | |||||||||
Amounts
settled in 4th quarter 2008
|
(17,500 | ) | (12,000 | ) | (29,500 | ) | ||||||
Reserve
balance at December 31, 2008
|
$ | - | $ | 66,000 | $ | 66,000 |
2008
|
2007
|
2006
|
||||||||||
Net
sales to external customers
|
||||||||||||
United
States
|
$ | 85,382,045 | $ | 98,347,762 | $ | 105,783,642 | ||||||
Australia/New
Zealand
|
2,680,540 | 2,943,848 | 2,550,086 | |||||||||
Canada
|
1,660,207 | 1,633,928 | 1,637,999 | |||||||||
Mexico
|
1,542,567 | 1,526,146 | 1,433,462 | |||||||||
United
Kingdom
|
1,023,378 | 1,062,088 | 1,234,976 | |||||||||
Malaysia/Singapore
|
2,691,611 | 1,765,124 | 1,804,704 | |||||||||
Philippines
|
2,709,463 | 2,942,156 | 2,197,813 | |||||||||
Germany
|
505,007 | 836,452 | 824,475 | |||||||||
Total
net sales
|
$ | 98,194,818 | $ | 111,057,504 | $ | 117,467,157 | ||||||
Assets
by area
|
||||||||||||
United
States
|
$ | 20,136,254 | $ | 29,388,767 | $ | 32,438,453 | ||||||
Australia/New
Zealand
|
485,377 | 604,852 | 500,916 | |||||||||
Canada
|
238,379 | 232,631 | 134,859 | |||||||||
Mexico
|
648,009 | 953,937 | 1,250,811 | |||||||||
United
Kingdom
|
182,179 | 320,767 | 283,884 | |||||||||
Malaysia/Singapore
|
1,392,268 | 1,006,780 | 1,209,616 | |||||||||
Philippines
|
519,252 | 599,733 | 977,034 | |||||||||
Germany
|
291,061 | 499,304 | 486,647 | |||||||||
Total
consolidated assets
|
$ | 23,892,779 | $ | 33,606,771 | $ | 37,282,220 |
2008
|
2007
|
2006
|
||||||||||
|
||||||||||||
Net sales by product category
|
||||||||||||
Nutritional
and dietary supplements
|
$ | 84,156,989 | $ | 96,935,192 | $ | 102,295,598 | ||||||
Skin
care products
|
995,636 | 1,091,896 | 1,119,836 | |||||||||
Sales
aids and other
|
2,196,290 | 1,438,158 | 2,081,986 | |||||||||
Handling
& freight income
|
10,845,903 | 11,592,258 | 11,969,737 | |||||||||
Total
net sales
|
$ | 98,194,818 | $ | 111,057,504 | $ | 117,467,157 |
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
(In
thousands, except per share amounts)
|
||||||||||||||||
2008
|
||||||||||||||||
Net
sales
|
$ | 28,271 | $ | 23,960 | $ | 23,861 | $ | 22,103 | ||||||||
Gross
profit
|
$ | 23,437 | $ | 19,849 | $ | 19,396 | $ | 18,076 | ||||||||
Net
income
|
$ | 1,526 | $ | 569 | $ | 536 | $ | 250 | ||||||||
Net
income available to common shareholders
|
$ | 1,526 | $ | 569 | $ | 536 | $ | 250 | ||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ | 0.10 | $ | 0.04 | $ | 0.04 | $ | 0.02 | ||||||||
Diluted
|
$ | 0.10 | $ | 0.04 | $ | 0.04 | $ | 0.02 | ||||||||
2007
|
||||||||||||||||
Net
sales
|
$ | 34,964 | $ | 26,325 | $ | 25,121 | $ | 24,648 | ||||||||
Gross
profit
|
$ | 28,902 | $ | 21,926 | $ | 20,800 | $ | 20,329 | ||||||||
Net
income
|
$ | 2,620 | $ | 823 | $ | 901 | $ | 697 | ||||||||
Net
income available to common shareholders
|
$ | 2,620 | $ | 823 | $ | 901 | $ | 697 | ||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ | 0.16 | $ | 0.05 | $ | 0.06 | $ | 0.04 | ||||||||
Diluted
|
$ | 0.16 | $ | 0.05 | $ | 0.06 | $ | 0.04 |
Column
A
|
Column
B
|
Column
C
|
Column
E
|
Column
F
|
||||||||||||
Classification
|
Balance
at
Beginning
of
Year
|
Charged
to Costs
and
Expenses
|
Deductions
Describe
|
Balance
at End
of
Year
|
||||||||||||
Year ended December 31,
2008
|
||||||||||||||||
Deducted
from asset accounts:
|
||||||||||||||||
Allowance
for doubtful accounts
|
$ | 8,300 | $ | 17,400 | $ | 15,500 |
(1)
|
$ | 10,200 | |||||||
Reserve
for obsolete inventory
|
33,300 | 84,700 | 72,500 |
(2)
|
45,500 | |||||||||||
Liability
accounts:
|
||||||||||||||||
Reserve
for refunds
|
630,000 | 840,500 |
(3)
|
1,106,500 |
(3)
|
364,000 | ||||||||||
Year ended December 31,
2007
|
||||||||||||||||
Deducted
from asset accounts:
|
||||||||||||||||
Allowance
for doubtful accounts
|
$ | 6,200 | $ | 19,200 | $ | 17,100 |
(1)
|
$ | 8,300 | |||||||
Reserve
for obsolete inventory
|
32,800 | 46,300 | 45,800 |
(2)
|
33,300 | |||||||||||
Liability
accounts:
|
||||||||||||||||
Reserve
for refunds
|
421,000 | 1,905,900 |
(3)
|
1,696,900 |
(3)
|
630,000 | ||||||||||
Year ended December 31,
2006
|
||||||||||||||||
Deducted
from asset accounts:
|
||||||||||||||||
Allowance
for doubtful accounts
|
$ | 39,700 | $ | 19,700 | $ | 53,200 |
(1)
|
$ | 6,200 | |||||||
Reserve
for obsolete inventory
|
158,000 | 81,800 | 207,000 |
(2)
|
32,800 | |||||||||||
Liability
accounts:
|
||||||||||||||||
Reserve
for refunds
|
382,000 | 1,368,700 |
(3)
|
1,329,700 |
(3)
|
421,000 |
(1)
|
Uncollectible
accounts written off, net of recoveries.
|
(2)
|
Disposal
of obsolete inventory.
|
(3)
|
Amounts
refunded, net of salable amounts returned are shown as a reduction of net
sales.
|