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Mannatech Reports Record Sales & Earnings for 2005 Annual Operating Income Grows 72%, exceeds $46 million. Coppell, Texas

Key Takeaway: Mannatech Reports Record Sales & Earnings for 2005 Annual Operating Income Grows 72%, exceeds $46 million. Coppell, Texas March 8, 2006 Mannatech, Incorporated (NASDAQ: MTEX) today reported record earnings per share for the year ended December 31, 2005 of $1.03 per diluted sh

Full Press Release Details

Mannatech Reports Record Sales & Earnings for 2005
Annual Operating Income Grows 72%,
exceeds $46 million.
Coppell, Texas March 8, 2006 Mannatech, Incorporated (NASDAQ: MTEX) today reported record earnings per share
for the year ended December 31, 2005 of $1.03 per diluted share for an increase of 45%, or $0.32 per diluted share as compared to $0.71 for the same period in 2004. In addition, consolidated net sales grew 32% to $389 million compared to $295
million in 2004 and set a new Company annual sales record. Fourth quarter results included record earnings per share of $0.34 per diluted share up 127% from $0.15 per diluted share for the same period in 2004, and consolidated net sales increased by
20% to $101 million as compared to $84 million for the same period in 2004.
Samuel Caster, Chairman of the Board and Chief Executive Officer, said
Our focus over the past year has included increasing our profitability. Our income from operations for the year ended 2005 increased $19 million, or 72%, to $46 million as compared to $27 million in 2004. We also improved our cost of sales,
our commission rate was lowered versus 2004, and we reduced our overhead costs by two full percentage points. These efforts amplified the effects of our sales increase and allowed us to drive our operating earnings to the highest levels Mannatech
has yet achieved. Our income from operations for the fourth quarter of 2005 rose to 15% of net sales, which shows the potential we believe our company has.
Mr. Caster continued, Our strong performance is a result of our continued effective strategy of delivering exceptional products coupled with outstanding customer service across the globe. We believe our strategy continues to work
well and we plan to innovate to bring more value to our investors and customers worldwide. We see continued growth in our future and are optimistic about our business and industry, as we expect to continue our introduction of new products,
refinement of existing products, and sustained international expansion.
During 2005, Mannatech improved its gross profit margin by reducing cost of
sales, as well as maintaining control of commissions and incentives and overhead costs. Mannatech also maintained a debt-free balance sheet with a strong cash position of over $73 million. Mannatech declared dividends of $0.29 per share in 2005 as
compared to $0.27 per share in 2004. Mannatech intends to continue dividend payments to its shareholders as encouragement of long-term stock ownership.
Fourth Quarter 2005 Results
Mannatech reported the following consolidated
results for its fourth quarter:
For geographical purposes, consolidated net sales by location for each quarter of 2005 were as follows (in millions):
First Quarter 2005 Second Quarter 2005 Third Quarter 2005 Fourth Quarter 2005
United States $ 56 65.9 % $ 70 67.7 % $ 67 66.3 % $ 66 66.2 %
Canada 7 7.9 % 7 7.1 % 7 7.0 % 7 7.0 %
Australia 8 9.5 % 9 8.7 % 9 9.3 % 10 9.3 %
United Kingdom 2 2.8 % 3 2.3 % 2 2.1 % 3 2.0 %
Japan 8 9.2 % 9 8.8 % 9 9.1 % 9 9.4 %
New Zealand 3 4.2 % 4 4.0 % 4 3.7 % 3 3.2 %
Republic of Korea 1 .5 % 1 1.0 % 1 1.5 % 2 1.7 %
Taiwan** % 0 0.4 % 1 0.9 % 1 0.9 %
Denmark*** % % 0.1 % 0 0.3 %
Total $ 85 100 % $ 103 100 % $ 100 100 % $ 101 100 %
operations in June 2005.
***United Kingdom began selling products in Denmark in August 2005.
2005 Full Year Results
Mannatech reported the following consolidated annual results for 2005:
Consolidated net sales by geographical location for the years ended December 31, were as
2003 2004 2005
(in millions)
United States $ 128 67.0 % $ 193 65.4 % $ 259 66.6 %
Canada 17 8.7 % 22 7.5 % 28 7.2 %
Australia 16 8.2 % 31 10.4 % 36 9.2 %
United Kingdom 5 2.6 % 10 3.6 % 9 2.3 %
Japan 18 9.7 % 25 8.3 % 35 9.1 %
New Zealand 7 3.8 % 13 4.4 % 15 3.7 %
Republic of Korea % 1 0.4 % 4 1.2 %
Taiwan** % % 2 0.6 %
Denmark*** % % 1 0.1 %
Totals $ 191 100 % $ 295 100 % $ 389 100 %
** Taiwan began operations in June 2005.
***United Kingdom began selling products in Denmark in August 2005.
The number of new and continuing independent associates and members who purchased our products and packs within the last 12 months are called current associates and members, and by year are as follows:
For the Year Ended December 31,
Current Associates and Members 2003 2004 2005
New 134,000 51 % 178,000 48 % 230,000 47 %
Continuing 130,000 49 % 191,000 52 % 260,000 53 %
Total 264,000 100 % 369,000 100 % 490,000 100 %
Based in Coppell, Texas, Mannatech, Incorporated is a wellness solutions provider that develops innovative, high-quality, proprietary nutritional supplements, topical products and weight management products, which are sold through a global
network-marketing system operating throughout the United States and the international markets of Canada, Australia, the United Kingdom, Japan, New Zealand, the Republic of Korea, Taiwan, and Denmark.
Please Note: This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by use of phrases or terminology such as may,
believes, estimates, shows , sees, optimistic, and plans or other similar words or the negative of such terminology. Similarly, descriptions of Mannatech s objectives,
strategies, plans, goals or targets contained herein are also considered forward-looking statements. Mannatech believes this release should be read in conjunction with all of its filings with the United States Securities and Exchange Commission and
cautions its readers that these forward-looking statements are subject to certain events, risks, uncertainties, and other factors. Some of these factors include, among others, Mannatech s inability to attract and retain associates and members,
increases in competition, litigation, regulatory changes, and its planned growth into new international markets. Although Mannatech believes that its expectations, statements, and assumptions reflected in these forward-looking statements are
reasonable, it cautions its readers to always consider all of the risk factors and any other cautionary statements carefully in evaluating each forward-looking statement in this release, as well as those set forth in its latest Annual Report on Form
10-K, and other filings filed with the United States Securities and Exchange Commission, including its current reports on Form 8-K. All of the forward-looking statements contained herein speak only as of the date of this release.
Contact Information:
(Summary Consolidated Financial Statements to follow)
MANNATECH, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except share and per share information)
December 31,
2004 2005
ASSETS
Cash and cash equivalents $ 44,198 $ 56,207
Short-term investments 1,974
Restricted cash 393 2,777
Income tax receivable 4,161
Accounts receivable 392 548
Inventories, net 13,157 19,811
Prepaid expenses and other current assets 3,188 3,471
Deferred tax assets 1,850 671
Note receivable due from an affiliate 144 153
Total current assets 67,483 85,612
Property and equipment, net 6,469 10,951
Construction in progress 3,544 8,157
Long-term restricted cash 1,571 1,476
Long-term investments 17,073 15,375
Other assets 1,203 1,121
Long-term deferred tax assets 1,003 103
Total assets $ 98,346 $ 122,795
LIABILITIES AND SHAREHOLDERS EQUITY
Current portion of capital lease $ 8 $ 23
Accounts payable 2,227 5,476
Accrued expenses 20,389 16,800
Commissions and incentives payable 12,718 15,588
Taxes payable 1,930 5,773
Deferred revenue 2,256 3,712
Accrued severance related to former executives 375 141
Total current liabilities 39,903 47,513
Capital lease, excluding current portion 26
Long-term liabilities 530 537
Long-term royalties due to an affiliate 1,658 3,341
Long-term deferred tax liabilities 4 1,086
Total liabilities 42,121 52,477
Commitments and contingencies
Shareholders equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.0001 par value, 99,000,000 shares authorized, 27,115,440 shares issued and 27,041,125 outstanding in 2004 and 27,404,513 shares issued and 26,738,364 outstanding in 2005 3 3
Additional paid-in capital 34,917 36,699
Retained earnings 21,672 42,505
Accumulated other comprehensive income (loss) 195 (1,098 )
56,787 78,109
Less treasury stock, at cost, 74,315 shares in 2004 and 666,149 shares in 2005 (562 ) (7,791 )
Total shareholders equity 56,225 70,318
MANNATECH, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except for
per share information)
Three months ended December 31, Twelve months ended December 31,
2004 2005 2004 2005
Net sales $ 84,226 $ 101,423 $ 294,508 $ 389,383
Cost of sales 12,976 14,842 44,847 58,028
Commissions and incentives 37,524 42,825 132,231 172,151
50,500 57,667 177,078 230,179
Gross profit 33,726 43,756 117,430 159,204
Operating expenses:
Selling and administrative expenses 13,896 17,327 50,006 65,923
Other operating costs 12,925 11,085 37,840 47,671
Non-cash charge related to affiliate stock sale 3,047 3,047
Total operating expenses 29,868 28,412 90,893 113,594
Income from operations 3,858 15,344 26,537 45,610
Interest income 306 524 735 1,778
Interest expense (1 ) (17 )
Other income (expense), net 781 (753 ) (257 ) (1,940 )
Income before income taxes 4,944 15,115 26,998 45,448
Provision for income taxes (899 ) (5,680 ) (7,446 ) (16,801 )
Net income $ 4,045 $ 9,435 $ 19,552 28,647
Earnings per common share:
Basic $ 0.15 $ 0.35 $ 0.74 $ 1.06
Diluted $ 0.15 $ 0.34 $ 0.71 $ 1.03
Weighted-average common shares outstanding:
Basic 26,768 26,744 26,436 26,990
Diluted 27,741 27,395 27,491 27,771
Last updated: Mar 8, 2006