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Natural Health Trends Corp.: Natural Health Trends Announces Net Income for the Fourth Quarter 2008

^{Published on 2009-03-16 18:03:03, Last Modified on 2009-03-16 18:05:08 - Market Wire}
 

DALLAS, TX--(Marketwire - March 16, 2009) - Natural Health Trends Corp. (NASDAQ: [ BHIP ]) today announced its financial results for the quarter ended December 31, 2008. The company reported sales of $11.1 million and net income of $229,000, after de-recognizing $2.2 million in past year commission liabilities in the fourth quarter of 2008.

Chris Sharng, the company's president, said, "We had a strong finish for the year 2008. Our deferred revenue, which represents orders not shipped as of December 31, was higher than at the end of the third quarter. We are also excited about the current momentum our Greater Chinese members have generated, following a prolonged Chinese New Year festival period that effectively reduced the number of working days in January and February of this year."

The company expects additional measures to reduce SG&A and cost of goods sold that were identified by the end of 2008 will generate cost savings of $500,000 per quarter, to be fully realized by June. At the end of the fourth quarter of 2008, Natural Health Trends implemented a price increase in Hong Kong, Europe and North America that it expects will further bolster the gross profit margin.

"This year, we have been actively planning new marketing programs, including training and meetings in Greater China that will begin within the next few weeks," continued Mr. Sharng. "We have also been actively working on opening a new market in Russia, where in-market customer service facilities are expected to be activated by the end of June. We feel that the trend in revenue and expenses we are witnessing after the Chinese New Year bodes well for a solid year."

The company plans to host a conference call at 11:30 a.m. EDT, March 17, 2009. Those who wish to participate may call telephone number (866) 597-6038, or (973) 582-2772 for international callers, 15 minutes before 11:30 a.m. EDT. Callers will need to give the conference identification number, 90390396. If you cannot participate in the call, but wish to hear it, you may log in to the company's homepage at [ www.naturalhealthtrendscorp.com ] and click on the conference call 1 1/2 hours after the completion of the call.

About Natural Health Trends Corp.

Natural Health Trends Corp. is an international direct-selling and e-commerce company operating through its subsidiaries throughout Asia, North America, and Europe. The company markets premium quality personal care products under the NHT Global brand. Additional information can be found on the company's website, and management encourages interested parties to register for updated corporate information via email on the company's home page, [ www.naturalhealthtrendscorp.com ].

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Forward-looking statements in this release do not constitute guarantees of future performance. Such forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. Such risks and uncertainties include the risks and uncertainties detailed under the caption "Risk Factors" in our Annual Report on Form 10-K filed on March 31, 2008, with the Securities and Exchange Commission. We assume no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

 NATURAL HEALTH TRENDS CORP. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands, Except Share Data) September 30, December 31, 2008 2008 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 3,969 $ 3,491 Restricted cash 227 340 Accounts receivable 222 71 Inventories, net 1,974 2,141 Other current assets 894 735 ------------- ------------- Total current assets 7,286 6,778 Property and equipment, net 1,321 1,173 Goodwill 1,764 1,764 Intangible assets, net 2,000 1,800 Restricted cash 3,678 3,646 Deferred tax assets 164 - Other assets 1,657 1,464 ------------- ------------- Total assets $ 17,870 $ 16,625 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,387 $ 1,746 Income taxes payable 376 187 Accrued distributor commissions 1,063 554 Other accrued expenses 2,806 2,456 Deferred revenue 2,116 2,841 Current portion of convertible debentures, net of discount of $609 and $2,320 at September 30, 2008 and December 31, 2008, respectively 1,339 1,534 Deferred tax liability - 351 Other current liabilities 3,192 1,170 ------------- ------------- Total current liabilities 12,279 10,839 Convertible debentures, net of discount of $2,302 at September 30, 2008 - - ------------- ------------- Total liabilities 12,279 10,839 Commitments and contingencies Minority interest 34 34 Stockholders' equity: Preferred stock, $0.001 par value; 5,000,000 shares authorized; 1,761,900 shares designated Series A convertible preferred stock, 138,400 shares issued and outstanding at September 30, 2008 and December 31, 2008, aggregate liquidation value of $263 124 124 Common stock, $0.001 par value; 50,000,000 shares authorized; 10,343,582 and 10,691,582 shares issued and outstanding at September 30, 2008 and December 31, 2008, respectively 10 11 Additional paid-in capital 79,579 79,711 Accumulated deficit (75,082) (74,853) Accumulated other comprehensive income: Foreign currency translation adjustments 926 759 ------------- ------------- Total stockholders' equity 5,557 5,752 ------------- ------------- Total liabilities and stockholders' equity $ 17,870 $ 16,625 ============= ============= NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, Except Per Share Data) Three Months Ended ----------------------------- September 30, December 31, 2008 2008 ------------- ------------- Net sales $ 11,016 $ 11,072 Cost of sales 3,050 3,096 ------------- ------------- Gross profit 7,966 7,976 Operating expenses: Distributor commissions 4,573 4,480 Selling, general and administrative expenses (including stock-based compensation expense of $128 and $133 during the three months ended September 30, 2008 and December 31, 2008, respectively) 4,358 3,945 Depreciation and amortization 338 366 Impairment of long-lived assets 2 - ------------- ------------- Total operating expenses 9,271 8,791 ------------- ------------- Loss from operations (1,305) (815) Other income (expense), net: Loss on foreign exchange (345) (29) Interest income 18 21 Interest expense (including amortization of debt issuance costs and accretion of debt discount of $559 and $713 during the three months ended September 30, 2008 and December 31, 2008, respectively) (666) (815) De-recognition of commission liabilities - 2,237 Other 19 (30) ------------- ------------- Total other income (expense), net (974) 1,384 ------------- ------------- Income (loss) before income taxes and minority interest (2,279) 569 Income tax provision (37) (340) ------------- ------------- Net income (loss) $ (2,316) $ 229 ============= ============= NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands) Three Months Ended ----------------------------- September 30, December 31, 2008 2008 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (2,316) $ 229 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization of property and equipment 138 166 Amortization of intangibles 200 200 Amortization of debt issuance costs 96 122 Accretion of debt discount 463 591 Stock-based compensation 128 133 Impairment of long-lived assets 2 - Deferred income taxes - 526 Changes in assets and liabilities: Accounts receivable 73 134 Inventories, net 828 (212) Other current assets 193 149 Other assets 143 28 Accounts payable (70) 349 Income taxes payable 7 (194) Accrued distributor commissions (406) (506) Other accrued expenses (143) (348) Deferred revenue (471) 727 Other current liabilities (157) (2,004) ------------- ------------- Net cash provided by (used in) operating activities (1,292) 90 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (130) (23) Decrease in restricted cash (42) (168) ------------- ------------- Net cash used in investing activities (172) (191) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES Payments on debt (145) (396) ------------- ------------- Net cash used in financing activities (145) (396) ------------- ------------- Effect of exchange rates on cash and cash equivalents 369 19 ------------- ------------- Net decrease in cash and cash equivalents (1,240) (478) CASH AND CASH EQUIVALENTS, beginning of period 5,209 3,969 ------------- ------------- CASH AND CASH EQUIVALENTS, end of period $ 3,969 $ 3,491 ============= =============