x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the quarterly period ended March 31, 2008
|
|
OR
|
|
o
|
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)
|
1
|
||
7
|
||
12
|
||
13
|
||
13
|
||
14
|
||
14
|
Reliv
International, Inc. and Subsidiaries
|
|||||||
Consolidated
Balance Sheets
|
|||||||
March
31
|
December
31
|
||||||
2008
|
2007
|
||||||
(unaudited)
|
|||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
13,666,929
|
$
|
11,694,699
|
|||
Short-term
investments
|
1,521,111
|
398,592
|
|||||
Accounts
and notes receivable, less allowances of
|
|||||||
$8,400
in 2008 and $8,300 in 2007
|
568,010
|
811,634
|
|||||
Accounts
due from employees and distributors
|
231,532
|
204,705
|
|||||
Inventories
|
|||||||
Finished
goods
|
3,541,178
|
3,290,114
|
|||||
Raw
materials
|
1,775,170
|
1,630,976
|
|||||
Sales
aids and promotional materials
|
1,133,070
|
1,258,148
|
|||||
Total
inventories
|
6,449,418
|
6,179,238
|
|||||
Refundable
income taxes
|
—
|
362,330
|
|||||
Prepaid
expenses and other current assets
|
820,855
|
862,172
|
|||||
Deferred
income taxes
|
557,430
|
574,430
|
|||||
Total
current assets
|
23,815,285
|
21,087,800
|
|||||
Other
assets
|
3,032,594
|
2,999,903
|
|||||
Accounts
due from employees and distributors
|
276,123
|
319,883
|
|||||
Property,
plant and equipment:
|
|||||||
Land
|
829,222
|
829,222
|
|||||
Building
|
9,720,987
|
9,817,692
|
|||||
Machinery
& equipment
|
3,685,104
|
3,673,515
|
|||||
Office
equipment
|
1,463,662
|
1,525,905
|
|||||
Computer
equipment & software
|
2,653,957
|
2,665,610
|
|||||
18,352,932
|
18,511,944
|
||||||
Less:
Accumulated depreciation
|
9,272,044
|
9,312,759
|
|||||
Net
property, plant and equipment
|
9,080,888
|
9,199,185
|
|||||
Total
assets
|
$
|
36,204,890
|
$
|
33,606,771
|
|||
See
notes to financial statements.
|
Reliv
International, Inc. and Subsidiaries
|
|||||||
Consolidated
Balance Sheets
|
|||||||
March
31
|
December
31
|
||||||
2008
|
2007
|
||||||
(unaudited)
|
|||||||
Liabilities
and stockholders' equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses:
|
|||||||
Trade
accounts payable and other accrued expenses
|
$
|
4,431,789
|
$
|
4,288,481
|
|||
Distributors
commissions payable
|
3,439,772
|
3,285,270
|
|||||
Sales
taxes payable
|
328,116
|
390,585
|
|||||
Payroll
and payroll taxes payable
|
770,341
|
499,921
|
|||||
Total
accounts payable and accrued expenses
|
8,970,018
|
8,464,257
|
|||||
Income
taxes payable
|
675,454
|
110,000
|
|||||
Total
current liabilities
|
9,645,472
|
8,574,257
|
|||||
Other
noncurrent liabilities
|
1,134,526
|
1,227,313
|
|||||
Stockholders'
equity:
|
|||||||
Preferred
stock, par value $.001 per share; 3,000,000
|
|||||||
shares
authorized; -0- shares issued and outstanding
|
|||||||
in
2008 and 2007
|
—
|
—
|
|||||
Common
stock, par value $.001 per share; 30,000,000
|
|||||||
authorized;
15,877,179 shares issued and 15,873,754
|
|||||||
shares
outstanding as of 3/31/2008 and 12/31/2007
|
15,877
|
15,877
|
|||||
Additional
paid-in capital
|
33,160,005
|
33,100,351
|
|||||
Accumulated
deficit
|
(7,343,295
|
)
|
(8,869,332
|
)
|
|||
Accumulated
other comprehensive loss:
|
|||||||
Foreign
currency translation adjustment
|
(385,179
|
)
|
(419,179
|
)
|
|||
Treasury
stock
|
(22,516
|
)
|
(22,516
|
)
|
|||
Total
stockholders' equity
|
25,424,892
|
23,805,201
|
|||||
Total
liabilities and stockholders' equity
|
$
|
36,204,890
|
$
|
33,606,771
|
|||
See
notes to financial statements.
|
Reliv
International, Inc. and Subsidiaries
|
|||||||
Consolidated
Statements of Income
|
|||||||
(unaudited)
|
|||||||
Three
months ended March 31
|
|||||||
2008
|
2007
|
||||||
Product
sales
|
$
|
25,197,178
|
$
|
31,397,966
|
|||
Handling
& freight income
|
3,074,208
|
3,565,679
|
|||||
|
|||||||
Net
sales
|
28,271,386
|
34,963,645
|
|||||
Costs
and expenses:
|
|||||||
Cost
of products sold
|
4,834,526
|
6,061,392
|
|||||
Distributor
royalties and commissions
|
11,122,372
|
13,928,563
|
|||||
Selling,
general and administrative
|
9,931,799
|
11,029,850
|
|||||
Total
costs and expenses
|
25,888,697
|
31,019,805
|
|||||
Income
from operations
|
2,382,689
|
3,943,840
|
|||||
Other
income (expense):
|
|||||||
Interest
income
|
134,873
|
212,602
|
|||||
Interest
expense
|
(413
|
)
|
(126
|
)
|
|||
Other
income (expense)
|
(35,112
|
)
|
96,933
|
||||
Income
before income taxes
|
2,482,037
|
4,253,249
|
|||||
Provision
for income taxes
|
956,000
|
1,633,000
|
|||||
Net
income
|
$
|
1,526,037
|
$
|
2,620,249
|
|||
Earnings
per common share - Basic
|
$
|
0.10
|
$
|
0.16
|
|||
Weighted
average shares
|
15,874,000
|
16,431,000
|
|||||
Earnings
per common share - Diluted
|
$
|
0.10
|
$
|
0.16
|
|||
Weighted
average shares
|
15,874,000
|
16,580,000
|
|||||
Cash
dividends declared per common share
|
$
|
—
|
$
|
—
|
|||
|
|||||||
See
notes to financial statements.
|
Reliv
International, Inc. and Subsidiaries
|
|||||||
|
|||||||
Consolidated
Statements of Cash Flows
|
|||||||
(unaudited)
|
|||||||
Three
months ended March 31
|
|||||||
2008
|
2007
|
||||||
Operating
activities:
|
|||||||
Net
income
|
$
|
1,526,037
|
$
|
2,620,249
|
|||
Adjustments
to reconcile net income to
|
|||||||
net
cash provided by operating activities:
|
|||||||
Depreciation
and amortization
|
264,052
|
248,760
|
|||||
Stock-based
compensation
|
59,655
|
20,006
|
|||||
Deferred
income taxes
|
(20,000
|
)
|
97,000
|
||||
Foreign
currency transaction (gain)/loss
|
(17,928
|
)
|
(35,525
|
)
|
|||
(Increase)
decrease in accounts and notes receivable
|
272,560
|
(288,514
|
)
|
||||
(Increase)
decrease in inventories
|
(232,909
|
)
|
(338,981
|
)
|
|||
(Increase)
decrease in refundable income taxes
|
362,330
|
279,096
|
|||||
(Increase)
decrease in prepaid expenses
|
|||||||
and
other current assets
|
46,308
|
(493,676
|
)
|
||||
(Increase)
decrease in other assets
|
(4,793
|
)
|
(320,424
|
)
|
|||
Increase
(decrease) in accounts payable and accrued expenses
|
390,387
|
2,415,931
|
|||||
Increase
(decrease) in income taxes payable
|
566,196
|
1,062,405
|
|||||
|
|||||||
Net
cash provided by operating activities
|
3,211,895
|
5,266,327
|
|||||
Investing
activities:
|
|||||||
Proceeds
from the sale of property, plant and equipment
|
6,510
|
1,192
|
|||||
Purchase
of property, plant and equipment
|
(135,186
|
)
|
(97,087
|
)
|
|||
Purchase
of investments
|
(1,521,111
|
)
|
(1,000,000
|
)
|
|||
Proceeds
from sales or maturities of investments, at cost
|
398,592
|
—
|
|||||
|
|||||||
Net
cash used in investing activities
|
(1,251,195
|
)
|
(1,095,895
|
)
|
|||
Financing
activities:
|
|||||||
Proceeds
from options and warrants exercised
|
—
|
46,465
|
|||||
Purchase
of stock for treasury
|
—
|
(3,350,986
|
)
|
||||
Net
cash used in financing activities
|
—
|
(3,304,521
|
)
|
||||
Effect
of exchange rate changes on cash and cash equivalents
|
11,530
|
30,050
|
|||||
Increase
in cash and cash equivalents
|
1,972,230
|
895,961
|
|||||
Cash
and cash equivalents at beginning of period
|
11,694,699
|
9,332,810
|
|||||
Cash
and cash equivalents at end of period
|
$
|
13,666,929
|
$
|
10,228,771
|
|||
See
notes to financial statements
|
Note 1-- |
Accounting
Policies
|
Note 2-- |
Comprehensive
Income
|
Note 3-- |
Basic
and Diluted Earnings per
Share
|
Three
months ended March 31
|
|||||||
2008
|
2007
|
||||||
Numerator:
|
|||||||
Net
income
|
$
|
1,526,037
|
$
|
2,620,249
|
|||
Denominator:
|
|||||||
Denominator
for basic earnings per
|
|||||||
share--weighted
average shares
|
15,874,000
|
16,431,000
|
|||||
Dilutive
effect of employee stock options
|
|||||||
and
other warrants
|
—
|
149,000
|
|||||
Denominator
for diluted earnings per
|
|||||||
share--adjusted
weighted average shares
|
15,874,000
|
16,580,000
|
|||||
Basic
earnings per share
|
$
|
0.10
|
$
|
0.16
|
|||
Diluted
earnings per share
|
$
|
0.10
|
$
|
0.16
|
Note 4-- |
Adoption
of New Accounting Standards -- Fair Value
|
Using
Quoted
|
Using
Significant
|
|||||||||
Total
|
Prices
in
|
Other
Observable
|
||||||||
Carrying
|
Active
Markets
|
Inputs
|
||||||||
Description
|
Value
|
(Level
1)
|
(Level
2)
|
|||||||
Certificates
of deposits (1)
|
$
|
4,482,856
|
$
|
4,482,856
|
$
|
—
|
||||
Marketable
securities (2)
|
921,749
|
921,749
|
—
|
|||||||
Derivatives
(3)
|
12,813
|
—
|
12,813
|
|||||||
$
|
5,417,418
|
$
|
5,404,605
|
$
|
12,813
|
|||||
(1) |
Representing
certificates of deposits recorded in cash, cash equivalents,
and short
term investments.
|
(2) |
Representing
assets of the Company's Supplemental Executive Retirement Plan
(trading
securities). Presented within Other Assets in the consolidated
balance
sheets.
|
(3) |
Representing
recorded asset of forward currency contracts and is presented
within
Prepaid Expenses and Other Current Assets in the consolidated
balance
sheets. The fair values of derivatives are determined either
through
quoted market prices in active markets for exchange traded derivatives
or
through pricing from brokers who develop values based on inputs
observable
in active markets such as interest rates and currency
volatilities.
|
Note 5-- |
Recent
Accounting Standards Pending
Adoption
|
Three
months ended
March
31,
|
|||||||
2008
|
2007
|
||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
|||
Costs
and expenses:
|
|||||||
Cost
of products sold
|
17.1
|
17.3
|
|||||
Distributor
royalties and commissions
|
39.4
|
39.8
|
|||||
Selling,
general and administrative
|
35.1
|
31.6
|
|||||
Income
from operations
|
8.4
|
11.3
|
|||||
Interest
expense
|
(0.0
|
)
|
(0.0
|
)
|
|||
Interest
and other income
|
0.4
|
0.9
|
|||||
Income
before income taxes
|
8.8
|
12.2
|
|||||
Provision
for income taxes
|
3.4
|
4.7
|
|||||
Net
income
|
5.4
|
%
|
7.5
|
%
|
Three
months ended March 31,
|
|||||||||||||||||||
2008
|
2007
|
Change
from prior year
|
|||||||||||||||||
Amount
|
%
of Net Sales
|
Amount
|
%
of Net
Sales
|
Amount
|
%
|
||||||||||||||
(dollars
in thousands)
|
|||||||||||||||||||
United
States
|
$
|
24,685
|
87.3
|
%
|
$
|
31,904
|
91.2
|
%
|
$
|
(7,219
|
)
|
(22.6
|
)%
|
||||||
Australia/New
Zealand
|
747
|
2.7
|
653
|
1.9
|
94
|
14.4
|
|||||||||||||
Canada
|
461
|
1.6
|
441
|
1.3
|
20
|
4.5
|
|||||||||||||
Mexico
|
398
|
1.4
|
410
|
1.2
|
(12
|
)
|
(2.9
|
)
|
|||||||||||
United
Kingdom/Ireland
|
287
|
1.0
|
287
|
0.8
|
—
|
0.0
|
|||||||||||||
Philippines
|
814
|
2.9
|
628
|
1.8
|
186
|
29.6
|
|||||||||||||
Malaysia/Singapore
|
642
|
2.3
|
330
|
0.9
|
312
|
94.5
|
|||||||||||||
Germany
|
237
|
0.8
|
311
|
0.9
|
(74
|
)
|
(23.8
|
)
|
|||||||||||
Consolidated
total
|
$
|
28,271
|
100.0
|
%
|
$
|
34,964
|
100.0
|
%
|
$
|
(6,693
|
)
|
(19.1
|
)%
|
March
31, 2008
|
March
31, 2007
|
%
Change
|
|||||||||||||||||||||
Active
Distributors
|
Master
Affiliates and Above
|
Active
Distributors
|
Master
Affiliates and Above
|
Active
Distributors
|
Master
Affiliates and Above
|
||||||||||||||||||
United
States
|
55,970
|
|
|
9,400
|
|
56,320
|
|
|
12,660
|
|
(0.6
|
)%
|
|
(25.8
|
)%
|
||||||||
Australia/New
Zealand
|
|
2,520
|
|
|
210
|
|
2,520
|
|
|
270
|
|
0.0
|
|
|
(22.2
|
)
|
|||||||
Canada
|
|
1,180
|
|
|
130
|
|
1,170
|
|
|
150
|
|
0.9
|
|
(13.3
|
)
|
||||||||
Mexico
|
|
1,490
|
|
|
190
|
|
1,170
|
|
|
170
|
|
27.4
|
|
|
11.8
|
||||||||
United
Kingdom/Ireland
|
|
740
|
|
|
80
|
|
940
|
|
|
130
|
|
(21.3
|
)
|
|
(38.5
|
)
|
|||||||
Philippines
|
|
4,730
|
|
|
380
|
|
3,750
|
|
|
270
|
|
26.1
|
|
|
40.7
|
||||||||
Malaysia/Singapore
|
|
2,540
|
|
|
340
|
|
2,310
|
|
|
260
|
|
10.0
|
|
|
30.8
|
||||||||
Germany
|
|
540
|
|
|
90
|
|
510
|
|
|
150
|
|
5.9
|
|
(40.0
|
)
|
||||||||
Consolidated
total
|
69,710
|
|
|
10,820
|
|
68,690
|
|
|
14,060
|
|
1.5
|
%
|
|
(23.0
|
)%
|
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
|
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).
|
|
10.2
|
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).
|
|
10.3
|
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).
|
|
|
||
10.4
|
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).
|
|
|
||
10.5
|
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).
|
|
|
||
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).
|
||
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).
|
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
|
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).
|
|
10.2
|
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).
|
|
10.3
|
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).
|
|
|
||
10.4
|
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).
|
|
|
||
10.5
|
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).
|
|
|
||
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).
|
||
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).
|
||