x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Delaware
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371172197
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(State or other jurisdiction of
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(I.R.S. Employer Identification Number)
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incorporation or organization)
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136 Chesterfield Industrial Boulevard
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Chesterfield, Missouri
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63005
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(Address of principal executive offices)
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(Zip Code)
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PART
I – FINANCIAL INFORMATION
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||||
Item
No. 1
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Financial
Statements (Unaudited)
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1
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||
Item
No. 2
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Management’s
Discussion and Analysis of Financial
Condition and Results of Operations
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7 | ||
Item
No. 4
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Controls
and Procedures
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12
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PART
II – OTHER INFORMATION
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||||
Item
No. 2
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Unregistered
Sales of Equity Securities and Use of Proceeds
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12
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Item No. 6
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Exhibits
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12
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March 31
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December 31
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|||||||
2010
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2009
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|||||||
(unaudited)
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||||||||
Assets
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||||||||
Current
assets:
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||||||||
Cash
and cash equivalents
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$ | 7,150,487 | $ | 5,760,913 | ||||
Accounts
and notes receivable, less allowances of $62,000 in 2010 and $59,700 in
2009
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322,815 | 326,022 | ||||||
Accounts
due from employees and distributors
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74,519 | 78,500 | ||||||
Inventories
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||||||||
Finished
goods
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3,157,007 | 3,073,570 | ||||||
Raw
materials
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1,346,921 | 1,388,140 | ||||||
Sales
aids and promotional materials
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695,247 | 622,694 | ||||||
Total
inventories
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5,199,175 | 5,084,404 | ||||||
Refundable
income taxes
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- | 23,789 | ||||||
Prepaid
expenses and other current assets
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1,195,316 | 652,544 | ||||||
Deferred
income taxes
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303,000 | 303,000 | ||||||
Total
current assets
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14,245,312 | 12,229,172 | ||||||
Other
assets
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1,875,067 | 1,569,079 | ||||||
Intangible
assets, net
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1,940,119 | 1,991,497 | ||||||
Property,
plant and equipment:
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||||||||
Land
and land improvements
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852,147 | 852,147 | ||||||
Building
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9,904,014 | 9,851,829 | ||||||
Machinery
& equipment
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3,423,242 | 3,426,720 | ||||||
Office
equipment
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1,502,602 | 1,494,915 | ||||||
Computer
equipment & software
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2,999,241 | 3,003,766 | ||||||
18,681,246 | 18,629,377 | |||||||
Less:
Accumulated depreciation
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10,468,399 | 10,264,692 | ||||||
Net
property, plant and equipment
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8,212,847 | 8,364,685 | ||||||
Total
assets
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$ | 26,273,345 | $ | 24,154,433 |
March 31
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December 31
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|||||||
2010
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2009
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|||||||
(unaudited)
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||||||||
Liabilities
and stockholders' equity
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||||||||
Current
liabilities:
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||||||||
Accounts
payable and accrued expenses:
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||||||||
Trade
accounts payable and other accrued expenses
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$ | 3,565,640 | $ | 2,627,674 | ||||
Distributors
commissions payable
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2,815,329 | 2,674,247 | ||||||
Sales
taxes payable
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407,445 | 362,612 | ||||||
Payroll
and payroll taxes payable
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584,610 | 577,756 | ||||||
Total
accounts payable and accrued expenses
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7,373,024 | 6,242,289 | ||||||
Income
taxes payable
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275,177 | - | ||||||
Current
maturities of long-term debt
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524,592 | 519,192 | ||||||
Total
current liabilities
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8,172,793 | 6,761,481 | ||||||
Noncurrent
liabilities:
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||||||||
Long-term
debt, less current maturities
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4,585,874 | 4,719,542 | ||||||
Other
noncurrent liabilities
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406,120 | 406,544 | ||||||
Total
noncurrent liabilities
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4,991,994 | 5,126,086 | ||||||
Stockholders'
equity:
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||||||||
Preferred
stock, par value $.001 per share; 3,000,000 shares authorized; -0- shares
issued and outstanding in 2010 and 2009
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- | - | ||||||
Common
stock, par value $.001 per share; 30,000,000 authorized; 14,425,185 shares
issued and 12,380,187 shares outstanding as of 3/31/2010; 14,425,185
shares issued and 12,380,187 shares outstanding as of
12/31/2009
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14,425 | 14,425 | ||||||
Additional
paid-in capital
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30,278,746 | 30,228,573 | ||||||
Accumulated
deficit
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(10,533,050 | ) | (11,279,526 | ) | ||||
Accumulated
other comprehensive loss:
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||||||||
Foreign
currency translation adjustment
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(582,661 | ) | (627,704 | ) | ||||
Treasury
stock
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(6,068,902 | ) | (6,068,902 | ) | ||||
Total
stockholders' equity
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13,108,558 | 12,266,866 | ||||||
Total
liabilities and stockholders' equity
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$ | 26,273,345 | $ | 24,154,433 |
Three months ended March 31
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||||||||
2010
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2009
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|||||||
Product
sales
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$ | 20,257,680 | $ | 21,166,181 | ||||
Handling
& freight income
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2,469,571 | 2,624,809 | ||||||
Net
sales
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22,727,251 | 23,790,990 | ||||||
Costs
and expenses:
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||||||||
Cost
of products sold
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4,556,382 | 4,575,751 | ||||||
Distributor
royalties and commissions
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8,480,076 | 8,937,667 | ||||||
Selling,
general and administrative
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8,543,450 | 8,617,873 | ||||||
Total
costs and expenses
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21,579,908 | 22,131,291 | ||||||
Income
from operations
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1,147,343 | 1,659,699 | ||||||
Other
income (expense):
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||||||||
Interest
income
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9,526 | 20,715 | ||||||
Interest
expense
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(51,676 | ) | (9,550 | ) | ||||
Other
income
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57,283 | 12,055 | ||||||
Income
before income taxes
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1,162,476 | 1,682,919 | ||||||
Provision
for income taxes
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416,000 | 671,000 | ||||||
Net
income
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$ | 746,476 | $ | 1,011,919 | ||||
Earnings
per common share - Basic
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$ | 0.06 | $ | 0.07 | ||||
Weighted
average shares
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12,380,000 | 14,299,000 | ||||||
Earnings
per common share - Diluted
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$ | 0.06 | $ | 0.07 | ||||
Weighted
average shares
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12,380,000 | 14,299,000 | ||||||
Cash
dividends declared per common share
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$ | - | $ | - |
Three months ended March 31
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2010
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2009
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|||||||
Operating
activities:
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Net
income
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$ | 746,476 | $ | 1,011,919 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
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Depreciation
and amortization
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302,444 | 277,010 | ||||||
Stock-based
compensation
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50,173 | 51,829 | ||||||
Deferred
income taxes
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(42,000 | ) | (29,000 | ) | ||||
Foreign
currency transaction (gain)/loss
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(23,203 | ) | 12,819 | |||||
(Increase)
decrease in accounts and notes receivable
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15,820 | 251,858 | ||||||
(Increase)
decrease in inventories
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(89,152 | ) | (485,459 | ) | ||||
(Increase)
decrease in refundable income taxes
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23,789 | 128,319 | ||||||
(Increase)
decrease in prepaid expenses and other current assets
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(538,096 | ) | (316,049 | ) | ||||
(Increase)
decrease in other assets
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(273,103 | ) | (252,355 | ) | ||||
Increase
(decrease) in accounts payable & accrued expenses and other noncurrent
liabilities
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1,103,295 | 1,598,651 | ||||||
Increase
(decrease) in income taxes payable
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274,961 | 523,255 | ||||||
Net
cash provided by operating activities
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1,551,404 | 2,772,797 | ||||||
Investing
activities:
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||||||||
Proceeds
from the sale of property, plant and equipment
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3,083 | - | ||||||
Purchase
of property, plant and equipment
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(91,041 | ) | (146,131 | ) | ||||
Proceeds
from final withdrawal from limited partnership investment
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- | 488,633 | ||||||
Net
cash provided by (used in) investing activities
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(87,958 | ) | 342,502 | |||||
Financing
activities:
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Principal
payments on short and long-term borrowings
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(128,268 | ) | (569,375 | ) | ||||
Purchase
of stock for treasury
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- | (14,115 | ) | |||||
Net
cash used in financing activities
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(128,268 | ) | (583,490 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
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54,396 | (9,111 | ) | |||||
Increase
(decrease) in cash and cash equivalents
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1,389,574 | 2,522,698 | ||||||
Cash
and cash equivalents at beginning of period
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5,760,913 | 4,460,637 | ||||||
Cash
and cash equivalents at end of period
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$ | 7,150,487 | $ | 6,983,335 |
Note
1—
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Accounting
Policies
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Note
2—
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Comprehensive
Income
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Note
3—
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Basic
and Diluted Earnings per Share
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Three months ended March 31
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||||||||
2010
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2009
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Numerator:
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Net
income
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$ | 746,476 | $ | 1,011,919 | ||||
Denominator:
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||||||||
Denominator
for basic earnings per share—weighted average shares
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12,380,000 | 14,299,000 | ||||||
Dilutive
effect of employee stock options and other
warrants
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- | - | ||||||
Denominator
for diluted earnings per share—adjusted weighted average
shares
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12,380,000 | 14,299,000 | ||||||
Basic
earnings per share
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$ | 0.06 | $ | 0.07 | ||||
Diluted
earnings per share
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$ | 0.06 | $ | 0.07 |
Note
4—
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Fair
Value Measurements
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Fair Value
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||||||||||||||||
Using Quoted
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Using Significant
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|||||||||||||||
Total
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Prices in
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Other Observable
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||||||||||||||
Carrying
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Fair
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Active Markets
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Inputs
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Description
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Amount
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Value
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(Level 1)
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(Level 2)
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March 31, 2010
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Long-term
debt (1)
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$ | 5,110,466 | $ | 5,060,000 | $ | - | $ | 5,060,000 | ||||||||
Marketable
securities (2)
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215,000 | 215,000 | 215,000 | - | ||||||||||||
December 31, 2009
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Long-term
debt (1)
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$ | 5,238,734 | $ | 5,184,000 | $ | - | $ | 5,184,000 | ||||||||
Marketable
securities (2)
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200,000 | 200,000 | 200,000 | - |
(1)
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The
fair value of the Company's variable interest rate debt approximates
carrying value due to the short-term duration of the debt and the frequent
re-setting of its variable interest rate. The fair value of the
of the Company's fixed interest rate long-term obligation was estimated by
management based upon the rate available at the balance sheet date for the
additional unused credit available to the
Company.
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(2)
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Representing
assets of the Company's Supplemental Executive Retirement Plan (trading
securities). Presented within Other Assets in the consolidated balance
sheets.
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Three months ended
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||||||||
March 31,
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||||||||
2010
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2009
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Net
sales
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100.0 | % | 100.0 | % | ||||
Costs
and expenses:
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||||||||
Cost
of products sold
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20.0 | 19.2 | ||||||
Distributor
royalties and commissions
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37.4 | 37.6 | ||||||
Selling,
general and administrative
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37.6 | 36.2 | ||||||
Income
from operations
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5.0 | 7.0 | ||||||
Interest
expense
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(0.2 | ) | (0.0 | ) | ||||
Interest
and other income
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0.3 | 0.1 | ||||||
Income
before income taxes
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5.1 | 7.1 | ||||||
Provision
for income taxes
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1.8 | 2.8 | ||||||
Net
income
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3.3 | % | 4.3 | % |
Three months ended March 31,
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2010
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2009
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Change from prior year
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||||||||||||||||||||||
Amount
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% of Net
Sales
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Amount
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% of Net
Sales
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Amount
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%
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|||||||||||||||||||
(dollars in thousands)
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||||||||||||||||||||||||
United
States
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$ | 19,448 | 85.6 | % | $ | 21,381 | 89.9 | % | $ | (1,933 | ) | (9.0 | )% | |||||||||||
Australia/New
Zealand
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727 | 3.2 | 516 | 2.1 | 211 | 40.9 | ||||||||||||||||||
Canada
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587 | 2.6 | 336 | 1.4 | 251 | 74.7 | ||||||||||||||||||
Mexico
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394 | 1.7 | 281 | 1.2 | 113 | 40.2 | ||||||||||||||||||
Europe
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420 | 1.8 | 308 | 1.3 | 112 | 36.4 | ||||||||||||||||||
Asia
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1,151 | 5.1 | 969 | 4.1 | 182 | 18.8 | ||||||||||||||||||
Consolidated
total
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$ | 22,727 | 100.0 | % | $ | 23,791 | 100.0 | % | $ | (1,064 | ) | (4.5 | )% |
March 31, 2010
|
March 31, 2009
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% Change
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||||||||||||||||||||
Active
Distributors
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Master
Affiliates and
Above
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Active
Distributors
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Master
Affiliates and
Above
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Active
Distributors
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Master
Affiliates and
Above
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|||||||||||||||||
United
States
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52,010
|
6,070
|
54,440
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7,490
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(4.5
|
)%
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(19.0
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)%
|
||||||||||||||
Australia/New
Zealand
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2,530
|
190
|
2,440
|
180
|
3.7
|
5.6
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||||||||||||||||
Canada
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1,310
|
140
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1,250
|
110
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4.8
|
27.3
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||||||||||||||||
Mexico
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2,290
|
220
|
1,700
|
200
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34.7
|
10.0
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||||||||||||||||
Europe
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1,350
|
180
|
1,080
|
140
|
25.0
|
28.6
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||||||||||||||||
Asia
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6,540
|
590
|
7,770
|
880
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(15.8
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)
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(33.0
|
)
|
||||||||||||||
Consolidated
total
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66,030
|
7,390
|
68,680
|
9,000
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(3.9
|
)%
|
(17.9
|
)%
|
Exhibit
|
||
Number
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Document
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31.1
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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).
|
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31.2
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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).
|
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32
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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).
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RELIV’ INTERNATIONAL, INC.
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By:
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/s/ Robert L. Montgomery
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Robert
L. Montgomery, Chairman of the Board of Directors, President and Chief
Executive Officer
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Date: May
10, 2010
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By:
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/s/ Steven D. Albright
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Steven
D. Albright, Chief Financial Officer (and accounting
officer)
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Date: May
10, 2010
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Exhibit
|
||
Number
|
Document
|
|
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).
|