Natures Sunshine Products (NASDAQ:NATRE)
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Nature's Sunshine Products, Inc. (NASDAQ:NATRE) today
provided an update on its January 13th comments on operating results
for the fourth quarter ended December 31, 2005, and on the status of
its review of selected financial information with respect to certain
of its foreign operations. As previously announced, the Company
continues to expect to report an approximate 4 percent increase in
sales for the period. However, Nature's Sunshine is now anticipating
fourth quarter operating income of approximately $0.8 million, as
compared to $6.4 million in the corresponding period in 2004. On
January 13th, the Company said it expected a 3 percent increase in
operating income.
The new estimate of operating income primarily reflects increased
allowances for volume discounts, inventory adjustments, and increased
selling, general and administrative costs. As a result, including the
previously disclosed effects of the higher tax rate resulting from the
strategic transfer of certain assets from the United States to
international locations, which remains unchanged, the Company
currently anticipates a fourth quarter net loss of approximately $5.2
million. The Company's anticipated fourth quarter operating results,
even as updated, are preliminary and have not been audited and,
consequently, are subject to change or adjustment.
The Company noted that its cash position remains strong and that
domestic operations continued to grow in 2005. Complete operating
results for the fourth quarter and 12 months ended December 31, 2005,
will be reported when completed.
Nature's Sunshine previously reported that it was reviewing
selected financial information with respect to certain of its foreign
operations and, therefore, the Company's independent auditor had not
completed its review of the Company's financial statements for the
three and nine month periods ended September 30, 2005. As a result,
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2005, which was filed on November 22, 2005, included
unaudited consolidated financial statements for the three and nine
month periods ended September 30, 2005 for which the Company's
independent auditor had not completed its review. Because the Form
10-Q was not complete, the Company is not in compliance with Nasdaq
Marketplace Rule 4310(c)(14) and received notice from Nasdaq that its
common stock was subject to delisting. At a hearing before the Nasdaq
Listing Qualifications Panel on December 8, 2005, the Company
requested an extension to file its complete 10-Q for the third quarter
of 2005. On January 19, 2006, the Panel granted the Company an
extension until March 31, 2006 to file its complete 10-Q.
Since the review commenced, the Company's Audit Committee, which
is overseeing the review, has expanded the scope of the review and
commenced an investigation of certain matters identified in the
review. The investigation involves matters related to fiscal 2005 as
well as prior periods. The Audit Committee engaged a nationally
recognized independent law firm to assist it in the review and
investigation. The law firm engaged a nationally recognized
independent accounting firm to assist it. Concerns regarding certain
transactions of the Company's foreign subsidiaries have been
identified, and continue to be reviewed. The Company investigation is
not yet completed. However, the Company has begun to implement certain
remedial measures to address the concerns about certain foreign
transactions and is committed to implementing any additional remedial
measures necessary to address any additional issues that may be
identified by the investigation. In addition, as soon as possible
following the completion of the investigation, the Company intends to
file an amendment to its 10-Q for the 3rd quarter of 2005 to reflect
the review of the Company's independent auditor.
About Nature's Sunshine
Nature's Sunshine Products manufactures and markets through direct
sales encapsulated and tableted herbal products, high quality natural
vitamins, and other complementary products. In addition to the United
States, the Company has operations in Japan, Mexico, Central America,
South Korea, Canada, Dominican Republic, Venezuela, Ecuador, Peru, the
United Kingdom and Ireland, Colombia, Brazil, Thailand, Israel,
Singapore and Taiwan. The Company also has exclusive distribution
agreements with selected companies in Argentina, Australia, Chile, New
Zealand, Norway, and the Russian Federation.
Statements in this press release concerning the Company's business
outlook, the ongoing review of selected financial information of
certain operations, or future economic performance, anticipated
profitability, revenues, expenses or other financial items, and
product line growth, together with other statements that are not
historical facts, are "forward-looking statements" as that term is
defined under Federal Securities Laws. "Forward-looking statements"
are subject to risks, uncertainties and other factors, which could
cause actual results to differ materially from those set forth in such
statements. Such risks, uncertainties, and factors include, but are
not limited to, foreign business risks, industry cyclicality,
fluctuations in customer demand and order pattern, changes in pricing
and general economic conditions, the results of the Company's
investigation, the accuracy of the Company's estimates of fourth
quarter operating results, the Company's ability to satisfy the
Nasdaq's requirements for the Company's continued listing on the
Nasdaq National Market, as well as other risks detailed in the
Company's filings with the Securities and Exchange Commission. The
Company disclaims any obligations to update any forward-looking
statement as a result of developments occurring after the date of this
press release.