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2004-05-25 10:20:07

Natural Health Trends Corp. Net Sales Rise 242% to Top $38 Million for First Quarter; Net Income Increases to $3.1 Million from $1.4 Million; Will Host Conference Call at 11:00 A.M. Edt


Health/Medical Writers / Business Editors DALLAS--(BUSINESS WIRE)--NHLCE-- Natural Health Trends Corp. (OTC BB: NHLCE), an international direct-selling company, announced today its financial results for the first quarter ended March 31, 2004. Net sales were approximately $38.4 million for the first quarter of 2004 compared to approximately $11.2 million for the three months ended March 31, 2003. This 242% increase was primarily attributable to the increased number of active Lexxus distributors (amounting to approximately $17.4 million), primarily in the Hong Kong subsidiary, Lexxus' expansion into new markets including South Korea in the second quarter of 2003 (approximately $1.1 million), sales of new products (approximately $4.7 million) and the shipment of Hong Kong orders in backlog as of December 31, 2003 (approximately $4.0 million). Gross profit was approximately $30.5 million in the three months ended March 31, 2004 compared with approximately $9.1 million for the same period in 2003. This 234% increase primarily resulted from the increase in gross sales of Lexxus products. Net income for the first quarter of 2004 was approximately $3.1 million, or $0.53 per fully diluted share, compared to approximately $1.4 million, or $0.28 per fully diluted share, for the first quarter of 2003. This increase is due to significantly larger net sales as well as smaller selling, general and administrative expenses as a percentage of net sales, which were partially offset by larger cost of sales and distributor commissions as a percentage of net sales. Mark Woodburn, president of Natural Health Trends, said, "I am extremely pleased to be able to report results for the first quarter of 2004 that are comparable to our performance for the entire first nine months of last year and exceed our yearly results for 2002. Our expansion activities into new markets and the addition of more distributors have clearly paid off. However, it should be noted that a substantial portion of our sales increase for the first quarter occurred in our Hong Kong operations where sales are likely to decrease in the second quarter due to adverse publicity aired on television in China during April." Woodburn also said, "As the first quarter closed, Natural Health Trends bought Marketvision Communications Corp., which is the exclusive developer and service provider of the direct-selling software we have used since mid-2001. This gives us an opportunity to reduce operating costs and retain control of the development of this mission critical software. I expect more of our top-line growth to reach the bottom line because of this transaction." He concluded, "The dramatic growth we have achieved at Natural Health Trends Corp. is the result of an excellent team of distributors selling products that are well-researched and in demand." Natural Health Trends Corp. will host a conference call on Tuesday, May 25, 2003, 11:00 am EDT to discuss the Company's first quarter 2004 results. Those who wish to participate in the conference call may telephone (888) 335-6674 approximately 15 minutes before the 11:00 am EDT starting time. A digital replay will be available approximately one and half hours after the completion of the call on the Company's website, Natural Health Trends Corp. is an international direct-selling company operating in more than 30 markets throughout Asia, North America and Eastern Europe. The Company markets premium quality personal care products under the Lexxus brand and markets its nutritional supplement products under the Kaire brand. Additional information can be found on the Company's website,, and management encourages interested parties to register for corporate updates via e-mail on the Company's homepage. Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "will," or "plans" to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission. -0- *T NATURAL HEALTH TRENDS CORP. CONSOLIDATED BALANCE SHEETS March 31, December 31, 2004 2003 ------------ ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 15,266,262 $ 11,133,075 Restricted cash 2,347,024 1,363,188 Accounts receivable 432,973 238,487 Inventories, net 5,766,889 3,580,303 Prepaid expenses and other 3,513,663 3,363,941 ------------ ------------ Total current assets 27,326,811 19,678,994 Property and equipment, net 869,637 882,648 Software 5,600,000 - Goodwill 12,756,037 207,765 Database, net 593,058 509,391 Deposits and other assets 272,852 778,607 ------------ ------------ Total assets $ 47,418,395 $ 22,057,405 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,830,414 $ 3,820,339 Accrued expenses 3,624,492 831,454 Accrued distributor commissions 4,930,758 2,285,182 Income taxes payable 1,831,887 1,442,655 Notes payable 238,760 287,703 Current portion of long-term debt 2,729,803 26,400 Deferred revenue 5,379,625 6,633,586 Other current liabilities 551,484 512,838 ------------ ------------ Total current liabilities 22,117,223 15,840,157 Long term debt 525,031 30,665 ------------ ------------ Total liabilities 22,642,254 15,870,822 Minority interest 626,681 710,957 Mezzanine common stock 960,000 - Stockholders' equity: Preferred stock ($1,000 par value; authorized 1,500,000 shares) - - Common stock ($0.001 par value; authorized 500,000,000 shares; issued and outstanding 5,446,365 and 4,656,409 shares as of March 31, 2004 and December 31, 2003, respectively) 5,446 4,656 Additional paid in capital 48,754,556 34,006,862 Accumulated deficit (25,278,505) (28,389,232) Accumulated other comprehensive loss (292,037) (146,660) ------------ ------------ Total stockholders' equity 23,189,460 5,475,626 ------------ ------------ Total liabilities and stockholders' equity $ 47,418,395 $ 22,057,405 ============ ============ NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, ------------------------- 2004 2003 ------------ ------------ Net Sales $ 38,435,209 $ 11,240,317 Cost of sales 7,928,128 2,096,707 ------------ ------------ Gross profit 30,507,081 9,143,610 Operating expenses: Distributor commissions 20,204,655 4,581,118 Selling, general and administrative expenses 6,473,164 2,822,956 ------------ ------------ Total operating expenses 26,677,819 7,404,074 ------------ ------------ Income from operations 3,829,262 1,739,536 Other income (expense): Gain (loss) on foreign exchange (8,868) 52,800 Other income, net 168,583 64,514 Interest expense, net (913) (8,400) ------------ ------------ Total other income, net 158,802 108,914 ------------ ------------ Income from operations before taxes and minority interest 3,988,064 1,848,450 Income tax provision (797,613) (370,000) Minority interest expense (79,724) (105,648) ------------ ------------ Net income 3,110,727 1,372,802 Preferred stock dividends - 402 ------------ ------------ Net income available to common stockholders $ 3,110,727 $ 1,372,400 ============ ============ Basic income per common share $ 0.67 $ 0.30 ============ ============ Diluted income per common share $ 0.53 $ 0.28 ============ ============ Weighted average shares outstanding: Basic 4,667,288 4,511,391 ============ ============ Diluted 5,909,383 4,907,791 ============ ============ *T KEYWORD: TEXAS INDUSTRY KEYWORD: MEDICAL MEDICAL SPORTS CONFERENCE CALLS EARNINGS SOURCE: Natural Health Trends Corp. CONTACT INFORMATION: Natural Health Trends Corp. Mark Woodburn, President, 972-241-4080 or Porter, LeVay & Rose, Inc. Michael Porter, President - Investor Relations Linda Decker, VP - Investor Relations Jeff Myhre, VP - Editorial 212-564-4700 Fax: 212-244-3075

Due Da Due......But Be Quick About It!!!!!


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