-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NleuiYPfih/zhwF8Gr0GP7IBj/qQzRVCbxD60ISFoyErIf82Ec2uCxP0BrD/gPnR b1+C3QsqqXTAlb/htdnySw== 0001056358-09-000081.txt : 20091105 0001056358-09-000081.hdr.sgml : 20091105 20091105154952 ACCESSION NUMBER: 0001056358-09-000081 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 29 CONFORMED PERIOD OF REPORT: 20090930 FILED AS OF DATE: 20091105 DATE AS OF CHANGE: 20091105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MANNATECH INC CENTRAL INDEX KEY: 0001056358 STANDARD INDUSTRIAL CLASSIFICATION: MEDICINAL CHEMICALS & BOTANICAL PRODUCTS [2833] IRS NUMBER: 752508900 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-24657 FILM NUMBER: 091161109 BUSINESS ADDRESS: STREET 1: 600 SOUTH ROYAL LANE STREET 2: SUITE 200 CITY: COPPELL STATE: TX ZIP: 75019 BUSINESS PHONE: 9724717400 MAIL ADDRESS: STREET 1: 600 SOUTH ROYAL LANE STREET 2: SUITE 200 CITY: COPPELL STATE: TX ZIP: 75019 10-Q/A 1 form10-qa_09302009.htm FORM10-Q/A FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009

September 2009

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

 

FORM 10-Q/A

(Amendment No. 1)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2009

OR

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.

 

Commission File No. 000-24657

 

MANNATECH, INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

 

 

Texas
(State or other Jurisdiction of Incorporation or Organization)

75-2508900
(I.R.S. Employer Identification No.)

600 S. Royal Lane, Suite 200, Coppell, Texas
(Address of Principal Executive Offices)

75019
(Zip Code)

 

 

Registrant’s Telephone Number, including Area Code: (972) 471-7400

____________________________________

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).* Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

 

As of October 31, 2009, the number of shares outstanding of the registrant’s sole class of common stock, par value $0.0001 per share, was 26,480,788.

 


EXPLANATORY NOTE

Mannatech, Incorporated is filing this Amendment No. 1 (the "Form 10-Q/A") to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (the "Form 10-Q"), filed with the Securities and Exchange Commission on November 5, 2009, for the sole purpose of furnishing the Interactive Data Files. The Interactive Data Files were inadvertently omitted from the Form 10-Q as originally filed due to unanticipated technical difficulties.

No other changes have been made to the Form 10-Q. This Form 10-Q/A continues to speak as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update any related disclosures made in the Form 10-Q.

 

PART II - OTHER INFORMATION

 

Item 6. Exhibits

 

See Index to Exhibits following the signature page of this Quarterly Report on Form 10-Q/A.

 

 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

MANNATECH, INCORPORATED

 

 

November 5, 2009

/S/ WAYNE L. BADOVINUS

 

Wayne L. Badovinus
President and Chief Executive Officer
(principal executive officer)

 

 

 

 

November 5, 2009

/S/ STEPHEN D. FENSTERMACHER

 

Stephen D. Fenstermacher
Executive Vice President and Global Chief Financial Officer
(principal financial officer)

 

 

 

 


INDEX TO EXHIBITS

 

 

 

 

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

File No.

Exhibit (s)

Filing Date

3.1

Amended and Restated Articles of Incorporation of
Mannatech, dated May 19, 1998.

S-1

333-63133

3.1

October 28.1998

3.2

Fourth Amended and Restated Bylaws of Mannatech, dated
August 8, 2001 (Corrected).

10-K

000-24657

3.2

March 16, 2007

3.3

First Amendment to the Fourth Amended and Restated
Bylaws of Mannatech, effective November 30, 2007.

8-K

000-24657

3.1

December 6, 2007

4.1

Specimen Certificate representing Mannatech’s common
stock, par value $0.0001 per share.

S-1

333-63133

4.1

October 28, 1998

10.1

Separation and Release Agreement, dated July 17, 2009,
between Mannatech, Incorporated, and
Terri F. Maxwell.

8-K

000-24657

10.1

July 21, 2009

31.1*

Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, of the Chief Executive Officer of Mannatech.

*

*

*

*

31.2*

Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, of the Chief Financial Officer of Mannatech.

*

*

*

*

32.1*

Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, of the Chief Executive Officer of Mannatech.

*

*

*

*

32.2*

Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, of the Chief Financial Officer of Mannatech.

*

*

*

*

101.INS**

XBRL Instance Document

**

**

**

**

101.SCH**

XBRL Taxonomy Extension Schema Document

**

**

**

**

101.CAL**

XBRL Taxonomy Extension Calculation Linkbase Document

**

**

**

**

101.LAB**

XBRL Taxonomy Extension Label Linkbase Document

**

**

**

**

101.PRE**

XBRL Taxonomy Extension Presentation Linkbase Document

**

**

**

**

101.DEF**

XBRL Taxonomy Extension Definition Linkbase Document

**

**

**

**

 

_____________

* Previously filed.

** Furnished herewith. In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

 

 

 

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FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td> </tr></table> < ;/div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> </div> -8368000 -12121000 66000 0 437000 597000 94000 468000 26464000 26461000 26462000 26461000 0 0 843000 131000 false -19243000 0 20000 -2635000 3636000 517000 -3593000 -0.35 -0.02 -0.74 -0.50 47191000 43501000 151357000 153270000 11923000 11105000 35944000 37014000 29547000 36202000 No <div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mannatech, Incorporated (together with its subsidiaries, the &#8220;Company&#8221;), located in Coppell, Texas, was incorporated in the state of Texas on November 4, 1993 and is listed on the NASDAQ Global Select Market under the symbol &#8220;MTEX&#8221;. The Company develops, markets, and sells high-quality, proprietary nutritional supplements, topical and skin care products, and weight-management products that are primarily sold to independent associates and members located in the United States, Canada, Australia, the United Kingdom, Japan, New Zealand, the Republic of Korea, Taiwan, Denmark, Germany, South Africa, Singapore, Austria, the Netherlands, Norway, and Sweden. </font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Independent associates (&#8220;associates&#8221;) purchase the Company&#8217;s products at published wholesale prices to either sell to retail customers or consume personally. Members purchase the Company&#8217;s products at a discount from published retail prices primarily for personal consumption. The Company cannot distinguish personal consumption sales from other sales because it has no involvement in its products after delivery, other than customary product warranties and returns. Only independent associates are eligible to earn commissions and incentives.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="D ISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the Company&#8217;s consolidated financial statements and footnotes contained herein do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;) to be considered &#8220;complete financial statements&#8221;. However, in the opinion of the Company&#8217;s management, the accompanying unaudited consolidated financial statements and footnotes contain all adjustments, including normal recurring adjustments, considered necessary for a fair presentation of the Company&#8217;s consolidated financial information as of, and for, the periods presented. The Company cautions that its consolidated results of operations for an interim period are not necessarily indicative of its consolidated results of operations to be expected for its fiscal year. The December 31, 2008 consolidated balance sheet was included in the audited consolidated financial statements in the Company&#8217;s annual report on Form 10-K for the year ended December 31, 2008 and filed with the United States Securities and Exchange Commission on March 12, 2009 (&#8220;2008 Annual Report&#8221;), which includes all disclosures required by GAAP. Therefore, these unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2008 Annual Report.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> </div> 2500000 4452000 -1022000 -39000 1265000 -6890000 14030000 11453000 10-Q 85313436 30945000 47103000 22577000 34982000 26464000 26461000 26462000 26461000 27687882 27667882 0.01 0.01 0001056358 Yes <div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Principles of Consolidation</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The consolidated financial statements and footnotes include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br />&l t;/div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Use of Estimates</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The preparation of the Company&#8217;s consolidated financial statements in accordance with GAAP requires the use of estimates that affect the reported value of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other factors. The Company continually evaluates the information used to make these estimates as the business and economic environment changes. Historically, actual results have not varied materially from the Company&#8217;s estimates and the Company does not currently anticipate a significant change in its assumptions related to these estimates. Actual results may differ from these estimates under different assumptions or conditions.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The use of estimates is pervasive throughout the consolidated financial statements, but the accounting policies and estimates considered to be the most significant are described in this note to the consolidated financial statements,&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Organization and Summary of Significant Accounting Policies</font>.</font& gt;</div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Cash and Cash Equivalents</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company includes in its cash and cash equivalents credit card receivables due from its credit card processor, as the cash proceeds from credit card receivabl es are generally received within 24 to 72 hours. As of September 30, 2009 and December 31, 2008, credit card receivables were $3.8 million and $3.3 million, respectively. 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As of September 30, 2009 and December 31, 2008, receivables consisted primarily of amounts due from members and associates. The Company periodically evaluates its receivables for collectability based on historical experience, recent account activities, and the length of time receivables are past due, and writes-off receivables when they become uncollectible. 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At September 30, 2009 and December 31, 2008, the Company also recorded a long-term liability for an estimated deferred benefit obligation related to a deferred benefit plan for its Japan operations of $0.8 million.</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; TEXT-DECORATION: underline">Comprehensive Incom e (loss) and Accumulated Other Comprehensive Income (Loss</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">)</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. 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TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT- SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Mannatech, Inc. v. K.Y.C. Inc. d/b/a Techmedica Health Inc., Triton Nutra, Inc., Ionx Holdings, Inc., and John Does 1-30</font>, Case No. 3-06-CV-0471-BD (N.D. Tex.)</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company filed a patent infringement lawsuit against K.Y.C. Inc. d/b/a Techmedica Health, Inc. (&#8220;Techmedica&#8221;), Triton Nutra, Inc., Ionx Holdings, Inc. (&#8220;Ionx&#8221;), and John Does 1-30, pending in the United States District Court of the Northern District of Texas, Dallas Division. The lawsuit alleges the defendants infringed United States Patent Nos. 6,929,807, 7,157,431, 7,196,064, 7,199,104, and 7,202,220, all entitled &#8220;Compositions of Plant Carbohydrates as Dietary Supplements,&#8221; and seeks to stop the manufacture, offer, and sale of defendants&#8217; infringing glyconutritional products, as well as cessation of defendants&#8217; false advertising about our products, including Ambrotose<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">&#174;</font>.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May 5, 2006, the Company initiated the lawsuit against Techmedica, alleging infringement of the &#8216;807 Patent. After Techmedica claimed that Triton Nutra manufactured its glyconutritional products, the Company amended its complaint on February 6, 2007 to add Triton Nutra as a defendant, as well as infringement claims related to the newly issued &#8216;431 Patent against both Techmedica and Triton Nutra. When Triton Nutra failed to answer the Amended Complaint, the Company requested, and the Clerk of Court entered, default against Triton Nutra on May 3, 2007.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August 10, 2007, the Court stayed the case pending entry of judgment in the Company&#8217;s earlier patent infringement suit against Glycoproducts International, Inc. f/k/a Glycobiotics International, Inc. (&#8220;Glycobiotics&#8221;). During the stay, on February 28, 2008, a federal grand jury indicted Techmedica Health and its president for violations of federal drug distribution laws, wire and mail fraud, and money laundering. The government is seeking any property derived from these activities, including over $17 million in cash and various real estate and other property. After the indictment, Ionx purchased all of the assets of Techmedica, including its inventory of glyconutritional products, and began selling these products on the internet under the assumed name Micronutra Health.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following the Company&#8217;s successful prosecution of its patent infringement suit against Glycobiotics, on July 30, 2008, the Court granted its unopposed motion to lift the stay in this suit. The Company filed its Second Amended Complaint on September 18, 2008, adding Ionx and John Does 1-30 as defendants and i nfringement claims related to the &#8216;064, &#8216;104, and &#8216;220 Patents, and naming Activive as an additional infringing glyconutritional product. In the Company&#8217;s preliminary infringement contentions, it identified nine infringing products: Nutratose, Activive, Candidol, Claritose, Lupazol, Respitrol, Rhumatol, Synaptol, and Viratrol. In its deposition on October 10, 2008, Techmedica&#8217;s corporate representative testified that all nine identified products are comprised of the same encapsulated ingredients.&#160;&#160;On October 13, 2008, Techmedica and Ionx filed identical answers and counterclaims, which claim that the Company&#8217;s patents-in-suit are invalid, unenforceable, or otherwise not infringed by defendants.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style= "DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August 28, 2009, in response to Defendants&#8217; motion for claim construction, the United States Magistrate Judge issued Findings and Recommendations construing three disputed claim terms in the patents-in-suit.&#160;&#160;Defendants have objected to two of the Magistrate Judge&#8217;s recommended constructions, and the parties are briefing the Court on this issue.&#160;&#160;After the Court rules on these objections, the parties will jointly submit a proposed scheduling order to continue the discovery process and set a trial date.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company will continue to vigorously prosecute this case. Given the precedent set by <font style="DISPLAY: inline; FONT-STYLE: italic">Mannatech v. Glycobiotics</font>, the Company believes the likelihood of an unfavorable outcome is remote, and with no counterclaims seeking monetary damages, any potential loss is limited to an award of the defendants&#8217; court costs.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Mannatech, Inc. v. Boston Mountain Laboratories, Green Life, LLC, and Xiang Lo</font>, Case No<font style="DISPLAY: inline; FONT-STYLE: italic">. </font>3:09-CV-01324-G (N.D. Tex)</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: blo ck; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company filed a patent infringement lawsuit against Boston Mountain Laboratories d/b/a Natural Health Warehouse (&#8220;Boston Mountain&#8221;), Green Life, LLC (&#8220;Green Life&#8221;), and Xiang Lo a/k/a Andrew Lo (&#8220;Lo&#8221;) on July 15, 2009.&#160;&#160;The matter is pending in the United States District Court of the Northern District of Texas, Dallas Division. The lawsuit alleges the defendants infringed United States Patent Nos. 6,929,807, 7,157,431, 7,196,064, 7,199,104, and 7,202,220, all entitled &#8220;Compositions of Plant Carbohydrates as Dietary Supplements,&#8221; and seeks to stop Boston Mountain and Green Life from manufacturing, offering for sale, and selling of defendants&#8217; infringing glyconutritional products. Xiang Lo is the sole member of Green Life, and it is b elieved that Green Life was organized and is operated as an alter ego, i.e., a mere tool or business conduit, of Andrew Lo.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On September 23, 2009, the Court granted a joint motion for entry of final judgment and permanent injunction, entering judgment for the Company and against Boston Mountain Laboratories, Inc.&#160;&#160;The Final Judgment and Permanent Injunction enjoins Boston Mountain Laboratories for the duration of the patents-in-suit from (1) manufacturing or selling BML Glyconutrient Formula, Glyco-8, Glycoessentials, Glyco-Essence, Glyconutrients, MG-3, and MG-3c (the &#8220;Enjoined Products&#8221;); (2) inducing infringement of the patents-in-suit; or (3) supplying or causing to be supplied in or from the United States all or a substantial portion of the components of the Enjoined Products.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After Green Life, LLC and Xiong Lo failed to answer the Company&#8217;s Complaint, on September 30, 2009, the Deputy Clerk of Court entered default against Green Life and Mr. Lo.&#160;&#160;The Company is now preparing its motion for entry of default judgment against them, which will seek the same injunctive relief secured against Boston Mountain.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPL AY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Litigation in General</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company has several pending claims incurred in the normal course of business. In the Company&#8217;s opinion, such claims can be resolved without any material adverse effect on its consolidated financial position, results of operations, or cash flows.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZ E: 10pt; FONT-FAMILY: Times New Roman">The Company maintains certain liability insurance; however, certain costs of defending lawsuits, such as those below the insurance deductible amount, are not covered by or only partially covered by its insurance policies, or its insurance carriers could refuse to cover certain of these claims in whole or in part. 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While it is not possible to predict with certainty what liability or damages the Company might incur in connection with any of the above-described lawsuits, based on the advice of counsel and a management review of the existing facts and circumstances related to these lawsuits, the Company has accrued $5.7 million as of September 30, 2009 for these matters, which is included in accrued expenses in its Consolidated Balance Sheet. Included in this amount is a $5.5 million accrual related to the Company&#8217;s settlement with the Texas Attorney General in early 2009. As part of the settlement, the Company agreed to refund up to $4.0 million to purchasers of the Company&#8217;s products between September 1, 2002 and August 1, 2007 who have not received commissions. 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The adoption of Topic 855 did not have a material impact on the Company&#8217;s consolidated financial statements and disclosures.</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In response to the current credit crisis, FASB updated three ASC Topics to address fair value measurement concerns as follows:</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div> <table cellpadding="0" cellspacing="0" id="list_0" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"> <tr val ign="top"> <td align="right" style="WIDTH: 36pt"> <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></div> </td> <td> <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FASB ASC Topic 820, <font style="DISPLAY: inline; FONT-STYLE: italic">Fair Value Measurements and Disclosures</font>, provides additional guidance on measuring the fair value of financial instruments when market activity has decreased and quoted prices may reflect distressed transactions;</font></div> </td> </tr></table> </div> <div> <table cellpadding="0" cellspacing="0" id="list_1" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"> <tr valign="top"> <td align="right" style="WIDTH: 36pt"> <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></div> </td> <td> <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FASB ASC Topic 320, <font style="DISPLAY: inline; FONT-STYLE: italic">Investments &#8211; Debt and Equity Securities,</font> amends the other-than-temporary impairment guidance for debt securities; and</font></div> </td> </tr></table> </div> <div> <table cellpadding="0" cellspacing="0" id="list_2" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-F AMILY: Times New Roman"> <tr valign="top"> <td align="right" style="WIDTH: 36pt"> <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></div> </td> <td> <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FASB ASC Topic 825, <font style="DISPLAY: inline; FONT-STYLE: italic">Financial Instruments</font>, expands the fair value disclosures required for financial instruments to interim reporting periods for publicly traded companies, including disclosure of the significant assumptions used to estimate the fair value of those financial instruments.</font></div> </td> </tr></table> </div> <div style="DISPLAY: block; TEXT-INDENT: 0 pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The adoption of the above mentioned amendments to the FASB ASC did not have a material impact on our financial condition, results of operations, and disclosures.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In January&#160;2009, the Securities and Exchange Commission issued Release No.&#160;33-9002, <font style="DISPLAY: inline; FONT-STYLE: italic">&#8220;Interactive Data to Improve Financial Reporting.&#8221;</font> The final rule requires companies to provide their financial statements and financial sta tement schedules to the Securities and Exchange Commission in interactive data format using the eXtensible Business Reporting Language (&#8220;XBRL&#8221;). The rule was adopted by the Securities and Exchange Commission to improve the ability of financial statement users to access and analyze financial data. The Securities and Exchange Commission adopted a phase-in schedule indicating when registrants must furnish interactive data. Under this schedule, the Company will be required to submit filings with financial statement information using XBRL commencing with our June&#160;30, 2011 quarterly report on Form 10-Q. We are furnishing financial information in XBRL format starting with this quarterly report on Form 10-Q. 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FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mannatech, Incorporated (together with its subsidiaries, the &#8220;Company&#8221;), located in Coppell, Texas, was incorporated in the state of Texas on November 4, 1993 and is listed on the NASDAQ Global Select Market under the symbol &#8220;MTEX&#8221;. The Company develops, markets, and sells high-quality, proprieta ry nutritional supplements, topical and skin care products, and weight-management products that are primarily sold to independent associates and members located in the United States, Canada, Australia, the United Kingdom, Japan, New Zealand, the Republic of Korea, Taiwan, Denmark, Germany, South Africa, Singapore, Austria, the Netherlands, Norway, and Sweden.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Independent associates (&#8220;associates&#8221;) purchase the Company&#8217;s products at published wholesale prices to either sell to retail customers or consume personally. Members purchase the Company&#8217;s products at a discount from published retail prices primarily for personal consumption. The Company cannot distinguish pers onal consumption sales from other sales because it has no involvement in its products after delivery, other than customary product warranties and returns. Only independent associates are eligible to earn commissions and incentives.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the Company&#8217;s consolidated financial statements and footnotes contained herein do not include all of the information and footnotes required by accounting principles generally accepte d in the United States of America (&#8220;GAAP&#8221;) to be considered &#8220;complete financial statements&#8221;. However, in the opinion of the Company&#8217;s management, the accompanying unaudited consolidated financial statements and footnotes contain all adjustments, including normal recurring adjustments, considered necessary for a fair presentation of the Company&#8217;s consolidated financial information as of, and for, the periods presented. The Company cautions that its consolidated results of operations for an interim period are not necessarily indicative of its consolidated results of operations to be expected for its fiscal year. The December 31, 2008 consolidated balance sheet was included in the audited consolidated financial statements in the Company&#8217;s annual report on Form 10-K for the year ended December 31, 2008 and filed with the United States Securities and Exchange Commission on March 12, 2009 (&#8220;2008 Annual Report&#8221;), w hich includes all disclosures required by GAAP. Therefore, these unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2008 Annual Report.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Principles of Consolidation</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The consolidated financial statements and footnotes include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Use of Estimates</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The preparation of the Company&#8217;s consolidated financial statements in accordance with GAAP requires the use of e stimates that affect the reported value of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other factors. The Company continually evaluates the information used to make these estimates as the business and economic environment changes. Historically, actual results have not varied materially from the Company&#8217;s estimates and the Company does not currently anticipate a significant change in its assumptions related to these estimates. Actual results may differ from these estimates under different assumptions or conditions.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The use of estimates is pervasive throughout the consolidated financial statements, but the accounting policies and esti mates considered to be the most significant are described in this note to the consolidated financial statements,&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Organization and Summary of Significant Accounting Policies</font>.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Cash and Cash Equivalents</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company includes in its cash and cash equivalents credit card receivables due from its credit card processor, as the cash proceeds from credit card receivables are generally received within 24 to 72 hours. As of September 30, 2009 and December 31, 2008, credit card receivables were $3.8 million and $3.3 million, respectively. Additionally, as of September 30, 2009 and December 31, 2008, cash and cash equivalents held in bank accounts in foreign countries totaled $11.8 million and $18.2 million, respectively.</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Restricted Cash</font></font></div> <div style="DIS PLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company is required to restrict cash for (i) direct selling insurance premiums and credit card sales in the Republic of Korea, (ii) reserve on credit card sales in North America, and (iii) Australia building lease collateral. As of September 30, 2009 and December 31, 2008, our total restricted cash was $9.4 million.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Accounts Receivable</font></font& gt;</div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accounts receivable are carried at their estimated collectible amounts. Receivables are created upon shipment of an order if the credit card payment is rejected or does not match the order total. As of September 30, 2009 and December 31, 2008, receivables consisted primarily of amounts due from members and associates. The Company periodically evaluates its receivables for collectability based on historical experience, recent account activities, and the length of time receivables are past due, and writes-off receivables when they become uncollectible. At September 30, 2009 and December 31, 2008, the Company held an allowance for doubtful accounts of less than $0.1 million.</font></div> <div sty le="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Inventories</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Inventories consist of raw materials, work in progress, finished goods, and promotional materials that are stated at the lower of cost (using standard costs that approximate average costs) or market. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off. </font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Other Assets</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of September 30, 2009 and December 31, 2008, other assets of $2.5 million and $1.5 million primarily consisted of deposits for contracts and building leases in various locations.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Commissions and Incentives</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Independent associates earn commissions and incentives based on their direct and indirect commissionable net sales over 13 business periods. Each business period equals 28 days. The Company accrues commissions and incentives when earned by independent associates and pays commissions on product sales three weeks following the business period end and pays commissions on its pack sal es five weeks following the business period end.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Other Long-Term Liabilities</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In August 2003, the Company entered into a Long-Term Post-Employment Royalty Agreement with Dr.&#160;Bill&#160;McAnalley, the Company&#8217;s former Chief Science Officer, pursuant to which the Company is required to pay Dr.&#160;McAnalley, or his heirs, royalties for ten years beginning September 2005 through August 2015. Quarterly payments related to this Long-Term Post-Employment Royalty Agreement are based on certain applicable annual global product sales by the Company in excess of $105.4 million. At the time the Company entered into this Long-Term Post-Employment Royalty Agreement, it was considered a post-employment benefit and the Company was required to measure and accrue the present value of the estimated future royalty payments related to the post-employment royalty benefit and recognize it over the life of Dr.&#160;McAnalley&#8217;s employment agreement, which was two years. As of September 30, 2009, the Company&#8217;s liability related to this royalty agreement was $2.1 million, of which $0.3 million was currently due and included in accrued expenses.&#160;&#160;As of December&#160;31, 2008, the Company&#8217;s long-term liability related to this royalty agreem ent was $2.4 million, of which $0.4 million was currently due and included in accrued expenses.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain operating leases for the Company&#8217;s regional office facilities contain a restoration clause that requires the Company to restore the premises to its original condition. As of September 30, 2009 and December 31, 2008, accrued restoration costs related to these leases amounted to $0.4 million. 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The Company records inbound freight as cost of sales and records shipping and handling costs associated with shipping products to customers as selling and administrative expenses. 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The 2008 Plan was approved by the Company&#8217;s shareholders at the 2008 Annual Shareholders&#8217; Meeting held on June 18, 2008. As of September 30, 2009, the 2008 Plan had 390,507 stock options available for grant.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company records stock-based compensation expense related to granting stock options in selling and administrative expenses. During each of the three months ended September 30, 2009 and 2008, the Company granted 30,000 stock options. During the nine months ended September 30, 2009 and 2008, the Company granted 305,000 a nd 376,095 stock options, respectively. The fair values of stock options granted during the nine months ended September 30, 2009 ranged from $1.24 to $2.01 per share. 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The lawsuit alleges the defendants infringed United States Patent Nos. 6,929,807, 7,157,431, 7,196,064, 7,199,104, and 7,202,220, all entitled &#8220;Composition s of Plant Carbohydrates as Dietary Supplements,&#8221; and seeks to stop the manufacture, offer, and sale of defendants&#8217; infringing glyconutritional products, as well as cessation of defendants&#8217; false advertising about our products, including Ambrotose<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">&#174;</font>.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May 5, 2006, the Company initiated the lawsuit against Techmedica, alleging infringement of the &#8216;807 Patent. After Techmedica claimed that Triton Nutra manufactured its glyconutritional products, the Company amended its complaint on February 6, 2007 to add Triton Nutra as a defendant, as well as infringement claims relat ed to the newly issued &#8216;431 Patent against both Techmedica and Triton Nutra. When Triton Nutra failed to answer the Amended Complaint, the Company requested, and the Clerk of Court entered, default against Triton Nutra on May 3, 2007.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August 10, 2007, the Court stayed the case pending entry of judgment in the Company&#8217;s earlier patent infringement suit against Glycoproducts International, Inc. f/k/a Glycobiotics International, Inc. (&#8220;Glycobiotics&#8221;). During the stay, on February 28, 2008, a federal grand jury indicted Techmedica Health and its president for violations of federal drug distribution laws, wire and mail fraud, and money laundering. The government is se eking any property derived from these activities, including over $17 million in cash and various real estate and other property. After the indictment, Ionx purchased all of the assets of Techmedica, including its inventory of glyconutritional products, and began selling these products on the internet under the assumed name Micronutra Health.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following the Company&#8217;s successful prosecution of its patent infringement suit against Glycobiotics, on July 30, 2008, the Court granted its unopposed motion to lift the stay in this suit. The Company filed its Second Amended Complaint on September 18, 2008, adding Ionx and John Does 1-30 as defendants and infringement claims related to the &#8216;064, & amp;#8216;104, and &#8216;220 Patents, and naming Activive as an additional infringing glyconutritional product. In the Company&#8217;s preliminary infringement contentions, it identified nine infringing products: Nutratose, Activive, Candidol, Claritose, Lupazol, Respitrol, Rhumatol, Synaptol, and Viratrol. In its deposition on October 10, 2008, Techmedica&#8217;s corporate representative testified that all nine identified products are comprised of the same encapsulated ingredients.&#160;&#160;On October 13, 2008, Techmedica and Ionx filed identical answers and counterclaims, which claim that the Company&#8217;s patents-in-suit are invalid, unenforceable, or otherwise not infringed by defendants.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Tim es New Roman">On August 28, 2009, in response to Defendants&#8217; motion for claim construction, the United States Magistrate Judge issued Findings and Recommendations construing three disputed claim terms in the patents-in-suit.&#160;&#160;Defendants have objected to two of the Magistrate Judge&#8217;s recommended constructions, and the parties are briefing the Court on this issue.&#160;&#160;After the Court rules on these objections, the parties will jointly submit a proposed scheduling order to continue the discovery process and set a trial date.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company will continue to vigorously prosecute this case. Given the precedent set by <font style="DISPLAY: inline; FONT-STYL E: italic">Mannatech v. Glycobiotics</font>, the Company believes the likelihood of an unfavorable outcome is remote, and with no counterclaims seeking monetary damages, any potential loss is limited to an award of the defendants&#8217; court costs.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Mannatech, Inc. v. Boston Mountain Laboratories, Green Life, LLC, and Xiang Lo</font>, Case No<font style="DISPLAY: inline; FONT-STYLE: italic">. </font>3:09-CV-01324-G (N.D. Tex)</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIG HT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company filed a patent infringement lawsuit against Boston Mountain Laboratories d/b/a Natural Health Warehouse (&#8220;Boston Mountain&#8221;), Green Life, LLC (&#8220;Green Life&#8221;), and Xiang Lo a/k/a Andrew Lo (&#8220;Lo&#8221;) on July 15, 2009.&#160;&#160;The matter is pending in the United States District Court of the Northern District of Texas, Dallas Division. The lawsuit alleges the defendants infringed United States Patent Nos. 6,929,807, 7,157,431, 7,196,064, 7,199,104, and 7,202,220, all entitled &#8220;Compositions of Plant Carbohydrates as Dietary Supplements,&#8221; and seeks to stop Boston Mountain and Green Life from manufacturing, offering for sale, and selling of defendants&#8217; infringing glyconutritional products. Xiang Lo is the sole member of Green Life, and it is believed that Green Life was organized and is opera ted as an alter ego, i.e., a mere tool or business conduit, of Andrew Lo.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On September 23, 2009, the Court granted a joint motion for entry of final judgment and permanent injunction, entering judgment for the Company and against Boston Mountain Laboratories, Inc.&#160;&#160;The Final Judgment and Permanent Injunction enjoins Boston Mountain Laboratories for the duration of the patents-in-suit from (1) manufacturing or selling BML Glyconutrient Formula, Glyco-8, Glycoessentials, Glyco-Essence, Glyconutrients, MG-3, and MG-3c (the &#8220;Enjoined Products&#8221;); (2) inducing infringement of the patents-in-suit; or (3) supplying or causing to be supplied in or from the United States all or a substantial portion of the components of the Enjoined Products.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After Green Life, LLC and Xiong Lo failed to answer the Company&#8217;s Complaint, on September 30, 2009, the Deputy Clerk of Court entered default against Green Life and Mr. Lo.&#160;&#160;The Company is now preparing its motion for entry of default judgment against them, which will seek the same injunctive relief secured against Boston Mountain.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FON T-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Litigation in General</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company has several pending claims incurred in the normal course of business. In the Company&#8217;s opinion, such claims can be resolved without any material adverse effect on its consolidated financial position, results of operations, or cash flows.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Comp any maintains certain liability insurance; however, certain costs of defending lawsuits, such as those below the insurance deductible amount, are not covered by or only partially covered by its insurance policies, or its insurance carriers could refuse to cover certain of these claims in whole or in part. The Company accrues costs to defend itself from litigation as it is incurred or as it becomes determinable.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The outcome of litigation may not be assured, and despite management&#8217;s views of the merits of any litigation, or the reasonableness of the Company&#8217;s estimates and reserves, the Company&#8217;s financial statements could nonetheless be materially affected by an adverse judgme nt. The Company believes it has adequately reserved for the contingencies arising from the above legal matters where an outcome was deemed to be probable, and the loss amount could be reasonably estimated. While it is not possible to predict with certainty what liability or damages the Company might incur in connection with any of the above-described lawsuits, based on the advice of counsel and a management review of the existing facts and circumstances related to these lawsuits, the Company has accrued $5.7 million as of September 30, 2009 for these matters, which is included in accrued expenses in its Consolidated Balance Sheet. Included in this amount is a $5.5 million accrual related to the Company&#8217;s settlement with the Texas Attorney General in early 2009. As part of the settlement, the Company agreed to refund up to $4.0 million to purchasers of the Company&#8217;s products between September 1, 2002 and August 1, 2007 who have not received commissions. Also included in the acc rual is the Company&#8217;s estimate for a third-party claim administration fee associated with this matter.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> </div> NOTE 6: LITIGATION Patent Infringement Litigation Mannatech, Inc. v. K.Y.C. Inc. d/b/a Techmedica Health Inc., Triton Nutra, Inc., false false No definition available. 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No authoritative reference available. false false 6 13 false Thousands Thousands UnKnown false true XML 18 R16.xml IDEA: SUBSEQUENT EVENTS 1.0.0.3 false SUBSEQUENT EVENTS false 1 $ false false u000 Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 u001 Standard http://www.xbrl.org/2003/instance shares xbrli 0 u002 Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 0 mtex_NotesToFinancialStatementsAbstract mtex false na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false No definition available. false 3 1 us-gaap_ScheduleOfSubsequentEventsTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">NOTE 10: </font>SUBSEQUENT EVENTS</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="keyword">As required by the Subsequent Events Topic of the FASB ASC, the Company evaluated all events or transactions that occurred after September&#160;30, 2009 up through November&#160;5, 2009, the date the Company issued these financial statements. During this period the Company did not have any material recognizable subsequent events.& lt;/a></font></div> </div> NOTE 10: SUBSEQUENT EVENTS As required by the Subsequent Events Topic of the FASB ASC, the Company evaluated all events or transactions that false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true XML 19 R9.xml IDEA: INCOME TAXES 1.0.0.3 false INCOME TAXES false 1 $ false false u000 Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 u001 Standard http://www.xbrl.org/2003/instance shares xbrli 0 u002 Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 0 mtex_NotesToFinancialStatementsAbstract mtex false na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false No definition available. false 3 1 us-gaap_IncomeTaxDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE 3: INCOME TAXES</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the three months and nine months ended September 30, 2009, the Company&#8217;s effective tax rate was 20.0% and 19.7%, respectively. For the three months and nine months ended September 30, 2008, the Company&#8217;s effective tax rate was 39.5% and 35.0%, respectively. The decrease for the three and nine months ended September 30, 2009 as compared to the same periods in 2008 was primarily due to additions to the valuation allowanc e for deferred tax assets in response to continued operating losses and the uncertainty associated with forecasting future operating results in the current economic environment.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> </div> NOTE 3: INCOME TAXES For the three months and nine months ended September 30, 2009, the Company&#8217;s effective tax rate was 20.0% and 19.7%, false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true XML 20 R6.xml IDEA: CONSOLIDATED STATEMENTS OF CASH FLOWS 1.0.0.3 false CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands false 1 $ false false u000 Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 u001 Standard http://www.xbrl.org/2003/instance shares xbrli 0 u002 Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 false 2 $ false false u000 Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 u001 Standard http://www.xbrl.org/2003/instance shares xbrli 0 u002 Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 5 3 us-gaap_NetCashProvidedByUsedInOperatingActivitiesAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false No definition available. false 6 4 us-gaap_NetIncomeLoss us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 true true -19519000 -19519 false false 2 true true -13248000 -13248 false false No definition available. 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No authoritative reference available. false 16 4 us-gaap_IncreaseDecreaseInIncomeTaxesReceivable us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 517000 517 false false 2 false true -3593000 -3593 false false No definition available. No authoritative reference available. false 17 4 us-gaap_IncreaseDecreaseInInventories us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 1265000 1265 false false 2 false true -6890000 -6890 false false No definition available. No authoritative reference available. false 18 4 mtex_PrepaidExpensesAndOtherCurrentAssets mtex false na duration monetary The net change during the reporting period in the amount of outstanding money paid in advance for goods or services that... false false false false false false false false false 1 false true 2220000 2220 false false 2 false true 2410000 2410 false false The net change during the reporting period in the amount of outstanding money paid in advance for goods or services that bring economic benefits for future periods and in other operating assets not otherwise defined in the taxonomy. No authoritative reference available. false 19 4 us-gaap_IncreaseDecreaseInOtherOperatingAssets us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true -1022000 -1022 false false 2 false true -39000 -39 false false No definition available. 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No authoritative reference available. false 23 4 mtex_IncreaseDecreaseInCommissionsAndIncentivesPayable mtex false na duration monetary The net change during the reporting period in the aggregate amount of commissions and incentives incurred but not yet paid. false false false false false false false false false 1 false true 2505000 2505 false false 2 false true -1721000 -1721 false false The net change during the reporting period in the aggregate amount of commissions and incentives incurred but not yet paid. No authoritative reference available. false 24 4 us-gaap_IncreaseDecreaseInDeferredRevenue us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 399000 399 false false 2 false true -906000 -906 false false No definition available. No authoritative reference available. false 25 4 us-gaap_NetCashProvidedByUsedInOperatingActivitiesContinuingOperations us-gaap true na duration monetary No definition available. false false false false false false false false false 1 false true -4708000 -4708 false false 2 false true -18002000 -18002 false false No definition available. No authoritative reference available. true 26 3 us-gaap_NetCashProvidedByUsedInInvestingActivitiesAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false No definition available. false 27 4 us-gaap_PaymentsToAcquirePropertyPlantAndEquipment us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true -2500000 -2500 false false 2 false true -4452000 -4452 false false No definition available. No authoritative reference available. false 28 4 us-gaap_ProceedsFromSaleMaturityAndCollectionsOfInvestments us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 0 0 false false 2 false true 20350000 20350 false false No definition available. No authoritative reference available. false 29 4 us-gaap_PaymentsToAcquireInvestments us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 0 0 false false 2 false true -7400000 -7400 false false No definition available. No authoritative reference available. false 30 4 us-gaap_IncreaseDecreaseInRestrictedCash us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 389000 389 false false 2 false true 1610000 1610 false false No definition available. No authoritative reference available. false 31 4 us-gaap_NetCashProvidedByUsedInInvestingActivitiesContinuingOperations us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true -2111000 -2111 false false 2 false true 10108000 10108 false false No definition available. No authoritative reference available. true 32 3 us-gaap_NetCashProvidedByUsedInFinancingActivitiesAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false No definition available. false 33 4 us-gaap_PaymentsOfDividends us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 1058000 1058 false false 2 false true 5293000 5293 false false No definition available. No authoritative reference available. false 34 4 us-gaap_ProceedsFromStockOptionsExercised us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true 66000 66 false false 2 false true 0 0 false false No definition available. No authoritative reference available. false 35 4 us-gaap_RepaymentsOfLongTermCapitalLeaseObligations us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 273000 273 false false 2 false true 82000 82 false false No definition available. No authoritative reference available. false 36 4 us-gaap_NetCashProvidedByUsedInFinancingActivitiesContinuingOperations us-gaap true debit duration monetary No definition available. false false false false false false false false false 1 false true -1265000 -1265 false false 2 false true -5375000 -5375 false false No definition available. 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No authoritative reference available. false 40 3 us-gaap_CashAndCashEquivalentsAtCarryingValue us-gaap true debit instant monetary No definition available. false false false false false false false true false 1 false true 22577000 22577 false false 2 false true 34982000 34982 false false No definition available. No authoritative reference available. false 41 3 mtex_SuplimentalDisclosureOfCashFlowInformationAbstract mtex false na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false No definition available. false 42 4 us-gaap_IncomeTaxesPaidNet us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true -2721000 -2721 false false 2 false true 2546000 2546 false false No definition available. No authoritative reference available. false 43 4 mtex_InterestPaidOnCapitalLeases mtex false na duration monetary The amount of cash paid during the current period for interest on leasing arrangements meeting the criteria for... false false false false false false false false false 1 true true 29000 29 false false 2 true true 13000 13 false false The amount of cash paid during the current period for interest on leasing arrangements meeting the criteria for capitalization. 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No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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No authoritative reference available. The net change during the reporting period in the amount of outstanding money paid in advance for goods or services that bring economic benefits for future periods and in other operating assets not otherwise defined in the taxonomy. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Carrying value as of the balance sheet date of the obligations incurred through that date and payable for sales commissions and incentives earned. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Primarily represents commissions and incentives earned by eligible independent associates based on their direct and indirect commissionable net sales. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The amount of cash paid during the current period for interest on leasing arrangements meeting the criteria for capitalization. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. XML 23 R13.xml IDEA: RECENT ACCOUNTING PRONOUNCEMENTS 1.0.0.3 false RECENT ACCOUNTING PRONOUNCEMENTS false 1 $ false false u000 Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 u001 Standard http://www.xbrl.org/2003/instance shares xbrli 0 u002 Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 0 mtex_NotesToFinancialStatementsAbstract mtex false na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false No definition available. false 3 1 us-gaap_ScheduleOfNewAccountingPronouncementsAndChangesInAccountingPrinciplesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE 7: RECENT ACCOUNTING PRONOUNCEMENTS</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June&#160;2009, the Financial Accounting Standards Board (FASB) approved the <font style="DISPLAY: inline; FONT-STYLE: italic">&#8220;FASB Accounting Standards Codification&#8221;</font> (&#8220;Codification&#8221;, &#8220;FASB ASC&#8221;) as the single source of authoritative generally accepted accounting principles (GAAP) and created a new Topic 105, <font style="DISPLAY: inli ne; FONT-STYLE: italic">Generally Accepted Accounting Principles</font>, in the General Principles and Objective Section of the Codification. Topic 105 is effective for interim and annual periods ending after September&#160;15, 2009, and its adoption did not have an impact on our financial condition or results of operations.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FASB ASC Topic 855, <font style="DISPLAY: inline; FONT-STYLE: italic">&#8220;Subsequent Events&#8221;</font> establishes general standards of accounting for disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and whether that date represents the date the financial statements were issued or were available to be issued. The adoption of Topic 855 did not have a material impact on the Company&#8217;s consolidated financial statements and disclosures.</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In response to the current credit crisis, FASB updated three ASC Topics to address fair value measurement concerns as follows:</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div> <table cellpadding="0" cellspacing="0" id="list_0" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"> <tr valign="top"> <td align="right" style="WIDTH: 36pt"> <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></div> </td> <td> <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FASB ASC Topic 820, <font style="DISPLAY: inline; FONT-STYLE: italic">Fair Value Measurements and Disclosures</font>, provides additional guidance on measuring the fair value of financial instruments when market activity has decreased and quoted prices may reflect distressed transactions;</font></div> </td> </tr></table> </div> <div> <table cellpadding="0" cellspacing="0" id="list_1" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"> <tr valign="top"> <td align="right" style="WIDTH: 36pt"> <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></div> </td> <td> <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FASB ASC Topic 320, <font style="DISPLAY: inline; FONT-STYLE: italic">Investments &#8211; Debt and Equity Securities,</font> amends the other-than-temporary impairment guidance for debt securities; and</font></div> </td> </tr></table> </div> <div> <table cellpadding="0" cellspacing="0" id="list_2" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"> <tr valign="top"> <td align="right " style="WIDTH: 36pt"> <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></div> </td> <td> <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FASB ASC Topic 825, <font style="DISPLAY: inline; FONT-STYLE: italic">Financial Instruments</font>, expands the fair value disclosures required for financial instruments to interim reporting periods for publicly traded companies, including disclosure of the significant assumptions used to estimate the fair value of those financial instruments.</font></div> </td> </tr></table> </div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0 pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The adoption of the above mentioned amendments to the FASB ASC did not have a material impact on our financial condition, results of operations, and disclosures.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In January&#160;2009, the Securities and Exchange Commission issued Release No.&#160;33-9002, <font style="DISPLAY: inline; FONT-STYLE: italic">&#8220;Interactive Data to Improve Financial Reporting.&#8221;</font> The final rule requires companies to provide their financial statements and financial statement schedules to the Securities and Exchange Commission in interactive data for mat using the eXtensible Business Reporting Language (&#8220;XBRL&#8221;). The rule was adopted by the Securities and Exchange Commission to improve the ability of financial statement users to access and analyze financial data. The Securities and Exchange Commission adopted a phase-in schedule indicating when registrants must furnish interactive data. Under this schedule, the Company will be required to submit filings with financial statement information using XBRL commencing with our June&#160;30, 2011 quarterly report on Form 10-Q. We are furnishing financial information in XBRL format starting with this quarterly report on Form 10-Q. As an earlier XBRL adopter, the Company may choose to discontinue furnishing XBRL data in the future until the required compliance date of June 30, 2011.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> </div> NOTE 7: RECENT ACCOUNTING PRONOUNCEMENTS In June&#160;2009, the Financial Accounting Standards Board (FASB) approved the &#8220;FASB Accounting false false No definition available. 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The Company develops, markets, and sells high-quality, proprietary nutritional supplements, topical and skin care products, and weight-management products that are primarily sold to independent associates and members located in the United States, Canada, Australia, the United Kingdom, Japan, New Zealand, the Republic of Korea, Taiwan, Denmark, Germany, South Africa, Singapore, Austria, the Netherlands, Norway, and Sweden.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Independent associates (&#8220;associates&#8221;) purchase the Company&#8217;s products at published wholesale prices to either sell to retail customers or consume personally. Members purchase the Company&#8217;s products at a discount from published retail prices primarily for personal consumption. The Company cannot distinguish personal consumption sales from other sales because it has no invol vement in its products after delivery, other than customary product warranties and returns. Only independent associates are eligible to earn commissions and incentives.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the Company&#8217;s consolidated financial statements and footnotes contained herein do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;) to be considered &#8220;complete financial statements&#8221;. However, in the opinion of the Company&#8217;s management, the accompanying unaudited consolidated financial statements and footnotes contain all adjustments, including normal recurring adjustments, considered necessary for a fair presentation of the Company&#8217;s consolidated financial information as of, and for, the periods presented. The Company cautions that its consolidated results of operations for an interim period are not necessarily indicative of its consolidated results of operations to be expected for its fiscal year. The December 31, 2008 consolidated balance sheet was included in the audited consolidated financial statements in the Company&#8217;s annual report on Form 10-K for the year ended December 31, 2008 and filed with the United States Securities and Exchange Commission on March 12, 2009 (&#8220;2008 Annual Report&#8221;), which includes all disclosures required by GAAP. Therefore, thes e unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2008 Annual Report.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Principles of Consolidation</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The consolidated financial statements and footnotes include the accounts of the Company and its wholly-o wned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Use of Estimates</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The preparation of the Company&#8217;s consolidated financial statements in accordance with GAAP requires the use of estimates that affect the reported value of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other factors. The Company continually evaluates the information used to make these estimates as the business and economic environment changes. Historically, actual results have not varied materially from the Company&#8217;s estimates and the Company does not currently anticipate a significant change in its assumptions related to these estimates. Actual results may differ from these estimates under different assumptions or conditions.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The use of estimates is pervasive throughout the consolidated financial statements, but the accounting policies and estimates considered to be the most significant are described in th is note to the consolidated financial statements,&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Organization and Summary of Significant Accounting Policies</font>.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Cash and Cash Equivalents</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company considers all highly liquid investments with original maturities of three mon ths or less to be cash equivalents. The Company includes in its cash and cash equivalents credit card receivables due from its credit card processor, as the cash proceeds from credit card receivables are generally received within 24 to 72 hours. As of September 30, 2009 and December 31, 2008, credit card receivables were $3.8 million and $3.3 million, respectively. Additionally, as of September 30, 2009 and December 31, 2008, cash and cash equivalents held in bank accounts in foreign countries totaled $11.8 million and $18.2 million, respectively.</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Restricted Cash</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company is required to restrict cash for (i) direct selling insurance premiums and credit card sales in the Republic of Korea, (ii) reserve on credit card sales in North America, and (iii) Australia building lease collateral. As of September 30, 2009 and December 31, 2008, our total restricted cash was $9.4 million.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Accounts Receivable</font></font></div> <div style="DISPLAY: block; TEXT-INDENT : 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accounts receivable are carried at their estimated collectible amounts. Receivables are created upon shipment of an order if the credit card payment is rejected or does not match the order total. As of September 30, 2009 and December 31, 2008, receivables consisted primarily of amounts due from members and associates. The Company periodically evaluates its receivables for collectability based on historical experience, recent account activities, and the length of time receivables are past due, and writes-off receivables when they become uncollectible. At September 30, 2009 and December 31, 2008, the Company held an allowance for doubtful accounts of less than $0.1 million.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> ; <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Inventories</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Inventories consist of raw materials, work in progress, finished goods, and promotional materials that are stated at the lower of cost (using standard costs that approximate average costs) or market. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off.</font></div> <div style="DISPLAY: block; T EXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Other Assets</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of September 30, 2009 and December 31, 2008, other assets of $2.5 million and $1.5 million primarily consisted of deposits for contracts and building leases in various locations.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDE NT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Commissions and Incentives</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Independent associates earn commissions and incentives based on their direct and indirect commissionable net sales over 13 business periods. Each business period equals 28 days. The Company accrues commissions and incentives when earned by independent associates and pays commissions on product sales three weeks following the business period end and pays commissions on its pack sales five weeks following the business period end.</font>&l t;/div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Other Long-Term Liabilities</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In August 2003, the Company entered into a Long-Term Post-Employment Royalty Agreement with Dr.&#160;Bill&#160;McAnalley, the Company&#8217;s former Chief Science Officer, pursuant to which the Company is required to pay Dr.&#160;McAnalley, or his heirs, royalties for ten years beginning September 2005 through August 2015. Quarterly payments related to this Long-Term Post-Employment Royalty Agreement are based on certain applicable annual global product sales by the Company in excess of $105.4 million. At the time the Company entered into this Long-Term Post-Employment Royalty Agreement, it was considered a post-employment benefit and the Company was required to measure and accrue the present value of the estimated future royalty payments related to the post-employment royalty benefit and recognize it over the life of Dr.&#160;McAnalley&#8217;s employment agreement, which was two years. As of September 30, 2009, the Company&#8217;s liability related to this royalty agreement was $2.1 million, of which $0.3 million was currently due and included in accrued expenses.&#160;&#160;As of December&#160;31, 2008, the Company&#8217;s long-term liability related to this royalty agreement was $2.4 million, of which $0.4 million was currently due a nd included in accrued expenses.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain operating leases for the Company&#8217;s regional office facilities contain a restoration clause that requires the Company to restore the premises to its original condition. As of September 30, 2009 and December 31, 2008, accrued restoration costs related to these leases amounted to $0.4 million. At September 30, 2009 and December 31, 2008, the Company also recorded a long-term liability for an estimated deferred benefit obligation related to a deferred benefit plan for its Japan operations of $0.8 million.</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; TEXT-DECORATION: underline">Comprehensive Income (loss) and Accumulated Other Comprehensive Income (Loss</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">)</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The Company&#8217;s comprehensive income (loss) consists of the Company&#8217;s net income (loss), foreign currency translation adjustments from its Japan, Republic of Korea, Taiwan, Norway, and Sweden operations, and changes in the pension obligation for its Japanese employees.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Revenue Recognition</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company&#8217;s revenue is derived from sales of its products, sales of its starter and renewal packs, and shipping fees. Substantially all of the Company&#8217;s products are sold to independent associates at published wholesale prices and to members at discounted published retail prices. The Company recognizes revenue upon receipt of packs and products by its customers. The Company records revenue net of any sales taxes and records a reserve for expected sales returns based on its historical experience.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company defers certain components of its revenue. Total deferred revenue consists of revenue received from: (i) sales of packs and products, which were shipped but not received by customers by period end; (ii) one-year magazine subscriptions; (iii) pack sales when the pack sale price exceeds the wholesale value of all individual components within the pack; and (iv) prepaid registration fees from customers planning to attend a future corporate-sponsored event. The Company recognizes deferred revenue from shipped packs and products upon receipt by the customer. Corporate-sponsored event revenue is recognized when the event is held. All other deferred revenue is recognized ratably over one year. 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No authoritative reference available. false 4 2 us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mannatech, Incorporated (together with its subsidiaries, the &#8220;Company&#8221;), located in Coppell, Texas, was incorporated in the state of Texas on November 4, 1993 and is listed on the NASDAQ Global Select Market under the symbol &#8220;MTEX&#8221;. The Company develops, markets, and sells high-quality, proprietary nutritional supplements, topical and skin care products, and weight-management products that are primarily sold to independent associates and members located in the United States, Canada, Australia, the United Kingdom, Japan, New Zealand, the Republic of Korea, Taiwan, Denmark, Germany, South Africa, Singapore, Austria, the Netherlands, Norway, and Sweden.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt">& lt;br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Independent associates (&#8220;associates&#8221;) purchase the Company&#8217;s products at published wholesale prices to either sell to retail customers or consume personally. Members purchase the Company&#8217;s products at a discount from published retail prices primarily for personal consumption. 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Accordingly, the Company&#8217;s consolidated financial statements and footnotes contained herein do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;) to be considered &#8220;complete financial statements&#8221;. However, in the opinion of the Company&#8217;s management, the accompanying unaudited consolidated financial statements and footnotes contain all adjustments, including normal recurring adjustments, considered necessary for a fair presentation of the Company&#8217;s consolidated financial information as of, and for, the periods presented. The Company cautions that its consolidated results of operations for an interim period are not necessarily indicative of its consolidated results of operations to be expected for its fiscal year. The December 31, 2008 consolidated balance sheet was included in the audited consolidated financial statements in the Company&#8217;s annual report on Form 10-K for the year ended December 31, 2008 and filed with the United States Securities and Exchange Commission on March 12, 2009 (&#8220;2008 Annual Report&#8221;), which includes all disclosures required by GAAP. Therefore, these unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2008 Annual Report.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> </div> Mannatech, Incorporated (together with its subsidiaries, the &#8220;Company&#8221;), located in Coppell, Texas, was incorporated in the state of Texas on false false No definition available. No authoritative reference available. false 5 2 us-gaap_SignificantAccountingPoliciesTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Principles of Consolidation</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The consolidated financial statements and footnotes include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: bl ock; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Use of Estimates</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The preparation of the Company&#8217;s consolidated financial statements in accordance with GAAP requires the use of estimates that affect the reported value of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other factors. The Company continually evaluates the information used to make these estimates as the business and economic environment changes. Historic ally, actual results have not varied materially from the Company&#8217;s estimates and the Company does not currently anticipate a significant change in its assumptions related to these estimates. Actual results may differ from these estimates under different assumptions or conditions.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The use of estimates is pervasive throughout the consolidated financial statements, but the accounting policies and estimates considered to be the most significant are described in this note to the consolidated financial statements,&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Organization and Summary of Significant Accounting Policies</font>.</font></div> <div style="DISPLA Y: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Cash and Cash Equivalents</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company includes in its cash and cash equivalents credit card receivables due from its credit card processor, as the cash proceeds from credit card receivables are generally received within 24 to 72 hours. As of September 30, 2009 and December 31, 2008, credit card receivables were $3.8 million and $3.3 million, respectively. Additionally, as of September 30, 2009 and December 31, 2008, cash and cash equivalents held in bank accounts in foreign countries totaled $11.8 million and $18.2 million, respectively.</font></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Restricted Cash</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company is required to restrict cash for (i) direc t selling insurance premiums and credit card sales in the Republic of Korea, (ii) reserve on credit card sales in North America, and (iii) Australia building lease collateral. As of September 30, 2009 and December 31, 2008, our total restricted cash was $9.4 million.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Accounts Receivable</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accounts recei vable are carried at their estimated collectible amounts. Receivables are created upon shipment of an order if the credit card payment is rejected or does not match the order total. As of September 30, 2009 and December 31, 2008, receivables consisted primarily of amounts due from members and associates. The Company periodically evaluates its receivables for collectability based on historical experience, recent account activities, and the length of time receivables are past due, and writes-off receivables when they become uncollectible. At September 30, 2009 and December 31, 2008, the Company held an allowance for doubtful accounts of less than $0.1 million.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font s tyle="DISPLAY: inline; TEXT-DECORATION: underline">Inventories</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Inventories consist of raw materials, work in progress, finished goods, and promotional materials that are stated at the lower of cost (using standard costs that approximate average costs) or market. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Other Assets</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of September 30, 2009 and December 31, 2008, other assets of $2.5 million and $1.5 million primarily consisted of deposits for contracts and building leases in various locations.</font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Commissions and Incentives</font></font></div> <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div> <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Independent associates earn commissions and incentives based on their direct and indirect commissionable net sales over 13 business periods. 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