x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Texas | 75-2508900 | |
(State or other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
1410 Lakeside Parkway, Suite 200, Flower Mound, Texas | 75028 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer x | Smaller reporting company x | Emerging Growth Company ¨ |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.0001 per share | MTEX | The Nasdaq Stock Market LLC |
Part I – FINANCIAL INFORMATION | |
Part II – OTHER INFORMATION | |
• | future plans related to budgets, future capital requirements, market share growth, and anticipated capital projects and obligations; |
• | the future impact of any changes to global associate career and compensation plans or incentives or the regulations thereto; |
ASSETS | March 31, 2019 (unaudited) | December 31, 2018 | |||||
Cash and cash equivalents | $ | 19,589 | $ | 21,845 | |||
Restricted cash | 1,513 | 1,514 | |||||
Accounts receivable, net of allowance of $767 and $770 in 2019 and 2018, respectively | 143 | 106 | |||||
Income tax receivable | 242 | 291 | |||||
Inventories, net | 12,848 | 12,821 | |||||
Prepaid expenses and other current assets | 3,803 | 3,361 | |||||
Deferred commissions | 2,420 | 2,449 | |||||
Total current assets | 40,558 | 42,387 | |||||
Property and equipment, net | 5,839 | 5,860 | |||||
Construction in progress | 740 | 904 | |||||
Long-term restricted cash | 7,979 | 7,225 | |||||
Other assets | 8,595 | 3,894 | |||||
Long-term deferred tax assets, net | 1,728 | 1,928 | |||||
Total assets | $ | 65,439 | $ | 62,198 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current portion of capital leases | $ | 81 | $ | 75 | |||
Accounts payable | 5,880 | 6,724 | |||||
Accrued expenses | 7,440 | 5,995 | |||||
Commissions and incentives payable | 11,079 | 12,189 | |||||
Taxes payable | 2,538 | 2,655 | |||||
Current notes payable | 975 | 702 | |||||
Deferred revenue | 5,393 | 5,274 | |||||
Total current liabilities | 33,386 | 33,614 | |||||
Capital leases, excluding current portion | 73 | 72 | |||||
Long-term deferred tax liabilities | 3 | 3 | |||||
Long-term notes payable | 756 | 883 | |||||
Other long-term liabilities | 5,575 | 2,302 | |||||
Total liabilities | 39,793 | 36,874 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, $0.0001 par value, 99,000,000 shares authorized, 2,742,857 shares issued and 2,395,219 shares outstanding as of March 31, 2019 and 2,742,857 shares issued and 2,381,149 shares outstanding as of December 31, 2018 | — | — | |||||
Additional paid-in capital | 33,905 | 33,939 | |||||
Retained earnings (deficit) | (2,397 | ) | (2,782 | ) | |||
Accumulated other comprehensive income | 3,896 | 4,337 | |||||
Treasury stock, at average cost, 347,638 shares as of March 31, 2019 and 361,708 shares as of December 31, 2018 | (9,758 | ) | (10,170 | ) | |||
Total shareholders’ equity | 25,646 | 25,324 | |||||
Total liabilities and shareholders’ equity | $ | 65,439 | $ | 62,198 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net sales | $ | 37,973 | $ | 41,383 | |||
Cost of sales | 7,427 | 8,249 | |||||
Gross profit | 30,546 | 33,134 | |||||
Operating expenses: | |||||||
Commissions and incentives | 15,199 | 16,985 | |||||
Selling and administrative expenses | 7,576 | 7,980 | |||||
Depreciation and amortization expense | 528 | 511 | |||||
Other operating costs | 6,123 | 8,546 | |||||
Total operating expenses | 29,426 | 34,022 | |||||
Income (loss) from operations | 1,120 | (888 | ) | ||||
Interest income (expense), net | (95 | ) | 29 | ||||
Other income (expense), net | 4 | 288 | |||||
Income (loss) before income taxes | 1,029 | (571 | ) | ||||
Income tax (provision) benefit | (341 | ) | 307 | ||||
Net income (loss) | $ | 688 | $ | (264 | ) | ||
Earnings (loss) per common share: | |||||||
Basic | $ | 0.29 | $ | (0.10 | ) | ||
Diluted | $ | 0.28 | $ | (0.10 | ) | ||
Weighted-average common shares outstanding: | |||||||
Basic | 2,396 | 2,719 | |||||
Diluted | 2,462 | 2,719 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net income (loss) | $ | 688 | $ | (264 | ) | ||
Foreign currency translations | (441 | ) | 334 | ||||
Comprehensive income | $ | 247 | $ | 70 |
Common stock Par value | Additional paid in capital | Retained earnings (deficit) | Accumulated other comprehensive income | Treasury stock | Total shareholders’ equity | ||||||||||||||||||
Balance at January 1, 2018 | — | $ | 34,928 | $ | 4,190 | $ | 5,984 | $ | (4,861 | ) | $ | 40,241 | |||||||||||
Net loss | — | — | (264 | ) | (264 | ) | |||||||||||||||||
Declared dividends | — | — | (340 | ) | (340 | ) | |||||||||||||||||
Charge related to stock-based compensation | — | 36 | — | 36 | |||||||||||||||||||
Issuance of unrestricted shares | — | (1,748 | ) | — | 1,993 | 245 | |||||||||||||||||
Foreign currency translations | — | — | — | 334 | 334 | ||||||||||||||||||
Balance at March 31, 2018 | $ | — | $ | 33,216 | $ | 3,586 | $ | 6,318 | $ | (2,868 | ) | $ | 40,252 | ||||||||||
Balance at January 1, 2019 | — | $ | 33,939 | $ | (2,782 | ) | $ | 4,337 | $ | (10,170 | ) | $ | 25,324 | ||||||||||
Net loss | — | — | 688 | — | — | 688 | |||||||||||||||||
Payment of cash dividends | — | — | (303 | ) | — | — | (303 | ) | |||||||||||||||
Charge related to stock-based compensation | — | 107 | — | — | — | 107 | |||||||||||||||||
Issuance of unrestricted shares | — | (141 | ) | — | — | 421 | 280 | ||||||||||||||||
Repurchase of common stock | — | — | — | — | (9 | ) | (9 | ) | |||||||||||||||
Foreign currency translations | — | — | — | (441 | ) | — | (441 | ) | |||||||||||||||
Balance at March 31, 2019 | $ | — | $ | 33,905 | $ | (2,397 | ) | $ | 3,896 | $ | (9,758 | ) | $ | 25,646 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | 688 | $ | (264 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 528 | 511 | |||||
Provision for inventory losses | 178 | 206 | |||||
Provision for doubtful accounts | 37 | 89 | |||||
Loss on disposal of assets | 62 | 14 | |||||
Charge related to stock-based compensation | 388 | 281 | |||||
Deferred income taxes | 200 | (1,118 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (74 | ) | (216 | ) | |||
Income tax receivable | 49 | 907 | |||||
Inventories | (206 | ) | 131 | ||||
Prepaid expenses and other current assets | (35 | ) | (853 | ) | |||
Deferred commissions | 29 | (31 | ) | ||||
Other assets | 156 | (67 | ) | ||||
Accounts payable | (844 | ) | (555 | ) | |||
Accrued expenses and other liabilities | (137 | ) | 182 | ||||
Taxes payable | (117 | ) | 681 | ||||
Commissions and incentives payable | (1,110 | ) | 1,033 | ||||
Deferred revenue | 119 | 44 | |||||
Net cash provided by (used in) operating activities | (89 | ) | 975 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Acquisition of property and equipment | (429 | ) | (282 | ) | |||
Proceeds from sale of assets | — | 1 | |||||
Net cash used in investing activities | (429 | ) | (281 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repurchase of common stock | (9 | ) | — | ||||
Payment of cash dividends | (303 | ) | (340 | ) | |||
Repayment of capital lease obligations | (247 | ) | (364 | ) | |||
Net cash used in financing activities | (559 | ) | (704 | ) | |||
Effect of currency exchange rate changes on cash and cash equivalents | (426 | ) | 298 | ||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (1,503 | ) | 288 | ||||
Cash, cash equivalents, and restricted cash at the beginning of the period | 30,584 | 46,761 | |||||
Cash, cash equivalents, and restricted cash at the end of the period | $ | 29,081 | $ | 47,049 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||
Income taxes paid | $ | 181 | $ | 248 | |||
Interest paid on capital leases and financing arrangements | $ | 27 | $ | 11 | |||
Assets acquired through financing arrangements | $ | — | $ | 1,356 |
March 31, 2019 | December 31, 2018 | ||||||
Cash and cash equivalents at beginning of period | $ | 21,845 | $ | 37,682 | |||
Current restricted cash at beginning of period | 1,514 | 1,514 | |||||
Long-term restricted cash at beginning of period | 7,225 | 7,565 | |||||
Cash, cash equivalents, and restricted cash at beginning of period | $ | 30,584 | $ | 46,761 | |||
Cash and cash equivalents at end of period | $ | 19,589 | $ | 21,845 | |||
Current restricted cash at end of period | 1,513 | 1,514 | |||||
Long-term restricted cash at end of period | 7,979 | 7,225 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 29,081 | $ | 30,584 |
Loyalty program | (in thousands) | ||
Loyalty deferred revenue as of January 1, 2018 | $ | 6,406 | |
Loyalty points forfeited or expired | (4,332 | ) | |
Loyalty points used | (11,398 | ) | |
Loyalty points vested | 12,469 | ||
Loyalty points unvested | 1,086 | ||
Loyalty deferred revenue as of December 31, 2018 | $ | 4,231 |
Loyalty deferred revenue as of January 1, 2019 | $ | 4,231 | |
Loyalty points forfeited or expired | (1,585 | ) | |
Loyalty points used | (2,329 | ) | |
Loyalty points vested | 1,906 | ||
Loyalty points unvested | 1,185 | ||
Loyalty deferred revenue as of March 31, 2019 | $ | 3,408 |
Sales reserve as of January 1, 2018 | $ | 117 | |
Provision related to sales made in current period | $ | 1,198 | |
Adjustment related to sales made in prior periods | $ | (10 | ) |
Actual returns or credits related to current period | $ | (1,125 | ) |
Actual returns or credits related to prior periods | $ | (104 | ) |
Sales reserve as of December 31, 2018 | $ | 76 | |
Sales reserve as of January 1, 2019 | $ | 76 | |
Provision related to sales made in current period | 261 | ||
Adjustment related to sales made in prior periods | 21 | ||
Actual returns or credits related to current period | (186 | ) | |
Actual returns or credits related to prior periods | (94 | ) | |
Sales reserve as of March 31, 2019 | $ | 78 |
March 31, 2019 | December 31, 2018 | ||||||
Raw materials | $ | 1,152 | $ | 803 | |||
Finished goods | 12,096 | 12,542 | |||||
Inventory reserves for obsolescence | (400 | ) | (524 | ) | |||
Total | $ | 12,848 | $ | 12,821 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Total gross compensation expense | $ | 108 | $ | 36 | |||
Total tax benefit associated with compensation expense | 6 | 7 | |||||
Total net compensation expense | $ | 102 | $ | 29 |
Nine months ending December 31, 2019 | Year ending December 31, | ||||||||||||||
2020 | 2021 | 2022 | |||||||||||||
Total gross unrecognized compensation expense | $ | 203 | $ | 125 | $ | — | $ | — | |||||||
Tax benefit associated with unrecognized compensation expense | 8 | 7 | — | — | |||||||||||
Total net unrecognized compensation expense | $ | 195 | $ | 118 | $ | — | $ | — |
Foreign Currency Translation | Pension Postretirement Benefit Obligation | Accumulated Other Comprehensive Income, Net | |||||||||
Balance as of December 31, 2018 | $ | 4,042 | $ | 295 | $ | 4,337 | |||||
Current-period change (1) | (441 | ) | — | (441 | ) | ||||||
Balance as of March 31, 2019 | $ | 3,601 | $ | 295 | $ | 3,896 |
Leases | Classification | March 31, 2019 | |||
Assets | |||||
Operating lease assets | Other assets | 4,812 | |||
Finance lease assets | Property and equipment, net | $ | 136 | ||
Total leased assets | $ | 4,948 | |||
Liabilities | |||||
Current | |||||
Operating | Accrued expenses | $ | 1,836 | ||
Finance | Current portion of capital leases | 81 | |||
Long-Term | |||||
Operating | Other long-term liabilities | 4,618 | |||
Finance | Capital leases, excluding current portion | 73 | |||
Total leased liabilities | $ | 6,608 | |||
Lease Cost | Classification | Three Months Ended March 31, 2019 | |||
Operating lease cost | Other operating cost | $ | 755 | ||
Finance lease cost | |||||
Amortization of leased assets | Depreciation and amortization | 23 | |||
Interest on lease liabilities | Interest expense | 2 | |||
Total lease cost | $ | 780 |
Lease Payments | Three Months Ended March 31, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from operating leases | $ | 755 | ||
Financing cash flows from finance leases | 12 |
March 31, 2019 | ||||||
Maturity of lease liabilities | Operating Leases | Financing Lease | ||||
Remaining 2019 | $ | 1,759 | $ | 68 | ||
2020 | 1,348 | 49 | ||||
2021 | 803 | 38 | ||||
2022 | 641 | 13 | ||||
2023 | 586 | — | ||||
Thereafter | 2,737 | — | ||||
Total minimum lease payments | $ | 7,874 | $ | 168 | ||
Imputed interest | (1,156 | ) | (14 | ) | ||
Present value of minimum lease payments | $ | 6,718 | $ | 154 |
Three Months Ended March 31, 2019 (1) | |||
Operating leases | |||
Weighted-average remaining lease term (years) | 7.1 | ||
Weighted-average discount rate | 4.7 | % | |
Financing leases | |||
Weighted-average remaining lease term (years) | 2.3 | ||
Weighted-average discount rate | 6.9 | % |
• | Level 1 – Quoted unadjusted prices for identical instruments in active markets. |
• | Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all observable inputs and significant value drivers are observable in active markets. |
• | Level 3 – Model-derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by the Company. |
March 31, 2019 | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets | |||||||||||||||
Money Market Funds – JPMorgan Chase, US | $ | 1,311 | $ | — | $ | — | $ | 1,311 | |||||||
Interest bearing deposits – various banks | 8,869 | — | — | 8,869 | |||||||||||
Total assets | $ | 10,180 | $ | — | $ | — | $ | 10,180 | |||||||
Amounts included in: | |||||||||||||||
Cash and cash equivalents | $ | 2,648 | $ | — | $ | — | $ | 2,648 | |||||||
Restricted cash | 740 | — | — | 740 | |||||||||||
Long-term restricted cash | 6,792 | — | — | 6,792 | |||||||||||
Total | $ | 10,180 | $ | — | $ | — | $ | 10,180 |
December 31, 2018 | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets | |||||||||||||||
Interest bearing deposits – various banks | $ | 11,391 | $ | — | $ | — | $ | 11,391 | |||||||
Total assets | $ | 11,391 | $ | — | $ | — | $ | 11,391 | |||||||
Amounts included in: | |||||||||||||||
Cash and cash equivalents | $ | 4,633 | $ | — | $ | — | $ | 4,633 | |||||||
Restricted cash | 741 | — | — | 741 | |||||||||||
Long-term restricted cash | 6,017 | — | — | 6,017 | |||||||||||
Total | $ | 11,391 | $ | — | $ | — | $ | 11,391 |
Three Months Ended March 31, | ||||||||||||||
Region | 2019 | 2018 | ||||||||||||
Americas | $ | 11.9 | 31.3 | % | $ | 13.7 | 33.1 | % | ||||||
Asia/Pacific | 22.8 | 60.0 | % | 24.2 | 58.4 | % | ||||||||
EMEA | 3.3 | 8.7 | % | 3.5 | 8.5 | % | ||||||||
Totals | $ | 38.0 | 100.0 | % | $ | 41.4 | 100.0 | % |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Consolidated product sales | $ | 37.2 | $ | 40.7 | ||||
Consolidated pack sales and associate fees | 0.6 | 0.5 | ||||||
Consolidated other | 0.2 | 0.2 | ||||||
Consolidated total net sales | $ | 38.0 | $ | 41.4 |
Region | March 31, 2019 | December 31, 2018 | |||||
Americas | $ | 5.4 | $ | 5.5 | |||
Asia/Pacific | 1.1 | 1.3 | |||||
EMEA | 0.1 | — | |||||
Total | $ | 6.6 | $ | 6.8 |
Region | March 31, 2019 | December 31, 2018 | |||||
Americas | $ | 5.0 | $ | 4.5 | |||
Asia/Pacific | 6.4 | 6.3 | |||||
EMEA | 1.4 | 2.0 | |||||
Total | $ | 12.8 | $ | 12.8 |
• | For the three months ended March 31, 2019, the average product order value decreased 8.1%, to $181, as compared to $197 for the same period in 2018. The number of product orders decreased by 2.2% to 216,154 for the three months ended March 31, 2019, as compared to 220,936 during the same period in 2018. |
• | The number of packs sold to, and associate fees paid by, new and continuing independent associates and preferred customers increased 17.4% during the first quarter of 2019 to 24,348, as compared to 20,738 during the same period in 2018. The average value of packs and associate fees decreased to $23 for the first quarter of 2019, as compared to $24 for the same period in 2018. |
2019 | 2018 | Change from 2019 to 2018 | ||||||||||||||||||
Total dollars | % of net sales | Total dollars | % of net sales | Dollar | Percentage | |||||||||||||||
Net sales | $ | 37,973 | 100.0 | % | $ | 41,383 | 100.0 | % | $ | (3,410 | ) | (8.2 | )% | |||||||
Cost of sales | 7,427 | 19.6 | % | 8,249 | 19.9 | % | (822 | ) | (10.0 | )% | ||||||||||
Gross profit | 30,546 | 80.4 | % | 33,134 | 80.1 | % | (2,588 | ) | (7.8 | )% | ||||||||||
Operating expenses: | ||||||||||||||||||||
Commissions and incentives | 15,199 | 40.0 | % | 16,985 | 41.0 | % | (1,786 | ) | (10.5 | )% | ||||||||||
Selling and administrative expenses | 7,576 | 20.0 | % | 7,980 | 19.3 | % | (404 | ) | (5.1 | )% | ||||||||||
Depreciation and amortization expense | 528 | 1.4 | % | 511 | 1.2 | % | 17 | 3.3 | % | |||||||||||
Other operating costs | 6,123 | 16.1 | % | 8,546 | 20.7 | % | (2,423 | ) | (28.4 | )% | ||||||||||
Total operating expenses | 29,426 | 77.5 | % | 34,022 | 82.2 | % | (4,596 | ) | (13.5 | )% | ||||||||||
Income from operations | 1,120 | 2.9 | % | (888 | ) | (2.1 | )% | 2,008 | (226.1 | )% | ||||||||||
Interest income | (95 | ) | (0.3 | )% | 29 | 0.1 | % | (124 | ) | 427.6 | % | |||||||||
Other income (expense), net | 4 | — | % | 288 | 0.7 | % | (284 | ) | (98.6 | )% | ||||||||||
Income before income taxes | 1,029 | 2.7 | % | (571 | ) | (1.4 | )% | 1,600 | (280.2 | )% | ||||||||||
Provision for income taxes | (341 | ) | (0.9 | )% | 307 | 0.7 | % | (648 | ) | (211.1 | )% | |||||||||
Net income (loss) | $ | 688 | 1.8 | % | $ | (264 | ) | (0.6 | )% | $ | 952 | (360.6 | )% |
Three-month period ended (in millions, except percentages) | March 31, 2019 | March 31, 2018 | Constant $ Change | |||||||||||||||
GAAP Measure: Total $ | Non-GAAP Measure: Constant $ | GAAP Measure: Total $ | Dollar | Percent | ||||||||||||||
Net sales | $ | 38.0 | $ | 39.4 | $ | 41.4 | $ | (2.0 | ) | (4.8 | )% | |||||||
Product | 37.2 | 38.6 | 40.7 | (2.1 | ) | (5.2 | )% | |||||||||||
Pack sales and associate fees | 0.6 | 0.6 | 0.5 | 0.1 | 20.0 | % | ||||||||||||
Other | 0.2 | 0.2 | 0.2 | — | — | % | ||||||||||||
Gross profit | 30.5 | 31.7 | 33.1 | (1.4 | ) | (4.2 | )% | |||||||||||
Income from operations | 1.1 | 1.4 | (0.9 | ) | 2.3 | (255.6 | )% |
Region | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | |||||||||||
Americas | $ | 11.9 | 31.3 | % | $ | 13.7 | 33.1 | % | |||||
Asia/Pacific | 22.8 | 60.0 | % | 24.2 | 58.4 | % | |||||||
EMEA | 3.3 | 8.7 | % | 3.5 | 8.5 | % | |||||||
Total | $ | 38.0 | 100.0 | % | $ | 41.4 | 100.0 | % |
• | changes in our sales prices; |
• | changes in shipping fees; |
• | changes in consumer demand; |
• | changes in the number of independent associates and preferred customers; |
• | changes in competitors’ products; |
• | changes in economic conditions; |
• | changes in regulations; |
• | announcements of new scientific studies and breakthroughs; |
• | introduction of new products; |
• | discontinuation of existing products; |
• | adverse publicity; |
• | changes in our commissions and incentives programs; |
• | direct competition; and |
• | fluctuations in foreign currency exchange rates. |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | Dollar | Percentage | |||||||||||
Consolidated product sales | $ | 37.2 | $ | 40.7 | $ | (3.5 | ) | (8.6 | )% | |||||
Consolidated pack sales and associate fees | 0.6 | 0.5 | 0.1 | 20.0 | % | |||||||||
Consolidated other | 0.2 | 0.2 | — | — | % | |||||||||
Total consolidated net sales | $ | 38.0 | $ | 41.4 | $ | (3.4 | ) | (8.2 | )% |
Three Months Ended March 31, | Change | |||||||||||||
2019 | 2018 | Dollar | Percentage | |||||||||||
New | $ | 0.2 | $ | 0.2 | $ | — | — | % | ||||||
Continuing | 0.4 | 0.3 | 0.1 | 33.3 | % | |||||||||
Total | $ | 0.6 | $ | 0.5 | $ | 0.1 | 20.0 | % |
• | registered our most popular products with the appropriate regulatory agencies in all countries of operations; |
• | rolled out new products; |
• | continued an aggressive marketing and educational campaign; |
• | continued to strengthen compliance initiatives; |
• | concentrated on publishing results of research studies and clinical trials related to our products; |
• | initiated additional incentives; |
• | continued to explore new advertising and educational tools to broaden name recognition; and |
• | implemented changes to our global associate career and compensation plan. |
2019 | 2018 | ||||||||||
New | 88,000 | 43.3 | % | 91,000 | 43.3 | % | |||||
Continuing | 115,000 | 56.7 | % | 119,000 | 56.7 | % | |||||
Total | 203,000 | 100.0 | % | 210,000 | 100.0 | % |
Country | 2019 | 2018 | |||
Australia | 30.0 | % | 30.0 | % | |
Canada | 26.5 | % | 26.5 | % | |
China | 25.0 | % | 25.0 | % | |
Colombia | 33.0 | % | 34.0 | % | |
Cyprus | 12.5 | % | 12.5 | % | |
Denmark | 22.0 | % | 22.0 | % | |
Gibraltar | 10.0 | % | 10.0 | % | |
Hong Kong | 16.5 | % | 16.5 | % | |
Japan | 30.2 | % | 34.8 | % | |
Mexico | 30.0 | % | 30.0 | % | |
Norway | 23.0 | % | 24.0 | % | |
Republic of Korea | 22.0 | % | 25.0 | % | |
Russia(1) | 20.0 | % | 20.0 | % | |
Singapore | 17.0 | % | 17.0 | % | |
South Africa | 28.0 | % | 28.0 | % | |
Sweden | 22.0 | % | 22.0 | % | |
Switzerland | 9.2 | % | 16.2 | % | |
Taiwan | 20.0 | % | 17.0 | % | |
Ukraine(2) | 18.0 | % | 18.0 | % | |
United Kingdom | 19.0 | % | 19.0 | % | |
United States | 23.8 | % | 24.0 | % |
Provided by/(Used in): | 2019 | 2018 | |||||
Operating activities | $ | (0.1 | ) | $ | 1.0 | ||
Investing activities | $ | (0.4 | ) | $ | (0.3 | ) | |
Financing activities | $ | (0.6 | ) | $ | (0.7 | ) |
Commitments and obligations | Remaining 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Less: Interest | Total | |||||||||||||||||||||||||
Finance lease obligations | $ | 68 | $ | 49 | $ | 38 | $ | 13 | $ | — | $ | — | $ | — | $ | 14 | $ | 154 | ||||||||||||||||
Purchase obligations (1)(2) | 3,875 | 5,100 | — | — | — | — | — | 8,975 | ||||||||||||||||||||||||||
Operating lease obligations (3) | 1,759 | 1,348 | 803 | 641 | 586 | 598 | 2,139 | 1,156 | (6) | 6,718 | ||||||||||||||||||||||||
Note payable and other financing arrangements | 834 | 627 | 370 | — | — | — | — | 1,831 | ||||||||||||||||||||||||||
Employment agreements | 440 | — | — | — | — | — | — | 440 | ||||||||||||||||||||||||||
Royalty agreement | 44 | 59 | 7 | — | — | — | — | 110 | ||||||||||||||||||||||||||
Tax liability (4) | — | — | — | — | — | — | 181 | 181 | ||||||||||||||||||||||||||
Other obligations (5) | 327 | 86 | 27 | 25 | 59 | — | 631 | 1,155 | ||||||||||||||||||||||||||
Total commitments and obligations | $ | 7,347 | $ | 7,269 | $ | 1,245 | $ | 679 | $ | 645 | $ | 598 | $ | 2,951 | $ | 1,170 | $ | 19,564 |
Estimated useful life | Net carrying value at March 31, 2019 | ||
Office furniture and equipment | 5 to 7 years | $0.7 million | |
Computer hardware and software | 3 to 5 years | 3.1 million | |
Automobiles | 3 to 5 years | 0.1 million | |
Leasehold improvements (1) | 2 to 10 years | 1.9 million | |
Total | $5.8 million |
Loyalty program | (in thousands) | ||
Loyalty deferred revenue as of January 1, 2018 | $ | 6,406 | |
Loyalty points forfeited or expired | (4,332 | ) | |
Loyalty points used | (11,398 | ) | |
Loyalty points vested | 12,469 | ||
Loyalty points unvested | 1,086 | ||
Loyalty deferred revenue as of December 31, 2018 | $ | 4,231 |
Loyalty deferred revenue as of January 1, 2019 | $ | 4,231 | |
Loyalty points forfeited or expired | (1,585 | ) | |
Loyalty points used | (2,329 | ) | |
Loyalty points vested | 1,906 | ||
Loyalty points unvested | 1,185 | ||
Loyalty deferred revenue as of March 31, 2019 | $ | 3,408 |
• | Retail Customer Product Return Policy. This policy allows a retail customer to return any of our products to the original associate who sold the product and receive a full cash refund from the associate for the first 180 days following the product’s purchase if located in the United States and Canada, and for the first 90 days following the product’s purchase in other countries where we sell our products. The associate may then return or exchange the product based on the associate product return policy. |
• | Associate and Preferred Customer Product Return Policy. This policy allows the associate or preferred customer to return an order within one year of the purchase date upon terminating his/her account. If an associate or preferred customer returns a product unopened and in good condition, he/she may receive a full refund minus a 10% restocking fee. We may also allow the associate or preferred customer to receive a full satisfaction guarantee refund if they have tried the product and are not satisfied for any reason, excluding promotional materials. This satisfaction guarantee refund applies in the United States and Canada, only for the first 180 days following the product’s purchase, and applies |
Three months ended March 31, 2019 | As of March 31, 2019 | |||||||||||
Country (foreign currency name) | Low | High | Average | Spot | ||||||||
Australia (Australian Dollar) | 0.69730 | 0.72704 | 0.71257 | 0.70981 | ||||||||
Canada (Canadian Dollar) | 0.73332 | 0.76364 | 0.75211 | 0.74923 | ||||||||
China (Renminbi) | 0.14542 | 0.14961 | 0.14819 | 0.14901 | ||||||||
Colombia (Peso) | 0.00031 | 0.00032 | 0.00032 | 0.00031 | ||||||||
Czech Republic (Koruna) | 0.04350 | 0.04504 | 0.04427 | 0.04352 | ||||||||
Denmark (Kroner) | 0.15030 | 0.15446 | 0.15222 | 0.15030 | ||||||||
Hong Kong (Hong Kong Dollar) | 0.12739 | 0.12770 | 0.12746 | 0.12740 | ||||||||
Japan (Yen) | 0.00894 | 0.00930 | 0.00908 | 0.00902 | ||||||||
Mexico (Peso) | 0.05090 | 0.05312 | 0.05208 | 0.05150 | ||||||||
New Zealand (New Zealand Dollar) | 0.66564 | 0.69141 | 0.68156 | 0.68089 | ||||||||
Norway (Krone) | 0.11397 | 0.11881 | 0.11662 | 0.11599 | ||||||||
Republic of Korea (Won) | 0.00088 | 0.00090 | 0.00089 | 0.00088 | ||||||||
Singapore (Singapore Dollar) | 0.73253 | 0.74303 | 0.73815 | 0.73768 | ||||||||
South Africa (Rand) | 0.06836 | 0.07520 | 0.07144 | 0.06912 | ||||||||
Sweden (Krona) | 0.10580 | 0.11329 | 0.10918 | 0.10761 | ||||||||
Switzerland (Franc) | 0.99079 | 1.02267 | 1.00371 | 1.00493 | ||||||||
Taiwan (New Taiwan Dollar) | 0.03235 | 0.03272 | 0.03245 | 0.03242 | ||||||||
United Kingdom (British Pound) | 1.25861 | 1.32997 | 1.30219 | 1.30423 | ||||||||
Various countries (1) (Euro) | 1.12189 | 1.15307 | 1.13604 | 1.12190 |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced programs(a) | Dollar value of shares that may yet be purchased (b) (in thousands) | ||||||||||
January 1, 2019 - January 31, 2019 | — | $ | — | — | $ | 18,902 | ||||||||
February 1, 2019 - February 28, 2019 | — | $ | — | — | $ | 18,902 | ||||||||
March 1, 2019 - March 31, 2019 | 498 | $ | 18.00 | 498 | $ | 18,893 | ||||||||
Total | 498 | 498 |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Exhibit (s) | Filing Date | |||||
Amended and Restated Articles of Incorporation of Mannatech, dated May 19, 1998. | S-1 | 333-63133 | 3.1 | October 28, 1998 | ||||||
Certificate of Amendment to the Amended and Restated Articles of Incorporation of Mannatech, dated January 13, 2012. | 8-K | 000-24657 | 3.1 | January 17, 2012 | ||||||
Fifth Amended and Restated Bylaws of Mannatech, dated August 25, 2014. | 8-K | 000-24657 | 3.1 | August 27, 2014 | ||||||
Specimen Certificate representing Mannatech’s common stock, par value $0.0001 per share. | S-1 | 333-63133 | 4.1 | October 28, 1998 | ||||||
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 | * | * | * | * |
* | Filed herewith. |
MANNATECH, INCORPORATED | ||
Dated: May 6, 2019 | By: | /s/ Alfredo Bala |
Alfredo Bala | ||
Chief Executive Officer | ||
(principal executive officer) |
Dated: May 6, 2019 | By: | /s/ David A. Johnson |
David A. Johnson | ||
Chief Financial Officer | ||
(principal financial officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Mannatech, Incorporated; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Alfredo Bala |
Alfredo Bala |
Chief Executive Officer |
(principal executive officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Mannatech, Incorporated; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ David A. Johnson |
David A. Johnson |
Chief Financial Officer |
(principal financial officer) |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Alfredo Bala |
Alfredo Bala |
Chief Executive Officer |
(principal executive officer) |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ David A. Johnson |
David A. Johnson |
Chief Financial Officer |
(principal financial officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 30, 2019 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | MANNATECH INC | |
Entity Central Index Key | 0001056358 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 2,395,219 |
CONSOLIDATED BALANCE SHEETS - (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
ASSETS | ||
Accounts receivable, allowance for doubtful accounts | $ 767 | $ 770 |
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 99,000,000 | 99,000,000 |
Common stock, shares issued (in shares) | 2,742,857 | 2,742,857 |
Common stock, shares outstanding (in shares) | 2,395,219 | 2,381,149 |
Treasury stock, shares (in shares) | 347,638 | 361,708 |
CONSOLIDATED STATEMENTS OF OPERATIONS - (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Statement [Abstract] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 37,973 | $ 41,383 |
Cost of sales | 7,427 | 8,249 |
Gross profit | 30,546 | 33,134 |
Operating expenses: | ||
Commissions and incentives | 15,199 | 16,985 |
Selling and administrative expenses | 7,576 | 7,980 |
Depreciation and amortization expense | 528 | 511 |
Other operating costs | 6,123 | 8,546 |
Total operating expenses | 29,426 | 34,022 |
Income (loss) from operations | 1,120 | (888) |
Interest income (expense), net | (95) | 29 |
Other income (expense), net | 4 | 288 |
Income (loss) before income taxes | 1,029 | (571) |
Income tax (provision) benefit | (341) | 307 |
Net income (loss) | $ 688 | $ (264) |
Earnings (loss) per common share: | ||
Basic (in dollars per share) | $ 0.29 | $ (0.10) |
Diluted (in dollars per share) | $ 0.28 | $ (0.10) |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 2,396 | 2,719 |
Diluted (in shares) | 2,462 | 2,719 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 688 | $ (264) |
Foreign currency translations | (441) | 334 |
Comprehensive income | $ 247 | $ 70 |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Mannatech, Incorporated (together with its subsidiaries, the “Company”), located in Flower Mound, Texas, was incorporated in the state of Texas on November 4, 1993 and is listed on the Nasdaq Global Select Market under the symbol “MTEX”. The Company develops, markets, and sells high-quality, proprietary nutritional supplements, topical and skin care and anti-aging products, and weight-management products. We currently sell our products into three regions: (i) the Americas (the United States, Canada, Colombia and Mexico); (ii) EMEA (Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, Namibia, the Netherlands, Norway, South Africa, Spain, Sweden and the United Kingdom); and (iii) Asia/Pacific (Australia, Japan, New Zealand, the Republic of Korea, Singapore, Taiwan, Hong Kong, and China). Active business building associates ("independent associates" or "associates") and preferred customers purchase the Company’s products at published wholesale prices. The Company cannot distinguish products sold for personal use from other sales, when sold to associates, because it is not involved with the products after delivery, other than usual and customary product warranties and returns. Only associates are eligible to earn commissions and incentives. The Company operates a non-direct selling business in mainland China. Our subsidiary in China, Meitai Daily Necessity & Health Products Co., Ltd. (“Meitai”), is operating as a traditional retailer under a cross-border e-commerce model in China. Meitai cannot legally conduct a direct selling business in China unless it acquires a direct selling license in China. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the Company’s consolidated financial statements and footnotes contained herein do not include all of the information and footnotes required by GAAP to be considered “complete financial statements”. However, in the opinion of the Company’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’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, 2018 consolidated balance sheet was included in the audited consolidated financial statements in the Company’s annual report on Form 10-K for the year ended December 31, 2018 and filed with the United States Securities and Exchange Commission (the “SEC”) on March 11, 2019 (the “2018 Annual Report”), 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 2018 Annual Report. Principles of Consolidation 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. Use of Estimates The preparation of the Company’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’s estimates and the Company does not currently anticipate a significant change in its assumptions related to these estimates. However, actual results may differ from these estimates under different assumptions or conditions. The use of estimates is pervasive throughout the consolidated financial statements, but the accounting policies and estimates considered the most significant are described in this note to the consolidated financial statements, Organization and Summary of Significant Accounting Policies. Cash, Cash Equivalents, and Restricted Cash 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 received within 24 to 72 hours. As of March 31, 2019, and December 31, 2018, credit card receivables were $2.8 million and $1.6 million, respectively. As of March 31, 2019, and December 31, 2018, cash and cash equivalents held in bank accounts in foreign countries totaled $15.3 million and $19.9 million, respectively. The Company invests cash in liquid instruments, such as money market funds and interest-bearing deposits. The Company also holds cash in high quality financial institutions and does not believe it has an excessive exposure to credit concentration risk. A significant portion of our cash and cash equivalent balances were concentrated within the Republic of Korea, with total net assets within this foreign location totaling $15.5 million and $14.4 million at March 31, 2019 and December 31, 2018, respectively. In addition, for the three months ended March 31, 2019 and 2018, a concentrated portion of our operating cash flows were earned from operations within the Republic of Korea. An adverse change in economic conditions within the Republic of Korea could negatively affect the Company’s results of operations. 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 the United States and Canada; and (iii) the Australia building lease collateral. As of March 31, 2019, and December 31, 2018, our total restricted cash was $9.5 million and $8.7 million, respectively. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's consolidated balance sheets to the total amount presented in the consolidated statement of cash flows (in thousands):
Accounts Receivable 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 March 31, 2019, and December 31, 2018, receivables consisted primarily of amounts due from preferred customers and associates. At each of March 31, 2019 and December 31, 2018, the Company's accounts receivable balance (net of allowance) was $0.1 million. 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. As of March 31, 2019, and December 31, 2018, the Company held an allowance for doubtful accounts of $0.8 million and $0.8 million, respectively. Inventories Inventories consist of raw materials, finished goods, and promotional materials that are stated at the lower of cost (using standard costs that approximate average costs) or net realizable value. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off. Other Assets As of March 31, 2019, and December 31, 2018, other assets were $8.6 million and $3.9 million, respectively. These amounts primarily consisted of deposits for building leases in various locations of $1.9 million and $2.0 million as of March 31, 2019 and December 31, 2018, respectively. Additionally, included in the March 31, 2019 and December 31, 2018 balances were $1.6 million and $1.7 million, respectively, representing a deposit with Mutual Aid Cooperative and Consumer in the Republic of Korea, an organization established by the Republic of Korea’s Fair Trade Commission to protect consumers who participate in network marketing activities. Also included in each of the March 31, 2019 and December 31, 2018 balances was $0.2 million of indefinite lived intangible assets relating to the Manapol® powder trademark. The March 31, 2019 balance also includes $4.8 million of operating lease right-of-use assets. See Note 8, Leases for more information. Notes Payable Notes payable were $1.7 million and $1.6 million as of March 31, 2019 and December 31, 2018, respectively, as a result of funding from a capital financing agreement related to our investment in leasehold improvements, computer hardware and software and other financing arrangements. At March 31, 2019, the current portion was $1.0 million. At December 31, 2018, the current portion was $0.7 million. Other Long-Term Liabilities Other long-term liabilities were $5.6 million and $2.3 million as of March 31, 2019 and December 31, 2018, respectively. As of March 31, 2019 and December 31, 2018, the Company recorded $0.2 million in other long-term liabilities related to uncertain income tax positions (see Note 7, Income Taxes, of the Company’s annual report on Form 10-K for the year ended December 31, 2018, filed March 11, 2019). Certain operating leases for the Company’s regional office facilities contain a restoration clause that requires the Company to restore the premises to its original condition. As of March 31, 2019 and December 31, 2018, accrued restoration costs related to these leases amounted to $0.4 million and $0.4 million, respectively. At March 31, 2019 and December 31, 2018, the Company also recorded a long-term liability for estimated defined benefit obligation related to a non-U.S. defined benefit plan for its Japan operations of $0.3 million and $0.4 million, respectively (see Note 9, Employee Benefit Plans, of the Company’s 10-K, filed March 11, 2019). As of March 31, 2019, the Company recorded $1.3 million in other long-term liabilities for lease incentives related to the corporate headquarters operating lease. The March 31, 2019 balance also includes $3.3 million of long-term operating lease right-of-use obligations. See Note 8, Leases for more information. Revenue Recognition The Company’s revenue is derived from sales of individual products and associate fees or, in certain geographic markets, starter and renewal packs. Substantially all of the Company’s product sales are made at published wholesale prices to associates and preferred customers. The Company records revenue net of any sales taxes and records a reserve for expected sales returns based on its historical experience. The Company recognizes revenue from shipped products when control of the product transfers to the customer, thus the performance obligation is satisfied. Corporate-sponsored event revenue is recognized when the event is held. Revenues from associate fees relate to providing associates with the right to earn commissions, benefits and incentives for an annual period. Revenue from software tools included in the first contractual year is recognized over three months and revenue from associate fees is recognized over 12 months (see Contracts with Multiple Performance Obligations for recognition guidelines). Almost all orders are paid via credit card. See Note 10, Segment Information, for disaggregation of revenues by geographic segment and type. The Company collected associate fees within the United States, Canada, South Africa, Japan, Australia, New Zealand, Singapore, Hong Kong, Taiwan, Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, the Netherlands, Norway, Spain, Sweden and the United Kingdom. Prior to the change, associates purchased packs that were bundles of products within these respective geographic markets. Deferred Commissions The Company defers commissions on (i) the sales of products shipped but not received by customers by the end of the respective period and (ii) the loyalty program. Deferred commissions are incremental costs and are amortized to expense consistent with how the related revenue is recognized. Deferred commissions were $2.4 million for the year ended December 31, 2018. Of this balance, $1.2 million was amortized to commissions expense for the three months ended March 31, 2019. At March 31, 2019, deferred commissions were $2.4 million. Deferred Revenue The Company defers certain components of its revenue. Deferred revenue consisted of: (i) sales of products shipped but not received by customers by the end of the respective period; (ii) revenue from the loyalty program; (iii) prepaid registration fees from customers planning to attend a future corporate-sponsored event; and (iv) prepaid annual associate fees. At December 31, 2018, the Company’s deferred revenue was $5.3 million. Of this balance, $4.6 million was recognized as revenue for the three months ended March 31, 2019. At March 31, 2019, the Company’s deferred revenue was $5.4 million. Mannatech’s customer loyalty program conveys a material right to the customer as it provides the promise to redeem loyalty points for the purchase of products, which is based on earning points through placing consecutive qualified automatic orders. The timing and recognition of loyalty points has not changed with the adoption of Accounting Standard Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"). The Company factors in breakage rates, which is the percentage of the loyalty points that are expected to be forfeited or expire, for purposes of revenue recognition. Breakage rates are estimated based on historical data and can be reasonably and objectively determined. There have not been significant changes for the breakage estimate as a result of adopting ASC 606. The deferred revenue associated with the loyalty program at March 31, 2019 and December 31, 2018 was $3.4 million and $4.2 million, respectively.
Sales Refund and Allowances The Company utilizes the expected value method, as set forth by ASC 606, to estimate the sales returns and allowance liability by taking the weighted average of the sales return rates over a rolling six-month period. The Company allocates the total amount recorded within the sales return and allowance liability as a reduction of the overall transaction price for the Company’s product sales. The Company deems the sales refund and allowance liability to be a variable consideration. The method for estimating the sales returns and allowance liability has remained consistent as a result of adopting ASC 606. Historically, sales returns have not materially changed through the years, as the majority of our customers who return their merchandise do so within the first 90 days after the original sale. Sales returns have historically averaged 1.5% or less of our gross sales. For the three months ended March 31, 2019 our sales return reserve consisted of the following (in thousands):
Contracts with Multiple Performance Obligations Orders placed by associates or preferred customers constitute our contracts. Product sales placed in the form of an automatic order contain two performance obligations - a) the sale of the product and b) the loyalty program. For these contracts, the Company accounts for each of these obligations separately as they are each distinct. The transaction price is allocated between the product sale and the loyalty program on a relative standalone selling price basis. Sales placed through a one-time order contain only the first performance obligation noted above - the sale of the product. The Company provides associates with access to a complimentary three-month package for the Success TrackerTM and Mannatech+ online business tools with the first payment of an associate fee. The first payment of an associate fee contains three performance obligations - a) the associate fee, whereby the Company provides an associate with the right to earn commissions, bonuses and incentives for a year, b) three months of complimentary access to utilize the Success Tracker™ online tool and c) three months of complimentary access to utilize the Mannatech+ online business tool. The transaction price is allocated between the three performance obligations on a relative standalone selling price basis. Associates do not have complimentary access to online business tools after the first contractual period. With regards to both of the aforementioned contracts, the Company determines the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of the contracts. Shipping and Handling Costs The Company records inbound freight as a component of inventory and cost of sales. The Company records freight and shipping fees collected from its customers as fulfillment costs. In accordance with ASC 606-10-25-18a, freight and shipping fees are not deemed to be separate performance obligations as these activities occur before the customer receives the product. Commissions and Incentives Associates earn commissions and incentives based on their direct and indirect commissionable net sales over each month of the fiscal year. The Company accrues commissions and incentives when earned by associates and pays commissions on product and pack sales on a monthly basis. Comprehensive Income and Accumulated Other Comprehensive Income Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The Company’s comprehensive income consists of the Company’s net income, foreign currency translation adjustments from its Japan, Republic of Korea, Taiwan, Denmark, Norway, Sweden, Colombia, Mexico and China operations, remeasurement of intercompany balances classified as equity in its Korea, Mexico and Cyprus operations, and changes in the pension obligation for its Japanese employees. Recently Adopted Accounting Pronouncements The Company adopted ASU 2016-02, Leases (Topic 842) ("ASU 2016-02") as of January 1, 2019 and applied it on a modified retrospective basis approach and elected to not adjust periods prior to January 1, 2019. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the carry forward of the historical lease classification. This new standard requires companies to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The adoption increased assets, net of incentive, by $4.8 million and liabilities by $6.5 million on our consolidated balance sheets and did not have a significant impact on our consolidated statement of operations and statements of cash flows. These leases primarily relate to office buildings and office equipment. See Note 8, Leases for more information. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220), which amended its standard on comprehensive income to provide an option for an entity to reclassify the stranded tax effects of the Tax Cuts and Jobs Act (the "TCJA") that was passed in December of 2017 from accumulated other comprehensive income (AOCI) directly to retained earnings. The stranded tax effects result from the remeasurement of deferred tax assets and liabilities which were originally recorded in comprehensive income but whose remeasurement is reflected in the income statement. This is a one-time amendment applicable only to the changes resulting from the TCJA. The standard became effective for the Company on January 1, 2019, and may be reflected retroactively to any period in which the impacts of the TCJA are recognized. The standard permits early adoption for any financial statements that have not been released as of the date of the revised standard. The overall financial impact of adopting this standard is unknown at this time. Other recently issued accounting pronouncements did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
INVENTORIES |
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INVENTORIES | INVENTORIES Inventories consist of raw materials, finished goods, and promotional materials. The Company provides an allowance for any slow-moving or obsolete inventories. Inventories as of March 31, 2019 and December 31, 2018, consisted of the following (in thousands):
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INCOME TAXES |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES For the three months ended March 31, 2019 and 2018, the Company’s effective tax rate was 33.2% and 53.7%, respectively. For the three months ended March 31, 2019 and 2018, the Company’s effective tax rate was determined based on the estimated annual effective income tax rate. The effective tax rate for the three months ended March 31, 2019 was different from the federal statutory rate due primarily to the mix of earnings across jurisdictions and the associated valuation allowance recorded on losses in certain jurisdictions. The effective tax rate for the three months ended March 31, 2018 generated a tax benefit due to loss before income tax. Items increasing the effective tax rate were due primarily to a mix of earnings across jurisdictions and the associated valuation allowance recorded on foreign losses in certain jurisdictions and the impact of global intangible low-tax income ("GILTI") as a result of TCJA. |
EARNINGS (LOSS) PER SHARE |
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Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE The Company calculates basic Earnings per Share ("EPS") by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted EPS also reflects the potential dilution that could occur if common stock were issued for awards outstanding under the Mannatech, Incorporated 2017 Stock Incentive Plan (as defined below). In determining the potential dilutive effect of outstanding stock options for each of the three months ended March 31, 2019, and 2018, the Company used the quarterly average common stock close price of $18.97 and $14.68 per share, respectively. For the three months ended March 31, 2019, approximately 0.1 million shares of the Company's common stock subject to options were excluded from the diluted EPS calculation, as the effect would have been antidilutive. |
STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company currently has one active stock-based compensation plan, the Mannatech, Incorporated 2017 Stock Incentive Plan (the "2017 Plan"), which was adopted by the Company’s Board of Directors (the "Board") on April 17, 2017 and was approved by its shareholders on June 8, 2017. The 2017 Plan supersedes the Mannatech, Incorporated 2008 Stock Incentive Plan (the "2008 Plan"), as amended, which was set to expire on February 20, 2018. The Board has reserved a maximum of 250,000 shares of our common stock that may be issued under the 2017 Plan, consisting of 181,674 newly reserved shares and 68,326 shares that remained available for issuance under the 2008 Plan (subject to adjustments for stock splits, stock dividends or other changes in corporate capitalization). As of March 31, 2019, the Company had a total of 42,434 shares available for grant under the 2017 Plan, which expires on April 16, 2027. The 2017 Plan provides for grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock and performance stock units to our employees, board members, and consultants. However, only employees of the Company and its corporate subsidiaries are eligible to receive incentive stock options. The exercise price per share for all stock options will be no less than the market value of a share of common stock on the date of grant. Any incentive stock option granted to an employee owning more than 10% of our common stock will have an exercise price of no less than 110% of our common stock’s market value on the grant date. The majority of stock options vest over two or three years, and generally are granted with a term of ten years, or five years in the case of an incentive option granted to an employee who owns more than 10% of our common stock. The Company records stock-based compensation expense related to granting stock options in selling and administrative expenses. During the three months ended March 31, 2019 and 2018, the Company granted no stock options. The Company recognized compensation expense as follows for the three months ended March 31 (in thousands):
As of March 31, 2019, the Company expects to record compensation expense in the future as follows (in thousands):
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SHAREHOLDERS' EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY Treasury Stock On May 18, 2018, the Company commenced a modified Dutch auction cash tender offer to purchase up to $16.0 million of its outstanding common stock, par value $0.0001 per share, at a per share price not greater than $21.00 nor less than $18.50, to each seller in cash, less any applicable withholding taxes and without interest (the "tender offer"). The tender offer expired on June 15, 2018. As a result of the tender offer, the Company accepted for purchase a total of 316,659 shares of its common stock that were properly tendered and not properly withdrawn at the price of $21.00 per share, for an aggregate purchase price of $6.6 million, which was funded from cash on hand. During the three months ended March 31, 2019, the Company purchased 498 additional shares of its common stock outstanding. As of March 31, 2019, the Company had 2,395,219 shares of common stock outstanding. Accumulated Other Comprehensive Income Accumulated other comprehensive income, displayed in the Consolidated Statement of Shareholders’ Equity, represents net income plus the results of certain shareholders’ equity changes not reflected in the Consolidated Statements of Operations, such as foreign currency translation and certain pension and post-retirement benefit obligations. The after-tax components of accumulated other comprehensive income, are as follows (in thousands):
(1)No material amounts reclassified from accumulated other comprehensive income. Dividends On March 12, 2019, the Board declared a dividend of $0.125 per share that was paid on March 29, 2019 to shareholders of record on March 22, 2019, for an aggregate amount of $300 thousand. |
LITIGATION |
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Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
LITIGATION | LITIGATION Administrative Proceeding Mannatech Korea, Ltd. v. Busan Custom Office, Busan District Court, Korea On or before April 12, 2015, Mannatech Korea, Ltd. filed a suit against the Busan Custom Office (“BCO”) to challenge BCO’s method of calculation regarding its assessment notice issued on July 11, 2013. The assessment notice included an audit of the Company’s imported goods covering fiscal years 2008 through 2012 and required the Company to pay $1.0 million for this assessment, all of which was paid in January 2014. Both parties submitted a response to the Court’s inquiry on January 15, 2016. The final hearing for the case was held on May 26, 2016 where each party presented their respective arguments. The Court set the decision hearing on October 27, 2016, and the Court decided the case in the Company’s favor. However, on November 18, 2016, BCO filed an appeal to the Busan High Court. The first hearing occurred on March 31, 2017, and the second hearing occurred on April 21, 2017. The final hearing was held on June 2, 2017. The Court issued its decision on June 30, 2017 in favor of the BCO. The Company appealed this decision on August 24, 2017. The Company anticipates a final decision on the appeal during the second half of 2019. This matter remains open. Insured Litigation - Product Liability Ruiguo Ma v. MTEX Hong Kong Limited and Beili Guan, Case No. 2019-Jin-0116-Civil-2339, Binhai New District Court, Tianjin, China On March 29, 2019, the Company was informed by one of its independent distributors, Beili Guan, of a potential lawsuit in China. The Company has not been served but confirmed the above-captioned lawsuit with the court. Ruiguo Ma (the “Plaintiff”) is alleging that his child suffered tooth decay after consuming Mannatech’s MannaBears product and underwent several surgeries. The Plaintiff is seeking damages of approximately $50,000 USD. The Company tendered this matter to its insurance carrier. It is not possible at this time to predict whether the Company will incur any liability, or to estimate the ranges of damages, if any, which may be incurred in connection with this matter. However, the Company believes it has a valid defense and will vigorously defend this claim. This matter remains open. Litigation in General The Company has incurred several claims in the normal course of business. The Company believes such claims can be resolved without any material adverse effect on our consolidated financial position, results of operations, or cash flows. The Company maintains certain liability insurance; however, certain costs of defending lawsuits are not covered by or only partially covered by its insurance policies, including claims that are below insurance deductibles. Additionally, insurance carriers could refuse to cover certain claims, in whole or in part. The Company accrues costs to defend itself from litigation as they are incurred. The outcome of litigation is uncertain, and despite management’s views of the merits of any litigation, or the reasonableness of the Company’s estimates and reserves, the Company’s financial statements could nonetheless be materially affected by an adverse judgment. The Company believes it has adequately reserved for the contingencies arising from current legal matters where an outcome was deemed to be probable, and the loss amount could be reasonably estimated. |
FAIR VALUE |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | FAIR VALUE The Company utilizes fair value measurements to record fair value adjustments to certain financial assets and to determine fair value disclosures. Fair Value Measurements and Disclosure (Topic 820) of the FASB establishes a fair value hierarchy that requires the use of observable market data, when available, and prioritizes the inputs to valuation techniques used to measure fair value in the following categories:
The primary objective of the Company’s investment activities is to preserve principal while maximizing yields without significantly increasing risk. The investment instruments held by the Company are money market funds and interest-bearing deposits for which quoted market prices are readily available. The Company considers these highly liquid investments to be cash equivalents. These investments are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company does not have any material financial liabilities that were required to be measured at fair value on a recurring basis at March 31, 2019. The table below presents the recorded amount of financial assets measured at fair value (in thousands) on a recurring basis as of March 31, 2019 and December 31, 2018.
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SEGMENT INFORMATION |
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SEGMENT INFORMATION | SEGMENT INFORMATION The Company's sole reporting segment is one where we sell proprietary nutritional supplements, skin care and anti-aging products, and weight-management and fitness products through network marketing distribution channels operating in twenty-five countries. Each of the business units sells similar packs (with the exception of the United States, Canada, South Africa, Japan, Australia, New Zealand, Singapore, Hong Kong, Taiwan, Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, the Netherlands, Norway, Sweden and the United Kingdom, where packs have been replaced with associate fees, see Note 1, Organization and Summary of Significant Accounting Policies) and products and possesses similar economic characteristics, such as selling prices and gross margins. In each country, the Company markets its products and pays commissions and incentives in similar market environments. The Company’s management reviews its financial information by country and focuses its internal reporting and analysis of revenues by pack sales and associate fees and product sales. The Company sells its products through its independent associates who occupy positions in our network and distribute products through similar distribution channels in each country. No single independent associate has ever accounted for more than 10% of the Company’s consolidated net sales. The Company also operates a non-direct selling business in mainland China. Our subsidiary in China, Meitai, is operating as a traditional retailer under a cross-border e-commerce model. Meitai cannot legally conduct a direct selling business in China unless it acquires a direct selling license in China. The Company operates facilities in fourteen countries and sells product in twenty-six countries around the world. These facilities are located in the United States, Canada, Switzerland, Australia, the United Kingdom, Japan, the Republic of Korea (South Korea), Taiwan, South Africa, Mexico, Hong Kong, Singapore, Colombia and China. Each facility services different geographic areas. We currently sell our products in three regions: (i) the Americas (the United States, Canada, Colombia and Mexico); (ii) EMEA (Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, Namibia, the Netherlands, Norway, South Africa, Spain, Sweden and the United Kingdom); and (iii) Asia/Pacific (Australia, Japan, New Zealand, the Republic of Korea, Singapore, Taiwan, Hong Kong and China). Consolidated net sales shipped to customers in these regions, along with pack or associate fee and product information for the three months ended March 31, were as follows (in millions, except percentages):
Long-lived assets, which include property and equipment and construction in process for the Company and its subsidiaries, as of March 31, 2019 and December 31, 2018, reside in the following regions, as follows (in millions):
Inventory balances, which consist of raw materials, finished goods, and promotional materials, as offset by the allowance for slow moving or obsolete inventories, reside in the following regions (in millions):
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Leases (Notes) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases of Lessee Disclosure [Text Block] | LEASES Adoption of ASC Topic 842, Leases On January 1, 2019, Mannatech adopted ASC Topic 842, Leases, ("ASC Topic 842") using the modified retrospective approach, which was applied to historical leases that were still effective as of January 1, 2019. Results for reporting periods beginning January 1, 2019, are presented in accordance with ASC Topic 842, while prior period amounts are reported in accordance with historical accounting treatment under ASC Topic 840, Leases, ("ASC Topic 840"). In accordance with the adoption of ASC Topic 842, the Company now records a net operating lease right-of-use ("ROU") asset and operating lease liability on the Consolidated Balance Sheets for all operating leases with a contract term in excess of 12 months or a net present value more than corporate capitalization thresholds. Prior to the adoption of ASC Topic 842, these same leases were treated as operating leases under ASC Topic 840 and therefore were not recorded on the December 31, 2018 Consolidated Balance Sheets. There was no impact to retained earnings and no significant impact on the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows as a result of adopting ASC Topic 842. Lease Recognition The Company has entered into contractual lease arrangements to rent office space and other office equipment from third-party lessors. ROU assets represent Mannatech’s right to use an underlying asset for the lease term, and lease liabilities represent Mannatech’s obligation to make future lease payments arising from the lease. Operating lease ROU assets and liabilities are recorded at commencement date based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these short-term leases on a straight-line basis over the lease term. Mannatech accounts for lease components, such as office space, separately from the non-lease components, such as maintenance service fees, based on estimated costs from the vendor. Mannatech uses the implicit interest rate when readily determinable. However, most of Mannatech's lease agreements do not provide an implicit interest rate. As such, Mannatech uses its incremental borrowing rate based on the information available at commencement date of the contract in determining the present value of future lease payments. The incremental borrowing rate is calculated using a risk-free interest rate adjusted for Mannatech's risk. The operating lease ROU asset also includes any lease incentives received in the recognition of the present value of future lease payments. Certain of Mannatech's leases may also include escalation clauses or options to extend or terminate the lease. These options are included in the present value recorded for the leases when it is reasonably certain that Mannatech will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Mannatech determines if an arrangement is a lease at inception of the contract and records the resulting operating lease asset on the Consolidated Balance Sheets as a component of "Prepaid expenses and other current assets", for the current portion, or "Other assets", for the long-term portion with offsetting liabilities recorded as a component of "Accrued expenses" and "Other long-term liabilities". Mannatech recognizes a lease in the financial statements when the arrangement either explicitly or implicitly involves property, plant, or equipment ("PP&E"), the contract terms are dependent on the use of the PP&E, and Mannatech has the ability or right to operate the PP&E or to direct others to operate the PP&E and receive greater than 10% of the economic benefits of the assets. As of March 31, 2019, Mannatech has eight financing leases. Lease costs represent the straight-line lease expense of ROU assets and short-term leases. As of March 31, 2019, our leased assets and liabilities consisted of the following (in thousands):
We incurred the following lease costs related to our operating and finance leases (in thousands):
For the three months ended March 31, 2019, cash paid amounts included in the measurement of lease liabilities included (in thousands):
As of March 31, 2019, future minimum lease payments on operating and financing leases were as follows (in thousands):
Lease term and discount rates related to the Company's leases are as follows:
(1) Prior periods are not presented as prior period amounts have not been adjusted under the modified retrospective method for the new lease recognition rule. |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation 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. |
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Use of Estimates | Use of Estimates The preparation of the Company’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’s estimates and the Company does not currently anticipate a significant change in its assumptions related to these estimates. However, actual results may differ from these estimates under different assumptions or conditions. The use of estimates is pervasive throughout the consolidated financial statements, but the accounting policies and estimates considered the most significant are described in this note to the consolidated financial statements, Organization and Summary of Significant Accounting Policies. |
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Cash and Cash Equivalents | Cash, Cash Equivalents, and Restricted Cash 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 received within 24 to 72 hours. As of March 31, 2019, and December 31, 2018, credit card receivables were $2.8 million and $1.6 million, respectively. As of March 31, 2019, and December 31, 2018, cash and cash equivalents held in bank accounts in foreign countries totaled $15.3 million and $19.9 million, respectively. The Company invests cash in liquid instruments, such as money market funds and interest-bearing deposits. The Company also holds cash in high quality financial institutions and does not believe it has an excessive exposure to credit concentration risk. |
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Restricted Cash | 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 the United States and Canada; and (iii) the Australia building lease collateral. As of March 31, 2019, and December 31, 2018, our total restricted cash was $9.5 million and $8.7 million, respectively. |
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Accounts Receivable | Accounts Receivable 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 March 31, 2019, and December 31, 2018, receivables consisted primarily of amounts due from preferred customers and associates. At each of March 31, 2019 and December 31, 2018, the Company's accounts receivable balance (net of allowance) was $0.1 million. 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. As of March 31, 2019, and December 31, 2018, the Company held an allowance for doubtful accounts of $0.8 million and $0.8 million, respectively. |
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Inventories | Inventories Inventories consist of raw materials, finished goods, and promotional materials that are stated at the lower of cost (using standard costs that approximate average costs) or net realizable value. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off. |
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Other Assets | Other Assets As of March 31, 2019, and December 31, 2018, other assets were $8.6 million and $3.9 million, respectively. These amounts primarily consisted of deposits for building leases in various locations of $1.9 million and $2.0 million as of March 31, 2019 and December 31, 2018, respectively. Additionally, included in the March 31, 2019 and December 31, 2018 balances were $1.6 million and $1.7 million, respectively, representing a deposit with Mutual Aid Cooperative and Consumer in the Republic of Korea, an organization established by the Republic of Korea’s Fair Trade Commission to protect consumers who participate in network marketing activities. Also included in each of the March 31, 2019 and December 31, 2018 balances was $0.2 million of indefinite lived intangible assets relating to the Manapol® powder trademark. The March 31, 2019 balance also includes $4.8 million of operating lease right-of-use assets. See Note 8, Leases for more information. |
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Notes Payable | Notes Payable Notes payable were $1.7 million and $1.6 million as of March 31, 2019 and December 31, 2018, respectively, as a result of funding from a capital financing agreement related to our investment in leasehold improvements, computer hardware and software and other financing arrangements. At March 31, 2019, the current portion was $1.0 million. At December 31, 2018, the current portion was $0.7 million. |
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Other Long-Term Liabilities | Other Long-Term Liabilities Other long-term liabilities were $5.6 million and $2.3 million as of March 31, 2019 and December 31, 2018, respectively. As of March 31, 2019 and December 31, 2018, the Company recorded $0.2 million in other long-term liabilities related to uncertain income tax positions (see Note 7, Income Taxes, of the Company’s annual report on Form 10-K for the year ended December 31, 2018, filed March 11, 2019). Certain operating leases for the Company’s regional office facilities contain a restoration clause that requires the Company to restore the premises to its original condition. As of March 31, 2019 and December 31, 2018, accrued restoration costs related to these leases amounted to $0.4 million and $0.4 million, respectively. At March 31, 2019 and December 31, 2018, the Company also recorded a long-term liability for estimated defined benefit obligation related to a non-U.S. defined benefit plan for its Japan operations of $0.3 million and $0.4 million, respectively (see Note 9, Employee Benefit Plans, of the Company’s 10-K, filed March 11, 2019). As of March 31, 2019, the Company recorded $1.3 million in other long-term liabilities for lease incentives related to the corporate headquarters operating lease. The March 31, 2019 balance also includes $3.3 million of long-term operating lease right-of-use obligations. See Note 8, Leases for more information. |
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Revenue Recognition | Revenue Recognition The Company’s revenue is derived from sales of individual products and associate fees or, in certain geographic markets, starter and renewal packs. Substantially all of the Company’s product sales are made at published wholesale prices to associates and preferred customers. The Company records revenue net of any sales taxes and records a reserve for expected sales returns based on its historical experience. The Company recognizes revenue from shipped products when control of the product transfers to the customer, thus the performance obligation is satisfied. Corporate-sponsored event revenue is recognized when the event is held. Revenues from associate fees relate to providing associates with the right to earn commissions, benefits and incentives for an annual period. Revenue from software tools included in the first contractual year is recognized over three months and revenue from associate fees is recognized over 12 months (see Contracts with Multiple Performance Obligations for recognition guidelines). Almost all orders are paid via credit card. See Note 10, Segment Information, for disaggregation of revenues by geographic segment and type. The Company collected associate fees within the United States, Canada, South Africa, Japan, Australia, New Zealand, Singapore, Hong Kong, Taiwan, Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, the Netherlands, Norway, Spain, Sweden and the United Kingdom. Prior to the change, associates purchased packs that were bundles of products within these respective geographic markets. Deferred Commissions The Company defers commissions on (i) the sales of products shipped but not received by customers by the end of the respective period and (ii) the loyalty program. Deferred commissions are incremental costs and are amortized to expense consistent with how the related revenue is recognized. Deferred commissions were $2.4 million for the year ended December 31, 2018. Of this balance, $1.2 million was amortized to commissions expense for the three months ended March 31, 2019. At March 31, 2019, deferred commissions were $2.4 million. Deferred Revenue The Company defers certain components of its revenue. Deferred revenue consisted of: (i) sales of products shipped but not received by customers by the end of the respective period; (ii) revenue from the loyalty program; (iii) prepaid registration fees from customers planning to attend a future corporate-sponsored event; and (iv) prepaid annual associate fees. At December 31, 2018, the Company’s deferred revenue was $5.3 million. Of this balance, $4.6 million was recognized as revenue for the three months ended March 31, 2019. At March 31, 2019, the Company’s deferred revenue was $5.4 million. Mannatech’s customer loyalty program conveys a material right to the customer as it provides the promise to redeem loyalty points for the purchase of products, which is based on earning points through placing consecutive qualified automatic orders. The timing and recognition of loyalty points has not changed with the adoption of Accounting Standard Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"). The Company factors in breakage rates, which is the percentage of the loyalty points that are expected to be forfeited or expire, for purposes of revenue recognition. Breakage rates are estimated based on historical data and can be reasonably and objectively determined. There have not been significant changes for the breakage estimate as a result of adopting ASC 606. The deferred revenue associated with the loyalty program at March 31, 2019 and December 31, 2018 was $3.4 million and $4.2 million, respectively.
Sales Refund and Allowances The Company utilizes the expected value method, as set forth by ASC 606, to estimate the sales returns and allowance liability by taking the weighted average of the sales return rates over a rolling six-month period. The Company allocates the total amount recorded within the sales return and allowance liability as a reduction of the overall transaction price for the Company’s product sales. The Company deems the sales refund and allowance liability to be a variable consideration. The method for estimating the sales returns and allowance liability has remained consistent as a result of adopting ASC 606. Historically, sales returns have not materially changed through the years, as the majority of our customers who return their merchandise do so within the first 90 days after the original sale. Sales returns have historically averaged 1.5% or less of our gross sales. For the three months ended March 31, 2019 our sales return reserve consisted of the following (in thousands):
Contracts with Multiple Performance Obligations Orders placed by associates or preferred customers constitute our contracts. Product sales placed in the form of an automatic order contain two performance obligations - a) the sale of the product and b) the loyalty program. For these contracts, the Company accounts for each of these obligations separately as they are each distinct. The transaction price is allocated between the product sale and the loyalty program on a relative standalone selling price basis. Sales placed through a one-time order contain only the first performance obligation noted above - the sale of the product. The Company provides associates with access to a complimentary three-month package for the Success TrackerTM and Mannatech+ online business tools with the first payment of an associate fee. The first payment of an associate fee contains three performance obligations - a) the associate fee, whereby the Company provides an associate with the right to earn commissions, bonuses and incentives for a year, b) three months of complimentary access to utilize the Success Tracker™ online tool and c) three months of complimentary access to utilize the Mannatech+ online business tool. The transaction price is allocated between the three performance obligations on a relative standalone selling price basis. Associates do not have complimentary access to online business tools after the first contractual period. With regards to both of the aforementioned contracts, the Company determines the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of the contracts. Shipping and Handling Costs The Company records inbound freight as a component of inventory and cost of sales. The Company records freight and shipping fees collected from its customers as fulfillment costs. In accordance with ASC 606-10-25-18a, freight and shipping fees are not deemed to be separate performance obligations as these activities occur before the customer receives the product. |
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Commissions and Incentives | Commissions and Incentives Associates earn commissions and incentives based on their direct and indirect commissionable net sales over each month of the fiscal year. The Company accrues commissions and incentives when earned by associates and pays commissions on product and pack sales on a monthly basis. |
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Comprehensive Income and Accumulated Other Comprehensive Income | Comprehensive Income and Accumulated Other Comprehensive Income Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The Company’s comprehensive income consists of the Company’s net income, foreign currency translation adjustments from its Japan, Republic of Korea, Taiwan, Denmark, Norway, Sweden, Colombia, Mexico and China operations, remeasurement of intercompany balances classified as equity in its Korea, Mexico and Cyprus operations, and changes in the pension obligation for its Japanese employees. |
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Recently Adopted and Issued But Not Yet Effective Accounting Pronouncements | Recently Adopted Accounting Pronouncements The Company adopted ASU 2016-02, Leases (Topic 842) ("ASU 2016-02") as of January 1, 2019 and applied it on a modified retrospective basis approach and elected to not adjust periods prior to January 1, 2019. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the carry forward of the historical lease classification. This new standard requires companies to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The adoption increased assets, net of incentive, by $4.8 million and liabilities by $6.5 million on our consolidated balance sheets and did not have a significant impact on our consolidated statement of operations and statements of cash flows. These leases primarily relate to office buildings and office equipment. See Note 8, Leases for more information. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220), which amended its standard on comprehensive income to provide an option for an entity to reclassify the stranded tax effects of the Tax Cuts and Jobs Act (the "TCJA") that was passed in December of 2017 from accumulated other comprehensive income (AOCI) directly to retained earnings. The stranded tax effects result from the remeasurement of deferred tax assets and liabilities which were originally recorded in comprehensive income but whose remeasurement is reflected in the income statement. This is a one-time amendment applicable only to the changes resulting from the TCJA. The standard became effective for the Company on January 1, 2019, and may be reflected retroactively to any period in which the impacts of the TCJA are recognized. The standard permits early adoption for any financial statements that have not been released as of the date of the revised standard. The overall financial impact of adopting this standard is unknown at this time. Other recently issued accounting pronouncements did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
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Fair Value | The Company utilizes fair value measurements to record fair value adjustments to certain financial assets and to determine fair value disclosures. Fair Value Measurements and Disclosure (Topic 820) of the FASB establishes a fair value hierarchy that requires the use of observable market data, when available, and prioritizes the inputs to valuation techniques used to measure fair value in the following categories:
The primary objective of the Company’s investment activities is to preserve principal while maximizing yields without significantly increasing risk. The investment instruments held by the Company are money market funds and interest-bearing deposits for which quoted market prices are readily available. The Company considers these highly liquid investments to be cash equivalents. These investments are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of cash, cash equivalents, and restricted cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's consolidated balance sheets to the total amount presented in the consolidated statement of cash flows (in thousands):
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Loyalty deferred revenue | The deferred revenue associated with the loyalty program at March 31, 2019 and December 31, 2018 was $3.4 million and $4.2 million, respectively.
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Sales return reserve | For the three months ended March 31, 2019 our sales return reserve consisted of the following (in thousands):
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INVENTORIES (Tables) |
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Schedule of inventory | Inventories as of March 31, 2019 and December 31, 2018, consisted of the following (in thousands):
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STOCK-BASED COMPENSATION (Tables) |
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Schedule of compensation cost | The Company recognized compensation expense as follows for the three months ended March 31 (in thousands):
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Schedule of unrecognized compensation expense | As of March 31, 2019, the Company expects to record compensation expense in the future as follows (in thousands):
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SHAREHOLDERS' EQUITY (Tables) |
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Components of accumulated other comprehensive income | The after-tax components of accumulated other comprehensive income, are as follows (in thousands):
(1)No material amounts reclassified from accumulated other comprehensive income. |
FAIR VALUE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value, assets measured on recurring basis | The table below presents the recorded amount of financial assets measured at fair value (in thousands) on a recurring basis as of March 31, 2019 and December 31, 2018.
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SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net sales shipped to customers by geographic region | Consolidated net sales shipped to customers in these regions, along with pack or associate fee and product information for the three months ended March 31, were as follows (in millions, except percentages):
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Product and pack information |
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Long-lived assets, by geographic region | Long-lived assets, which include property and equipment and construction in process for the Company and its subsidiaries, as of March 31, 2019 and December 31, 2018, reside in the following regions, as follows (in millions):
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Inventory balances, by region | Inventory balances, which consist of raw materials, finished goods, and promotional materials, as offset by the allowance for slow moving or obsolete inventories, reside in the following regions (in millions):
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Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost [Table Text Block] | We incurred the following lease costs related to our operating and finance leases (in thousands):
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Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] | For the three months ended March 31, 2019, cash paid amounts included in the measurement of lease liabilities included (in thousands):
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Schedule Of Maturities Of Operating And Finance Leases Liabilities [Table Text Block] | As of March 31, 2019, future minimum lease payments on operating and financing leases were as follows (in thousands):
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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Cash And Cash Equivalents, Resticted Cash And Restricted Cash Equivalents [Roll Forward] | ||||
Cash and cash equivalents | $ 19,589 | $ 21,845 | $ 37,682 | |
Current restricted cash | 1,513 | 1,514 | 1,514 | |
Long-term restricted cash | 7,979 | 7,225 | 7,565 | |
Cash, cash equivalents and restricted cash | $ 29,081 | $ 30,584 | $ 47,049 | $ 46,761 |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loyalty Deferred Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Loyalty program | ||
Loyalty deferred revenue, beginning balance | $ 4,231 | $ 6,406 |
Loyalty points forfeited or expired | (1,585) | (4,332) |
Loyalty points used | (2,329) | (11,398) |
Loyalty points vested | 1,906 | 12,469 |
Loyalty points unvested | 1,185 | 1,086 |
Loyalty deferred revenue, ending balance | $ 3,408 | $ 4,231 |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Sales Returns (Details) - Allowance for Sales Returns - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Sales reserves, beginning balance | $ 76 | $ 117 |
Provision related to sales made in current period | 261 | 1,198 |
Adjustment related to sales made in prior periods | 21 | (10) |
Actual returns or credits related to current period | (186) | (1,125) |
Actual returns or credits related to prior periods | (94) | (104) |
Sales reserves, ending balance | $ 78 | $ 76 |
INVENTORIES (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,152 | $ 803 |
Finished goods | 12,096 | 12,542 |
Inventory reserves for obsolescence | (400) | (524) |
Total | $ 12,848 | $ 12,821 |
INCOME TAXES (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 33.20% | 53.70% |
EARNINGS (LOSS) PER SHARE (Details) - $ / shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Earnings Per Share [Abstract] | ||
Average common stock closing price (in dollars per share) | $ 18.97 | $ 14.68 |
Antidilutive securities excluded from earnings per share, amount (in shares) | 0.1 |
STOCK-BASED COMPENSATION - Recognized Compensation Expense (Details) - Stock Options - 2008 Plan - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total gross compensation expense | $ 108 | $ 36 |
Total tax benefit associated with compensation expense | 6 | 7 |
Total net compensation expense | 102 | $ 29 |
Total gross unrecognized compensation expense | ||
Six months ending December 31, 2018 | 203 | |
2019 | 125 | |
2020 | 0 | |
2021 | 0 | |
Tax benefit associated with unrecognized compensation expense | ||
Six months ending December 31, 2018 | 8 | |
2019 | 7 | |
2020 | 0 | |
2021 | 0 | |
Total net unrecognized compensation expense | ||
Six months ending December 31, 2018 | 195 | |
2019 | 118 | |
2020 | 0 | |
2021 | $ 0 |
SHAREHOLDERS' EQUITY - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 22, 2019 |
Mar. 12, 2019 |
Jun. 15, 2018 |
May 18, 2018 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Common Stock | ||||||
Repurchase of common stock | $ 6,600 | $ 16,000 | ||||
Treasury Stock, Shares, Acquired | 498 | |||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock price (in dollars per share) | $ 21.00 | |||||
Purchased shares | 316,659 | |||||
Common stock, shares outstanding (in shares) | 2,395,219 | 2,381,149 | ||||
Dividends [Abstract] | ||||||
Dividend payable per share (in dollars per share) | $ 0.125 | |||||
Dividends paid | $ 300 | |||||
Maximum | ||||||
Common Stock | ||||||
Common stock price (in dollars per share) | 21.00 | |||||
Minimum | ||||||
Common Stock | ||||||
Common stock price (in dollars per share) | $ 18.50 |
SHAREHOLDERS' EQUITY - Accumulated Other Comprehensive Income (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
March 31, 2018 | $ 25,324 |
March 31, 2019 | 25,646 |
Accumulated Other Comprehensive Income, Net | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
March 31, 2018 | 4,337 |
Current-period change | (441) |
March 31, 2019 | 3,896 |
Foreign Currency Translation | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
March 31, 2018 | 4,042 |
Current-period change | (441) |
March 31, 2019 | 3,601 |
Pension Postretirement Benefit Obligation | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
March 31, 2018 | 295 |
Current-period change | 0 |
March 31, 2019 | $ 295 |
LITIGATION (Details) $ in Millions |
1 Months Ended |
---|---|
Jan. 31, 2014
USD ($)
| |
Busan Custom Office [Member] | Pending Litigation | |
Loss Contingencies [Line Items] | |
Damages paid | $ 1.0 |
SEGMENT INFORMATION - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019
region
country
| |
Segment Reporting [Abstract] | |
Number of countries in which entity network marketing and distribution channels operates | 25 |
Number of countries in which company operates facilities | 14 |
Number of countries in which entity sells products | 26 |
Number of regions in which company sells products | region | 3 |
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