Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 31, 2013 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'MANNATECH INC | ' |
Entity Central Index Key | '0001056358 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Entity Voluntary Filers | 'No | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 2,653,913 |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-13 | ' |
CONSOLIDATED_BALANCE_SHEETS_UN
CONSOLIDATED BALANCE SHEETS - (UNAUDITED) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $19,441 | $14,377 |
Restricted cash | 1,527 | 1,515 |
Accounts receivable, net of allowance of $40 and $20 in 2013 and 2012, respectively | 402 | 324 |
Income tax receivable | 188 | 884 |
Inventories, net | 14,733 | 15,154 |
Prepaid expenses and other current assets | 3,614 | 2,487 |
Deferred commissions | 2,240 | 562 |
Deferred tax assets | 647 | 561 |
Total current assets | 42,792 | 35,864 |
Property and equipment, net | 3,614 | 4,825 |
Construction in progress | 30 | 8 |
Long-term restricted cash | 5,035 | 3,736 |
Other assets | 2,938 | 3,187 |
Long-term deferred tax assets | 633 | 502 |
Total assets | 55,042 | 48,122 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ' | ' |
Current portion of capital leases | 653 | 780 |
Accounts payable | 6,784 | 4,154 |
Accrued expenses | 7,598 | 6,348 |
Commissions and incentives payable | 9,195 | 7,935 |
Taxes payable | 1,972 | 3,901 |
Current deferred tax liability | 291 | 179 |
Deferred revenue | 5,284 | 1,486 |
Total current liabilities | 31,777 | 24,783 |
Capital leases, excluding current portion | 583 | 938 |
Long-term deferred tax liabilities | 10 | 2 |
Other long-term liabilities | 1,706 | 2,178 |
Total liabilities | 34,076 | 27,901 |
Commitments and contingencies | ' | ' |
Shareholders' equity: | ' | ' |
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding | 0 | 0 |
Common stock, $0.0001 par value, 99,000,000 shares authorized, 2,773,972 shares issued and 2,653,913 shares outstanding as of September 30, 2013 and 2,768,972 shares issued and 2,647,735 shares outstanding as of December 31, 2012 | 0 | 0 |
Additional paid-in capital | 42,556 | 42,614 |
Accumulated deficit | -6,293 | -6,920 |
Accumulated other comprehensive loss | -646 | -677 |
Less treasury stock, at cost, 120,059 and 121,237 shares in 2013 and 2012, respectively | -14,651 | -14,796 |
Total shareholders' equity | 20,966 | 20,221 |
Total liabilities and shareholders' equity | $55,042 | $48,122 |
CONSOLIDATED_BALANCE_SHEETS_UN1
CONSOLIDATED BALANCE SHEETS - (UNAUDITED) (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
ASSETS | ' | ' |
Accounts receivable, allowance for doubtful accounts | $40 | $20 |
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) | $0.00 | $0.00 |
Common stock, shares authorized (in shares) | 99,000,000 | 99,000,000 |
Common stock, shares issued (in shares) | 2,773,972 | 2,768,972 |
Common stock, shares outstanding (in shares) | 2,653,913 | 2,647,735 |
Treasury stock, shares (in shares) | 120,059 | 121,237 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS - (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONSOLIDATED STATEMENTS OF OPERATIONS - (UNAUDITED) [Abstract] | ' | ' | ' | ' |
Net sales | $44,432 | $43,049 | $130,899 | $131,162 |
Cost of sales | 9,225 | 8,698 | 25,616 | 25,824 |
Gross profit | 35,207 | 34,351 | 105,283 | 105,338 |
Operating expenses: | ' | ' | ' | ' |
Commissions and incentives | 19,640 | 18,658 | 56,362 | 56,280 |
Selling and administrative | 8,497 | 8,640 | 25,669 | 28,240 |
Depreciation and amortization | 474 | 703 | 1,699 | 4,082 |
Other operating costs | 6,167 | 5,261 | 18,919 | 19,109 |
Total operating expenses | 34,778 | 33,262 | 102,649 | 107,711 |
Income (loss) from operations | 429 | 1,089 | 2,634 | -2,373 |
Interest income (expense) | 25 | 6 | 29 | -26 |
Other income (expense), net | -275 | 455 | -1,278 | 542 |
Income (loss) before income taxes | 179 | 1,550 | 1,385 | -1,857 |
(Provision for) benefit from income taxes | -980 | 663 | -758 | 215 |
Net income (loss) | ($801) | $2,213 | $627 | ($1,642) |
Income (loss) per share: | ' | ' | ' | ' |
Basic (in dollars per share) | ($0.30) | $0.84 | $0.24 | ($0.62) |
Diluted (in dollars per share) | ($0.30) | $0.83 | $0.23 | ($0.62) |
Weighted-average common shares outstanding: | ' | ' | ' | ' |
Basic (in shares) | 2,650 | 2,648 | 2,649 | 2,648 |
Diluted (in shares) | 2,650 | 2,681 | 2,717 | 2,648 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) - (UNAUDITED) [Abstract] | ' | ' | ' | ' |
Net income (loss) | ($801) | $2,213 | $627 | ($1,642) |
Foreign currency translations | 829 | -181 | 31 | -542 |
Comprehensive income (loss) | $28 | $2,032 | $658 | ($2,184) |
CONSOLIDATED_STATEMENT_OF_SHAR
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - (UNAUDITED) (USD $) | Common Stock Par Value [Member] | Additional Paid in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Treasury Stock [Member] | Total |
In Thousands, unless otherwise specified | ||||||
Balance at Dec. 31, 2012 | $0 | $42,614 | ($6,920) | ($677) | ($14,796) | $20,221 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' |
Net income | 0 | 0 | 627 | 0 | 0 | 627 |
Charge related to stock-based compensation | 0 | 137 | 0 | 0 | 0 | 137 |
Stock options exercised | 0 | 22 | 0 | 0 | 145 | 167 |
Tax shortfall from expiration of stock options | 0 | -84 | 0 | 0 | 0 | -84 |
Tax benefit from exercise | ' | -133 | ' | ' | ' | -133 |
Foreign currency translations | 0 | 0 | 0 | 31 | 0 | 31 |
Balance at Sep. 30, 2013 | $0 | $42,556 | ($6,293) | ($646) | ($14,651) | $20,966 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income (loss) | $627 | ($1,642) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 1,699 | 4,082 |
Provision for inventory losses | 318 | 928 |
Provision for doubtful accounts | 222 | 30 |
(Loss) proceeds on disposal of assets | -1 | 63 |
Accounting charge related to stock-based compensation expense | 137 | 167 |
Deferred income taxes | -203 | -63 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -313 | -41 |
Income tax receivable | 702 | -4 |
Inventories | 151 | -1,106 |
Prepaid expenses and other current assets | -410 | 630 |
Other assets | -1,495 | -1,125 |
Accounts payable | 2,645 | 72 |
Accrued expenses and other liabilities | 947 | -3,394 |
Taxes payable | -1,933 | -1,046 |
Commissions and incentives payable | 1,364 | -1,272 |
Deferred revenue | 3,758 | 613 |
Net cash provided by (used in) operating activities | 8,215 | -3,108 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Acquisition of property and equipment | -524 | -273 |
Proceeds from sales of assets | 1 | 86 |
Change in restricted cash | -1,238 | -331 |
Net cash used in investing activities | -1,761 | -518 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from stock options exercised | 22 | 0 |
Repurchase of fractional shares from reverse stock split | 0 | -3 |
Repayment of capital lease obligations | -1,157 | -813 |
Net cash used in financing activities | -1,135 | -816 |
Effect of currency exchange rate changes on cash and cash equivalents | -255 | -834 |
Net increase (decrease) in cash and cash equivalents | 5,064 | -5,276 |
Cash and cash equivalents at the beginning of the period | 14,377 | 18,057 |
Cash and cash equivalents at the end of the period | 19,441 | 12,781 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ' | ' |
Income taxes paid, net | -2,187 | -843 |
Interest paid on capital leases | -108 | -127 |
Summary of non-cash investing and financing activities: | ' | ' |
Note receivable, net relating to sale of property and equipment | 195 | 237 |
Assets acquired through financing | $685 | ' |
ORGANIZATION_AND_SUMMARY_OF_SI
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Mannatech, Incorporated (together with its subsidiaries, the “Company”), located in Coppell, Texas, was incorporated in the state of Texas on November 4, 1993 and is listed on the NASDAQ Global Select Market (“Nasdaq”) under the symbol “MTEX”. The Company develops, markets, and sells high-quality, proprietary nutritional supplements, topical and skin care products, and weight-management products. The Company currently sells its products in three regions: (i) North America (the United States, Canada, and Mexico); (ii) Europe/the Middle East/Africa (“EMEA”) (Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, Namibia, the Netherlands, Norway, South Africa, Sweden, Ukraine, and the United Kingdom); (iii) Asia/Pacific (Australia, Hong Kong, Japan, New Zealand, the Republic of Korea, Singapore, and Taiwan). In December 2012, the Company commenced the shipment of its products to Hong Kong and officially launched Hong Kong operations in April 2013. In November 2012, the Company commenced the shipment of its products to Ukraine and officially launched Ukrainian operations in July 2013. | |||||
Independent associates (“associates”) purchase the Company’s products at published wholesale prices to either sell to retail customers or for personal use. Members purchase the Company’s products at a discount from published retail prices primarily for personal use. The Company cannot distinguish products sold for personal use from other sales 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 accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the Company’s consolidated financial statements and footnotes contained herein do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“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, 2012 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, 2012 and filed with the United States Securities and Exchange Commission (the “SEC”) on March 28, 2013 (the “2012 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 2012 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. | |||||
Reclassifications | |||||
Certain reclassifications have been made to the financial statements for prior periods to conform to the current period presentation. | |||||
Use of Estimates | |||||
The preparation of the Company’s consolidated financial statements in accordance with generally accepted accounting principles 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 and Cash Equivalents | |||||
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 of submission to the credit card processor. Credit card receivables were $3.3 million at September 30, 2013 and $1.7 million at December 31, 2012. Cash and cash equivalents held in bank accounts in foreign countries totaled $14.3 million and $10.8 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. | |||||
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 September 30, 2013 and December 31, 2012, our total restricted cash was $6.6 million and $5.3 million, respectively. | |||||
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 September 30, 2013 and December 31, 2012, receivables consisted primarily of amounts due from members and associates. The Company periodically evaluates its receivables for collectability based on historical experience, recent account activities, and the length of time receivables are past due and writes-off receivables when they become uncollectible. At each of September 30, 2013 and December 31, 2012, the Company held an allowance for doubtful accounts of less than $0.1 million. | |||||
Inventories | |||||
Inventories consist of raw materials, finished goods, and promotional materials that are stated at the lower of cost or market (using standard costs that approximate average costs). The Company periodically reviews inventories for obsolescence, and any inventories identified as obsolete are reserved or written off. | |||||
Other Assets | |||||
As of September 30, 2013 and December 31, 2012, other assets were $2.9 million and $3.2 million, respectively, and primarily consisted of deposits for building leases in various locations of $1.5 million and $1.8 million, respectively. Additionally, included in the September 30, 2013 and December 31, 2012 balances was $1.0 million, 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 the September 30, 2013 and December 31, 2012 balances was $0.2 million of indefinite lived intangible assets relating to the Manapol ® powder trademark. | |||||
Other Long-Term Liabilities | |||||
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 September 30, 2013 and December 31, 2012, accrued restoration costs related to these leases amounted to $0.2 million and $0.5 million, respectively. Also included in long-term liabilities at September 30, 2013 and December 31, 2012 was an estimated defined benefit obligation related to a non-U.S. defined benefit plan for its Japan operations of $0.7 million. | |||||
In August 2003, the Company entered into a Long-Term Post-Employment Royalty Agreement with Dr. Bill McAnalley, the Company’s former Chief Science Officer, pursuant to which the Company is required to pay Dr. McAnalley, or his heirs, royalties for ten years beginning September 2005 and continuing through August 2015. Quarterly payments related to this Long-Term Post-Employment Royalty Agreement are based on certain applicable annual global product sales by the Company in excess of $105.4 million. At the time the Company entered into this Long-Term Post-Employment Royalty Agreement, it was considered a post-employment benefit and the Company was required to measure and accrue the present value of the estimated future royalty payments related to this benefit and recognize it over the life of Dr. McAnalley’s employment agreement, which was two years. As of September 30, 2013 and December 31, 2012, the Company’s liability related to this royalty agreement was $0.1 million and $0.2 million, respectively. | |||||
Revenue Recognition and Deferred Commissions | |||||
The Company’s revenue is derived from sales of individual products, sales of its starter and renewal packs, and shipping fees. Substantially all of the Company’s product and pack sales are made to associates at published wholesale prices and to members at discounted published retail prices. 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 packs and products upon receipt by the customer. Corporate-sponsored event revenue is recognized when the event is held. The Company defers certain components of its revenue. At each of September 30, 2013 and December 31, 2012, the Company’s deferred revenue was $5.3 million and $1.5 million, respectively. During the third quarter of 2013, the Company started a loyalty program where customers earn loyalty points from qualified automatic orders, which can be applied to future purchases. The Company defers the dollar equivalent in revenue of these points until the points are applied or forfeited. The deferred revenue associated with the loyalty program at September 30, 2013 was $2.5 million. Deferred revenue consisted primarily of: (i) sales of packs and products shipped but not received by the customers by the end of the respective period; (ii) revenue from the loyalty program and (iii) prepaid registration fees from customers planning to attend a future corporate-sponsored event. In total current assets, the Company defers commissions on (i) the sales of packs and products shipped but not received by the customers by the end of the respective period and (ii) the loyalty program. Deferred commissions were $2.2 million and $0.6 million at September 30, 2013 and December 30, 2012, respectively. | |||||
We estimate a sales return reserve for expected sales refunds based on our historical experience over a rolling six-month period. If actual results differ from our estimated sales return reserve due to various factors, the amount of revenue recorded for each period could be materially affected. Historically, our 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 nine months ended September 30, 2013 our sales return reserve consisted of the following (in thousands): | |||||
September 30, | |||||
2013 | |||||
Sales reserve as of January 1, 2013 | $ | 156 | |||
Provision related to sales made in current period | 882 | ||||
Adjustment related to sales made in prior periods | 3 | ||||
Actual returns or credits related to current period | (706 | ) | |||
Actual returns or credits related to prior periods | (159 | ) | |||
Sales reserve as of September 30, 2013 | $ | 176 | |||
Shipping and Handling Costs | |||||
The Company records freight and shipping fees collected from its customers as revenue. The Company records inbound freight as a component of inventory and cost of sales. To improve the matching of costs associated with the revenue from freight and shipping fees collected, beginning December 31, 2012, freight charges associated with shipping products to our customers were reclassified to cost of sales from selling and administrative expenses with prior periods’ presentations adjusted accordingly. Total revenue from freight and shipping fees were approximately $1.9 million and $1.6 million for the three months ended September 30, 2013 and 2012, respectively, and $5.7 million and $4.6 million for the nine months ended September 30, 2013 and 2012, respectively. Total freight costs for shipping products to our customers included in cost of sales were approximately $1.7 million and $1.9 million for the three months ended September 30, 2013 and 2012, respectively, and $5.0 million and $5.6 million for the nine months ended September 30, 2013 and 2012, respectively. | |||||
Commissions and Incentives | |||||
Associates earn commissions and incentives based on their direct and indirect commissionable net sales over 13 business periods each year. Each business period equals 28 days. The Company accrues commissions and incentives when earned by associates and pays commissions on product sales three weeks following the business period end and pays commissions on its pack sales five weeks following the business period end. | |||||
In order to more closely conform to the financial presentation of our competitors, beginning December 31, 2012, commissions and incentive expenses were reclassified to operating expenses from cost of sales with prior periods’ presentations adjusted accordingly. Total commissions and incentive expenses reclassified to operating expenses were approximately $19.6 million and $18.7 million for the three months ended September 30, 2013 and 2012, respectively, and $56.4 million and $56.3 million for the nine months ended September 30, 2013 and 2012, respectively. | |||||
Comprehensive Income (loss) and Accumulated Other Comprehensive Income (loss) | |||||
Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from 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 (loss) consists of the Company’s net income (loss), foreign currency translation adjustments from its Japan, Republic of Korea, Taiwan, Singapore, Norway, Sweden, Mexico, and Ukraine operations, and changes in the pension obligation for its Japanese employees. |
INVENTORIES
INVENTORIES | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
INVENTORIES [Abstract] | ' | ||||||||
INVENTORIES | ' | ||||||||
NOTE 2: INVENTORIES | |||||||||
Inventories consist of raw materials and finished goods, which also includes promotional materials. The Company provides an allowance for any slow-moving or obsolete inventories. Inventories at September 30, 2013 and December 31, 2012, consisted of the following (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials | $ | 4,766 | $ | 6,071 | |||||
Finished goods | 11,217 | 10,702 | |||||||
Inventory reserves for obsolescence | (1,250 | ) | (1,619 | ) | |||||
Total | $ | 14,733 | $ | 15,154 |
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2013 | |
INCOME TAXES [Abstract] | ' |
INCOME TAXES | ' |
NOTE 3: INCOME TAXES | |
For the three and nine months ended September 30, 2013, the Company’s effective tax rate was 548.26% and 54.72%, respectively. For the three and nine months ended September 30, 2012, the Company’s effective income tax rate was 42.8% and 11.6%, respectively. For the three and nine months ended September 30, 2013 and 2012, the Company’s effective tax rate was determined based on the estimated annual effective tax rate. | |
The examination of our 2005-2009 tax years by the IRS for U.S. federal tax purposes was settled during the second quarter of 2013. In connection with the audit, the IRS and the Company agreed to a net tax deficiency of $0.8 million and the payment of interest accrued through June 30, 2013 of $0.2 million, without any penalties. The tax payment and related interest were made during the third quarter of 2013. In connection with the settlement of the audit, the Company reclassified amounts owed to the IRS and previously recorded as uncertain tax positions as taxes payable, resulting in a $1.0 million tax benefit through September 30, 2013. | |
Excluding the release of uncertain income tax positions in connection with the settlement of the IRS audit, the effective tax rate for the three and nine months ended September 30, 2013 would have been 1,122.52% and 128.78%. These rates are higher than what would have been expected if the federal statutory income tax rate were applied to income before taxes primarily from the unfavorable differences from foreign operations. | |
On July 11, 2013, the Company was issued an assessment notice from the Busan Custom Office in Korea in the amount of KRW 2,147,034,680 (approximately $1.9 million) resulting from an audit covering fiscal years 2008 through 2012. At September 30, 2013, we have recorded $0.9 million in taxes payable on our consolidated balance sheet related to this assessment, with $0.5 million related to customs charges being recorded as cost of sales and $0.4 million related to surtaxes on customs and VAT being recorded as other expense. An additional amount of approximately $0.7 million is recoverable VAT, which has no effect on the Company’s statement of operations. The amounts being accrued are based on our current estimate of the possible outcome of our appeal of the assessment through the administrative review processes. | |
There are other ongoing income tax audits in various international jurisdictions that are not material to our financial statements. |
EARNINGS_LOSS_PER_SHARE
EARNINGS (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 2013 | |
EARNINGS (LOSS) PER SHARE [Abstract] | ' |
EARNINGS (LOSS) PER SHARE | ' |
NOTE 4: 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 2008 Stock Incentive Plan. The Company reported a net loss and net income for the three months ended September 30, 2013 and 2012, respectively. In determining the potential dilution effect of outstanding stock options during the three months ended September 30, 2013 and 2012, the Company used the quarter’s average common stock close price of $19.48 and $6.22 per share, respectively. The Company reported net income and net loss for the nine months ended September 30, 2013 and 2012, respectively. For each of the periods, 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. In determining the potential dilution effect of outstanding stock options during the nine months ended September 30, 2013 and 2012, the Company used the nine month average common stock close price of $11.68 and $5.12 per share, respectively. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ' | ||||||||||||||||
STOCK-BASED COMPENSATION | ' | ||||||||||||||||
NOTE 5: STOCK-BASED COMPENSATION | |||||||||||||||||
The Company currently has one active stock-based compensation plan, which was approved by shareholders. The Company grants stock options to employees, consultants, and board members at the fair market value of its common stock, on the date of grant, with a term no greater than ten years. The majority of stock options vest over two or three years. Shareholders who own 10% or more of the Company’s outstanding stock are granted incentive stock options at an exercise price that may not be less than 110% of the fair market value of the Company’s common stock on the date of grant and have a term no greater than five years. | |||||||||||||||||
In February 2008, the Company’s Board of Directors approved the Mannatech, Incorporated 2008 Stock Incentive Plan, as amended (the “2008 Plan”), which reserves up to 200,000 shares for issuance of stock options and restricted stock to our employees, board members, and consultants, plus any shares reserved under the Company’s then-existing, unexpired stock plans for which options had not yet been issued, and any shares underlying outstanding options under the then-existing stock option plans that terminate without having been exercised in full. The 2008 Plan was approved by the Company’s shareholders at the 2008 Annual Shareholders’ Meeting and was amended at the 2012 Annual Shareholders’ Meeting to increase the number of shares of common stock subject to the plan by 100,000. As of September 30, 2013, the 2008 Plan had 72,371 stock options available for grant before the plan expires on February 20, 2018. | |||||||||||||||||
The Company records stock-based compensation expense related to granting stock options in selling and administrative expenses. During the three months ended September 30, 2013, the Company granted 2,500 stock options with a fair value of $11.71 to an employee. The stock options have an exercise price of $18.81 per share, vest over 3 years, and expire on August 19, 2023. During the three months ended September 30, 2012, the Company did not grant stock options. During the nine months ended September 30, 2013 and 2012, the Company granted 82,500 and 20,000 stock options, respectively. The fair value of stock options granted during the nine months ended September 30, 2013 ranged from $3.53 to $11.71 per share. The Company recognized compensation expense as follows for the three and nine months ended September 30 (in thousands): | |||||||||||||||||
Three months | Nine months | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Total gross compensation expense | $ | 41 | $ | 43 | $ | 137 | $ | 167 | |||||||||
Total tax benefit associated with compensation expense | 6 | 7 | 27 | 37 | |||||||||||||
Total net compensation expense | $ | 35 | $ | 36 | $ | 110 | $ | 130 | |||||||||
As of September 30, 2013, the Company expects to record compensation expense in the future as follows (in thousands): | |||||||||||||||||
Three months ending | Year ending December 31, | ||||||||||||||||
31-Dec-13 | 2014 | 2015 | 2016 | ||||||||||||||
Total gross unrecognized compensation expense | $ | 35 | $ | 119 | $ | 100 | $ | 21 | |||||||||
Tax benefit associated with unrecognized compensation expense | 6 | 20 | 15 | 2 | |||||||||||||
Total net unrecognized compensation expense | $ | 29 | $ | 99 | $ | 85 | $ | 19 |
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2013 | |
SHAREHOLDERS' EQUITY [Abstract] | ' |
SHAREHOLDERS' EQUITY | ' |
NOTE 6: SHAREHOLDERS’ EQUITY | |
Equity Line | |
On September 16, 2010, the Company entered into an Investment Agreement (as amended, the “Investment Agreement”) with Dutchess Opportunity Fund, II, LP, a Delaware limited partnership (the “Investor”), whereby the Company may sell up to $10 million of the Company’s common stock to the Investor over a period of 36 months from the first trading day following the effectiveness of a registration statement registering the resale of shares pursuant to the Investment Agreement (the “Equity Line”). | |
The Company may draw on the Equity Line from time to time, as and when it determines appropriate in accordance with the terms and conditions of the Investment Agreement. The Company is not permitted to draw on the Equity Line unless there is an effective registration statement to cover the resale of the shares. The Company filed a registration statement with the SEC, and on October 28, 2010, the SEC declared effective the Company’s Registration Statement on Form S-3 (File No. 333-169774), which registers up to 500,000 shares of common stock (as adjusted for a 1-for-10 reverse stock split effected January 13, 2012) that may be resold by the Investor pursuant to the Investment Agreement. | |
Investors should read the Investment Agreement together with the other information concerning the Company that the Company publicly files in reports and statements with the SEC. | |
No shares of common stock were issued pursuant to the Investment Agreement as of October 28, 2013, when the Investment Agreement expired. | |
Treasury Stock | |
The Company is authorized to repurchase the lesser of (i) 131,756 shares and (ii) $1.3 million in shares pursuant to a stock repurchase plan adopted by the Company’s Board of Directors on June 30, 2004 (as amended, the “June 2004 Plan”). On August 28, 2006, a second program permitting the Company to purchase, in the open market, up to $20 million of its outstanding shares was approved by our Board of Directors (the “August 2006 Plan”). | |
As of September 30, 2013, the maximum number of shares available for repurchase under the June 2004 Plan was 19,084, and the total number of shares purchased in the open market under the June 2004 Plan was 112,672. No shares were repurchased under the June 2004 Plan during the third quarter of 2013 and no shares have ever been purchased under the August 2006 Plan. The Company does not have any stock repurchase plans or programs other than the June 2004 Plan and the August 2006 Plan. |
LITIGATION
LITIGATION | 9 Months Ended |
Sep. 30, 2013 | |
LITIGATION [Abstract] | ' |
LITIGATION | ' |
NOTE 7: LITIGATION | |
Pending Litigation | |
Natalie Clark v. Mannatech, Incorporated, Case No. DC-13-05038, 192nd Judicial District Court, Dallas County, Texas | |
On May 10, 2013 the Company was served notice of a lawsuit filed by Ms. Natalie Clark, a former executive with the Company, in the 192nd Judicial District Court, Dallas County, Texas (the “Court”) alleging discrimination and harassment based on gender. Ms. Clark alleges that she was stripped of her duties and wrongfully discharged as part of an alleged “purge of females in key positions” within the Company. Ms. Clark is seeking damages in excess of $1,000,000. The Company has retained counsel and filed its answer denying Ms. Clark’s allegations. This case is set for jury trial on June 2, 2014. Additionally, the Court issued a standard mediation order and mediation must be conducted no later than May 2, 2014. | |
The parties are engaged in the discovery process. 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. | |
Administrative Proceedings | |
The examination of our 2005-2009 tax years by the IRS for U.S. federal tax purposes was settled during the second quarter of 2013. On May 13, 2013, the IRS and the Company concluded the audit and agreed to a net tax deficiency of $0.8 million and the payment of interest accrued through June 30, 2013 of $0.2 million, without any penalties. In connection with the settlement of the audit, the Company reclassified amounts owed to the IRS and previously recorded as uncertain income tax positions as taxes payable, resulting in a $1.0 million tax benefit during the three months ended June 30, 2013. There are other ongoing income tax audits in various international jurisdictions that are not expected to have a material effect on our financial statements. | |
On July 11, 2013 the Company was issued an assessment notice from the Busan Custom Office in Korea in the amount of KRW 2,147,034,680 (approximately $1.9 million) resulting from an audit covering fiscal years 2008 through 2012. We are pursuing relief through the administrative review processes available in the jurisdiction. Additionally, we have created a reserve of approximately $0.9 million which reflects our current estimate of the probable outcome of our appeal. | |
There are other ongoing audits in various international jurisdictions that are not expected to have a material effect on our financial statements. | |
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 its 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 are 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 or as they become determinable. | |
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 related legal fees and the contingencies arising from the above legal matters where an outcome was deemed to be probable, and the loss amount could be reasonably estimated. |
RECENT_ACCOUNTING_PRONOUNCEMEN
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2013 | |
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | ' |
NOTE 8: RECENT ACCOUNTING PRONOUNCEMENTS | |
In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. Under this standard, entities will be required to disclose additional information with respect to changes in accumulated other comprehensive income (“AOCI”) balances by component and significant items reclassified out of AOCI. Expanded disclosures for presentation of changes in AOCI involve disaggregating the total change of each component of other comprehensive income (for example, unrealized gains or losses on available for sale marketable securities) as well as presenting separately for each such component the portion of the change in AOCI related to (1) amounts reclassified into income and (2) current-period other comprehensive income. Additionally, for amounts reclassified into income, disclosure in one location would be required, based upon each specific AOCI component, of the amounts impacting individual income statement line items. Disclosure of the income statement line item impacts will be required only for components of AOCI reclassified into income in their entirety. This ASU is effective beginning January 1, 2013. Because this standard only impacts presentation and disclosure requirements, its adoption did not have a material impact on the Company’s consolidated results of operations or financial condition. No additional disclosures were presented during the quarter as there were no material reclassifications from AOCI during the periods presented. |
FAIR_VALUE
FAIR VALUE | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
FAIR VALUE [Abstract] | ' | ||||||||||||||||
FAIR VALUE | ' | ||||||||||||||||
NOTE 9: 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 Accounting Standard Codification (“ASC”) 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: | |||||||||||||||||
· 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. | |||||||||||||||||
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 September 30, 2013. | |||||||||||||||||
The table below presents the recorded amount of financial assets measured at fair value (in thousands) on a recurring basis as of September 30, 2013. | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets | |||||||||||||||||
Money Market Funds – Fidelity, US | $ | 192 | $ | — | $ | — | $ | 192 | |||||||||
Interest bearing deposits – various banks, Korea | 3,716 | — | — | 3,716 | |||||||||||||
Total assets | $ | 3,908 | $ | — | $ | — | $ | 3,908 | |||||||||
Amounts included in: | |||||||||||||||||
Cash and cash equivalents | $ | 192 | $ | — | $ | — | $ | 192 | |||||||||
Long-term restricted cash | 3,716 | — | — | 3,716 | |||||||||||||
Total | $ | 3,908 | $ | — | $ | — | $ | 3,908 |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 9 Months Ended | ||||||||||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||||||||||
SEGMENT INFORMATION [Abstract] | ' | ||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | ' | ||||||||||||||||||||||||||||||||
NOTE 10: SEGMENT INFORMATION | |||||||||||||||||||||||||||||||||
The Company conducts its business as a single operating segment, consolidating all of its business units into a single reportable entity, as a seller of proprietary nutritional supplements, topical and skin care products, and weight-management products through its network marketing distribution channels operating in twenty-four countries. Each of the Company’s business units sells similar packs 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 packs and product sales. The Company sells its products through its associates and distributes its products through similar distribution channels in each country. No single associate has ever accounted for more than 10% of the Company’s consolidated net sales. | |||||||||||||||||||||||||||||||||
The Company operates facilities in eleven countries and sells product in twenty-four 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, and Ukraine. Each facility services different geographic areas. We currently sell our products in three regions: (i) North America (the United States, Canada, and Mexico); (ii) EMEA (Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, Namibia, the Netherlands, Norway, South Africa, Sweden, Ukraine, and the United Kingdom); (iii) Asia/Pacific (Australia, Hong Kong, Japan, New Zealand, the Republic of Korea, Singapore, and Taiwan). In December 2012, the Company commenced the shipment of its products to Hong Kong and officially launched Hong Kong operations in April 2013. In November 2012, the Company commenced the shipment of its products to Ukraine and officially launched Ukrainian operations in July 2013. The Switzerland office was created to manage certain day-to-day business needs of non-North American markets. | |||||||||||||||||||||||||||||||||
Consolidated net sales shipped to customers in these regions, along with pack and product information for the three and nine months ended September 30, are as follows (in millions, except percentages): | |||||||||||||||||||||||||||||||||
Three months | Nine months | ||||||||||||||||||||||||||||||||
Region | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||
North America | $ | 18.7 | 42.2 | % | $ | 20.7 | 48.1 | % | $ | 60.5 | 46.2 | % | $ | 66 | 50.3 | % | |||||||||||||||||
Asia/Pacific | 22 | 49.5 | % | 17.8 | 41.4 | % | 59.7 | 45.6 | % | 53 | 40.4 | % | |||||||||||||||||||||
EMEA | 3.7 | 8.3 | % | 4.5 | 10.5 | % | 10.7 | 8.2 | % | 12.1 | 9.3 | % | |||||||||||||||||||||
Totals | $ | 44.4 | 100 | % | $ | 43 | 100 | % | $ | 130.9 | 100 | % | $ | 131.1 | 100 | % | |||||||||||||||||
Three months | Nine months | ||||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||||||||
Consolidated product sales | $ | 31.7 | $ | 38.3 | $ | 108 | $ | 117.1 | |||||||||||||||||||||||||
Consolidated pack sales | 10.9 | 3 | 17.1 | 9.1 | |||||||||||||||||||||||||||||
Consolidated other, including freight | 1.8 | 1.7 | 5.8 | 4.9 | |||||||||||||||||||||||||||||
Consolidated total net sales | $ | 44.4 | $ | 43 | $ | 130.9 | $ | 131.1 | |||||||||||||||||||||||||
Long-lived assets, which include property, equipment and construction in progress for the Company and its subsidiaries, reside in the following regions (in millions): | |||||||||||||||||||||||||||||||||
Region | September 30, | December 31, | |||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||
North America | $ | 2.7 | $ | 3.8 | |||||||||||||||||||||||||||||
Asia/Pacific | 0.5 | 0.7 | |||||||||||||||||||||||||||||||
EMEA | 0.4 | 0.3 | |||||||||||||||||||||||||||||||
Total | $ | 3.6 | $ | 4.8 | |||||||||||||||||||||||||||||
Inventory balances by region, which consists of raw materials, work in progress, finished goods, and promotional materials, as offset by obsolete inventories, were as follows (in millions): | |||||||||||||||||||||||||||||||||
Region | September 30, | December 31, | |||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||
North America | $ | 8.2 | $ | 9.5 | |||||||||||||||||||||||||||||
Asia/Pacific | 4.5 | 4.2 | |||||||||||||||||||||||||||||||
EMEA | 2 | 1.5 | |||||||||||||||||||||||||||||||
Total | $ | 14.7 | $ | 15.2 |
ORGANIZATION_AND_SUMMARY_OF_SI1
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [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. | |||||
Reclassifications | ' | ||||
Reclassifications | |||||
Certain reclassifications have been made to the financial statements for prior periods to conform to the current period presentation. | |||||
Use of Estimates | ' | ||||
Use of Estimates | |||||
The preparation of the Company’s consolidated financial statements in accordance with generally accepted accounting principles 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 and Cash Equivalents | ' | ||||
Cash and Cash Equivalents | |||||
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 of submission to the credit card processor. Credit card receivables were $3.3 million at September 30, 2013 and $1.7 million at December 31, 2012. Cash and cash equivalents held in bank accounts in foreign countries totaled $14.3 million and $10.8 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. | |||||
Restricted Cash | ' | ||||
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 September 30, 2013 and December 31, 2012, our total restricted cash was $6.6 million and $5.3 million, respectively. | |||||
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 September 30, 2013 and December 31, 2012, receivables consisted primarily of amounts due from members and associates. The Company periodically evaluates its receivables for collectability based on historical experience, recent account activities, and the length of time receivables are past due and writes-off receivables when they become uncollectible. At each of September 30, 2013 and December 31, 2012, the Company held an allowance for doubtful accounts of less than $0.1 million. | |||||
Inventories | ' | ||||
Inventories | |||||
Inventories consist of raw materials, finished goods, and promotional materials that are stated at the lower of cost or market (using standard costs that approximate average costs). The Company periodically reviews inventories for obsolescence, and any inventories identified as obsolete are reserved or written off. | |||||
Other Assets | ' | ||||
Other Assets | |||||
As of September 30, 2013 and December 31, 2012, other assets were $2.9 million and $3.2 million, respectively, and primarily consisted of deposits for building leases in various locations of $1.5 million and $1.8 million, respectively. Additionally, included in the September 30, 2013 and December 31, 2012 balances was $1.0 million, 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 the September 30, 2013 and December 31, 2012 balances was $0.2 million of indefinite lived intangible assets relating to the Manapol ® powder trademark. | |||||
Other Long-Term Liabilities | ' | ||||
Other Long-Term Liabilities | |||||
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 September 30, 2013 and December 31, 2012, accrued restoration costs related to these leases amounted to $0.2 million and $0.5 million, respectively. Also included in long-term liabilities at September 30, 2013 and December 31, 2012 was an estimated defined benefit obligation related to a non-U.S. defined benefit plan for its Japan operations of $0.7 million. | |||||
In August 2003, the Company entered into a Long-Term Post-Employment Royalty Agreement with Dr. Bill McAnalley, the Company’s former Chief Science Officer, pursuant to which the Company is required to pay Dr. McAnalley, or his heirs, royalties for ten years beginning September 2005 and continuing through August 2015. Quarterly payments related to this Long-Term Post-Employment Royalty Agreement are based on certain applicable annual global product sales by the Company in excess of $105.4 million. At the time the Company entered into this Long-Term Post-Employment Royalty Agreement, it was considered a post-employment benefit and the Company was required to measure and accrue the present value of the estimated future royalty payments related to this benefit and recognize it over the life of Dr. McAnalley’s employment agreement, which was two years. As of September 30, 2013 and December 31, 2012, the Company’s liability related to this royalty agreement was $0.1 million and $0.2 million, respectively. | |||||
Revenue Recognition and Deferred Commissions | ' | ||||
Revenue Recognition and Deferred Commissions | |||||
The Company’s revenue is derived from sales of individual products, sales of its starter and renewal packs, and shipping fees. Substantially all of the Company’s product and pack sales are made to associates at published wholesale prices and to members at discounted published retail prices. 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 packs and products upon receipt by the customer. Corporate-sponsored event revenue is recognized when the event is held. The Company defers certain components of its revenue. At each of September 30, 2013 and December 31, 2012, the Company’s deferred revenue was $5.3 million and $1.5 million, respectively. During the third quarter of 2013, the Company started a loyalty program where customers earn loyalty points from qualified automatic orders, which can be applied to future purchases. The Company defers the dollar equivalent in revenue of these points until the points are applied or forfeited. The deferred revenue associated with the loyalty program at September 30, 2013 was $2.5 million. Deferred revenue consisted primarily of: (i) sales of packs and products shipped but not received by the customers by the end of the respective period; (ii) revenue from the loyalty program and (iii) prepaid registration fees from customers planning to attend a future corporate-sponsored event. In total current assets, the Company defers commissions on (i) the sales of packs and products shipped but not received by the customers by the end of the respective period and (ii) the loyalty program. Deferred commissions were $2.2 million and $0.6 million at September 30, 2013 and December 30, 2012, respectively. | |||||
We estimate a sales return reserve for expected sales refunds based on our historical experience over a rolling six-month period. If actual results differ from our estimated sales return reserve due to various factors, the amount of revenue recorded for each period could be materially affected. Historically, our 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 nine months ended September 30, 2013 our sales return reserve consisted of the following (in thousands): | |||||
September 30, | |||||
2013 | |||||
Sales reserve as of January 1, 2013 | $ | 156 | |||
Provision related to sales made in current period | 882 | ||||
Adjustment related to sales made in prior periods | 3 | ||||
Actual returns or credits related to current period | (706 | ) | |||
Actual returns or credits related to prior periods | (159 | ) | |||
Sales reserve as of September 30, 2013 | $ | 176 | |||
Shipping and Handling Costs | ' | ||||
Shipping and Handling Costs | |||||
The Company records freight and shipping fees collected from its customers as revenue. The Company records inbound freight as a component of inventory and cost of sales. To improve the matching of costs associated with the revenue from freight and shipping fees collected, beginning December 31, 2012, freight charges associated with shipping products to our customers were reclassified to cost of sales from selling and administrative expenses with prior periods’ presentations adjusted accordingly. Total revenue from freight and shipping fees were approximately $1.9 million and $1.6 million for the three months ended September 30, 2013 and 2012, respectively, and $5.7 million and $4.6 million for the nine months ended September 30, 2013 and 2012, respectively. Total freight costs for shipping products to our customers included in cost of sales were approximately $1.7 million and $1.9 million for the three months ended September 30, 2013 and 2012, respectively, and $5.0 million and $5.6 million for the nine months ended September 30, 2013 and 2012, respectively. | |||||
Commissions and Incentives | ' | ||||
Commissions and Incentives | |||||
Associates earn commissions and incentives based on their direct and indirect commissionable net sales over 13 business periods each year. Each business period equals 28 days. The Company accrues commissions and incentives when earned by associates and pays commissions on product sales three weeks following the business period end and pays commissions on its pack sales five weeks following the business period end. | |||||
In order to more closely conform to the financial presentation of our competitors, beginning December 31, 2012, commissions and incentive expenses were reclassified to operating expenses from cost of sales with prior periods’ presentations adjusted accordingly. Total commissions and incentive expenses reclassified to operating expenses were approximately $19.6 million and $18.7 million for the three months ended September 30, 2013 and 2012, respectively, and $56.4 million and $56.3 million for the nine months ended September 30, 2013 and 2012, respectively. | |||||
Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) | ' | ||||
Comprehensive Income (loss) and Accumulated Other Comprehensive Income (loss) | |||||
Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from 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 (loss) consists of the Company’s net income (loss), foreign currency translation adjustments from its Japan, Republic of Korea, Taiwan, Singapore, Norway, Sweden, Mexico, and Ukraine operations, and changes in the pension obligation for its Japanese employees. |
ORGANIZATION_AND_SUMMARY_OF_SI2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | ||||
Sales return reserve | ' | ||||
For the nine months ended September 30, 2013 our sales return reserve consisted of the following (in thousands): | |||||
September 30, | |||||
2013 | |||||
Sales reserve as of January 1, 2013 | $ | 156 | |||
Provision related to sales made in current period | 882 | ||||
Adjustment related to sales made in prior periods | 3 | ||||
Actual returns or credits related to current period | (706 | ) | |||
Actual returns or credits related to prior periods | (159 | ) | |||
Sales reserve as of September 30, 2013 | $ | 176 |
INVENTORIES_Tables
INVENTORIES (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
INVENTORIES [Abstract] | ' | ||||||||
Schedule of inventory | ' | ||||||||
Inventories consist of raw materials and finished goods, which also includes promotional materials. The Company provides an allowance for any slow-moving or obsolete inventories. Inventories at September 30, 2013 and December 31, 2012, consisted of the following (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials | $ | 4,766 | $ | 6,071 | |||||
Finished goods | 11,217 | 10,702 | |||||||
Inventory reserves for obsolescence | (1,250 | ) | (1,619 | ) | |||||
Total | $ | 14,733 | $ | 15,154 |
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ' | ||||||||||||||||
Schedule of compensation cost | ' | ||||||||||||||||
The Company recognized compensation expense as follows for the three and nine months ended September 30 (in thousands): | |||||||||||||||||
Three months | Nine months | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Total gross compensation expense | $ | 41 | $ | 43 | $ | 137 | $ | 167 | |||||||||
Total tax benefit associated with compensation expense | 6 | 7 | 27 | 37 | |||||||||||||
Total net compensation expense | $ | 35 | $ | 36 | $ | 110 | $ | 130 | |||||||||
Schedule of unrecognized compensation cost | ' | ||||||||||||||||
As of September 30, 2013, the Company expects to record compensation expense in the future as follows (in thousands): | |||||||||||||||||
Three months ending | Year ending December 31, | ||||||||||||||||
31-Dec-13 | 2014 | 2015 | 2016 | ||||||||||||||
Total gross unrecognized compensation expense | $ | 35 | $ | 119 | $ | 100 | $ | 21 | |||||||||
Tax benefit associated with unrecognized compensation expense | 6 | 20 | 15 | 2 | |||||||||||||
Total net unrecognized compensation expense | $ | 29 | $ | 99 | $ | 85 | $ | 19 |
FAIR_VALUE_Tables
FAIR VALUE (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
FAIR VALUE [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 September 30, 2013. | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Assets | |||||||||||||||||
Money Market Funds – Fidelity, US | $ | 192 | $ | — | $ | — | $ | 192 | |||||||||
Interest bearing deposits – various banks, Korea | 3,716 | — | — | 3,716 | |||||||||||||
Total assets | $ | 3,908 | $ | — | $ | — | $ | 3,908 | |||||||||
Amounts included in: | |||||||||||||||||
Cash and cash equivalents | $ | 192 | $ | — | $ | — | $ | 192 | |||||||||
Long-term restricted cash | 3,716 | — | — | 3,716 | |||||||||||||
Total | $ | 3,908 | $ | — | $ | — | $ | 3,908 |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||||||||||
SEGMENT INFORMATION [Abstract] | ' | ||||||||||||||||||||||||||||||||
Net sales shipped to customers by geographic region | ' | ||||||||||||||||||||||||||||||||
Consolidated net sales shipped to customers in these regions, along with pack and product information for the three and nine months ended September 30, are as follows (in millions, except percentages): | |||||||||||||||||||||||||||||||||
Three months | Nine months | ||||||||||||||||||||||||||||||||
Region | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||
North America | $ | 18.7 | 42.2 | % | $ | 20.7 | 48.1 | % | $ | 60.5 | 46.2 | % | $ | 66 | 50.3 | % | |||||||||||||||||
Asia/Pacific | 22 | 49.5 | % | 17.8 | 41.4 | % | 59.7 | 45.6 | % | 53 | 40.4 | % | |||||||||||||||||||||
EMEA | 3.7 | 8.3 | % | 4.5 | 10.5 | % | 10.7 | 8.2 | % | 12.1 | 9.3 | % | |||||||||||||||||||||
Totals | $ | 44.4 | 100 | % | $ | 43 | 100 | % | $ | 130.9 | 100 | % | $ | 131.1 | 100 | % | |||||||||||||||||
Product and pack information | ' | ||||||||||||||||||||||||||||||||
Three months | Nine months | ||||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||||||||
Consolidated product sales | $ | 31.7 | $ | 38.3 | $ | 108 | $ | 117.1 | |||||||||||||||||||||||||
Consolidated pack sales | 10.9 | 3 | 17.1 | 9.1 | |||||||||||||||||||||||||||||
Consolidated other, including freight | 1.8 | 1.7 | 5.8 | 4.9 | |||||||||||||||||||||||||||||
Consolidated total net sales | $ | 44.4 | $ | 43 | $ | 130.9 | $ | 131.1 | |||||||||||||||||||||||||
Long-lived assets, by geographic region | ' | ||||||||||||||||||||||||||||||||
Long-lived assets, which include property, equipment and construction in progress for the Company and its subsidiaries, reside in the following regions (in millions): | |||||||||||||||||||||||||||||||||
Region | September 30, | December 31, | |||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||
North America | $ | 2.7 | $ | 3.8 | |||||||||||||||||||||||||||||
Asia/Pacific | 0.5 | 0.7 | |||||||||||||||||||||||||||||||
EMEA | 0.4 | 0.3 | |||||||||||||||||||||||||||||||
Total | $ | 3.6 | $ | 4.8 | |||||||||||||||||||||||||||||
Inventory balances, by region | ' | ||||||||||||||||||||||||||||||||
Inventory balances by region, which consists of raw materials, work in progress, finished goods, and promotional materials, as offset by obsolete inventories, were as follows (in millions): | |||||||||||||||||||||||||||||||||
Region | September 30, | December 31, | |||||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||||||
North America | $ | 8.2 | $ | 9.5 | |||||||||||||||||||||||||||||
Asia/Pacific | 4.5 | 4.2 | |||||||||||||||||||||||||||||||
EMEA | 2 | 1.5 | |||||||||||||||||||||||||||||||
Total | $ | 14.7 | $ | 15.2 |
ORGANIZATION_AND_SUMMARY_OF_SI3
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Business | |||||
Cash and Cash Equivalents [Abstract] | ' | ' | ' | ' | ' |
Credit card receivables | $3,300,000 | ' | $3,300,000 | ' | $1,700,000 |
Cash and cash equivalents held in foreign bank accounts | 14,300,000 | ' | 14,300,000 | ' | 10,800,000 |
Restricted Cash [Abstract] | ' | ' | ' | ' | ' |
Restricted cash | 6,600,000 | ' | 6,600,000 | ' | 5,300,000 |
Accounts Receivables [Abstract] | ' | ' | ' | ' | ' |
Allowance for doubtful accounts | 100,000 | ' | 100,000 | ' | 100,000 |
Other Assets [Abstract] | ' | ' | ' | ' | ' |
Other assets | 2,938,000 | ' | 2,938,000 | ' | 3,187,000 |
Deposits for building leases | 1,500,000 | ' | 1,500,000 | ' | 1,800,000 |
Fair trade commission deposits | 1,000,000 | ' | 1,000,000 | ' | 1,000,000 |
Indefinite lived intangible assets | 200,000 | ' | 200,000 | ' | 200,000 |
Other Long-Term Liabilities [Abstract] | ' | ' | ' | ' | ' |
Accrued lease restoration costs | 200,000 | ' | 200,000 | ' | 500,000 |
Estimated defined benefit obligation related to a non-U.S. defined benefit plan for its Japan operations | 700,000 | ' | 700,000 | ' | 700,000 |
Global product sales threshold for Long-Term Post Employment Royalty Agreement | ' | ' | 105,400,000 | ' | ' |
Recognition period of employment agreement | ' | ' | '2 years | ' | ' |
Post-employment benefit liability | 100,000 | ' | 100,000 | ' | 200,000 |
Revenue Recognition [Abstract] | ' | ' | ' | ' | ' |
Deferred revenue | 5,300,000 | ' | 5,300,000 | ' | 1,500,000 |
Deferred revenue associated with loyalty program | 2,500,000 | ' | 2,500,000 | ' | ' |
Deferred commissions | 2,240,000 | ' | 2,240,000 | ' | 562,000 |
Percentage of sale returns (in hundredths) | ' | ' | 1.50% | ' | ' |
Shipping and Handling Costs [Abstract] | ' | ' | ' | ' | ' |
Revenue from freight and shipping fees | 1,900,000 | 1,600,000 | 5,700,000 | 4,600,000 | ' |
Freight costs | 1,700,000 | 1,900,000 | 5,000,000 | 5,600,000 | ' |
Commissions and Incentives [Abstract] | ' | ' | ' | ' | ' |
Number of business periods per year | ' | ' | 13 | ' | ' |
Number of days per business period | ' | ' | '28 days | ' | ' |
Number of weeks following business period end for payment of product sales commissions | ' | ' | 'Three weeks | ' | ' |
Number of weeks following business period end for payment of pack sales commissions | ' | ' | 'Five weeks | ' | ' |
Total commission and incentive expenses reclassified to operating expenses | 19,600,000 | 18,700,000 | 56,400,000 | 56,300,000 | ' |
Reserve for Sales Returns [Member] | ' | ' | ' | ' | ' |
Movement in Valuation Allowances and Reserves [Roll Forward] | ' | ' | ' | ' | ' |
Sales reserve as of January 1, 2013 | ' | ' | 156,000 | ' | ' |
Provision related to sales made in current period | ' | ' | 882,000 | ' | ' |
Adjustment related to sales made in prior periods | ' | ' | 3,000 | ' | ' |
Actual returns or credits related to current period | ' | ' | -706,000 | ' | ' |
Actual returns or credits related to prior periods | ' | ' | -159,000 | ' | ' |
Sales reserve as of September 30, 2013 | $176,000 | ' | $176,000 | ' | ' |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
INVENTORIES [Abstract] | ' | ' |
Raw materials | $4,766 | $6,071 |
Finished goods | 11,217 | 10,702 |
Inventory reserves for obsolescence | -1,250 | -1,619 |
Total | $14,733 | $15,154 |
INCOME_TAXES_Details
INCOME TAXES (Details) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Jul. 11, 2013 | Jul. 11, 2013 | 13-May-13 | Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | 13-May-13 | Sep. 30, 2013 | Sep. 30, 2013 | |
USD ($) | USD ($) | USD ($) | USD ($) | KRW | USD ($) | Internal Revenue Service (IRS) [Member] | Internal Revenue Service (IRS) [Member] | Internal Revenue Service (IRS) [Member] | Internal Revenue Service (IRS) [Member] | Internal Revenue Service (IRS) [Member] | Internal Revenue Service (IRS) [Member] | ||||
USD ($) | USD ($) | Earliest Open Tax Year [Member] | Latest Open Tax Year [Member] | ||||||||||||
Income Tax Examination [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effective tax rate (in hundredths) | 548.26% | ' | 42.80% | ' | 54.72% | 11.60% | ' | ' | ' | 1122.52% | ' | 128.78% | ' | ' | ' |
Open tax years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2005 | '2009 |
Net tax deficiency associated with RAR | ' | ' | ' | ' | ' | ' | ' | ' | $800,000 | ' | ' | ' | $800,000 | ' | ' |
Interest accrued | ' | ' | ' | 200,000 | ' | ' | ' | ' | ' | ' | 200,000 | ' | ' | ' | ' |
Tax Benefit Associated With RAR | 1,000,000 | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Assessment notice from Busan Custom Office | ' | ' | ' | ' | ' | ' | 1,900,000 | 2,147,034,680 | ' | ' | ' | ' | ' | ' | ' |
Fiscal years covered in audit | ' | ' | ' | ' | ' | ' | '2008-2012 | '2008-2012 | ' | ' | ' | ' | ' | ' | ' |
Taxes payable | ' | ' | ' | ' | ' | ' | 900,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Customs charges | ' | ' | ' | ' | ' | ' | 500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Surtaxes on customs charges | ' | ' | ' | ' | ' | ' | 400,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Recoverable VAT | ' | ' | ' | ' | ' | ' | $700,000 | ' | ' | ' | ' | ' | ' | ' | ' |
EARNINGS_LOSS_PER_SHARE_Detail
EARNINGS (LOSS) PER SHARE (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Average common stock close price (in dollars per share) | $19.48 | $6.22 | $11.68 | $5.12 |
Stock Options [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.1 | ' | 0.1 | 0.1 |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Number of active stock based compensation plan | ' | ' | 1 | ' |
Option contract term (in years) | ' | ' | '10 | ' |
Percentages of stock option ownership considered for higher exercise price of option (in hundredths) | ' | ' | 10.00% | ' |
Option exercise price as percentages of closing exercise price of stock for specific shareholders (in hundredths) | ' | ' | 110.00% | ' |
Expiration period of stock option plan | ' | ' | '5 years | ' |
Number of shares authorized (in shares) | 200,000 | ' | 200,000 | ' |
Increase in number of shares authorized (in shares) | ' | ' | 100,000 | ' |
Number of shares available for grant (in shares) | 72,371 | ' | 72,371 | ' |
Options granted (in shares) | 2,500 | 0 | 82,500 | 20,000 |
Weighted average grant date fair value (in dollars per share) | $11.71 | ' | ' | ' |
Options exercise price (in dollars per share) | $18.81 | ' | ' | ' |
Share-based compensation expense [Abstract] | ' | ' | ' | ' |
Total gross compensation expense | $41 | $43 | $137 | $167 |
Total tax benefit associated with compensation expense | 6 | 7 | 27 | 37 |
Total net compensation expense | 35 | 36 | 110 | 130 |
Unrecognized compensation expense [Abstract] | ' | ' | ' | ' |
Total gross unrecognized compensation expense to be recognized over remainder of current fiscal year | 35 | ' | 35 | ' |
Total gross unrecognized compensation expense in 2014 | 119 | ' | 119 | ' |
Total gross unrecognized compensation expense in 2015 | 100 | ' | 100 | ' |
Total gross unrecognized compensation expense in 2016 | 21 | ' | 21 | ' |
Tax benefit associated with unrecognized compensation expense remainder of current fiscal year | 6 | ' | 6 | ' |
Tax benefit associated with unrecognized compensation expense in 2014 | 20 | ' | 20 | ' |
Tax benefit associated with unrecognized compensation expense in 2015 | 15 | ' | 15 | ' |
Tax benefit associated with unrecognized compensation expense in 2016 | 2 | ' | 2 | ' |
Total net unrecognized compensation expense | 29 | ' | 29 | ' |
Total net unrecognized compensation expense in 2014 | 99 | ' | 99 | ' |
Total net unrecognized compensation expense in 2015 | 85 | ' | 85 | ' |
Total net unrecognized compensation expense in 2016 | $19 | ' | $19 | ' |
Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Vesting period of stock options | ' | ' | '2 years | ' |
Weighted average grant date fair value (in dollars per share) | ' | ' | $3.53 | ' |
Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Vesting period of stock options | ' | ' | '3 years | ' |
Weighted average grant date fair value (in dollars per share) | ' | ' | $11.71 | ' |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY (Details) (USD $) | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | ||||
In Millions, except Share data, unless otherwise specified | Jun. 30, 2004 | Sep. 30, 2013 | Aug. 28, 2006 | Sep. 30, 2013 | Sep. 30, 2013 | Oct. 28, 2013 | Oct. 28, 2010 | Sep. 16, 2010 |
June 2004 Plan [Member] | June 2004 Plan [Member] | August 2006 Plan [Member] | August 2006 Plan [Member] | Equity Line [Member] | Equity Line [Member] | Equity Line [Member] | Equity Line [Member] | |
Financing Arrangements [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum value of common stock may be sold to investor | ' | ' | ' | ' | ' | ' | ' | $10 |
Equity line, term | ' | ' | ' | ' | ' | ' | ' | '36 months |
Common stock registered (in shares) | ' | ' | ' | ' | ' | ' | 500,000 | ' |
Reverse stock split description | ' | ' | ' | ' | 'as adjusted for a 1-for-10 reverse stock split effected January 13, 2012 | ' | ' | ' |
Stock split conversion ratio | ' | ' | ' | ' | 0.1 | ' | ' | ' |
Common stock issued pursuant to investment agreement (in shares) | ' | ' | ' | ' | ' | 0 | ' | ' |
Equity, Class of Treasury Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Stock repurchase program, repurchase authorization | ' | 'the lesser of (i) 131,756 shares and (ii) $1.3 million in shares | ' | 'up to $20 million of its outstanding shares | ' | ' | ' | ' |
Number of common shares authorized to be repurchased (in shares) | 131,756 | ' | ' | ' | ' | ' | ' | ' |
Stock repurchase program, authorized amount | $1.30 | ' | $20 | ' | ' | ' | ' | ' |
Stock repurchase program, remaining number of shares authorized to be repurchased (in shares) | ' | 19,084 | ' | ' | ' | ' | ' | ' |
Stock repurchased since inception shares (in shares) | ' | 112,672 | ' | ' | ' | ' | ' | ' |
Common stock repurchased (in shares) | ' | ' | ' | 0 | ' | ' | ' | ' |
LITIGATION_Details
LITIGATION (Details) | 3 Months Ended | 6 Months Ended | 6 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2013 | Jun. 30, 2013 | Jun. 30, 2013 | Jul. 11, 2013 | Jul. 11, 2013 | 13-May-13 | Jun. 30, 2013 | 13-May-13 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | |
USD ($) | USD ($) | USD ($) | USD ($) | KRW | USD ($) | Internal Revenue Service (IRS) [Member] | Internal Revenue Service (IRS) [Member] | Internal Revenue Service (IRS) [Member] | Internal Revenue Service (IRS) [Member] | Pending Litigation [Member] | |
USD ($) | USD ($) | Earliest Open Tax Year [Member] | Latest Open Tax Year [Member] | USD ($) | |||||||
Loss Contingencies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Damages sought | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,000,000 |
Income Tax Examination [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Open tax years | ' | ' | ' | ' | ' | ' | ' | ' | '2005 | '2009 | ' |
Net tax deficiency associated with RAR | ' | ' | ' | ' | ' | 800,000 | ' | 800,000 | ' | ' | ' |
Interest accrued | ' | ' | 200,000 | ' | ' | ' | 200,000 | ' | ' | ' | ' |
Litigation in General [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Assessment notice from Busan Custom Office | ' | ' | ' | 1,900,000 | 2,147,034,680 | ' | ' | ' | ' | ' | ' |
Taxes payable | ' | ' | ' | 900,000 | ' | ' | ' | ' | ' | ' | ' |
Fiscal years covered in audit | ' | ' | ' | '2008-2012 | '2008-2012 | ' | ' | ' | ' | ' | ' |
Tax Benefit Associated With RAR | $1,000,000 | $1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
FAIR_VALUE_Details
FAIR VALUE (Details) (Recurring Basis [Member], USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Cash and cash equivalents | $192 |
Long-term restricted cash | 3,716 |
Total | 3,908 |
Level 1 [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Cash and cash equivalents | 192 |
Long-term restricted cash | 3,716 |
Total | 3,908 |
Level 2 [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Cash and cash equivalents | 0 |
Long-term restricted cash | 0 |
Total | 0 |
Level 3 [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Cash and cash equivalents | 0 |
Long-term restricted cash | 0 |
Total | 0 |
Money Market Funds [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Cash and cash equivalents | 192 |
Money Market Funds [Member] | Level 1 [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Cash and cash equivalents | 192 |
Money Market Funds [Member] | Level 2 [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Cash and cash equivalents | 0 |
Money Market Funds [Member] | Level 3 [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Cash and cash equivalents | 0 |
Interest Bearing Deposits [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Long-term restricted cash | 3,716 |
Interest Bearing Deposits [Member] | Level 1 [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Long-term restricted cash | 3,716 |
Interest Bearing Deposits [Member] | Level 2 [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Long-term restricted cash | 0 |
Interest Bearing Deposits [Member] | Level 3 [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Long-term restricted cash | $0 |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Country | Segment | ||||
Country | |||||
Region | |||||
SEGMENT INFORMATION [Abstract] | ' | ' | ' | ' | ' |
Number of operating segments | ' | ' | 1 | ' | ' |
Number of countries in which entity network marketing and distribution channels operates | ' | ' | 24 | ' | ' |
Minimum percentage of revenue considered for accounted of major customer (in hundredths) | ' | ' | 10.00% | ' | ' |
Number of countries in which company operates facilities | 11 | ' | 11 | ' | ' |
Number of countries in which company sells products | ' | ' | 24 | ' | ' |
Number of regions in which company sells products | ' | ' | 3 | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' | ' |
Consolidated net sales shipped to customers | $44,400,000 | $43,000,000 | $130,900,000 | $131,100,000 | ' |
Percent of total revenue (in hundredths) | 100.00% | 100.00% | 100.00% | 100.00% | ' |
Long-lived assets by regions [Abstract] | ' | ' | ' | ' | ' |
Long-lived assets | 3,614,000 | ' | 3,614,000 | ' | 4,825,000 |
Inventory, by Country [Abstract] | ' | ' | ' | ' | ' |
Inventories, net | 14,733,000 | ' | 14,733,000 | ' | 15,154,000 |
North America [Member] | ' | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' | ' |
Consolidated net sales shipped to customers | 18,700,000 | 20,700,000 | 60,500,000 | 66,000,000 | ' |
Percent of total revenue (in hundredths) | 42.20% | 48.10% | 46.20% | 50.30% | ' |
Long-lived assets by regions [Abstract] | ' | ' | ' | ' | ' |
Long-lived assets | 2,700,000 | ' | 2,700,000 | ' | 3,800,000 |
Inventory, by Country [Abstract] | ' | ' | ' | ' | ' |
Inventories, net | 8,200,000 | ' | 8,200,000 | ' | 9,500,000 |
Asia/Pacific [Member] | ' | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' | ' |
Consolidated net sales shipped to customers | 22,000,000 | 17,800,000 | 59,700,000 | 53,000,000 | ' |
Percent of total revenue (in hundredths) | 49.50% | 41.40% | 45.60% | 40.40% | ' |
Long-lived assets by regions [Abstract] | ' | ' | ' | ' | ' |
Long-lived assets | 500,000 | ' | 500,000 | ' | 700,000 |
Inventory, by Country [Abstract] | ' | ' | ' | ' | ' |
Inventories, net | 4,500,000 | ' | 4,500,000 | ' | 4,200,000 |
EMEA [Member] | ' | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' | ' |
Consolidated net sales shipped to customers | 3,700,000 | 4,500,000 | 10,700,000 | 12,100,000 | ' |
Percent of total revenue (in hundredths) | 8.30% | 10.50% | 8.20% | 9.30% | ' |
Long-lived assets by regions [Abstract] | ' | ' | ' | ' | ' |
Long-lived assets | 400,000 | ' | 400,000 | ' | 300,000 |
Inventory, by Country [Abstract] | ' | ' | ' | ' | ' |
Inventories, net | 2,000,000 | ' | 2,000,000 | ' | 1,500,000 |
Consolidated Product Sales [Member] | ' | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' | ' |
Consolidated net sales shipped to customers | 31,700,000 | 38,300,000 | 108,000,000 | 117,100,000 | ' |
Consolidated Pack Sales [Member] | ' | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' | ' |
Consolidated net sales shipped to customers | 10,900,000 | 3,000,000 | 17,100,000 | 9,100,000 | ' |
Consolidated Other, Including Freight [Member] | ' | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' | ' |
Consolidated net sales shipped to customers | $1,800,000 | $1,700,000 | $5,800,000 | $4,900,000 | ' |