Exhibit 99.1
FOR IMMEDIATE RELEASE
June 24, 2002
Market America, Inc. Contact:
1302 Pleasant Ridge Road Martin L. Weissman
Greensboro, NC 27409-9326 Executive Vice President
Phone: (336) 605-0040 Fax: (336) 605-0041 (336) 478-4051
www.marketamerica.com
MARKET AMERICA, INC. BOARD ANNOUNCES FOURTH QUARTER EARNINGS AND
SETS DATE FOR SHAREHOLDERS TO CONSIDER MANAGEMENT BUYOUT
Greensboro, NC -- Market America, Inc. (OTC Bulletin Board: MARK), an innovative
product brokerage and Internet marketing company specializing in One-to-One
Marketing and Mass Customization, announced today the results for the fiscal
year and fiscal quarter ended April 30, 2002, as discussed below. Market America
also announced today that it had set July 22, 2002 as the date for a
shareholders' meeting to consider a previously announced management buyout
transaction. The record date for that meeting, to be held at the company's
offices in Greensboro, North Carolina, is June 4, 2002.
Sales revenue increased for the ninth consecutive year. For the years ended
April 30, 2002 and 2001, sales were $159.3 and $138.5 million, respectively.
This represents a $20.8 million (15.0%) sales growth from 2001 to 2002. The
15-percent sales growth in the year ended April 30, 2002 can be attributed
to sales of both new and continuing products in the nutritional supplement
category.
Salary expense was $11.1 million in the year ended April 30, 2002, compared to
$8.5 million in the year ended April 30, 2001. As a percentage of sales, salary
expense was 7.0% and 6.2% for the years ended April 30, 2002 and 2001. The
increase in the year ended April 30, 2002 has been a result of a commitment by
management to improve human resources within Market America to better serve the
needs of Market America's distributors. Bonus expense for the year ended April
30, 2002 was approximately $700,000 higher than for the previous year due to the
accrual of bonuses for the 2002 calendar year under the new calendar-year based
bonus plan established in the fourth quarter of the year ended April 30, 2002.
Market America's effective income tax rate was 39.0% in the year ended April 30,
2002 compared to 31.1% in the year ended April 30, 2001. The effective income
tax rate was lower for the year ended April 30, 2001 as a result of the
amendment of prior years' state income tax returns. In 2001, Market America
amended the returns due to a change in its multi-state income allocation
methodology and claimed refunds totaling $3,477,237.
The following table presents Market America's financial statement data for the
year ended April 30, 2002 alongside Market America's financial statement data
for the year ended April 30, 2001.
Year ended
April 30, 2002 April 30, 2001
------------------------- --------------------------
Sales $ 159,312,371 $138,513,706
Cost of Sales 40,413,286 36,405,439
------------------------- --------------------------
GROSS PROFIT 118,899,085 102,108,267
Selling Expenses:
Commissions 66,028,826 59,300,200
General and Administrative
Expenses:
Salaries 11,100,704 8,522,042
Consulting 261,599 640,713
Rents 1,270,644 1,193,551
Depreciation and
Amortization 1,401,685 937,208
Other expenses 8,009,536 6,678,166
------------------------- --------------------------
22,044,168 17,971,680
------------------------- --------------------------
INCOME FROM OPERATIONS 30,826,091 24,836,387
Other Income (Expense)
Interest income 1,867,113 3,366,261
Interest expense (211,206) (173,397)
Dividend income 25,934 29,137
Realized gain on available-
for-sale securities 186,633 686,260
Miscellaneous income 463,176 581,493
------------------------- --------------------------
2,331,650 4,489,754
------------------------- --------------------------
INCOME BEFORE TAXES 33,157,741 29,326,141
Income Taxes 12,931,889 9,113,747
------------------------- --------------------------
NET INCOME $ 20,225,852 $ 20,212,394
========================= ==========================
Basic earnings per common share $ 1.04 $ 1.04
========================= ==========================
Weighted average number of
shares outstanding 19,420,000 19,428,356
========================= ==========================
Market America's sales continued to grow during the three month periods ended
April 30, 2002. Net sales increased 19.2% to $44.2 million from $37.1 million
for the quarter ended April 30, 2002 compared to the same period in 2001. Net
sales increased by 15.0% to $159.3 million from $138.5 million for the year
ended April 30, 2002 compared to 2001. The company reported net income of $5.1
million for the fourth quarter of 2002 compared to $6.6 million for the fourth
quarter of 2001, a decrease of 22.0%. Earnings per share were $0.27 in the
fourth quarter of 2002 compared to $0.34 in the fourth quarter of 2001. The
decrease in net income and earnings per share was primarily due to a lower
effective income tax rate during the fiscal 2001 period as a result of the
amendment of several prior year state income tax returns claiming refunds due to
a change in Market America's multi-state income allocation methodology.
The following table summarizes Market America's financial statement data for the
three month period ended April 30, 2002 alongside Market America's financial
statement data for the three month period ended April 30, 2001.
Three month period ended
April 30, 2002 April 30, 2001
------------------------- --------------------------
(unaudited) (unaudited)
Sales $44,221,606 $37,097,357
Cost of Sales 11,120,329 9,835,303
------------------------- --------------------------
GROSS PROFIT 33,101,277 27,262,054
Selling Expenses:
Commissions 17,053,326 14,766,815
General and Administrative
Expenses:
Salaries 4,544,777 3,350,741
Consulting 99,334 73,845
Rents 358,201 279,114
Depreciation and
Amortization 355,999 252,837
Other Expenses 2,402,474 1,737,424
------------------------- --------------------------
7,760,785 5,693,961
------------------------- --------------------------
INCOME FROM OPERATIONS 8,287,166 6,801,278
Other Income (Expense)
Interest income 334,071 1,244,541
Interest expense (32,527) (56,559)
Dividend income 1,128 27,694
Realized gain on available-
for-sale securities 13,635 79,653
Miscellaneous income 90,506 119,870
------------------------- --------------------------
406,813 1,415,199
------------------------- --------------------------
INCOME BEFORE TAXES 8,693,979 8,216,477
Income Taxes 3,545,001 1,611,688
------------------------- --------------------------
NET INCOME $5,148,978 $6,604,789
========================= ==========================
Basic earnings per common share $0.27 $0.34
========================= ==========================
Weighted average number of
shares outstanding 19,420,000 19,420,000
========================= ==========================
The following table presents Market America's summary balance sheet at April 30,
2002 alongside Market America's summary balance sheet at April 30, 2001.
At April 30, 2002 At April 30, 2001
--------------------------------------------------
Working Capital $ 77,262,311 $ 59,501,154
Inventories 4,158,045 3,296,701
Total Assets 112,861,625 92,433,090
Long-Term Debt 1,845,422 1,955,346
Shareholders' Equity 96,306,796 76,100,087
Return on Shareholders' Equity (1) 23.5% 30.5%
- -------------------
(1) Net Income divided by average shareholders' equity
Market America markets a wide range of consumer-oriented products and services
through a network of over 85,000 Independent Distributors and UnFranchise(R)
Owners in the United States, Canada, Puerto Rico, Guam and the Bahamas, with
current expansion into Australia. These Independent Distributors build
personalized customer relations through One-to-One Marketing and manage a
portfolio of Preferred Customers that purchase products and supply data used to
create mass customized products. Through their Custom Web Portal, Distributors
service their customers and provide a conduit to market-driven products. Market
America is changing the face of business, one customer at a time.
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