Nature's Sunshine Products Provides Update on Comments on Fourth Quarter and Status of Review of Selected Financial Information
February 17 2006 - 11:23AM
Business Wire
Nature's Sunshine Products, Inc. (NASDAQ:NATRE) today provided an
update on its January 13th comments on operating results for the
fourth quarter ended December 31, 2005, and on the status of its
review of selected financial information with respect to certain of
its foreign operations. As previously announced, the Company
continues to expect to report an approximate 4 percent increase in
sales for the period. However, Nature's Sunshine is now
anticipating fourth quarter operating income of approximately $0.8
million, as compared to $6.4 million in the corresponding period in
2004. On January 13th, the Company said it expected a 3 percent
increase in operating income. The new estimate of operating income
primarily reflects increased allowances for volume discounts,
inventory adjustments, and increased selling, general and
administrative costs. As a result, including the previously
disclosed effects of the higher tax rate resulting from the
strategic transfer of certain assets from the United States to
international locations, which remains unchanged, the Company
currently anticipates a fourth quarter net loss of approximately
$5.2 million. The Company's anticipated fourth quarter operating
results, even as updated, are preliminary and have not been audited
and, consequently, are subject to change or adjustment. The Company
noted that its cash position remains strong and that domestic
operations continued to grow in 2005. Complete operating results
for the fourth quarter and 12 months ended December 31, 2005, will
be reported when completed. Nature's Sunshine previously reported
that it was reviewing selected financial information with respect
to certain of its foreign operations and, therefore, the Company's
independent auditor had not completed its review of the Company's
financial statements for the three and nine month periods ended
September 30, 2005. As a result, the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2005, which was filed
on November 22, 2005, included unaudited consolidated financial
statements for the three and nine month periods ended September 30,
2005 for which the Company's independent auditor had not completed
its review. Because the Form 10-Q was not complete, the Company is
not in compliance with Nasdaq Marketplace Rule 4310(c)(14) and
received notice from Nasdaq that its common stock was subject to
delisting. At a hearing before the Nasdaq Listing Qualifications
Panel on December 8, 2005, the Company requested an extension to
file its complete 10-Q for the third quarter of 2005. On January
19, 2006, the Panel granted the Company an extension until March
31, 2006 to file its complete 10-Q. Since the review commenced, the
Company's Audit Committee, which is overseeing the review, has
expanded the scope of the review and commenced an investigation of
certain matters identified in the review. The investigation
involves matters related to fiscal 2005 as well as prior periods.
The Audit Committee engaged a nationally recognized independent law
firm to assist it in the review and investigation. The law firm
engaged a nationally recognized independent accounting firm to
assist it. Concerns regarding certain transactions of the Company's
foreign subsidiaries have been identified, and continue to be
reviewed. The Company investigation is not yet completed. However,
the Company has begun to implement certain remedial measures to
address the concerns about certain foreign transactions and is
committed to implementing any additional remedial measures
necessary to address any additional issues that may be identified
by the investigation. In addition, as soon as possible following
the completion of the investigation, the Company intends to file an
amendment to its 10-Q for the 3rd quarter of 2005 to reflect the
review of the Company's independent auditor. About Nature's
Sunshine Nature's Sunshine Products manufactures and markets
through direct sales encapsulated and tableted herbal products,
high quality natural vitamins, and other complementary products. In
addition to the United States, the Company has operations in Japan,
Mexico, Central America, South Korea, Canada, Dominican Republic,
Venezuela, Ecuador, Peru, the United Kingdom and Ireland, Colombia,
Brazil, Thailand, Israel, Singapore and Taiwan. The Company also
has exclusive distribution agreements with selected companies in
Argentina, Australia, Chile, New Zealand, Norway, and the Russian
Federation. Statements in this press release concerning the
Company's business outlook, the ongoing review of selected
financial information of certain operations, or future economic
performance, anticipated profitability, revenues, expenses or other
financial items, and product line growth, together with other
statements that are not historical facts, are "forward-looking
statements" as that term is defined under Federal Securities Laws.
"Forward-looking statements" are subject to risks, uncertainties
and other factors, which could cause actual results to differ
materially from those set forth in such statements. Such risks,
uncertainties, and factors include, but are not limited to, foreign
business risks, industry cyclicality, fluctuations in customer
demand and order pattern, changes in pricing and general economic
conditions, the results of the Company's investigation, the
accuracy of the Company's estimates of fourth quarter operating
results, the Company's ability to satisfy the Nasdaq's requirements
for the Company's continued listing on the Nasdaq National Market,
as well as other risks detailed in the Company's filings with the
Securities and Exchange Commission. The Company disclaims any
obligations to update any forward-looking statement as a result of
developments occurring after the date of this press release.
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