May 01, 2012
Financial News, May 2012
Avon Rejects Coty’s Unsolicited Indication of Interest
Avon Products Inc. (AVP—NYSE) confirmed that it received an unsolicited, non-binding indication of interest from Coty Inc. to acquire Avon for $23.25 per share, or about $10 billion in cash.
Avon rejected Coty’s bid, saying it “substantially undervalues” the company and was not in the best interest of its shareholders, who would have received only a 20 percent premium over the company’s closing share price on March 30, 2012. The Avon Board said in a statement that the offer did not reflect “the fundamental value of Avon and its global beauty care franchise.”
Another matter of concern included strategic direction, and Avon’s Board of Directors remains confident in the company’s stand-alone prospects.
Also, the Board considered that Coty’s indication of interest does not constitute a real offer: Coty’s indication of interest is non-binding and, by its own terms, subject to numerous conditions such as financing, due diligence and the negotiation of a definitive agreement.
Completion of the CEO search was another concern, which is part of what the company believes is its strong long-term prospects. Avon’s Board has since finalized the search. Sherilyn S. (Sheri) McCoy was appointed CEO effective April 23, 2012, and will also serve as a director on the company’s Board. She assumes leadership of Avon following a 30-year career at Johnson & Johnson.
Coty is a privately held company that is majority-owned by Joh. A Benckiser, the largest shareholder in the European consumer-products maker Reckitt Benckiser Group Plc (RB). The company sells perfumes by Heidi Klum and Beyonce Knowles and holds licenses for Calvin Klein and Marc Jacobs brands.
Avon, the company for women, is a leading global beauty company, with over $11 billion in annual revenue. As the world’s largest direct seller, Avon markets to women in more than 100 countries through approximately 6.4 million active independent Avon Sales Representatives.
Medifast Inc. (MED—NYSE), a U.S. manufacturer and provider of clinically proven portion-controlled weight-loss programs, reported financial results for the fourth quarter and fiscal year ended Dec. 31, 2011.
Fourth Quarter 2011
For the fourth quarter ended Dec. 31, 2011, Medifast net revenue increased 10 percent to $69.6 million from net revenue of $63.0 million in the fourth quarter of the prior year.
Revenue in the direct sales channel, Take Shape for Life, increased 4 percent to $43.3 million in the fourth quarter of 2011, compared to $41.5 million in the same period last year. Growth in revenue for Take Shape for Life was driven by increased customer product sales as a result of an increase in the number of active health coaches. The company ended the quarter with approximately 9,600 active health coaches, an increase of 7 percent compared to 9,000 in the fourth quarter of 2010.
Gross profit for the fourth quarter of 2011 increased 12 percent to $52.3 million, compared to $46.8 million in the fourth quarter of the prior year. The company’s gross profit margin increased 100 basis points to 75.2 percent in the fourth quarter versus 74.2 percent in the fourth quarter of 2010.
Operating income for the fourth quarter of 2011 was $1.5 million, compared to $5.2 million in the same period a year ago. The operating margin decreased to 2.2 percent, compared to 8.3 percent last year.
Net income for the fourth quarter of 2011 was $1.2 million, or 8 cents per diluted share, compared to net income of $3.4 million, or 23 cents per diluted share for the comparable period last year.
Fiscal Year 2011
For the fiscal year ended Dec. 31, 2011, Medifast reported a net revenue increase of 16 percent to $298.2 million from net revenue of $257.6 million in 2010.
Gross profit for the full year 2011 increased 17 percent to $224.5 million, compared to $192.5 million in the same period last year. The company’s gross profit margin increased 60 basis points to 75.3 percent in 2011 versus 74.7 percent in 2010.
Fiscal year 2011 operating income was $27.4 million compared to $31.6 million in the same period a year ago. The company’s operating margin was 9.2 percent versus 12.3 percent for the same period last year.
Net income for the fiscal year 2011 was $18.5 million, or $1.31 per diluted share, compared to net income of $19.6 million, or $1.35 per share, for the comparable period last year.
Medifast Inc., founded in 1980 and located in Owings Mills, Md., sells its products and programs via four unique distribution channels: the web and national call centers, the Take Shape for Life personal coaching division, medically supervised Medifast Weight Control Centers, and a national network of wholesale physicians and medical practices.
RBC Life Sciences Inc.
RBC Life Sciences Inc. (RBCL—OTCQB), a provider of proprietary nutritional supplements, and wound care and pain management products, reported consolidated net sales of $28.4 million for the year ended Dec. 31, 2011, a 1 percent increase over 2010 consolidated net sales of $28.2 million. For the year ended Dec. 31, 2011, the company reported a net loss of $71,000, or zero cents per diluted share, compared to net earnings of $558,000, or 2 cents per diluted share, during 2010.
According to RBC Life Sciences President and CEO Clinton H. Howard, the launch of a new dietary supplement product, along with the expansion of business in Southeast Asia, accounted for much of the sales growth. And the net loss for the year resulted mainly from investments made in a new branch office in Taiwan—which opened Oct. 1, 2011—and a decline in international licensee sales.
Through wholly owned subsidiaries, RBC Life Sciences develops, markets and distributes high-quality nutritional supplements and personal care products under its RBC Life brand to a growing population of consumers seeking wellness and a healthy lifestyle.
Relìv International Inc.
Relìv International Inc. (RELV—NASDAQ), a maker of nutritional supplements that promote optimal health, reported its financial results for the fourth quarter and full year of 2011.
Fourth Quarter 2011
Relìv reported net sales of $16.9 million for the fourth quarter of 2011, compared with sales of $18.5 million for the fourth quarter of 2010. U.S. sales declined by 13.4 percent for the quarter, compared with the same quarter in 2010. International sales for the quarter increased 14.4 percent, led by significant growth in Europe, which reported an increase of 83.9 percent.
Relìv reported net income of $320,000, or 3 cents per diluted share, for the fourth quarter of 2011, compared with net income of $559,000, or 5 cents per diluted share, for the fourth quarter of 2010. Income from operations for the fourth quarter of 2011 was $471,000, compared with $827,000 in the same quarter of 2010.
Full Year 2011
Relìv reported net sales of $73.9 million for 2011, compared with net sales of $78.7 million in 2010. U.S. net sales decreased from $66.9 million to $60.9 million. Net sales in Relìv’s foreign markets for 2011 increased 9.7 percent, compared with net sales for 2010. Net sales were particularly strong in Europe, where net sales increased 80.4 percent. Growth in the European market in 2011 was driven by strong increases in new distributor enrollments.
Net income for 2011 was $1.0 million, compared with $1.7 million in 2010. Diluted earnings per share were 8 cents in 2011, compared with 14 cents in 2010.
Relìv International Inc., based in Chesterfield, Mo., produces nutritional supplements that promote optimal nutrition along with premium skincare products. The company sells its products through an international network marketing system of independent distributors in 15 countries.
Lightyear Network Solutions Inc.
Lightyear Network Solutions Inc. (LYNS.OB—OTCBB), an established provider of data, voice and wireless telecommunication services to business and residential customers throughout North America, announced its financial results for the year ended Dec. 31, 2011.
2011 non-GAAP EBITDA improved to $1.3 million, compared with a loss before interest, taxes, depreciation, amortization and net gain on bargain purchase of $2.5 million in 2010.
2011 net loss from operations was $900,000, compared with 2010’s loss from operations of $2.9 million.
Due to the redemption of the 9.5 million shares of Convertible Preferred Stock, the company reported a deemed dividend of approximately $11.8 million, or approximately 54 cents per diluted share.
Loss per Common Share before the deemed dividend for the redemption of Convertible Preferred Stock was 3 cents.
Through its wholly owned subsidiaries, Lightyear Network Solutions Inc. provides telecommunication services to large, medium and small businesses and to residential consumers throughout North America.
Natural Health Trends Corp.
Natural Health Trends Corp. (NHTC.PK—OTCQB) announced its financial results for the quarter ended Dec. 31, 2011. The company reported sales of $8.2 million, up 33 percent over a year ago, and earnings per share of 4 cents for the quarter, compared to losses per share of 4 cents during the comparable period in 2010.
Natural Health Trends Corp. is an international direct selling and e-commerce company operating through its subsidiaries throughout Asia, North America and Europe. The company markets premium quality personal care products under the NHT Global brand.
Educational Development Corp.
Educational Development Corp. (EDUC—NASDAQ) announced their quarterly cash dividend.
The Board of Directors has authorized a 12 cents per share cash dividend. The dividend was payable on March 16, 2012, to shareholders of record March 9, 2012.
Educational Development Corp. sells children’s books, including Usborne Books and the Kane/Miller line of international children’s titles, through a multi-level sales organization of independent consultants, through 5,000 retail stores and over the Internet.
Just Energy Group Inc.
Just Energy Group Inc. (JE.TO—NYSE; JE.TO—TSX), parent company to direct seller Momentis, filed notice with the Toronto Stock Exchange and the New York Stock Exchange announcing its March dividend of CAN$0.10333/common share (CAN$1.24 annually) payable on March 31, 2012, to shareholders of record at the close of business on March 15, 2012. This dividend is designated as an “eligible dividend” for Canadian income tax purposes.
Just Energy also reports that at Feb. 29, 2012, the conversion price for each CAN$1,000 of its outstanding 6 percent convertible unsecured subordinated debenture issued on Oct. 2, 2007, has been adjusted in accordance with the Trust Indenture dated Oct. 2, 2007, as supplemented from time to time, to CAN$29.56 convertible into 33.83 common shares of Just Energy Group Inc.
Just Energy, which commenced business in 1997, primarily sells natural gas and electricity to residential and commercial customers under long-term fixed-price, price-protected or variable-priced contracts and green energy products.
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