x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-3714405 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer x | Non-accelerated filer o |
Class | Outstanding at November 12, 2013 | |
Common stock, $.001 par value per share | 13,884,293 |
Part 1 Financial Information: | |
Item 1 Financial Statements | |
Condensed Consolidated Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012 (audited) | 3 |
Condensed Consolidated Statements of Income (unaudited) for the Three and Nine Months Ended September 30, 2013 and 2012 | 4 |
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended September 30, 2013 and 2012 | 5 |
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Nine Months Ended September 30, 2013 | 6 |
Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2013 and 2012 | 7 |
Notes to Unaudited Condensed Financial Statements | 8 |
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
Item 3 Quantitative and Qualitative Disclosures about Market Risk | 24 |
Item 4 Controls and Procedures | 24 |
Part II Other Information: | |
Item 1 Legal Proceedings | 24 |
Item 1.A Risk Factors | 24 |
Item 5 Other Information | 25 |
Item 6 Exhibits | 27 |
2 | ||
|
|
(Unaudited) |
|
(Audited) |
| ||
|
|
September 30, 2013 |
|
December 31, 2012 |
| ||
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
47,980,000 |
|
$ |
39,937,000 |
|
Accounts receivable-net of allowance for sales returns and doubtful accounts of $731,000 and $542,000 |
|
|
1,932,000 |
|
|
2,148,000 |
|
Inventory |
|
|
17,451,000 |
|
|
20,804,000 |
|
Investment securities |
|
|
34,028,000 |
|
|
20,057,000 |
|
Income taxes, prepaid |
|
|
2,555,000 |
|
|
873,000 |
|
Prepaid expenses and other current assets |
|
|
2,035,000 |
|
|
3,296,000 |
|
Deferred tax assets |
|
|
875,000 |
|
|
1,460,000 |
|
Total current assets |
|
|
106,856,000 |
|
|
88,575,000 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment - net |
|
|
41,135,000 |
|
|
40,109,000 |
|
Trademarks and intangibles - net |
|
|
49,000 |
|
|
428,000 |
|
Other assets |
|
|
356,000 |
|
|
1,139,000 |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
148,396,000 |
|
$ |
130,251,000 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
30,338,000 |
|
$ |
28,221,000 |
|
Current maturities of long-term debt and capital leases |
|
|
220,000 |
|
|
528,000 |
|
Total current liabilities |
|
|
30,558,000 |
|
|
28,749,000 |
|
|
|
|
|
|
|
|
|
Other liabilities: |
|
|
|
|
|
|
|
Long-term debt, net of current portion |
|
|
- |
|
|
3,113,000 |
|
Capital leases, net of current portion |
|
|
530,000 |
|
|
696,000 |
|
Deferred tax liabilities |
|
|
5,970,000 |
|
|
6,907,000 |
|
Total liabilities |
|
|
37,058,000 |
|
|
39,465,000 |
|
|
|
|
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
|
|
|
Preferred stock, $.001 par value (1,500,000 authorized, no shares issued and outstanding) |
|
|
- |
|
|
- |
|
Common stock; par value $.001 per share; 20,000,000 shares authorized; 15,542,118 and 15,525,955 issued; 13,884,293 and 13,767,380 issued and outstanding |
|
|
16,000 |
|
|
16,000 |
|
Additional paid-in capital |
|
|
42,285,000 |
|
|
40,191,000 |
|
Accumulated other comprehensive income |
|
|
332,000 |
|
|
553,000 |
|
Retained earnings |
|
|
95,213,000 |
|
|
76,534,000 |
|
Less: cost of 1,608,908 shares of common stock in treasury |
|
|
(26,508,000) |
|
|
(26,508,000) |
|
Total stockholders' equity |
|
|
111,338,000 |
|
|
90,786,000 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
148,396,000 |
|
$ |
130,251,000 |
|
3 | ||
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
86,480,000 |
|
$ |
90,968,000 |
|
$ |
279,595,000 |
|
$ |
273,464,000 |
|
Cost of sales |
|
|
21,627,000 |
|
|
22,632,000 |
|
|
69,403,000 |
|
|
68,233,000 |
|
Gross Profit |
|
|
64,853,000 |
|
|
68,336,000 |
|
|
210,192,000 |
|
|
205,231,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administration |
|
|
57,504,000 |
|
|
59,408,000 |
|
|
183,624,000 |
|
|
185,568,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
7,349,000 |
|
|
8,928,000 |
|
|
26,568,000 |
|
|
19,663,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income, net |
|
|
167,000 |
|
|
64,000 |
|
|
317,000 |
|
|
226,000 |
|
Other income |
|
|
362,000 |
|
|
(13,000) |
|
|
581,000 |
|
|
925,000 |
|
|
|
|
529,000 |
|
|
51,000 |
|
|
898,000 |
|
|
1,151,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
7,878,000 |
|
|
8,979,000 |
|
|
27,466,000 |
|
|
20,814,000 |
|
Provision for income taxes |
|
|
2,205,000 |
|
|
1,771,000 |
|
|
8,787,000 |
|
|
6,803,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5,673,000 |
|
$ |
7,208,000 |
|
$ |
18,679,000 |
|
$ |
14,011,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.41 |
|
$ |
0.53 |
|
$ |
1.35 |
|
$ |
1.02 |
|
Diluted earnings per share |
|
$ |
0.41 |
|
$ |
0.52 |
|
$ |
1.34 |
|
$ |
1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
13,884,293 |
|
|
13,705,188 |
|
|
13,852,155 |
|
|
13,709,702 |
|
Diluted |
|
|
13,903,412 |
|
|
13,804,212 |
|
|
13,955,217 |
|
|
13,766,013 |
|
4 | ||
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5,673,000 |
|
$ |
7,208,000 |
|
$ |
18,679,000 |
|
$ |
14,011,000 |
|
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gains/losses on marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of marketable securities, net of tax |
|
|
304,000 |
|
|
165,000 |
|
|
(4,000) |
|
|
292,000 |
|
Adjustment for net (gains)/losses realized and included in net income, net of tax |
|
|
(32,000) |
|
|
(1,000) |
|
|
(217,000) |
|
|
(91,000) |
|
Total change in unrealized gains/losses on marketable securities, net of tax |
|
|
272,000 |
|
|
164,000 |
|
|
(221,000) |
|
|
201,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
272,000 |
|
|
164,000 |
|
|
(221,000) |
|
|
201,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
5,945,000 |
|
$ |
7,372,000 |
|
$ |
18,458,000 |
|
$ |
14,212,000 |
|
5 | ||
|
|
Number of Shares Issued |
|
Par Value $0.001 Amount |
|
Additional Paid- In Capital |
|
Retained Earnings |
|
Accumulated other comprehensive income |
|
Treasury Stock |
|
Total |
| |||||||
Balance, December 31, 2012 |
|
|
15,525,955 |
|
$ |
16,000 |
|
$ |
40,191,000 |
|
$ |
76,534,000 |
|
$ |
553,000 |
|
$ |
(26,508,000) |
|
$ |
90,786,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued to executives |
|
|
16,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation to executives and directors |
|
|
|
|
|
|
|
|
1,772,000 |
|
|
|
|
|
|
|
|
|
|
|
1,772,000 |
|
Share-based compensation tax benefit |
|
|
|
|
|
|
|
|
322,000 |
|
|
|
|
|
|
|
|
|
|
|
322,000 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
18,679,000 |
|
|
|
|
|
|
|
|
18,679,000 |
|
Net change in unrealized gain on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(221,000) |
|
|
|
|
|
(221,000) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2013 |
|
|
15,542,118 |
|
$ |
16,000 |
|
$ |
42,285,000 |
|
$ |
95,213,000 |
|
$ |
332,000 |
|
$ |
(26,508,000) |
|
$ |
111,338,000 |
|
6 | ||
|
|
Nine Months Ended September 30, |
| ||||
|
|
2013 |
|
2012 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income |
|
$ |
18,679,000 |
|
$ |
14,011,000 |
|
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
7,912,000 |
|
|
8,219,000 |
|
Realized gain on investment securities, net |
|
|
(337,000) |
|
|
(4,000) |
|
Share-based compensation |
|
|
1,772,000 |
|
|
1,816,000 |
|
Deferred income taxes |
|
|
(47,000) |
|
|
(440,000) |
|
Loss on disposal of fixed assets |
|
|
85,000 |
|
|
59,000 |
|
Changes in assets and liabilities which provided (used) cash: |
|
|
|
|
|
|
|
Accounts receivable |
|
|
216,000 |
|
|
(1,255,000) |
|
Inventory |
|
|
3,353,000 |
|
|
1,690,000 |
|
Prepaid expenses and other current assets |
|
|
1,261,000 |
|
|
(19,000) |
|
Other assets |
|
|
764,000 |
|
|
219,000 |
|
Accounts payable and accrued expenses |
|
|
2,117,000 |
|
|
10,603,000 |
|
Income taxes |
|
|
(1,682,000) |
|
|
4,828,000 |
|
Net cash provided by operating activities |
|
|
34,093,000 |
|
|
39,727,000 |
|
Cash Flow from Investing Activities: |
|
|
|
|
|
|
|
Sale of investment securities |
|
|
7,416,000 |
|
|
7,140,000 |
|
Purchase of investment securities |
|
|
(21,576,000) |
|
|
(6,802,000) |
|
Purchase of property and equipment |
|
|
(8,644,000) |
|
|
(7,435,000) |
|
Net cash used in investing activities |
|
|
(22,804,000) |
|
|
(7,097,000) |
|
Cash Flow from Financing Activities: |
|
|
|
|
|
|
|
Repayment of long-term debt and capital leases |
|
|
(3,587,000) |
|
|
(1,297,000) |
|
Decrease in note receivable |
|
|
19,000 |
|
|
13,000 |
|
Excess tax benefits from share-based compensation |
|
|
322,000 |
|
|
567,000 |
|
Purchase of treasury stock |
|
|
- |
|
|
(2,764,000) |
|
Net cash used in financing activities |
|
|
(3,246,000) |
|
|
(3,481,000) |
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
|
8,043,000 |
|
|
29,149,000 |
|
Cash and cash equivalents - beginning of the period |
|
|
39,937,000 |
|
|
14,262,000 |
|
Cash and cash equivalents - end of period |
|
$ |
47,980,000 |
|
$ |
43,411,000 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
Interest paid |
|
$ |
49,000 |
|
$ |
93,000 |
|
Income taxes paid |
|
$ |
10,143,000 |
|
$ |
2,249,000 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non cash activity: |
|
|
|
|
|
|
|
Capitalized lease additions |
|
$ |
- |
|
$ |
104,000 |
|
7 | ||
1. |
Basis of Presentation |
2. |
Presentation of Financial Statements |
3. |
Recent Accounting Pronouncements |
4. |
Revenue Recognition |
5. |
Inventories |
8 | ||
|
|
2013 |
|
2012 |
| ||
Raw Materials |
|
$ |
5,235,000 |
|
$ |
5,685,000 |
|
Packaging |
|
|
730,000 |
|
|
653,000 |
|
Non-food Finished Goods |
|
|
796,000 |
|
|
961,000 |
|
Finished Goods |
|
|
10,936,000 |
|
|
13,857,000 |
|
Reserve for Obsolete Inventory |
|
|
(246,000) |
|
|
(352,000) |
|
|
|
$ |
17,451,000 |
|
$ |
20,804,000 |
|
9 | ||
6. |
Intangible Assets |
|
|
As of September 30, 2013 |
|
As of December 31, 2012 |
|
|
| ||||||||
|
|
Gross Carrying Amount |
|
Accumulated Amortization |
|
Gross Carrying Amount |
|
Accumulated Amortization |
|
Weighted-Avg. Amortization Period |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer lists |
|
$ |
235,000 |
|
$ |
228,000 |
|
$ |
235,000 |
|
$ |
206,000 |
|
3 years |
|
Trademarks, patents, and copyrights |
|
|
2,437,000 |
|
|
2,395,000 |
|
|
2,437,000 |
|
|
2,038,000 |
|
4 years |
|
Total |
|
$ |
2,672,000 |
|
$ |
2,623,000 |
|
$ |
2,672,000 |
|
$ |
2,244,000 |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
Customer lists |
|
$ |
7,000 |
|
$ |
20,000 |
|
$ |
22,000 |
|
$ |
60,000 |
|
Trademarks, patents, and copyrights |
|
|
111,000 |
|
|
132,000 |
|
|
357,000 |
|
|
351,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total trademarks and intangibles |
|
$ |
118,000 |
|
$ |
152,000 |
|
$ |
379,000 |
|
$ |
411,000 |
|
7. |
Earnings per Share |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5,673,000 |
|
$ |
7,208,000 |
|
$ |
18,679,000 |
|
$ |
14,011,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding |
|
|
13,884,293 |
|
|
13,705,188 |
|
|
13,852,155 |
|
|
13,709,702 |
|
Effect of dilutive common stock equivalents |
|
|
19,119 |
|
|
99,024 |
|
|
103,062 |
|
|
56,311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common shares outstanding |
|
|
13,903,412 |
|
|
13,804,212 |
|
|
13,955,217 |
|
|
13,766,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.41 |
|
$ |
0.53 |
|
$ |
1.35 |
|
$ |
1.02 |
|
Diluted |
|
$ |
0.41 |
|
$ |
0.52 |
|
$ |
1.34 |
|
$ |
1.02 |
|
10 | ||
8. |
Estimates |
9. |
Financial Instruments |
11 | ||
|
|
September 30, 2013 |
| |||||||||||||||||||
|
|
Cost |
|
Unrealized Gains |
|
Unrealized Losses |
|
Accrued Interest |
|
Estimated Fair Value |
|
Cash & Cash Equivalents |
|
Investment Securities |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
45,816,000 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
45,816,000 |
|
$ |
45,816,000 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money Market Accounts |
|
|
2,164,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
2,164,000 |
|
|
2,164,000 |
|
|
- |
|
Mutual Funds |
|
|
9,426,000 |
|
|
52,000 |
|
|
(244,000) |
|
|
- |
|
|
9,234,000 |
|
|
- |
|
|
9,234,000 |
|
Corporate Equity Securities |
|
|
4,585,000 |
|
|
668,000 |
|
|
(98,000) |
|
|
- |
|
|
5,155,000 |
|
|
- |
|
|
5,155,000 |
|
Government & Agency Securities |
|
|
7,774,000 |
|
|
83,000 |
|
|
(76,000) |
|
|
31,000 |
|
|
7,812,000 |
|
|
- |
|
|
7,812,000 |
|
|
|
|
23,949,000 |
|
|
803,000 |
|
|
(418,000) |
|
|
31,000 |
|
|
24,365,000 |
|
|
2,164,000 |
|
|
22,201,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Bonds |
|
|
3,629,000 |
|
|
99,000 |
|
|
- |
|
|
23,000 |
|
|
3,751,000 |
|
|
- |
|
|
3,751,000 |
|
Corporate Bonds |
|
|
8,007,000 |
|
|
73,000 |
|
|
(57,000) |
|
|
53,000 |
|
|
8,076,000 |
|
|
- |
|
|
8,076,000 |
|
|
|
|
11,636,000 |
|
|
172,000 |
|
|
(57,000) |
|
|
76,000 |
|
|
11,827,000 |
|
|
- |
|
|
11,827,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
81,401,000 |
|
$ |
975,000 |
|
$ |
(475,000) |
|
$ |
107,000 |
|
$ |
82,008,000 |
|
$ |
47,980,000 |
|
$ |
34,028,000 |
|
|
|
December 31, 2012 |
| |||||||||||||||||||
|
|
Cost |
|
Unrealized Gains |
|
Unrealized Losses |
|
Accrued Interest |
|
Estimated Fair Value |
|
Cash & Cash Equivalents |
|
Investment Securities |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
38,977,000 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
38,977,000 |
|
$ |
38,977,000 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money Market Accounts |
|
|
960,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
960,000 |
|
|
960,000 |
|
|
- |
|
Mutual Funds |
|
|
234,000 |
|
|
13,000 |
|
|
(1,000) |
|
|
- |
|
|
246,000 |
|
|
- |
|
|
246,000 |
|
Corporate Equity Securities |
|
|
1,853,000 |
|
|
489,000 |
|
|
(46,000) |
|
|
- |
|
|
2,296,000 |
|
|
- |
|
|
2,296,000 |
|
Government & Agency Securities |
|
|
7,004,000 |
|
|
180,000 |
|
|
(3,000) |
|
|
34,000 |
|
|
7,215,000 |
|
|
- |
|
|
7,215,000 |
|
|
|
|
10,051,000 |
|
|
682,000 |
|
|
(50,000) |
|
|
34,000 |
|
|
10,717,000 |
|
|
960,000 |
|
|
9,757,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Bonds |
|
|
4,197,000 |
|
|
124,000 |
|
|
(4,000) |
|
|
27,000 |
|
|
4,344,000 |
|
|
- |
|
|
4,344,000 |
|
Corporate Bonds |
|
|
5,772,000 |
|
|
136,000 |
|
|
(2,000) |
|
|
50,000 |
|
|
5,956,000 |
|
|
- |
|
|
5,956,000 |
|
|
|
|
9,969,000 |
|
|
260,000 |
|
|
(6,000) |
|
|
77,000 |
|
|
10,300,000 |
|
|
- |
|
|
10,300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
58,997,000 |
|
$ |
942,000 |
|
$ |
(56,000) |
|
$ |
111,000 |
|
$ |
59,994,000 |
|
$ |
39,937,000 |
|
$ |
20,057,000 |
|
10. |
Shared-based Compensation |
|
|
Shares |
|
Weighed-Average Grant Date Fair Value |
| ||
Unvested at December 31, 2012 |
|
|
149,667 |
|
$ |
8.21 |
|
Granted |
|
|
314,706 |
|
|
25.23 |
|
Vested |
|
|
(151,883) |
|
|
13.14 |
|
Forfeited |
|
|
- |
|
|
- |
|
Unvested at September 30, 2013 |
|
|
312,490 |
|
$ |
22.95 |
|
12 | ||
11. |
Business Segments |
13 | ||
|
|
Three Months Ended September, 2013 |
| ||||||||||
|
|
Medifast |
|
MWCC & Wholesale |
|
Other |
|
Consolidated |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
73,324,000 |
|
$ |
13,156,000 |
|
$ |
- |
|
$ |
86,480,000 |
|
Cost of Sales |
|
|
18,120,000 |
|
|
3,507,000 |
|
|
- |
|
|
21,627,000 |
|
Selling, General and Administrative Expense |
|
|
44,970,000 |
|
|
8,434,000 |
|
|
1,408,000 |
|
|
54,812,000 |
|
Depreciation and Amortization |
|
|
1,939,000 |
|
|
684,000 |
|
|
69,000 |
|
|
2,692,000 |
|
Interest(net) and other |
|
|
(306,000) |
|
|
3,000 |
|
|
(226,000) |
|
|
(529,000) |
|
Income before income taxes |
|
$ |
8,601,000 |
|
$ |
528,000 |
|
$ |
(1,251,000) |
|
$ |
7,878,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Assets |
|
$ |
91,370,000 |
|
$ |
12,450,000 |
|
$ |
44,576,000 |
|
$ |
148,396,000 |
|
|
|
Three Months Ended September 30, 2012 |
| ||||||||||
|
|
Medifast |
|
MWCC & Wholesale |
|
Other |
|
Consolidated |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
76,777,000 |
|
$ |
14,191,000 |
|
$ |
- |
|
$ |
90,968,000 |
|
Cost of Sales |
|
|
18,986,000 |
|
|
3,646,000 |
|
|
- |
|
|
22,632,000 |
|
Selling, General and Administrative Expense |
|
|
46,118,000 |
|
|
9,311,000 |
|
|
1,012,000 |
|
|
56,441,000 |
|
Depreciation and Amortization |
|
|
2,068,000 |
|
|
841,000 |
|
|
58,000 |
|
|
2,967,000 |
|
Interest(net) and other |
|
|
30,000 |
|
|
5,000 |
|
|
(86,000) |
|
|
(51,000) |
|
Income before income taxes |
|
$ |
9,575,000 |
|
$ |
388,000 |
|
$ |
(984,000) |
|
$ |
8,979,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Assets |
|
$ |
82,402,000 |
|
$ |
17,362,000 |
|
$ |
28,536,000 |
|
$ |
128,300,000 |
|
|
|
Nine Months Ended September, 2013 |
| ||||||||||
|
|
Medifast |
|
MWCC & Wholesale |
|
Other |
|
Consolidated |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
238,625,000 |
|
$ |
40,970,000 |
|
$ |
- |
|
$ |
279,595,000 |
|
Cost of Sales |
|
|
58,790,000 |
|
|
10,613,000 |
|
|
- |
|
|
69,403,000 |
|
Selling, General and Administrative Expense |
|
|
145,028,000 |
|
|
26,058,000 |
|
|
4,626,000 |
|
|
175,712,000 |
|
Depreciation and Amortization |
|
|
5,583,000 |
|
|
2,135,000 |
|
|
194,000 |
|
|
7,912,000 |
|
Interest(net) and other |
|
|
(228,000) |
|
|
7,000 |
|
|
(677,000) |
|
|
(898,000) |
|
Income before income taxes |
|
$ |
29,452,000 |
|
$ |
2,157,000 |
|
$ |
(4,143,000) |
|
$ |
27,466,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Assets |
|
$ |
91,370,000 |
|
$ |
12,450,000 |
|
$ |
44,576,000 |
|
$ |
148,396,000 |
|
|
|
Nine Months Ended September 30, 2012 |
| ||||||||||
|
|
Medifast |
|
MWCC & Wholesale |
|
Other |
|
Consolidated |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
230,550,000 |
|
$ |
42,914,000 |
|
$ |
- |
|
$ |
273,464,000 |
|
Cost of Sales |
|
|
57,694,000 |
|
|
10,539,000 |
|
|
- |
|
|
68,233,000 |
|
Selling, General and Administrative Expense |
|
|
138,140,000 |
|
|
31,426,000 |
|
|
7,783,000 |
|
|
177,349,000 |
|
Depreciation and Amortization |
|
|
5,955,000 |
|
|
2,071,000 |
|
|
193,000 |
|
|
8,219,000 |
|
Interest(net) and other |
|
|
76,000 |
|
|
14,000 |
|
|
(1,241,000) |
|
|
(1,151,000) |
|
Income before income taxes |
|
$ |
28,685,000 |
|
$ |
(1,136,000) |
|
$ |
(6,735,000) |
|
$ |
20,814,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Assets |
|
$ |
82,402,000 |
|
$ |
17,362,000 |
|
$ |
28,536,000 |
|
$ |
128,300,000 |
|
14 | ||
12. |
Contingencies |
15 | ||
Item 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. FORWARD LOOKING STATEMENTS |
16 | ||
· | Commissions: The primary way a Health Coach is compensated is through earning commissions on product sold. Health Coaches earn commissions by referring product sales through their own replicated website or through the Company’s in-house call center. The clients of Health Coaches are responsible for ordering and paying for products, and their order is shipped directly from the Company to the client’s home or designated address. Our Health Coaches do not handle payments and are not required to purchase or store products in order to receive a commission. In addition, Health Coaches do not receive a commission on their own personal product orders. Health Coaches pay the same price for products as their clients. The Company pays retail commissions to qualified Health Coaches on a weekly basis. |
· | Bonuses: Health Coaches are offered several bonus opportunities, including client support bonuses, certification bonus, team growth bonuses, generation bonuses, elite leadership bonuses, consistency bonuses, client acquisition bonuses, and new Health Coach assist bonuses. The purposes of these bonuses are to reward Health Coaches for successfully referring product sales to the Take Shape For Life network, and to incentivize Health Coaches to further support and develop other Health Coaches within their network. The Company pays bonuses on a monthly basis to qualified Health Coaches. |
17 | ||
o |
Client Support bonuses are paid to Health Coaches who have at least 1,200 in frontline product sales to either Clients or personally sponsored Health Coaches. These are incremental bonuses based on the Health Coach frontline product sales performance. |
|
o |
Certification bonus is paid to Health Coaches who have purchased the COPE online certification course, completed the course work and passed a final examination. This bonus is earned on all frontline product sales starting in the month certification status is obtained. |
|
|
|
|
o |
Team growth bonuses are paid to Health Coaches who have at least five ordering clients per month and who have generated over $1,200 in group product sales per month. Monthly growth bonuses are incremental bonuses that enable Health Coaches to earn income on product orders placed by clients and/or Health Coach Teams within their network. |
|
|
|
|
o |
Generation bonuses are paid to Health Coaches who qualify as Executive Director and have one or more Health Coaches in their business who have achieved the rank of Executive Director. An Executive Director is a Health Coach who has obtained 5 Qualifying Points. Qualifying Points are earned for every $1,200 in frontline product sales generated or every qualified Senior Coach Team. . A Senior Coach is a Health Coach who generates at least $1,200 a month in group product sales from a combination of at least five personally enrolled, ordering Clients, and/or Health Coaches, Health Coach teams, or a combination of both. |
|
|
|
|
o |
Elite leadership bonuses are paid to Health Coaches who qualify as Executive Director and have three or more Health Coaches in their business who have achieved the rank of Executive Director. |
|
|
|
|
o |
Consistency bonuses are paid to Health Coaches who are Certified and maintain frontline product sales and/or qualified Senior Coach Team performance with order consistency month after month. Health Coaches who generate at least $2,000 or more in frontline product sales for three consecutive months are paid a Health Coach consistency bonus. Certified Health Coaches who maintain at least $6,000 in frontline product sales, at least $15,000 in group product sales, and qualify 5 Senior Coach teams for three consecutive months are paid a Fully Integrated Business Coach Consistency Bonus. |
|
|
|
|
o |
Client acquisition bonuses are paid to new Health Coaches who develop five Clients and generate $1,000 in frontline product sales within their first 30 calendar days in Take Shape For Life program. |
|
|
|
|
o |
The assist bonuses are paid to Health Coaches who assist a newly sponsored Health Coach attain the Client acquisition bonus. |
18 | ||
i. | designate the Center’s Protected Territory. |
ii. | review for approval the sites selected by the Franchisee for the Center. |
iii. | review for approval the lease governing the location where the Center is to be located. |
iv. | provide the franchisee with standard plans and specifications for the build-out of the Center along with a list of equipment and improvements which the franchisee is required to purchase and install. |
v. | provide an initial training program. |
vi. | provide the franchisee on-site assistance and guidance for approximately three to five days during or close to the opening of the Center. |
vii. | provide the franchisee with online access to a password-protected, electronic version of the Medifast Weight Control Centers® Franchise Operations Manuals. |
19 | ||
|
|
Three Months Ended September 30, |
| ||||||||||||
|
|
2013 |
|
|
2012 |
|
|
$ Change |
|
% Change |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
86,480,000 |
|
|
$ |
90,968,000 |
|
|
$ |
(4,488,000) |
|
|
-5 |
% |
Cost of sales |
|
|
21,627,000 |
|
|
|
22,632,000 |
|
|
|
(1,005,000) |
|
|
-4 |
% |
Gross Profit |
|
|
64,853,000 |
|
|
|
68,336,000 |
|
|
|
(3,483,000) |
|
|
-5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative costs |
|
|
57,504,000 |
|
|
|
59,408,000 |
|
|
|
(1,904,000) |
|
|
-3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
7,349,000 |
|
|
|
8,928,000 |
|
|
|
(1,579,000) |
|
|
-18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
167,000 |
|
|
|
64,000 |
|
|
|
103,000 |
|
|
161 |
% |
Other expense |
|
|
362,000 |
|
|
|
(13,000) |
|
|
|
375,000 |
|
|
-2885 |
% |
|
|
|
529,000 |
|
|
|
51,000 |
|
|
|
478,000 |
|
|
937 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
7,878,000 |
|
|
|
8,979,000 |
|
|
|
(1,101,000) |
|
|
-12 |
% |
Provision for income tax expense |
|
|
2,205,000 |
|
|
|
1,771,000 |
|
|
|
434,000 |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5,673,000 |
|
|
$ |
7,208,000 |
|
|
$ |
(1,535,000) |
|
|
-21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
75.0 |
% |
|
|
75.1 |
% |
|
|
|
|
|
|
|
Selling, general, and administrative costs |
|
|
66.5 |
% |
|
|
65.3 |
% |
|
|
|
|
|
|
|
Income from Operations |
|
|
8.5 |
% |
|
|
9.8 |
% |
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
| ||||||||||||
|
|
2013 |
|
|
2012 |
|
|
$ Change |
|
|
% Change |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
279,595,000 |
|
|
$ |
273,464,000 |
|
|
$ |
6,131,000 |
|
|
2 |
% |
Cost of sales |
|
|
69,403,000 |
|
|
|
68,233,000 |
|
|
|
1,170,000 |
|
|
2 |
% |
Gross Profit |
|
|
210,192,000 |
|
|
|
205,231,000 |
|
|
|
4,961,000 |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative costs |
|
|
183,624,000 |
|
|
|
185,568,000 |
|
|
|
(1,944,000) |
|
|
-1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
26,568,000 |
|
|
|
19,663,000 |
|
|
|
6,905,000 |
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
317,000 |
|
|
|
226,000 |
|
|
|
91,000 |
|
|
40 |
% |
Other expense |
|
|
581,000 |
|
|
|
925,000 |
|
|
|
(344,000) |
|
|
-37 |
% |
|
|
|
898,000 |
|
|
|
1,151,000 |
|
|
|
(253,000) |
|
|
-22 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
27,466,000 |
|
|
|
20,814,000 |
|
|
|
6,652,000 |
|
|
32 |
% |
Provision for income tax expense |
|
|
8,787,000 |
|
|
|
6,803,000 |
|
|
|
1,984,000 |
|
|
29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
18,679,000 |
|
|
$ |
14,011,000 |
|
|
$ |
4,668,000 |
|
|
33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
75.2 |
% |
|
|
75.0 |
% |
|
|
|
|
|
|
|
Selling, general, and administrative costs |
|
|
65.7 |
% |
|
|
67.9 |
% |
|
|
|
|
|
|
|
Income from Operations |
|
|
9.5 |
% |
|
|
7.2 |
% |
|
|
|
|
|
|
|
20 | ||
21 | ||
The reconciliations of these non-GAAP financial measures are as follows: |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
$ |
7,349,000 |
|
$ |
8,928,000 |
|
$ |
26,568,000 |
|
$ |
19,663,000 |
|
FTC Settlement Expense |
|
|
- |
|
|
- |
|
|
- |
|
|
3,700,000 |
|
Adjusted Income from operations |
|
$ |
7,349,000 |
|
$ |
8,928,000 |
|
$ |
26,568,000 |
|
$ |
23,363,000 |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5,673,000 |
|
$ |
7,208,000 |
|
$ |
18,679,000 |
|
$ |
14,011,000 |
|
FTC Settlement Expense |
|
|
- |
|
|
- |
|
|
- |
|
|
3,700,000 |
|
Adjusted Net Income |
|
$ |
5,673,000 |
|
$ |
7,208,000 |
|
$ |
18,679,000 |
|
$ |
17,711,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.41 |
|
$ |
0.52 |
|
$ |
1.34 |
|
$ |
1.02 |
|
Impact for adjustments |
|
|
- |
|
|
- |
|
|
- |
|
|
0.27 |
|
Adjusted diluted earnings per share |
|
$ |
0.41 |
|
$ |
0.52 |
|
$ |
1.34 |
|
$ |
1.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average diluted shares outstanding used in the calculation of theses non-GAAP financial measures are the same as the weighted-average shares outstanding used in the calculation of the reported per share amounts. | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
13,884,293 |
|
|
13,705,188 |
|
|
13,852,155 |
|
|
13,709,702 |
|
Diluted |
|
|
13,903,412 |
|
|
13,804,212 |
|
|
13,955,217 |
|
|
13,766,013 |
|
22 | ||
|
|
Net Sales by Segment for the three months ended September 30, |
| |||||||||||
|
|
2013 |
|
|
2012 |
| ||||||||
Segments |
|
Sales |
|
% of Total |
|
|
Sales |
|
% of Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medifast |
|
$ |
73,324,000 |
|
|
85 |
% |
|
$ |
76,777,000 |
|
|
84 |
% |
MWCC and Wholesale |
|
|
13,156,000 |
|
|
15 |
% |
|
|
14,191,000 |
|
|
16 |
% |
Total Sales |
|
$ |
86,480,000 |
|
|
100 |
% |
|
$ |
90,968,000 |
|
|
100 |
% |
|
|
Net Sales by Segment for the nine months ended September 30, |
| |||||||||||
|
|
2013 |
|
|
2012 |
| ||||||||
Segments |
|
Sales |
|
% of Total |
|
|
Sales |
|
% of Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medifast |
|
$ |
238,625,000 |
|
|
85 |
% |
|
$ |
230,550,000 |
|
|
84 |
% |
MWCC and Wholesale |
|
|
40,970,000 |
|
|
15 |
% |
|
|
42,914,000 |
|
|
16 |
% |
Total Sales |
|
$ |
279,595,000 |
|
|
100 |
% |
|
$ |
273,464,000 |
|
|
100 |
% |
|
|
Income Before Income Taxes by Segment for the three months ended September 30, |
| |||||||||||
|
|
2013 |
|
|
2012 |
| ||||||||
Segments |
|
Profit |
|
% of Total |
|
|
Profit |
|
% of Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medifast |
|
$ |
8,601,000 |
|
|
109 |
% |
|
$ |
9,575,000 |
|
|
107 |
% |
MWCC and Wholesale |
|
|
528,000 |
|
|
7 |
% |
|
|
388,000 |
|
|
4 |
% |
All Other |
|
|
(1,251,000) |
|
|
-16 |
% |
|
|
(984,000) |
|
|
-11 |
% |
Income before income taxes |
|
$ |
7,878,000 |
|
|
100 |
% |
|
$ |
8,979,000 |
|
|
100 |
% |
|
|
Income Before Income Taxes by Segment for the nine months ended September 30, |
| |||||||||||
|
|
2013 |
|
|
2012 |
| ||||||||
Segments |
|
Profit |
|
% of Total |
|
|
Profit |
|
% of Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medifast |
|
$ |
29,452,000 |
|
|
107 |
% |
|
$ |
28,685,000 |
|
|
138 |
% |
MWCC and Wholesale |
|
|
2,157,000 |
|
|
8 |
% |
|
|
(1,136,000) |
|
|
-5 |
% |
All Other |
|
|
(4,143,000) |
|
|
-14 |
% |
|
|
(6,735,000) |
|
|
-31 |
% |
Income before income taxes |
|
$ |
27,466,000 |
|
|
100 |
% |
|
$ |
20,814,000 |
|
|
100 |
% |
23 | ||
24 | ||
25 | ||
BY: | /S/ MICHAEL C. MACDONALD | November 12, 2013 |
Michael C. MacDonald | ||
Executive Chairman of the Board and Chief Executive Officer | ||
(principal executive officer ) |
BY: | /S/ TIMOTHY G. ROBINSON | November 12, 2013 |
Timothy G. Robinson | ||
Chief Financial Officer | ||
(principal financial officer) |
26 | ||
Exhibit Number | Description of Exhibit | |
3.1 | Certificate of Incorporation of the Company and amendments thereto.* | |
3.2 | By-Laws of the Company-Amended.* | |
31.1 | Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
27 | ||
1. | I have reviewed this report on Form 10-Q of Medifast, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Michael C. MacDonald |
Michael C. MacDonald |
Executive Chairman of the Board and Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of Medifast, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Timothy G. Robinson Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the report fairly presents, in all material respects, the financial condition and results of the operations of the Company. |
|
By: | /s/ Michael C. MacDonald | |
Michael C. MacDonald | ||
Chief Executive Officer | ||
November 12, 2013 | ||
By: | /s/ Timothy G. Robinson | |
Timothy G. Robinson | ||
Chief Financial Officer | ||
November 12, 2013 |
Share-based Compensation
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation |
The Company has issued restricted stock to employees and nonemployee directors generally with terms up to five years. The fair value is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period. The following table summarizes the restricted stock activity:
The total restricted stock awards vested and charged against income during the three months ended September 30, 2013 and 2012 was $620,000 and $360,000, respectively and $2.0 million and $1.8 million for the nine months ended September 30, 2013 and 2012, respectively. The total income tax benefit recognized in the consolidated statement of income for these restricted stock awards was approximately $211,000 and $139,000 for the three months ended September 30, 2013 and 2012, respectively and $602,000 and $702,000 for the nine months ended September 30, 2013 and 2012, respectively. The tax benefit recognized in additional paid-in capital upon vesting of restricted stock awards was approximately $224,000 and $104,000 for the three months ended September 30, 2013 and 2012, respectively and $322,000 and 567,000 for the nine months ended September 30, 2013 and 2012, respectively. There was approximately $7.2 million of total unrecognized compensation cost related to restricted stock awards as of September 30, 2013. The cost is expected to be recognized over a weighted-average period of approximately 4.4 years. |
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