Natural Health Trends Corp. Announces Third Quarter Financial Results

DALLAS, Nov 11, 2004 (BUSINESS WIRE) -- Natural Health Trends Corp. (NHLC), an international direct-selling company, announced today its financial results for its three and nine months ended September 30, 2004.

Net sales for the third quarter and the first nine months of 2004 were approximately $40.5 million and $96.6 million, respectively. Net sales of approximately $40.5 million for the third quarter of 2004 were up 142%, compared to approximately $16.7 million for the same period in the prior year. An increase in the number of active Lexxus distributors, re-orders and sales of new products contributed to the Company's sales growth. Net income for the third quarter of 2004 was approximately $5.0 million, or $0.75 per fully diluted share, compared to net income of approximately $1.3 million, or $0.22 per fully diluted share, for the third quarter of 2003. Net income for the nine months ended September 30, 2004 was approximately $1.4 million or $0.22 per fully diluted share compared to net income of approximately $3.6 million or $0.63 per fully diluted share for the prior period.

The third quarter sales incorporated approximately $11.9 million in revenue deferred from the second quarter, including $6.6 million in orders taken but not shipped as of June 30, $5.4 million shipped but not recognized until the third quarter and partly offset by $120,000 in incremental product returns (See Exhibit A to this press release for the financial impact to the Company as a result of the events in Hong Kong). The third quarter sales did not include $2.4 million in orders taken but not shipped as of September 30.

Mark Woodburn, President of Natural Health Trends Corp., said, "By the end of September, we did not ship about $2.4 million of the orders taken during the third quarter. This was reflected in the increase in deferred revenue, excluding the $11.9 million from the second quarter. Considering that, in the second quarter, we shipped $1 million more than the orders taken during that quarter, the third quarter was steady with the second quarter. After all the challenges, especially those in Hong Kong, we managed to overcome in the first half, we are very pleased with the results."

Mr. Woodburn continued, "In the next few months, we are planning to open retail stores in China, and expect to launch our Mexican business early next year. We are also identifying candidates to lead our management team for the Japanese market, presently scheduled to be opened in mid-2005."

Natural Health Trends Corp. will host a conference call on Friday, November 12, 2004, at 11:00 am EST to discuss the Company's financial results for its three and nine months ended September 30, 2004. Those who wish to participate in the conference call may telephone (888) 335-6674 approximately 15 minutes before the 11:00 am EST starting time. A digital replay will be available approximately one and one half hours after the completion of the call on the Company's website,


Natural Health Trends Corp. is an international direct-selling company operating in more than 30 markets throughout Asia, North America and Eastern Europe. The Company markets premium quality personal care products under the Lexxus brand and markets its nutritional supplement products under the Kaire brand. Additional information can be found on the Company's website, and management encourages interested parties to register for updated corporate information via e-mail on the Company's homepage,

Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "will," or "plans" to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.

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