Natural Health Trends Corp. Reports Strong Growth in Sales and Operating Income for Fiscal 2003; Net Sales Up 70%, EPS Shoots up to 95 Cents

DALLAS, Apr 13, 2004 (BUSINESS WIRE) -- Natural Health Trends Corp. (NHLC) , an international direct-selling company, announced today its financial results for the fiscal year ended December 31, 2003.

Net sales were approximately $62.9 million for the year ended December 31, 2003 compared to net sales of just under $37.0 million for the previous year. The 70% increase stems primarily from the increased number of active distributors for its Lexxus division. The expansion of the Lexxus sales network into South Korea in the second quarter of 2003 amounted to 10% of the entire gain, and a further 5% came from the sale of new products introduced during the year. Due to the tremendous growth in certain Asian markets, the Company had a sales backlog at the end of the year of approximately $4.0 million, which is included in deferred revenue and will be recognized into revenue in the first quarter of 2004.

Year-end gross profit for 2003 was approximately $50.4 million compared to gross profit for 2002 of just under $30.0 million. Increased sales of Lexxus products accounted for this 68% increase, which was tempered by an increase in the cost of sales due to the change of product mix sold in 2003 and higher transportation costs.

Income before discontinued operations increased to $5.4 million, or $0.95 per fully diluted share for the year ended December 31, 2003, compared to a loss of $261,000, or $(0.11) per fully diluted share for the year ended December 31, 2002. Compared to 2002, this increase in 2003 is due to significantly larger net sales and smaller commissions, selling, general and administrative and stock option based compensation expenses as a percentage of net sales offset by a slight increase in cost of sales as a percentage of net sales.

Net income was just shy of $5.4 million, or $0.95 per fully diluted share for the year ended December 31, 2003, compared to $2.1 million, or $0.66 per fully diluted share for the year ended December 31, 2002. The number of fully diluted shares at year-end 2003 stood at 5,688,099, compared to 3,118,196 at year-end 2002. The Company has focused on growing its cash balance in an effort to open new markets and to fund future product developments.

For the fourth quarter ended December 31, 2003, net sales were $22.9 million, compared to $12.4 million for the quarter ended December 31, 2002, an increase of 81.5%. Gross profit for the fourth quarter 2003 was $17.8 million compared to $9.8 million in the same period prior year. Net income reached $1.7 million, or $0.30 per fully diluted share, in the last quarter of 2003 versus $1.9 million, or $0.56 per fully diluted share, in the last quarter of 2002. The drop in the earnings per fully diluted share of $0.26 between the quarters ended December 31, 2002 and December 31, 2003 is the result of the $2.4 million gain recognized in 2002 related to a gain on discontinued operations.

Mark Woodburn, President of Natural Health Trends Corp., said, "We are extremely satisfied with the financial results for 2003. Our decisions to enter South Korea and bring new products to the market have already paid off. We expect to continue to expand our geographic reach in the coming months, including expansion into Mexico. We have several new products in development and we will launch these products as our development teams complete their work."

He concluded, "We look forward to a prosperous 2004, with continued growth in our existing markets, some additional international expansion and new product introductions. With the restatements behind us, and the revenue recognition issues no longer playing a part in the Company's financial results, we feel that the future is an opportunity for Natural Health Trends Corp. to seek its full potential."

Natural Health Trends Corp. will host a conference call today, April 13, 2003, 4:00 pm EST to discuss the Company's 2003 year-end financial results. Those who wish to participate in the conference call may telephone (888) 335-6674 approximately 15 minutes before the 4:00 pm starting time. A digital replay will be available approximately one and 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 corporate updates 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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