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Reliv International Reports Second-Quarter Financial Results

CHESTERFIELD, Mo., Aug. 3, 2011 /PRNewswire/ -- Reliv International, Inc. (NASDAQ:RELV - News), a maker of nutritional supplements that promote optimal health, today reported its financial results for the second quarter of 2011.

Net sales for the quarter were $18.0 million, a 4.4 percent decrease from the second quarter last year. Net U.S. sales totaled $14.8 million, representing a 7.0 percent decline from the same quarter in 2010. Net sales outside of the United States increased 10.1 percent to $3.2 million, led by a 47.3 percent increase in European net sales, compared to the second quarter 2010.

Net income for the second quarter was $69,000 or $0.01 per diluted share, compared to $206,000 or $0.02 per diluted share in the 2010 second quarter. Earnings declined due to the decrease in U.S. net sales coupled with increases in several of our components of cost of goods sold. We experienced increases in production costs and higher order shipping costs due to general rate increases and higher fuel surcharges.

"The high unemployment rate, reduced discretionary income due to higher energy costs and declining consumer sentiment combined to hinder our efforts to increase sales in the United States," Robert L. Montgomery, chairman, president and chief executive officer.

"To combat those trends, we have a number of activities that we believe will lead to higher sales by the fourth quarter of 2011 or early 2012," Montgomery said. "We have powerful sales promotions which we plan to launch in the second half of the year, for example. We have an exciting international conference planned for later this month. We will continue to implement the new branding initiative we launched in February. Our R&D team has promising new products in the developmental stage."

Net sales for the first six months of 2011 were $39.7 million compared to $41.5 million in the same period in 2010. In the U.S., net sales were down 5.9 percent; international net sales increased 3.8 percent in the first half of 2011 compared to the first half of 2010. Our European operations accounted for most of the increase in net sales outside of the United States.

Net income for the first six months was $679,000, or $0.05 per diluted share, compared to $952,000 or $0.08 per diluted share in the same period in 2010.

New distributor enrollments in the second quarter declined 10 percent from the number of enrollments in the same quarter last year. Reliv's total distributor count was 58,450 as of June 30, 2011, down 8.2 percent from the same date last year. There was a significant increase, however, in the number of customers who became distributors. "We view this migration, from a customer to a distributor, as movement in the right direction, and we are looking at ways to encourage more customers to make this choice," Montgomery said.

"We continue to work with our field to build momentum," Montgomery said. "We are investing in areas we believe will increase sales. At the same time, we are carefully reviewing our U.S. and international operations for potential improvements and restructuring opportunities."

Additional financial results

• Net cash generated from operating activities totaled $1.8 million, equal to the amount we reported in the second quarter of 2010.
   
• Reliv had cash and cash equivalents of $7.0 million as of June 30, 2011, a 7.3 percent increase over the same date in 2010.
   
• Using an existing stock buyback authorization, Reliv bought back 27,134 shares at an average share price of $2.02 per share during the second quarter.

Financial highlights