DELAWARE
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13-3714405
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Incorporation
State
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Tax
Identification number
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11445
CRONHILL DRIVE, OWINGS MILLS, MD
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21117
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Principal
Office Address
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Large
accelerated filer ¨
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Accelerated
filer x
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Non-accelerated
filer ¨
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Page
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PART
I
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Item
1.
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Business
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4
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Item
1A.
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Risk
Factors
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14
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Item
1B.
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Unresolved
Staff Comments
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17
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Item
2.
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Properties
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17
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Item
3.
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Legal
Proceedings
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17
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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17
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PART
II
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||
Item
5.
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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18
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Item
6.
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Selected
Financial Data
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19
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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20
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Item
7A
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Quantitative
and Qualitative Disclosures about Market Risk
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28
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Item
8.
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Financial
Statements and Supplementary Data
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28
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Item
9.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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28
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Item
9A.
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Controls
and Procedures
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29
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PART
III
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Item
10.
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Directors,
Executive Officers and Corporate Governance
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30
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Item
11.
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Executive
Compensation
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43
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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51
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence
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52
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Item
14.
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Principal
Accounting Fees and Services
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53
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PART
IV
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Item
15.
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Exhibits,
Financial Statement Schedules
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54
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Name
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Age
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Position
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Bradley
T. MacDonald
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62
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Executive
Chairman of the Board of Directors
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Michael
S. McDevitt
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32
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Chief
Executive Officer and Chief Financial Officer
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Leo
V. Williams
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62
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Executive
Vice President
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Margaret
Sheetz
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32
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Chief
Operating Officer and President
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Brendan
N. Connors
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32
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Vice
President of Finance
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2009
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||||||||
Low
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High
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|||||||
Quarter
Ended March 31, 2009
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4.09 | 7.77 | ||||||
Quarter
Ended June 30, 2009
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4.15 | 11.46 | ||||||
Quarter
Ended September 30, 2009
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9.89 | 22.31 | ||||||
Quarter
Ended December 31, 2009
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19.42 | 35.35 |
2008
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||||||||
Low
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High
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|||||||
Quarter
Ended March 31, 2008
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3.68 | 4.99 | ||||||
Quarter
Ended June 30, 2008
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4.35 | 6.68 | ||||||
Quarter
Ended September 30, 2008
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4.80 | 8.85 | ||||||
Quarter
Ended December 31, 2008
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3.52 | 6.79 |
Period
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Total Number of Shares
Purchased
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Average Price Paid
per Share
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Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs
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Maximum Number of Shares
that May Yet Be Purchased
Under the Plans or Programs
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||||||||||||
January
1 - December 31, 2009
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25,000 | $ | 4.09 | 25,000 | 365,000 |
Restated
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||||||||||||||||||||
2009
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2008
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2007
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2006
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2005
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||||||||||||||||
(In
thousands, except per share data)
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||||||||||||||||||||
Revenue
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165,618 | 105,445 | 83,779 | 74,086 | 40,129 | |||||||||||||||
Operating
Income
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19,366 | 8,199 | 5,715 | 7,381 | 3,549 | |||||||||||||||
Income
from Continuing Operations
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19,293 | 7,850 | 5,543 | 7,463 | 3,405 | |||||||||||||||
EPS
- Basic
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0.89 | 0.37 | 0.26 | 0.36 | 0.14 | |||||||||||||||
EPS
- Diluted
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0.81 | 0.34 | 0.25 | 0.34 | 0.14 | |||||||||||||||
Total
Assets
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63,162 | 50,317 | 43,087 | 36,375 | 30,259 | |||||||||||||||
Current
Portion of long-term debt and revolving credit
facilities
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796 | 3,421 | 1,863 | 1,804 | 1,194 | |||||||||||||||
Total
long-term Debt
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5,444 | 4,313 | 4,570 | 3,509 | 3,977 | |||||||||||||||
Weighted
average shares outstanding
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||||||||||||||||||||
Basic
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13,772 | 13,126 | 12,961 | 12,669 | 12,259 | |||||||||||||||
Diluted
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14,736 | 14,329 | 13,644 | 13,483 | 12,781 |
Consolidated
Balance Sheet
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(Unaudited)
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(Audited)
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||||||
For
the Year Ended December 31, 2009
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As
Previously
Reported
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As
Restated
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||||||
Total
Current Assets
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34,967,000 | 34,730,000 | ||||||
Total
Assets
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64,140,000 | 62,755,000 | ||||||
Total
Current Liabilities
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5,764,000 | 6,183,000 | ||||||
Total
Liabilities
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11,208,000 | 13,180,000 | ||||||
Total
Stockholder's Equity
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52,932,000 | 49,575,000 | ||||||
Total
Liabilities and Shareholder's Equity
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64,140,000 | 62,755,000 |
Key
Balance Sheet Financial Ratios
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||||||
For
the Year Ended December 31, 2009
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||||||
Current
Ratio
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6.1
to 1
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5.6
to 1
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||||
Quick
Ratio
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4.1
to 1
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3.8
to 1
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||||
Debt
to Equity Ratio
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.12
to 1
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.12
to 1
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||||
Return
on Equity
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22.6%
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24%
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|||
Return
on Assets
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18.7%
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19%
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Net
Sales by Segment as of December 31,
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||||||||||||||||||||||||
2009
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2008
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2007
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||||||||||||||||||||||
Segments
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Sales
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%
of Total
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Sales
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%
of Total
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Sales
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%
of Total
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||||||||||||||||||
Medifast
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150,037,000 | 91 | % | 97,116,000 | 92 | % | 78,861,000 | 94 | % | |||||||||||||||
All
Other
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15,581,000 | 9 | % | 8,329,000 | 8 | % | 4,918,000 | 6 | % | |||||||||||||||
Eliminations
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0 | % | 0 | % | 0 | % | ||||||||||||||||||
Total
Sales
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165,618,000 | 100 | % | 105,445,000 | 100 | % | 83,779,000 | 100 | % |
Net
Profit by Segment as of December 31,
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||||||||||||||||||||||||
(Restated)
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(Restated)
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|||||||||||||||||||||||
2009
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2008
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2007
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||||||||||||||||||||||
Segments
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Profit
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%
of Total
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Profit
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%
of Total
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Profit
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%
of Total
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||||||||||||||||||
Medifast
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13,275,000 | 111 | % | 7,503,000 | 155 | % | 5,526,000 | 161 | % | |||||||||||||||
All
Other
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(1,311,000 | ) | -11 | % | (2,669,000 | ) | -55 | % | (2,100,000 | ) | -61 | % | ||||||||||||
Eliminations
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0 | % | 0 | % | 0 | % | ||||||||||||||||||
Net
Profit
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11,964,000 | 100 | % | 4,834,000 | 100 | % | 3,426,000 | 100 | % |
2010
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2011
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2012
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2013
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2014
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Thereafter
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|||||||||||||||||||
Contractual
Obligations
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||||||||||||||||||||||||
Total
Debt
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796,000 | 796,000 | 796,000 | 566,000 | 257,000 | 3,029,000 | ||||||||||||||||||
Operating
Leases
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1,112,000 | 1,085,000 | 1,002,000 | 553,000 | 249,000 | 294,000 | ||||||||||||||||||
Copier
Equipment Service Contracts
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1,062,000 | 1,031,000 | 964,000 | 758,000 | 412,000 | - | ||||||||||||||||||
Total
contractual obligations
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2,970,000 | 2,912,000 | 2,762,000 | 1,877,000 | 918,000 | 3,323,000 |
ITEM 9.
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CHANGES
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
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Director
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Name
and Experience
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Since
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Harvey C. “Barney” Barnum,
Jr., age 69, was sworn in as the Deputy Assistant Secretary of the
Navy for Reserve Affairs on July 23, 2001. In this capacity he was
responsible for all matters regarding the Navy and Marine Corps Reserve
including manpower, equipment, policy and budgeting. On Jan. 20, 2009,
Barnum was designated Acting Assistant Secretary of the Navy (Manpower and
Reserve Affairs). Mr. Barnum was the fourth Marine to be awarded the
nation’s highest honor, the Medal of Honor for valor in Vietnam. He
retired from the Marine Corps as a Colonel in August 1989 after 27 and
one-half years of service. Barnum served multiple tours
as an artilleryman with both the 3rd and 2nd Marine Divisions to include
two tours in Vietnam; 2nd Marine Aircraft Wing; guard officer at Marine
Barracks, Pearl Harbor, and operations officer, Hawaiian Armed Forces
Police; weapons instructor at the Officer Basic School; four years at
Marine Corps Recruit Depot, Parris Island, as commanding officer,
Headquarters Company and the 2nd Recruit Training Battalion of the
Training Regiment; Chief of Current Operations, US Central Command where
he planned and executed the first U.S./Jordanian joint exercise staff as
the commander of U.S. Forces and twice planned and executed Operation
Bright Star spread over four southwest Asian countries involving 26,000
personnel. Headquarters Marine Corps tours included: aide to the assistant
commandant as a captain and deputy director Public Affairs, Director
Special Projects Directorate and Military Secretary to the Commandant as a
colonel. Upon retirement in 1989, Barnum served as the principal director,
Drug Enforcement Policy, Office of the Secretary of Defense. Barnum’s
personal medals and decorations include: the Medal of Honor; Defense
Superior Service Medal; Legion of Merit; the Bronze Star Medal with Combat
“V” and gold star in lieu of a second award; Purple Heart; Meritorious
Service Medal; Navy Commendation Medal; Navy Achievement Medal with Combat
“V”; Combat Action Ribbon; Presidential Unit Citation; Army Presidential
Unit Citation; Joint Meritorious Unit Award; Navy Unit Citation; two
awards of the Meritorious Unit Citation; the Vietnamese Cross of Gallantry
(silver) and the Department of the Navy Distinguished Public Service
Award. Barnum has attended The Basic School, U.S. Army Field Artillery
School, Amphibious Warfare School, U.S. Army Command and General Staff
College and the U.S. Naval War College. He is the past president of the
Congressional Medal of Honor Society, Connecticut Man of the Year ’67,
presented Honorary Legum Doctorem St Anselm College; Rotary Paul Harris
Fellow; Abe Pollin Leadership Award ’03, Marine Corps League “Iron Mike”
Award and Order of the Carabao Distinguished Service Award.
Harvey
C. “Barney” Barnum was first selected to be a Director in 2009 because of
his extensive distinguished government service at the Department of the
Navy Executive level and his distinguished military career which includes
the Medal of Honor Award for bravery in Vietnam. Mr. Barnum will bring
expertise to the Board in the area of Public Policy initiatives as it
relates to his knowledge of the Executive and Legislative Branch of the US
Government and his oversight of our Governmental Relations and Policy
initiatives on Obesity related to Medifast products, protocols and
clinical studies.
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2009
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Barry B. Bondroff, CPA,
age 61, is an officer and director with Gorfine, Schiller & Gardyn,
PA, a full-service certified public accounting firm offering a wide range
of accounting and consulting services. Previously,
he was a Senior Managing Director with SMART. Bondroff brings over 35
years of experience providing companies of all sizes and industries with
practical and cost-effective accounting, assurance, tax, business,
technology and financial advisory services. Prior to managing SMART,
Bondroff was the Managing Director for Grabush, Newman & Co., P.A.,
which combined with SMART in May 2003. Bondroff began his career with
Grabush Newman in 1970, and in 1976 became Officer and was promoted to
Managing Director in 1982. He earned his Bachelor of Science degree in
Accounting from the University of Baltimore. Additionally, Bondroff serves
on the Board of Directors for the publicly traded First Mariner Bank of
Maryland, a NASDAQ listed SEC registrant. He is active with First Mariner
serving on the Executive Committee, Loan Committee, Audit Committee and as
Chairman of the Compensation Committee. In addition to his professional
affiliations, Bondroff served on the Executive Committee for Israel Bonds
and was a Director of Cycle Across Maryland. He has served the National
Jewish Medical and Research Center, the Jewish Center for Business
Development and has assisted the Baltimore Symphony Orchestra in its
fundraising efforts. In addition, Barry was a past President and Treasurer
of the Edward A. Meyerberg Northwest Senior Center, and also served as a
Member of the Board of Directors for the Levindale Hebrew Geriatric Center
and Hospital. He currently serves as Treasurer for Special
Olympics of Maryland, as a Trustee for Stevenson University in Maryland
and a member of the Audit Committee of the Associated.
|
2008
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Barry
B Bondroff was first selected as a Director in 2008 because of his broad
business experience as a CPA, corporate governance experience over more
than 36 years. His current selection as a Director utilizes that
experience as a financial expert and his elected position of Vice Chairman
of the Board. His service on the Audit Committee and Nominating Committee
and his availability as a local director in Baltimore provide for local
oversight and practical consulting in the area of financial management,
risk assessment and Sarbanes Oxley regulations. He has been appointed the
Chairman of a special committee that investigated and found a convicted
felon’s allegations against Medifast “false, misleading and without
merit.” He also provides an extensive rolodex that assists Medifast’s
management team to find the best talent in the market to assist in our
growth and development.
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Charles P. Connolly, age
60, is currently an independent director focusing on bank relationships,
debt refinancing, merger and acquisition strategy and executive
compensation design. Mr. Connolly spent 29 years at First Union Corp. that
merged with Wachovia Bank in 2001. He retired in 2001 as the President and
CEO of First Union Corp. of Pennsylvania and Delaware. Mr. Connolly serves
on the Boards of numerous profit and non-profit
organizations. He holds an MBA from the University of Chicago
and AB from Villanova University.
Charles
P. Connolly was first selected as a Director in 2006 for his extensive
executive experience and financial acumen derived from an executive
banking resume. His current selection as Director leverages that
background of reviewing the financials and performance of hundreds of
companies in the public and private sector. He possesses a unique
financial and risk assessment perspective into the operations and
financial management of the company. He spends an extraordinary amount of
time with our executive team providing guidance and consultation on key
metrics and performance objectives that have served Medifast well in the
past few years. As the Chairman of the Audit Committee he has served
diligently to insure that the company maintains its high standards of
accountability.
|
2006
|
|
Jason L. Groves Esq.,
age 39, is the Assistant Vice President of Government Affairs for Verizon
Maryland, since 2003. Mr. Groves is also an Army
veteran. He was a direct commissioned Judge Advocate in the
United States Army Judge Advocate General's Corps (JAG). As a JAG
Officer, he practiced law while stationed at Fort George G. Meade,
Maryland. He had the distinction of prosecuting criminal cases in
the District Court of Maryland as a Special Assistant United States
Attorney. Over the course of three years, he received two Army
Achievement Medals, and one Army Commendation Medal. Mr.
Groves is a graduate of the Disney University College Program for
managers. He received his Bachelor of Science degree, cum laude, in
Business with a concentration in Hospitality Management from
Bethune-Cookman College. He also obtained his law degree from North
Carolina Central University School of Law and is a member of the New
Jersey and District of Columbia bars as well as several bar
associations.
Jason
L. Groves, Esq. was first selected as a Director in 2009 based on his
military, business and legal background. In addition he has extensive
experience with governmental relations and knowledge of the healthcare and
communications technology fields. He was a Federal and State prosecutor
thus providing keen insight on the regulatory and legal issues the company
faces in today’s business climate. His service on the Audit
Committee has provided timely oversight for all projects he has
undertaken.
|
2009
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George J. Lavin, Jr.,
Esq., age 81, was the senior founding partner of Lavin, O’Neil,
Ricci, Ceprone & Disipio. Mr. Lavin is a 1951 graduate of Bucknell
University. He attended the University of Pennsylvania School of Law,
receiving an LL.B. in 1956, and then served as a Special Agent, Federal
Bureau of Investigation, United States Department of Justice, until 1959.
Mr. Lavin is one of the dominant product liability defense attorneys in
the nation. He has had regional responsibilities in several automotive
specialty areas, and was called upon to try matters throughout the county
on behalf of his clients. Mr. Lavin's practice and specialty emphasized
his commitment to defending the automotive industry. Mr. Lavin is admitted
to practice before the Supreme Court of Pennsylvania, the United States
Court of Appeals for the Third Circuit and the United States District
Courts for the Eastern and Middle Districts of Pennsylvania. He is a
member of the Faculty Advisory Board of the Academy of Advocacy, the
Association of Defense Counsel, The Defense Research Institute, The
American Board of Trial Advocates, and the Temple University Law School
faculty. He has also been elected a fellow of the American College of
Trial Lawyers. On March 1, 1994, Mr. Lavin assumed the title of Counsel to
The Firm. Mr. Lavin is presently the General Counsel to the
Augustinian order of Villanova, PA.
George
J. Lavin, Esq. was first selected as a Director in 2005 for his
prestigious demonstrated legal experience on behalf of major international
businesses, management experience in his law firm and his extensive
service with the FBI. His current selection as Director values his
experiential oversight on legal matters as well as his service on the
Audit Committee and mentoring talents.
|
2005
|
|
Bradley T. MacDonald,
age 62, is the Executive Chairman of the Board of Medifast,
Inc. Mr. MacDonald has been Chairman of the Board of Medifast,
Inc. since January 1998 and was also Chief Executive officer until March
of 2007. He was the principal architect of the turnaround of
Medifast and formulated the “Direct to Consumer” business models that are
the primary drivers of Revenue to this day. He also was the co-founder of
Take Shape for Life and acquired the Clinic operations in 2002. During his
time as CEO, he managed the company to 29 consecutive quarters of profits
and improved shareholders equity from negative $4 million to over $27
million in less than seven years. He also increased the Company’s market
cap from less than $1 million to over $100 million and listed the company
on the NYSE. At the time the Board planned leadership succession occurred,
the Board assigned Mr. MacDonald executive responsibilities in the
following areas: legal affairs, treasury, banking relationships, M&A,
strategic plan oversight, public policy oversight, and community relations
in addition to Board responsibilities as Executive Chairman and as the
formal Co-founder of Take Shape for Life. In 2006, Mr.
MacDonald received the prestigious and audited Ernst and Young award of
“Entrepreneur of the Year” for the state of Maryland in the consumer
products category. Also, he helped lead the Company to national
recognition in Forbes Magazine ranking Medifast 28th
of the top 200 small companies in America. Mr. MacDonald was previously
employed by the Company as its Chief Executive Officer from September 1996
to August 1997. From 1991 through 1994, Colonel MacDonald returned to
active duty to be Deputy Director and Chief Financial Officer of the
Retail, Food, Hospitality and Recreation Businesses for the United States
Marine Corps. Prior thereto, Mr. MacDonald served as Chief Operating
Officer of the Bonneau Sunglass Company, President of Pennsylvania Optical
Co., Chairman and CEO of MacDonald and Associates, which had major
financial interests in retail drug, consumer candy, and pilot sunglass
companies. Mr. MacDonald was national president of the Marine Corps
Reserve Officers Association and retired from the United States Marine
Corps Reserve as a Colonel in 1997, after 27 years of service. He
was appointed and served on the Defense Advisory Board for Employer
Support of the Guard and Reserve (ESGR.) for three
years. Currently, Mr. MacDonald serves on the
Board of Directors of Stevenson University in Maryland, and the Catholic
Family Foundation of the Archdiocese of Baltimore. He is also the
Vice-Chairman of the Board of Directors of the Marine Corps Reserve Toys
for Tots Foundation. Mr. MacDonald is the father of Margaret
Sheetz who performs the role of President and Chief Operating Officer at
Medifast, Inc. Mr. Michael C. MacDonald is the brother of Mr.
Bradley T. MacDonald.
Bradley
T. MacDonald was first selected as a Director in 1996, because of his
executive and entrepreneurial experience in the businesses noted above. In
addition he has held leadership positions of increasing responsibility in
the United States Marine Corps attaining the rank of Colonel and attending
service schools to include the Naval War College. His current
selection as Director is based on his successful turnaround of Medifast as
CEO and successfully guiding the company under a new profitable business
model. Having extensive experience on Wall Street, as CEO of
Medifast when he restructured the company in 1999 which has
since recorded over 41 consecutive quarters of
profitability, he is able to provide strategic
guidance to the company. Upon reaching 60 years old with the advice and
consent of the Board he was elected Executive Chairman of the Board to
utilize his breadth of knowledge and experience regarding Medifast,
Inc.
|
1996
|
Michael C. MacDonald,
age 57, is a retired Senior Corporate Officer. His last
position was Senior Vice President of World Wide Operational Effectiveness
for Xerox Corporation. He was named to this position in
September 2008 and led a corporate initiative to review the company’s core
functions including Sales, Marketing, Human Resources and other key areas
to ensure maximum effectiveness of resources. Before this
position, he was the World Wide President of Marketing Operations,
responsible for corporate marketing, Xerox.com, advertising, brand
creation, public relations and corporate communications. Prior
to his corporate assignments, he was President of Xerox North America, a
6.5 B Division responsible for all services, solutions and products sold
and maintained in the United States and Canada. This included a
direct sales force of 4,000, a technical service staff of 25,000 and
support staff of 6,000, a total of 35,000 employees. Mr.
MacDonald also held Vice Presidential positions leading the Northeast
Region Sales and Technical Service organization, the North American
Marketing organization, the North American Agent/Dealer organization and
the North American Supplies organization. A career described as
sustained success and over achievement in revenue, profit and customer
satisfaction. His leadership profile is one of creativity,
vision, high expectations and results with commensurate high levels of
customer loyalty, employee development and satisfaction. Mr.
MacDonald also serves on the Board of Directors of Medifast, Inc., Paetec,
Inc. and the Jimmy V Foundation. In addition, he is also a
board member of the North American Marketing Advisory Board and has been
recognized on four occasions as one of the Top Twenty Marketing Executives
of the Year by Business to Business Magazine. Previous to 2009,
he was a member of the Board of Directors of the U.S. Chamber of
Commerce.
Michael
C. MacDonald was first selected as a Director in 1998 based on his broad
based executive experience for Xerox. His current selection as Director is
based on his tenured service with Xerox, and being a director of Paetec
Inc. and Medifast Inc. through the restructuring of all the companies. He
has a national reputation as an expert in Sales and Marketing in the high
technology field. He has been instrumental in building the high technology
platform that Medifast operates today through a period of continuous
growth in the business. Because of his expertise and business acumen, the
Board has elected him to the Executive Committee in recognition of his
expertise in corporate governance.
|
1998
|
|
Sr. Catherine T. Maguire
RSM, age 59, a Sister
of Mercy, has served as Associate Executive Director at SILOAM, a Body,
Mind, Spirit wellness center for the HIV/AIDS community, from 1997 -
2010. Prior to this Sr. Maguire worked in AIDS Ministry within
the prison system in Washington DC., and served as vocation director for
her religious community for 8 years. She received a BS degree
in Education/English in 1972, a MS degree in Library Science in 1974 both
from Villanova University, and a MA degree in Theology with an emphasis in
Pastoral Ministry & Spirituality in 1995 from St. Michael’s College in
Vermont. She served on the Board of the National Religious
Vocation Conference from 1990-1992.
Sister
Catherine T. Maguire, RSM was first selected as a Director in 2009 for her
extensive executive experience with not for profit human services
organizations and her strong background in organizational ethics and human
resources and personnel management. She has multiple advanced degrees and
will assist in developing the “Women Executives” of Medifast. As a result
of her extensive management and human resources background she was elected
to the Nominations committee where she will assist in screening and
evaluating potential Director Candidates and insure the corporate values
related to diversity are implemented in the company and on the
Board.
|
2009
|
|
John P. McDaniel, age
66, is a seasoned healthcare executive with more than 36 years of
experience as a chief executive officer, most recently at MedStar Health
in Columbia, Maryland, one of the largest and most comprehensive
healthcare delivery systems in the mid-Atlantic region with annual
revenues exceeding $3 billion, encompassing 25,000 employees 5,000
physicians and nine leading hospitals and other health related businesses.
Mr. McDaniel has a degree in Business Administration from Wittenberg
University, a MHA in Health Management and Policy from the University of
Michigan, and an Honorary Doctorate of Humane Letters (LHD) from
Wittenberg University. He is presently a Partner in The Hickory Ridge
Group, an advisory, development and investment organization that focuses
on emerging healthcare and technology entities. He is also a
member of the board of the Greater Baltimore Committee, the Greater
Washington Board of Trade, Wittenberg University, First Mariner Bank Corp
and the Washington Real Estate Trust (WRE).
|
2009
|
John
P. McDaniel was first selected a Director in 2009 for his extensive
executive and entreprenurial experience. His extensive management and
Board knowledge concerning the health care industry and health care policy
will provide seasoned oversight on behalf of shareholders. Because of his
experience and leadership experience as the Chairman of the Racing
Commission of Maryland, Director of First Mariner Bank and former Chairman
and CEO of Medstar Health Systems he is serving on the Executive and
Compensation Committees to bring his business acumen and organizational
knowledge to oversight the Company
|
||
Michael S. McDevitt, age
32, is the Chief Executive Officer of Medifast, Inc. Prior to
joining the company in June, 2002, he was a Senior Analyst for the
Blackstone Group, a private equity group in New York City.
Medifast
has continued to excel under Mr. McDevitt’s leadership, demonstrated by
the company’s recent report of its 41st consecutive quarter of
profitability for the fourth quarter, 2009. Medifast continues
to see strong year over year growth, most recently experiencing 57% top
line growth and over 114% profitability growth, versus the same time
period last year. During his tenure as CEO/CFO of Medifast the company was
named number 16 on Forbes’ 2009 list of America’s Best Small
Companies, a jump from 85 one year ago. Additionally, Medifast
was ranked number 28 on the 2008 Fortune Small Business list of
fastest-growing small public companies, up from number 47 in 2007. Mr.
McDevitt volunteers as a big brother for Big Brothers Big Sisters of
Central Maryland, fully supporting the organization’s mission of helping
boys and girls grow up to be confident, caring young adults. He
is a member of the board of directors for the American Heart Association’s
Baltimore region. Additionally, Mr. McDevitt supports the
efforts of the American Diabetes Association and the Toys For Tots
Foundation. He is on the board of directors of the Augustinian Press and
works with several organizations of fellow CEOs. Mr.
McDevitt holds a Bachelor degree in Business Administration with a
concentration in Finance from James Madison University.
Michael
S McDevitt was first selected as a Management Director in 2007 after he
had assumed the positions of Chief Executive Officer and Chief Financial
Officer of Medifast, Inc. His prior and current executive experience has
contributed to the dynamic growth of Medifast. He brings a strong
successful financial and operational management perspective to the
Executive Committee of the Board.
|
2007
|
|
Jeannette M. Mills, age
43, currently serving as senior vice president with the Baltimore Gas and
Electric Company, a subsidiary of Constellation Energy. A Baltimore, MD
native, Mills earned her Bachelor of Science in Electrical Engineering
from Virginia Polytechnic Institute & State University (Virginia Tech)
and she currently serves on the Advisory Board of the Bradley Department
of Electrical and Computer Engineering. In 2006, Mills earned her Masters
of Business Administration from Loyola College. Ms. Mills also works in
the community, serving on the Board of Directors for Voices for Children,
Howard County's Court Appointed Special Advocate Program. Additionally,
she serves on the Board of the Creative Alliance, a Program that builds
communities by bringing together artists and audiences from diverse
backgrounds to experience spectacular arts programs and engage in the
creative process.
Jeannette M. Mills
was first selected as a Director in 2008 not only for her technical
background but primarily for her high level of executive experience. Her
service as Chairperson of the Compensation Committee has effectively
utilized her talents to review and assess the operations and metrics used
to evaluate key executives in the company. She has been instrumental in
providing guidance and direction to ensure that all executives maintain
the transparent high performance culture, and entreprenurial philosophy of
executive compensation balanced with appropriate risk assessment
analysis.
|
2008
|
|
Jerry D. Reece, age 69,
is chief executive officer of Reece & Nichols: Real Estate,
Mortgage, Title Insurance. The real estate arm of the company
is the largest real estate brokerage in Greater Kansas City. With over 40
years experience in real estate, Jerry Reece formed J.D. Reece Realtors in
early 1987. He sold the company in 2001 to Homeservices of
America, Inc. a Berkshire Hathaway affiliate. In addition
to marketing resale homes as well as a broad range of new home
subdivisions, the company specializes in the corporate transferee market.
After graduating from the University of Oregon in 1963 with a B.S. in
Finance, Jerry Reece joined the United States Marine Corps and served in
Hawaii and Vietnam as a first lieutenant. Following active duty, he
continued his service in the Marine Corps Reserve. His various assignments
included the command of a rifle battalion and service as a member of the
Secretary of the Navy's Marine Corps Reserve Policy Board at the Pentagon.
Retired with the rank of colonel, he is a past member of the Board of
Directors of the Marine Toys for Tots Foundation. His personal decorations
include the Legion of Merit, The Navy Commendation Medal with Combat "V"
and the Combat Action Ribbon.
|
2009
|
Jerry
D. Reece was first selected as a Director in 2009 for his executive,
entrepreneurial and broad real estate expertise. He is a leader in his
community in Kansas City and has served on many for profit and non profit
Boards, He is a decorated Vietnam veteran who has both civil and military
executive experience to provide oversight and be a resource for executive
and real estate matters requiring Board and corporate governance
oversight..
|
||
Donald F. Reilly, OSA,
age 62, holds a Doctorate in Ministry (Counseling) from New York
Theological and an M.A. from Washington Theological Union as well as a
B.A. from Villanova University. Reverend Don Reilly was ordained a priest
in 1974. His assignments included Associate Pastor, Pastor at St. Denis,
Havertown, Pennsylvania, Staff at Villanova University, Personnel Director
of the Augustinian Province of St. Thomas of Villanova, Provincial
Counselor, Co-Founder of SILOAM Ministries where he ministers and counsels
HIV/AIDS patients and caregivers. He is currently on the Board of
Directors of Villanova University. He also serves on the Board
of Trustees of Merrimack College, MA, St. Augustine Prep, NJ, and Malvern
Prep, PA. Fr. Reilly was Prior Provincial of the Augustinian
Order at Villanova, PA from 2002 - 2010. He oversaw more than
220 Augustinian Friars and their service to the Church, teaching at
universities and high schools, ministering to parishes, serving as
chaplain in the Armed Forces and hospitals, ministering to AIDS victims,
and serving missions in Japan, Peru, and South Africa.
Very
Rev. Donald F.
Reilly, OSA was first selected as a Director in 1998 for his strong
background in Personnel and Executive management with the Augustinian
Community which serves the Catholic Church at Villanova University,
Merrimack College, High Schools, Parishes and missions in Japan, South
Africa and Peru. His current selection as Director utilizes his
extensive knowledge of the Company serving as a Director and participating
in the restructuring of the company in 1999. He was also instrumental in
developing the current business model in consultation with the Business
School at Villanova University. As Chairman of the Nominations committee
and being a Ph.D and nationally known academic he has been an invaluable
asset providing guidance to the company and creating shareholder value. He
also is the primary person on the Nomination Committee to identify and
evaluate potential Director Candidates for character necessary
to perform high performance, risk assessment and
be transparent which are desirable characteristics
for all potential directors. This will ensure continuity in
respect to the company’s corporate governance practices and
philosophy.
|
1998
|
|
Margaret Sheetz, age 32,
is the President and Chief Operating Officer of Medifast.
Inc. Prior to joining the company in 2000, she was a legal
assistant with the firm of Carrington, Coleman, Sloman and Blumenthal in
Dallas, Texas. As Medifast continues to see strong year over year growth,
Ms. Sheetz has provided the operational and technical leadership that has
resulted in Medifast providing the proper infrastructure to support the
growth of the company to include making dramatic productivity improvement
in the company’s operational capabilities, building a strong
infrastructure of distribution, manufacturing, information systems and
human resource operations necessary to support rapid business growth. She
supports the efforts of the American Diabetes Association, the American
Heart Association and the Toys For Tots Foundation. Ms. Sheetz
is also very active with several organizations of Maryland executives. She
holds a Bachelor of Arts degree from Villanova University and received an
Executive MBA from Loyola University.
Margaret M. Sheetz was
first selected as a Management Director in 2008 after she had assumed the
positions of President and Chief Operating Officer of Medifast, Inc. She
is the senior experienced operations executive who has built the
operational structure of the company. In addition to her strong
operational expertise she has strength in IT integration with operations
and human resources managememt. She has an Executive MBA which has
assisted her in the training development of her subordinates. She is the
focused executive since 2000 who has been instrumental in building the
manufacturing and distribution infrastructure with her team of
professionals. Her leadership and oversight skills are recognized and she
is recognized in the company as a detail oriented executive who builds
high performance teams. The Board considers her the source person to get
information pertinent to the oversight of Medifast’s
operations.
|
2008
|
|
Ÿ
|
have
the sole authority and responsibility to hire, evaluate and, where
appropriate, replace the independent
auditors;
|
|
Ÿ
|
meet
and review with management and the independent auditors the interim
financial statements and the Company’s disclosures under Management’s
Discussion and Analysis of Financial Condition and Results of Operations
prior to the filing of the Company’s Quarterly Reports on
Form 10-Q;
|
|
Ÿ
|
meet
and review with management and the independent auditors the financial
statements to be included in the Company’s Annual Report on Form 10-K
(or the annual report to shareowners) including (i) their judgment
about the quality, not just acceptability, of the Company’s accounting
principles, including significant financial reporting issues and judgments
made in connection with the preparation of the financial statements;
(ii) the clarity of the disclosures in the financial statements; and
(iii) the Company’s disclosures under Management’s Discussion and
Analysis of Financial Condition and Results of Operations, including
critical accounting policies;
|
|
Ÿ
|
review
and discuss with management, the internal auditors and the independent
auditors the Company’s policies with respect to risk assessment and risk
management;
|
|
Ÿ
|
review
and discuss with management, the internal auditors and the independent
auditors the Company’s internal controls, the results of the internal
audit program, and the Company’s disclosure controls and procedures, and
quarterly assessment of such controls and
procedures;
|
|
Ÿ
|
establish
procedures for handling complaints regarding accounting, internal
accounting controls and auditing matters, including procedures for
confidential, anonymous submission of concerns by employees regarding
accounting and auditing matters;
and
|
|
Ÿ
|
Review
and discuss with management, the internal auditors and the independent
auditors the overall adequacy and effectiveness of the Company’s legal,
regulatory and ethical compliance
programs
|
|
Ÿ
|
Serve
as a communication report to link under company Whistlerblower
Policy
|
|
Ÿ
|
measure
the Chief Executive Officer’s performance against his goals and objectives
pursuant to the Company plans;
|
|
Ÿ
|
determine
the compensation of the Chief Executive Officer after considering the
evaluation by the Board of Directors of his
performance;
|
|
Ÿ
|
review
and approve compensation of elected officers and all senior executives
based on their evaluations, taking into account the evaluation by the
Chief Executive Officer;
|
|
Ÿ
|
review
and approve any employment agreements, severance arrangements, retirement
arrangements, change in control agreements/provisions, and any special
or supplemental benefits for each elected officer and
senior executive of the Company;
|
|
Ÿ
|
approve,
modify or amend all non-equity plans designed and intended to provide
compensation primarily for elected officers and senior executives of the
Company;
|
|
Ÿ
|
make
recommendations to the Board regarding adoption of equity plans;
and
|
|
Ÿ
|
Modify
or amend all equity plans.
|
|
Ÿ
|
Review
the executive compensation philosophy of the Company; and assess any risks
which may be reasonably deemed material to the Company; and recommend to
the Board any changes deemed necessary to the Company executive
compensation plan; or any sales channel compensation
plan.
|
Name
|
Fees Earned or
Paid in Cash
($)
|
Stock Awards
($)(1)
|
Total ($)
|
|||||||||
Barry
B. Bondroff
|
$ | - | $ | 39,195 | $ | 39,195 | ||||||
Charles
P. Connolly
|
16,000 | 44,565 | 60,565 | |||||||||
George
Lavin, Jr., Esq.
|
- | 44,565 | 44,565 | |||||||||
Michael
C. MacDonald
|
- | 49,935 | 49,935 | |||||||||
Catherine
T. Maguire
|
28,280 | 28,280 | ||||||||||
John
P. McDaniel
|
28,280 | 28,280 | ||||||||||
Jeannette
M. Mills
|
39,195 | 39,195 | ||||||||||
Rev.
Donald F. Reilly, OSA
|
- | 49,935 | 49,935 |
(1)
|
Amounts
are calculated based on the aggregate grant date fair value of these
rewards compute in accordance with ASC Topic 718 “Stock Compensation”
which excludes the effect of estimated forfeitures. The
assumptions and methodologies used to calculate these amounts are
discussed in Note 2 to our Consolidated Financial Statements in the 2009
Annual Report to Stockholders filed on Form 10-K with the Securities and
Exchange Commission. Under generally accepted accounting
principles, compensation expense with respect to stock awards and option
awards granted to our employees is recognized over the vesting periods of
the applicable rewards.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
|
Number of
Securities
Underlying
Unexercised
Options (#)
|
Option
Exercise
|
Option
Expiration
|
Number
Shares or
Units of
Stock That
Have Not
Vested
|
Market Value
of Shares or
Units of
Stock that
have not
Vested
|
||||||||||||||||||
Exercisable
|
Un-Exercisable
|
Price ($)
|
Date
|
Vested (#)
|
($)(1)
|
|||||||||||||||||||
Barry
B. Bondroff
|
- | - | - | - | 5,000 | 152,900 | ||||||||||||||||||
Charles
P. Connolly
|
- | - | - | - | 8,000 | 244,640 | ||||||||||||||||||
George
Lavin, Jr., Esq.
|
- | - | - | - | 8,000 | 244,640 | ||||||||||||||||||
Michael
C. MacDonald
|
- | - | - | - | 11,000 | 336,380 | ||||||||||||||||||
Catherine
T. Maguire
|
- | - | - | - | 2,500 | 76,450 | ||||||||||||||||||
John
P. McDaniel
|
- | - | - | - | 2,500 | 76,450 | ||||||||||||||||||
Jeannette
M. Mills
|
- | - | - | - | 5,000 | 152,900 | ||||||||||||||||||
Rev.
Donald F. Reilly, OSA
|
- | - | - | - | 11,000 | 336,380 |
|
(1)
|
The
market value of shares of stock that have not vested is based on the
closing price of our common stock on December 31, 2009, or $30.58 per
share.
|
1.
|
Pre-Tax profit as a percentage
of sales. Each executive officer receives 33.33% of the total
target payout if Medifast, Inc. achieves the targeted pre-tax profit as a
% of sales. Each officer receives a portion of the total target payout if
Medifast, Inc. achieves the targeted performance level, and additional
increments for performance above the target. For pre-tax earnings as a
percentage of sales the target was 10%. Medifast, Inc. was well
above the threshold performance level for pre-tax earnings as a percentage
of sales in 2009 at 11.7% compared to the target of
10%.
|
2.
|
Corporate Revenue. Each
officer receives 33.33% of the total target payout if Medifast, Inc.
achieves the targeted sales amount for the full year. Each
officer receives a portion of the total target payout if Medifast, Inc.
achieves the targeted performance level, and additional increments for
performance above the target. For corporate sales the target was $135
million. Medifast, Inc. was well above the targeted
performance level for sales in 2009 finishing at $165.6 million, or $30.6
million above the target set by the
Board.
|
3.
|
Net increase in cash and cash
equivalents. Each officer receives 33.33% of the total target
payout if Medifast, Inc. achieves the targeted net cash increase for the
full year. Each officer receives a portion of the total target
payout if Medifast, Inc. achieves the targeted performance level, and
additional increments for performance above the target The net increase in
cash and cash equivalents target was $6 million. Medifast, Inc. exceeded
the maximum performance level for the net increase in cash and cash
equivalents in 2009 by generating a $10.9 million net increase in cash and
cash equivalents.
|
Salary
|
Stock
Awards
|
Option
Awards
|
Bonus
|
Nonqualified
Deferred
Compensation
Contributions
|
All Other
|
Total
|
||||||||||||||||||||||||
Name and Pricipal Position
|
Year
|
($)<
/font>
|
($)(1)
|
($)(1)
|
($)(2)
|
($)
|
($)(3)
|
($)
|
||||||||||||||||||||||
Bradley
T. MacDonald
|
2009
|
$ | 225,000 | $ | 331,000 | - | $ | 235,000 | $ | 3,600 | $ | 794,600 | ||||||||||||||||||
Chairman
of the Board
|
2008
|
225,000 | 107,000 | - | - | 100,000 | 6,700 | 438,700 | ||||||||||||||||||||||
2007
|
225,000 | - | - | - | 100,000 | 6,600 | 331,600 | |||||||||||||||||||||||
Michael
S. McDevitt
|
2009
|
185,000 | 639,000 | - | 410,000 | 5,800 | 1,239,800 | |||||||||||||||||||||||
Chief
Executive and CFO
|
2008
|
135,000 | 450,000 | - | 75,000 | 2,700 | 662,700 | |||||||||||||||||||||||
2007
|
135,000 | 289,000 | - | 75,000 | 2,500 | 501,500 | ||||||||||||||||||||||||
Leo
V. Williams
|
2009
|
135,000 | - | - | 85,000 | 4,600 | 224,600 | |||||||||||||||||||||||
Executive
Vice President
|
2008
|
132,500 | - | - | 25,000 | 2,900 | 160,400 | |||||||||||||||||||||||
2007
|
132,500 | - | - | 25,000 | 1,900 | 159,400 | ||||||||||||||||||||||||
Margaret
Sheetz
|
2009
|
155,000 | 531,000 | - | 350,000 | 4,900 | 1,040,900 | |||||||||||||||||||||||
Chief
Operating Officer,
|
2008
|
100,000 | 372,000 | - | 50,000 | 3,000 | 525,000 | |||||||||||||||||||||||
President
|
2007
|
100,000 | 237,000 | - | 50,000 | 2,900 | 389,900 | |||||||||||||||||||||||
Brendan
N. Connors
|
2009
|
125,000 | 167,000 | - | 117,000 | 3,900 | 412,900 | |||||||||||||||||||||||
VP
of Finance
|
2008
|
99,000 | 101,000 | - | 20,000 | 3,000 | 223,000 | |||||||||||||||||||||||
2007
|
99,000 | 47,000 | - | 20,000 | 2,900 | 168,900 |
(1)
|
Amounts shown represent the
aggregate grant date fair value of the stock awards in the year indicated.
For a discussion of the assumptions made in the valuation reflected in
these columns, see Note 2 of Notes to Consolidated Financial Statements in
our Annual Report on Form 10-K for the year ended December 31, 2009.
The actual value that may be realized from an award is contingent upon the
satisfaction of the conditions to vesting in that award on the date the
award is vested. Thus, there is no assurance that the value, if any,
eventually realized will correspond to the amount
shown.
|
(2)
|
Bonus
amounts determined as more specifically discussed above under
“—Compensation Discussion and
Analysis”
|
(3)
|
The
amounts represent the Company’s matching contributions under the 401(K)
plan.
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
|
Number of
Securities
Underlying
Unexercised
Options (#)
|
Option
Exercise
|
Option
Expiration
|
Number Shares
or Units of
Stock That
Have Not
Vested
|
Market Value
of Shares or
Units of Stock
that have not
Vested
|
Equity incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other rights
|
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other rights That
Have Not Vested
|
|||||||||||||||||||||
Exercisable
|
Un-Exercisable
|
Price
($)
|
Date
|
Vested
(#)(1)
|
($)(2)
|
(#)
|
($)
|
||||||||||||||||||||||
Bradley
T. MacDonald
|
|||||||||||||||||||||||||||||
Chairman
of the Board
|
- | - | - | 204,000 | 6,238,320 | - | - | ||||||||||||||||||||||
Michael
S. McDevitt
|
|||||||||||||||||||||||||||||
Chief
Executive Officer, CFO
|
- | - | - | 303,667 | 9,286,137 | - | - | ||||||||||||||||||||||
Leo
V. Williams
|
|||||||||||||||||||||||||||||
Executive
Vice President
|
10,000 | - | 3.83 |
10/28/2010
|
- | - | - | - | |||||||||||||||||||||
Margaret Sheetz
|
|||||||||||||||||||||||||||||
Chief
Operating Officer, President
|
- | - | - | 252,000 | 7,706,160 | - | - | ||||||||||||||||||||||
Brendan
N. Connors
|
|||||||||||||||||||||||||||||
VP
of Finance
|
- | - | 91,000 | 2,782,780 | - | - |
(1)
|
The
restricted stock grants vest over five and six years of service as
described below under “Narrative Disclosure to Summary Compensation Table
and Grants of Plan-Based Awards”
|
(2)
|
The
market value of shares of stock that have not vested is based on the
closing price of our common stock on December 31, 2009, or $30.58 per
share.
|
Option Awards
|
Stock Awards
|
|||||||||||||||
Number of
Shares Acquired
on Exercise
|
Value Realized
on Exercise
|
Number of
Shares
Acquired on
Vesting
|
Value
Realized on
Vesting
|
|||||||||||||
Name
|
(#)
|
($)(1)
|
(#)
|
($)(2)
|
||||||||||||
Bradley
T. MacDonald
|
- | - | ||||||||||||||
Executive
Chairman of the Board
|
- | - | 20,000 | 285,000 | ||||||||||||
14,000 | 102,340 | |||||||||||||||
20,000 | 131,000 | |||||||||||||||
9,000 | 53,280 | |||||||||||||||
Michael
S. McDevitt
|
84,895 | 1,369,356 | 15,000 | 88,800 | ||||||||||||
Chief
Executive Officer, CFO
|
33,333 | 243,664 | ||||||||||||||
30,000 | 427,500 | |||||||||||||||
24,000 | 157,200 | |||||||||||||||
9,000 | 53,280 | |||||||||||||||
Leo
V. Williams
|
||||||||||||||||
Executive
Vice President
|
- | - | - | - | ||||||||||||
Margaret
Sheetz
|
15,000 | 88,800 | ||||||||||||||
Chief
Operating Officer, President
|
- | - | 25,000 | 182,750 | ||||||||||||
25,000 | 356,250 | |||||||||||||||
20,000 | 131,000 | |||||||||||||||
8,000 | 47,360 | |||||||||||||||
Brendan
N. Connors
|
19,805 | 319,455 | 3,000 | 17,760 | ||||||||||||
VP
of Finance
|
5,000 | 36,550 | ||||||||||||||
10,000 | 142,500 | |||||||||||||||
8,000 | 52,400 | |||||||||||||||
4,000 | 23,680 |
(1)
|
Represents
the difference between the exercise price and the fair market value of the
common stock on the date of exercise, multiplied by the number of options
exercised.
|
(2)
|
Represents
the number of restricted shares vested, and the number of shares vested
multiplied by the fair market value of the common stock on the vesting
date.
|
Plan category
|
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
|
Weighted
average exercise
price of
outstanding
options,
warrants and
rights
|
Number of
securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a))
|
|||||
(a)
|
(b)
|
(c)
|
||||||
Equity
compensation plans approved by security holders
|
10,000
|
(1) | $ |
3.83
|
1,442,500
|
|||
Equity
compensation plans not approved by security holders
|
-
|
-
|
-
|
(1)
|
Consists
of 10,000 shares of common stock issuable upon the exercise of outstanding
options
|
Executive
Contributions in
Last FY
|
Company
Contributions
in Last FY
|
Aggregate
Earnings in Last
FY
|
Aggregate
Withdrawals/
Distributions
|
Aggregate
Balance at Last
FYE
|
||||||||||||||||
($)
|
($)(1)
|
($)
|
($)
|
($)
|
||||||||||||||||
Bradley
T. MacDonald
|
- | - | 247,000 | - | 1,040,000 | |||||||||||||||
Chairman
of the Board
|
||||||||||||||||||||
Michael
S. McDevitt
|
- | - | - | - | - | |||||||||||||||
Chief
Executive Officer, CFO
|
||||||||||||||||||||
Leo
V. Williams
|
- | - | - | - | - | |||||||||||||||
Executive
Vice President
|
||||||||||||||||||||
Margaret
Sheetz
|
- | - | - | - | - | |||||||||||||||
Chief
Operating Officer, President
|
||||||||||||||||||||
Brendan
N. Connors
|
- | - | - | - | - | |||||||||||||||
VP
of Finance
|
(1)
|
All
amounts are reported in compensation on the “2009 Summary Compensation
Table”
|
Severance ($) (1)
|
||||
Bradley
T. MacDonald
|
$ | 337,500 | ||
Michael
S. McDevitt
|
$ | 277,500 | ||
Margaret
Sheetz
|
$ | 232,500 | ||
Brendan
N. Connors
|
$ | 187,500 |
Severance
($)(1)
|
Accelerated
Vesting of
Stock Awards
($)(2)
|
Total
|
||||||||||
Bradley
T. MacDonald
|
$ | 337,500 | $ | 6,238,320 | $ | 6,575,820 | ||||||
Michael
S. McDevitt
|
277,500 | 9,286,137 | 9,563,637 | |||||||||
Margaret
Sheetz
|
232,500 | 7,606,160 | 7,838,660 | |||||||||
Brendan
N. Connors
|
187,500 | 2,782,780 | 2,970,280 |
(1)
|
Based
on 2009 salary.
|
(2)
|
Accelerated
vesting of stock awards were based on NYSE close price of the Common
Shares on December 31, 2009 of $30.58 per
share.
|
Name and Address of
5% Beneficial Owner
|
Shares
Beneficially
Owned (1)
|
Percent of
Outstanding
Common Stock
|
||||||
FMR,
LLC
|
||||||||
82
Devonshire Street
|
1,185,000 | 7.7 | % | |||||
Boston,
MA 02109
|
||||||||
Wellington
Management Company, LLP
|
835,832 | 5.42 | % | |||||
75
State Street
|
||||||||
Boston,
MA 02109
|
Name of Beneficial Owner
|
Shares Beneficially
Owned (1)(2)
|
Shares
Acquirable
Within 60 days
|
Percent of
Outstanding
Common Stock (%)
|
|||||||||
Bradley
T. MacDonald (3)
|
797,050 | - | 5.18 | % | ||||||||
Michael
S. McDevitt
|
420,012 | - | 2.73 | % | ||||||||
Margaret
Sheetz
|
293,692 | - | 1.91 | % | ||||||||
Brendan
N. Connors, CPA
|
108,484 | - | * | |||||||||
Donald
F. Reilly
|
81,483 | - | * | |||||||||
Michael
C. MacDonald
|
69,197 | - | * | |||||||||
Charles
P. Connolly
|
37,575 | - | * | |||||||||
John
P. McDaniel
|
24,500 | - | * | |||||||||
Catherine
T. Maguire
|
8,500 | - | * | |||||||||
Leo
V. Williams
|
16,000 | - | * | |||||||||
George
J. Lavin, Jr., Esq.
|
24,200 | - | * | |||||||||
Barry
B. Bondroff, CPA
|
17,000 | - | * | |||||||||
Jeannette
M. Mills
|
12,500 | - | * | |||||||||
All
directors, nominees for directors and executive officers as a group (13
persons)
|
1,910,193 | - | 12.40 | % |
*
|
Less
than 1%.
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission. Under those rules and for purposes of the table above
(a) if a person has decision making power over either the voting or
the disposition of any shares, that person is generally deemed to be a
beneficial owner of those shares; (b) if two or more persons have
decision making power over either the voting or the disposition of any
shares, they will be deemed to share beneficial ownership of those shares,
in which case the same shares will be included in share ownership totals
for each of those persons; and (c) if a person held options to
purchase shares that were exercisable on, or became exercisable within 60
days of, March 30, 2010, that person will be deemed to be the beneficial
owner of those shares and those shares (but not shares that are subject to
options held by any other stockholder) will be deemed to be outstanding
for purposes of computing the percentage of the outstanding shares that
are beneficially owned by that person. Information supplied by officers
and directors.
|
(2)
|
Unless
otherwise noted, reflects the number of shares that could be purchased by
exercise of options available at March 26, 2010, or within 60 days
thereafter under our stock option
plans.
|
(3)
|
The
shares set forth as beneficially owned by Mr. Bradley T. MacDonald
include 133,402 shares owned by his wife Shirley MacDonald, and 85,167
shares owned by the MacDonald Family Trust. His daughter,
Margaret Sheetz, beneficially owns 293,692 shares which added to Bradley
T. MacDonald’s 797,050 beneficially owned shares results in 1,090,742
shares owned by the MacDonald
family.
|
2009 (3)
|
2008
|
|||||||
Audit
Fees(1)
|
$ | 184,000 | $ | 154,000 | ||||
Tax
fees(2)
|
43,000 | 29,000 | ||||||
All
other fees
|
- | - | ||||||
Total
|
$ | 227,000 | $ | 183,000 |
(1)
|
Audit
fees consist of fees for professional services rendered for the audit of
the Company’s consolidated financial statements included in the Company’s
Annual Report on Form 10-K, including the audit of internal controls
required by Section 404 of the Sarbanes-Oxley Act of 2002, and the
review of financial statements included in the Company’s Quarterly Reports
on Form 10-Q, and for services that are normally provided by the auditor
in connection with statutory and regulatory filings or
engagements.
|
(2)
|
Tax
fees were billed for tax compliance
services
|
(3)
|
On
January 1, 2010 Bagell, Josephs, Levine, and Co. merged with Friedman,
LLP. Friedman, LLP performed the audit for the year-ended
December 31, 2009.
|
Reports
of Independent Registered Public Accounting Firms
|
57-58
|
Consolidated
Balance Sheets
|
59
|
Consolidated
Statements of Income
|
60
|
Consolidated
Statements of Stockholders’ Equity
|
61
|
Consolidated
Statements of Cash Flows
|
62
|
Notes
to Consolidated Financial Statements
|
63
|
/s/Bagell,
Josephs, Levine & Company, L.L.C.
|
Marlton,
NJ 08053
|
March
6, 2009
|
(Restated)
|
||||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 12,708,000 | $ | 1,841,000 | ||||
Accounts
receivable-net of allowance for sales returns and doubtful accounts of
$100,000
|
676,000 | 448,000 | ||||||
Inventory
|
11,232,000 | 13,856,000 | ||||||
Investment
securities
|
3,594,000 | 1,099,000 | ||||||
Deferred
compensation
|
1,040,000 | 792,000 | ||||||
Prepaid
expenses and other current assets
|
5,334,000 | 3,165,000 | ||||||
Note
receivable - current
|
46,000 | 180,000 | ||||||
Current
portion of deferred tax asset
|
100,000 | 100,000 | ||||||
Total
current assets
|
34,730,000 | 21,481,000 | ||||||
Property,
plant and equipment - net
|
23,237,000 | 21,709,000 | ||||||
Trademarks
and intangibles - net
|
4,104,000 | 5,547,000 | ||||||
Deferred
tax asset, net of current portion
|
193,000 | 150,000 | ||||||
Note
receivable, net of current assets
|
112,000 | 1,080,000 | ||||||
Other
assets
|
379,000 | 350,000 | ||||||
TOTAL
ASSETS
|
$ | 62,755,000 | $ | 50,317,000 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
4,966,000 | 5,130,000 | ||||||
Income
taxes payable
|
22,000 | 102,000 | ||||||
Line
of credit
|
- | 3,164,000 | ||||||
Deferred
compensation payable
|
399,000 | 261,000 | ||||||
Current
maturities of long-term debt
|
796,000 | 257,000 | ||||||
Total
current liabilities
|
6,183,000 | 8,914,000 | ||||||
Other
liabilities
|
||||||||
Long-term
debt, net of current portion
|
5,444,000 | 4,313,000 | ||||||
Deferred
tax liability- non current
|
1,553,000 | 1,869,000 | ||||||
Total
liabilities
|
13,180,000 | 15,096,000 | ||||||
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; 15,438,941 issued and 15,031,103
outstanding and 14,585,960 issued and 14,313,768 shares
outstanding
|
16,000 | 15,000 | ||||||
Additional
paid-in capital
|
28,456,000 | 25,250,000 | ||||||
Accumulated
other comprehensive income (loss)
|
159,000 | (389,000 | ) | |||||
Retained
earnings
|
24,264,000 | 12,301,000 | ||||||
Less:
cost of 367,838 and 272,192 shares of common stock in
treasury
|
(3,320,000 | ) | (1,956,000 | ) | ||||
Total
stockholders' equity
|
49,575,000 | 35,221,000 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 62,755,000 | $ | 50,317,000 |
(Restated)
|
(Restated)
|
|||||||||||
2009
|
2008
|
2007
|
||||||||||
Revenue
|
$ | 165,618 | $ | 105,445 | $ | 83,779 | ||||||
Cost
of sales
|
(40,293 | ) | (25,332 | ) | (21,464 | ) | ||||||
Gross
profit
|
125,325 | 80,113 | 62,315 | |||||||||
Selling,
general, and administration
|
(105,959 | ) | (71,914 | ) | (56,600 | ) | ||||||
Income
from operations
|
19,366 | 8,199 | 5,715 | |||||||||
Other
income (expense):
|
||||||||||||
Interest
expense
|
(145 | ) | (366 | ) | (387 | ) | ||||||
Interest
income
|
155 | 149 | 105 | |||||||||
Other
income (expense)
|
(83 | ) | (132 | ) | 110 | |||||||
(73 | ) | (349 | ) | (172 | ) | |||||||
Income
before provision for income taxes
|
19,293 | 7,850 | 5,543 | |||||||||
Provision
for income taxes
|
(7,330 | ) | (3,016 | ) | (2,117 | ) | ||||||
Net
income attributable to common shareholders
|
$ | 11,963 | $ | 4,834 | $ | 3,426 | ||||||
Basic
earnings per share
|
$ | 0.89 | $ | 0.37 | $ | 0.26 | ||||||
Diluted
earnings per share
|
$ | 0.81 | $ | 0.34 | $ | 0.25 | ||||||
Weighted
average shares outstanding -
|
||||||||||||
Basic
|
13,515,318 | 13,126,534 | 12,960,930 | |||||||||
Diluted
|
14,736,639 | 14,329,525 | 13,644,149 |
Par Value
|
Additional
|
Accumulated
|
||||||||||||||||||||||||||
Number
|
$0.001
|
Paid-In
|
Retained
|
other comp
|
Treasury
|
|||||||||||||||||||||||
of Shares
|
Amount
|
Capital
|
Earnings
|
income/(loss)
|
Stock
|
Total
|
||||||||||||||||||||||
Balance
at December 31, 2006, as previously reported
|
13,631,898 | $ | 14,000 | $ | 23,273,000 | $ | 5,981,000 | $ | 334,000 | $ | (1,686,000 | ) | $ | 27,916,000 | ||||||||||||||
Adjustments
|
(1,941,000 | ) | (1,941,000 | ) | ||||||||||||||||||||||||
Balance,
December 31, 2006, as restated
|
13,631,898 | $ | 14,000 | $ | 23,273,000 | $ | 4,040,000 | $ | 334,000 | $ | (1,686,000 | ) | $ | 25,975,000 | ||||||||||||||
Warrants
converted to common stock
|
40,000 | 100 | 192,000 | 192,100 | ||||||||||||||||||||||||
Common
stock issued to Directors
|
9,700 | 100 | 31,000 | 31,100 | ||||||||||||||||||||||||
Options
excercised to common stock
|
27,500 | 100 | 24,000 | 24,100 | ||||||||||||||||||||||||
FASB
123R vesting
|
101,000 | 101,000 | ||||||||||||||||||||||||||
Vesting
of unearned compensation
|
641,000 | 641,000 | ||||||||||||||||||||||||||
Repurchase
of treasury stock
|
(309,000 | ) | (309,000 | ) | ||||||||||||||||||||||||
Treasury
shares issued to employees
|
(300 | ) | (24,000 | ) | 24,000 | (300 | ) | |||||||||||||||||||||
Net
Loss- unrealized loss on investments
|
(13,000 | ) | (13,000 | ) | ||||||||||||||||||||||||
Net
income
|
3,427,000 | 3,427,000 | ||||||||||||||||||||||||||
Balance,
December 31, 2007
|
13,709,098 | $ | 14,000 | $ | 24,238,000 | $ | 7,467,000 | $ | 321,000 | $ | (1,971,000 | ) | $ | 30,069,000 | ||||||||||||||
Common
stock issued to Directors
|
37,000 | 100 | 152,000 | 152,100 | ||||||||||||||||||||||||
Options
excercised to common stock
|
61,112 | 100 | 72,000 | (43,000 | ) | 72,100 | ||||||||||||||||||||||
Shares
issued to Executives and Directors with 2 to 5 year
vesting
|
736,750 | 700 | - | 700 | ||||||||||||||||||||||||
Vesting
of unearned compensation to executives and directors
|
851,000 | 851,000 | ||||||||||||||||||||||||||
Cancellation
of options and reissuance of restricted shares
|
42,000 | 100 | (75,000 | ) | (74,900 | ) | ||||||||||||||||||||||
Treasury
shares issued in legal settlement
|
12,000 | 58,000 | 12,000 | |||||||||||||||||||||||||
Net
Loss- unrealized loss on investments
|
(710,000 | ) | (710,000 | ) | ||||||||||||||||||||||||
Net
income
|
4,834,000 | 4,834,000 | ||||||||||||||||||||||||||
Balance,
December 31, 2008
|
14,585,960 | $ | 15,000 | $ | 25,250,000 | $ | 12,301,000 | $ | (389,000 | ) | $ | (1,956,000 | ) | $ | 35,221,000 | |||||||||||||
Common
stock issued to Directors
|
49,000 | 100 | 207,000 | 207,100 | ||||||||||||||||||||||||
Options
excercised to common stock
|
133,334 | 100 | 331,000 | (331,000 | ) | 100 | ||||||||||||||||||||||
Warrants
converted to common stock
|
44,647 | 100 | 214,000 | 214,100 | ||||||||||||||||||||||||
Shares
issued to Executives and Directors with 2 to 5 year
vesting
|
586,000 | 700 | - | 700 | ||||||||||||||||||||||||
Fair
value adjustment for stock compensation tax benefit
|
303,000 | 303,000 | ||||||||||||||||||||||||||
Vesting
of unearned compensation to executives and directors
|
2,151,000 | 2,151,000 | ||||||||||||||||||||||||||
Receipt
of treasury stock as payment of note receivable
|
(931,000 | ) | (931,000 | ) | ||||||||||||||||||||||||
Purchase
of treasury stock on open market
|
(102,000 | ) | (102,000 | ) | ||||||||||||||||||||||||
Net
Gain- unrealized gain on investments
|
548,000 | 548,000 | ||||||||||||||||||||||||||
Net
income
|
11,963,000 | 11,963,000 | ||||||||||||||||||||||||||
Balance,
December 31, 2009
|
15,398,941 | $ | 16,000 | $ | 28,456,000 | $ | 24,264,000 | $ | 159,000 | $ | (3,320,000 | ) | $ | 49,575,000 |
(Restated)
|
(Restated)
|
|||||||||||
2009
|
2008
|
2007
|
||||||||||
(Audited)
|
(Audited)
|
(Audited)
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
$ | 11,963,000 | $ | 4,834,000 | $ | 3,426,000 | ||||||
Adjustments
to reconcile net income to net cash provided by operating activities from
continuing operations:
|
||||||||||||
Depreciation
and amortization
|
$ | 5,267,000 | $ | 4,574,000 | 3,471,000 | |||||||
Realized
loss on investment securities
|
81,000 | 216,000 | 103,000 | |||||||||
Common
stock issued for services
|
207,000 | 152,000 | 31,000 | |||||||||
Treasury
stock issued in legal settlement
|
- | 70,000 | - | |||||||||
Stock
options vested during period
|
- | - | 100,000 | |||||||||
Stock
options cancelled during period
|
- | (77,000 | ) | - | ||||||||
Excess
tax benefits from share-base payments arrangements
|
303,000 | - | 39,000 | |||||||||
Vesting
of unearned compensation
|
2,151,000 | 852,000 | 641,000 | |||||||||
Net
change in other comprehensive (loss) income
|
550,000 | (711,000 | ) | (13,000 | ) | |||||||
Deferred
tax asset
|
(43,000 | ) | 110,000 | (54,000 | ) | |||||||
Deferred
tax liability
|
(316,000 | ) | 365,000 | (766,000 | ) | |||||||
Changes
in assets and liabilities:
|
||||||||||||
(Increase)
Decrease in accounts receivable
|
(228,000 | ) | 43,000 | (43,000 | ) | |||||||
(Increase)
Decrease in inventory
|
2,624,000 | (4,675,000 | ) | (926,000 | ) | |||||||
(Increase)
Decrease in prepaid expenses & other current assets
|
(452,000 | ) | 693,000 | (128,000 | ) | |||||||
(Increase)
Decrease in deferred compensation
|
(110,000 | ) | 282,000 | (140,000 | ) | |||||||
(Increase) in
prepaid taxes
|
(1,413,000 | ) | (1,131,000 | ) | - | |||||||
(Increase)
in other assets
|
(29,000 | ) | (251,000 | ) | (52,000 | ) | ||||||
Increase
(Decrease) in accounts payable and accrued expenses
|
(162,000 | ) | 850,000 | 1,367,000 | ||||||||
Increase
(Decrease) in income taxes payable
|
(80,000 | ) | (700,000 | ) | 898,000 | |||||||
Net
cash provided by operating activities
|
20,313,000 | 5,496,000 | 7,954,000 | |||||||||
Cash
Flow from Investing Activities:
|
||||||||||||
(Purchase)
Sale of investment securities, net
|
(2,579,000 | ) | 129,000 | (4,000 | ) | |||||||
(Purchase)
of property and equipment
|
(5,118,000 | ) | (7,429,000 | ) | (5,151,000 | ) | ||||||
(Purchase)
of intangible assets
|
(235,000 | ) | (13,000 | ) | (2,814,000 | ) | ||||||
Net
cash (used in) investing activities
|
(7,932,000 | ) | (7,313,000 | ) | (7,969,000 | ) | ||||||
Cash
Flow from Financing Activities:
|
||||||||||||
Issuance
of common stock, options and warrants
|
214,000 | 30,000 | 216,000 | |||||||||
Proceeds
(Repayment) of long-term debt, net
|
1,670,000 | (264,000 | ) | (586,000 | ) | |||||||
Increase
(Decrease) in line of credit
|
(3,163,000 | ) | 1,565,000 | 1,706,000 | ||||||||
Decrease
in note receivable
|
170,000 | 132,000 | 137,000 | |||||||||
Excess
tax benefits from share-based payment arrangements
|
(303,000 | ) | - | (39,000 | ) | |||||||
(Purchase)
of treasury stock
|
(102,000 | ) | - | (309,000 | ) | |||||||
Net
cash provided by financing activities
|
(1,514,000 | ) | 1,463,000 | 1,125,000 | ||||||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
10,867,000 | (354,000 | ) | 1,110,000 | ||||||||
Cash
and cash equivalents - beginning of the period
|
1,841,000 | 2,195,000 | 1,085,000 | |||||||||
Cash
and cash equivalents - end of period
|
$ | 12,708,000 | $ | 1,841,000 | $ | 2,195,000 | ||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||
Interest
paid
|
$ | 145,000 | $ | 367,000 | $ | 387,000 | ||||||
Income
taxes
|
$ | 9,167,000 | $ | 3,661,000 | $ | 1,790,000 | ||||||
Supplemental
disclosure of non cash activity:
|
||||||||||||
Common
shares issued for options or warrants
|
$ | - | $ | 30,000 | $ | - | ||||||
Treasury
stock issued in legal settlement
|
$ | - | $ | 70,000 | $ | - | ||||||
Line
of credit converted to long-term debt
|
$ | - | $ | - | $ | 2,156,000 | ||||||
Treasury
stock received in payment of note receivable
|
$ | 931,500 | $ | - | $ | - |
Building
and building improvements
|
39
years
|
Equipment
and fixtures
|
3 -
15 years
|
Vehicles
|
5
years
|
(Restated)
|
(Restated)
|
|||||||||||
2009
|
2008
|
2007
|
||||||||||
Numerator:
|
||||||||||||
Net
income attributable to Medifast, Inc.
|
$ | 11,963,000 | $ | 4,834,000 | $ | 3,426,000 | ||||||
Denominator:
|
||||||||||||
Weighted
average shares of common stock outstanding
|
13,515,318 | 13,126,534 | 12,960,930 | |||||||||
Effect
of dilutive common stock equivalents
|
1,221,321 | 1,202,991 | 683,219 | |||||||||
Weighted
average diluted common shares outstanding
|
14,736,639 | 14,329,525 | 13,644,149 | |||||||||
EPS
attributable to Medifast, Inc.
|
||||||||||||
Basic
|
$ | 0.89 | $ | 0.37 | $ | 0.26 | ||||||
Diluted
|
$ | 0.81 | $ | 0.34 | $ | 0.25 |
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Accrued interest
|
Estimated Fair
Value
|
||||||||||||||||
Cash
and cash equivalents
|
||||||||||||||||||||
Demand
deposits
|
$ | 3,826,000 | $ | - | $ | - | $ | - | $ | 3,826,000 | ||||||||||
Money
market accounts
|
8,882,000 | - | 8,882,000 | |||||||||||||||||
December
31, 2009
|
$ | 12,708,000 | $ | - | $ | - | $ | - | $ | 12,708,000 | ||||||||||
Investment
Securities
|
||||||||||||||||||||
Investment
Securities
|
$ | 3,504,000 | $ | 78,000 | $ | (10,000 | ) | $ | 22,000 | $ | 3,594,000 | |||||||||
December
31, 2009
|
$ | 3,504,000 | $ | 78,000 | $ | (10,000 | ) | $ | 22,000 | $ | 3,594,000 | |||||||||
Cash
and cash equivalents
|
||||||||||||||||||||
Demand
deposits
|
$ | 918,000 | $ | - | $ | 918,000 | ||||||||||||||
Money
market accounts
|
923,000 | - | 923,000 | |||||||||||||||||
December
31, 2008
|
$ | 1,841,000 | $ | - | $ | - | $ | - | $ | 1,841,000 | ||||||||||
Investment
Securities
|
||||||||||||||||||||
Investment
Securities
|
$ | 1,088,000 | $ | 11,000 | $ | 1,099,000 | ||||||||||||||
December
31, 2008
|
$ | 1,088,000 | $ | - | $ | - | $ | 11,000 | $ | 1,099,000 |
2009
|
2008
|
|||||||
Raw
Materials
|
$ | 3,900,000 | $ | 2,810,000 | ||||
Packaging
|
2,628,000 | 2,234,000 | ||||||
Finished
Goods
|
4,704,000 | 8,812,000 | ||||||
Total
|
$ | 11,232,000 | $ | 13,856,000 |
2009
|
2008
|
|||||||
Marketing
and advertising
|
$ | 1,832,000 | $ | 1,531,000 | ||||
Supplies
|
745,000 | 413,000 | ||||||
Insurance
|
546,000 | 90,000 | ||||||
Taxes
|
2,211,000 | 1,131,000 | ||||||
$ | 5,334,000 | $ | 3,165,000 |
2009
|
2008
|
|||||||
Land
|
$ | 650,000 | $ | 650,000 | ||||
Building
and building improvements
|
9,034,000 | 8,603,000 | ||||||
Equipment
and fixtures
|
26,478,000 | 21,810,000 | ||||||
Vehicle
|
59,000 | 43,000 | ||||||
$ | 36,221,000 | $ | 31,106,000 | |||||
Less
accumulated depreciation and amortization
|
12,984,000 | 9,397,000 | ||||||
Property,
plant and equipment - net
|
$ | 23,237,000 | $ | 21,709,000 |
As of December 31, 2009
|
As of December 31, 2008
|
|||||||||||||||
Gross Carrying
|
Accumulated
|
Gross Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Customer
lists
|
$ | 8,567,000 | $ | 6,086,000 | $ | 8,332,000 | $ | 4,649,000 | ||||||||
Non-compete
agreements
|
840,000 | 840,000 | 840,000 | 840,000 | ||||||||||||
Trademarks,
patents, and copyrights
|
||||||||||||||||
finite
life
|
1,622,000 | 926,000 | 1,622,000 | 685,000 | ||||||||||||
infinite
life
|
927,000 | - | 927,000 | - | ||||||||||||
Total
|
$ | 11,956,000 | $ | 7,852,000 | $ | 11,721,000 | $ | 6,174,000 |
2009
|
2008
|
2007
|
||||||||||
Customer
lists
|
$ | 1,392,000 | $ | 1,584,000 | $ | 1,096,000 | ||||||
Non-compete
agreements
|
- | - | - | |||||||||
Trademarks,
patents, and copyrights
|
241,000 | 239,000 | 236,000 | |||||||||
Total
trademarks and intangibles
|
$ | 1,633,000 | $ | 1,823,000 | $ | 1,332,000 |
2010
|
1,182,000 | |||
2011
|
1,181,000 | |||
2012
|
746,000 | |||
2013
|
63,000 | |||
2014
|
5,000 |
2009
|
2008
|
|||||||
Trade
payables
|
$ | 2,011,000 | $ | 3,658,000 | ||||
Sales
commissions payable
|
2,645,000 | 1,303,000 | ||||||
Accrued
payroll and related taxes
|
312,000 | 169,000 | ||||||
Total
|
$ | 4,966,000 | $ | 5,130,000 |
For
the Years Ending
|
||||
December
31,
|
||||
2010
|
2,174,000 | |||
2011
|
2,116,000 | |||
2012
|
1,966,000 | |||
2013
|
1,311,000 | |||
2014
|
661,000 | |||
Thereafter
|
294,000 | |||
Total
minimum payments required
|
$ | 8,522,000 |
2009
|
2008
|
2007
|
||||||||||
Provision
at the U.S. federal statutory rate
|
34.0 | % | 34.0 | % | 34.0 | % | ||||||
State
taxes, net of federal benefit
|
4.8 | % | 3.2 | % | 5.4 | % | ||||||
Permanent
differences
|
-0.8 | % | 1.2 | % | -1.2 | % | ||||||
Income
tax expense
|
38.0 | % | 38.4 | % | 38.2 | % |
2009
|
2008
|
2007
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 6,276,000 | $ | 3,059,000 | $ | 1,213,000 | ||||||
State
|
695,000 | 432,000 | 84,000 | |||||||||
Total
Current
|
$ | 6,971,000 | $ | 3,491,000 | $ | 1,297,000 | ||||||
Deferred:
|
||||||||||||
Federal
|
$ | 283,000 | $ | (390,000 | ) | $ | 672,000 | |||||
State
|
76,000 | (85,000 | ) | 148,000 | ||||||||
Total
deferred
|
359,000 | (475,000 | ) | 820,000 | ||||||||
Income
tax expense
|
$ | 7,330,000 | $ | 3,016,000 | $ | 2,117,000 |
2009
|
2008
|
2007
|
||||||||||
Deferred
tax assets
|
||||||||||||
Deferred
compensation
|
$ | 250,000 | $ | 208,000 | 317,000 | |||||||
Inventory
overhead and write downs
|
43,000 | 42,000 | 43,000 | |||||||||
Total
deferred tax assets
|
$ | 293,000 | $ | 250,000 | 360,000 | |||||||
Deferred
Tax Liabilities
|
||||||||||||
Depreciation
and Amortization
|
$ | (1,553,000 | ) | $ | (1,869,000 | ) | (1,506,000 | ) | ||||
Total
deferred tax liabilities
|
$ | (1,553,000 | ) | $ | (1,869,000 | ) | $ | (1,506,000 | ) |
2009
|
2008
|
2007
|
||||||||||||||||||||||
Shares
|
Weighted
Average
Exercise Price
|
Shares
|
Weighted
Average
Exercise
Price
|
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||||||||||||
Outstanding
at beginning of year
|
143,334 | $ | 3.00 | 291,300 | $ | 4.19 | 321,579 | $ | 3.88 | |||||||||||||||
Options
exercised
|
(133,334 | ) | 2.94 | (28,334 | ) | 0.50 | (27,500 | ) | 0.89 | |||||||||||||||
Options
forfeited or expired
|
- | 0.00 | (119,632 | ) | 6.39 | (2,779 | ) | 1.60 | ||||||||||||||||
Outstanding
at end of year
|
10,000 | $ | 3.83 | 143,334 | $ | 3.00 | 291,300 | $ | 4.19 | |||||||||||||||
Options
exercisable at year end
|
10,000 | $ | 3.83 | 143,334 | $ | 3.00 | 211,300 | $ | 3.35 |
Options Outstanding
|
Options
Exercisable
|
||||||||||||||||||||
Weighted
|
|||||||||||||||||||||
Average
|
|||||||||||||||||||||
Contractual
|
Weighted
|
Weighted
|
|||||||||||||||||||
Range of
|
Life
|
Average
|
Average
|
||||||||||||||||||
Exercise
|
Number
|
Remaining
|
Exercise
|
Number
|
Exercise
|
||||||||||||||||
Prices
|
Outstanding
|
(in Years)
|
Price
|
Exercisable
|
Price
|
||||||||||||||||
$ |
3.83
|
10,000 | 0.83 | $ | 3.83 | 10,000 | $ | 3.83 | |||||||||||||
10,000 | $ | 3.83 | 10,000 | $ | 3.83 |
Shares
|
Weighed-Average
Grant Date Fair Value
|
|||||||
Outstanding
at January 1, 2009
|
1,019,835 | $ | 4.42 | |||||
Granted
|
586,000 | 6.33 | ||||||
Vested
|
(401,457 | ) | 5.36 | |||||
Forfeited
|
- | - | ||||||
Outstanding
at December 31, 2009
|
1,204,378 | 5.57 |
2009
|
2008
|
|||||||
$475,000
seven-year loan secured by the building and land at a variable
rate at LIBOR plus 250 bps, which was 2.74% on December 31,
2009. Due 2011
|
301,000 | 332,000 | ||||||
$5,000,000
revolving line of credit at the LIBOR rate plus 1.3%, which was 2.50% at
December 31, 2009
|
- | - | ||||||
$7,500,000
revolving line of credit at the LIBOR rate plus 1.3%, which was 2.50% at
December 31, 2009
|
- | 3,163,000 | ||||||
$3,000,000
ten-year term loan, with Merrill Lynch at LIBOR plus 1.3%, this was 1.54%
at December 31, 2009. Due 2017
|
2,675,000 | 2,825,000 | ||||||
$1,500,000
ten-year term loan, with Merrill Lynch at LIBOR plus 1.3%, this was 1.54%
at December 31, 2009. Due 2017
|
1,338,000 | 1,413,000 | ||||||
$2,600,000
3-year term loan, with Bank of America at Libor plus 200 bps, which was
2.25% on December 31, 2009. Due 2012.
|
1,926,000 | - | ||||||
6,240,000 | 7,733,000 | |||||||
Less
current portion
|
796,000 | 3,421,000 | ||||||
5,444,000 | 4,312,000 |
2010
|
796,000 | |||
2011
|
796,000 | |||
2012
|
796,000 | |||
2013
|
566,000 | |||
2014
|
257,000 | |||
Thereafter
|
3,029,000 | |||
$ | 6,240,000 |
Exercise
|
December 31,
|
||||||||||||||
Price
|
Expiration Date
|
2009
|
2008
|
2007
|
|||||||||||
$
|
4.80
|
January,
2009
|
- | 80,000 | 80,000 | ||||||||||
$
|
16.78
|
July,
2008
|
- | - | 82,500 | ||||||||||
- | 80,000 | 162,500 | |||||||||||||
Weighted
average exercise price
|
- | 4.80 | 10.88 |
Assets
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Investment
securities
|
$ | 3,594,000 | - | - | $ | 3,594,000 | ||||||||||
Cash
equivalents
|
12,708,000 | - | - | 12,708,000 | ||||||||||||
Total
Assets
|
$ | 16,302,000 | $ | - | $ | - | $ | 16,302,000 | ||||||||
Liabilities
|
6,240,000 | - | - | 6,240,000 | ||||||||||||
Total
Liabilities
|
$ | 6,240,000 | $ | - | $ | - | $ | 6,240,000 |
Year Ended December 31, 2009
|
||||||||||||||||
Medifast
|
All Other
|
Eliminations
|
Consolidated
|
|||||||||||||
Revenues,
net
|
$ | 150,037,000 | $ | 15,581,000 | $ | 165,618,000 | ||||||||||
Cost
of Sales
|
37,046,000 | 3,247,000 | 40,293,000 | |||||||||||||
Other
Selling, General and Adminstrative Expenses
|
88,191,000 | 12,584,000 | 100,775,000 | |||||||||||||
Depreciation
and Amortization
|
4,266,000 | 1,001,000 | 5,267,000 | |||||||||||||
Interest
(net)
|
17,000 | (27,000 | ) | (10,000 | ) | |||||||||||
Provision
for income taxes
|
7,330,000 | - | 7,330,000 | |||||||||||||
Net
income (loss)
|
$ | 13,187,000 | $ | (1,224,000 | ) | - | $ | 11,963,000 | ||||||||
Segment
Assets
|
$ | 32,829,000 | $ | 29,926,000 | $ | 62,755,000 |
(Restated)
|
||||||||||||||||
Year Ended December 31, 2008
|
||||||||||||||||
Medifast
|
All Other
|
Eliminations
|
Consolidated
|
|||||||||||||
Revenues,
net
|
$ | 97,116,000 | $ | 8,329,000 | $ | 105,445,000 | ||||||||||
Cost
of Sales
|
23,611,000 | 1,721,000 | 25,332,000 | |||||||||||||
Other
Selling, General and Adminstrative Expenses
|
59,334,000 | 8,138,000 | 67,472,000 | |||||||||||||
Depreciation
and Amortization
|
3,613,000 | 961,000 | 4,574,000 | |||||||||||||
Interest
(net)
|
39,000 | 178,000 | 217,000 | |||||||||||||
Provision
for income taxes
|
3,016,000 | - | 3,016,000 | |||||||||||||
Net
income (loss)
|
$ | 7,503,000 | $ | (2,669,000 | ) | - | $ | 4,834,000 | ||||||||
Segment
Assets
|
$ | 34,034,000 | $ | 16,283,000 | $ | 50,317,000 |
(Restated)
|
||||||||||||||||
Year Ended December 31, 2007
|
||||||||||||||||
Medifast
|
All Other
|
Eliminations
|
Consolidated
|
|||||||||||||
Revenues,
net
|
$ | 78,861,000 | $ | 4,918,000 | $ | 83,779,000 | ||||||||||
Cost
of Sales
|
20,364,000 | 1,100,000 | 21,464,000 | |||||||||||||
Other
Selling, General and Adminstrative Expenses
|
48,250,000 | 4,769,000 | 53,019,000 | |||||||||||||
Depreciation
and Amortization
|
2,527,000 | 944,000 | 3,471,000 | |||||||||||||
Interest
(net)
|
77,000 | 205,000 | 282,000 | |||||||||||||
Provision
for income taxes
|
2,117,000 | - | 2,117,000 | |||||||||||||
Net
income (loss)
|
$ | 5,526,000 | $ | (2,100,000 | ) | - | $ | 3,426,000 | ||||||||
Segment
Assets
|
$ | 25,386,000 | $ | 17,701,000 | $ | 43,087,000 |
Consolidated Balance Sheets
|
||||||||||||
For the Year Ended December 31, 2008
|
As Previously
Reported
|
Adjustments
|
As Restated
|
|||||||||
Deferred
Tax Asset-non current
|
1,131,000 | (981,000 | ) | 150,000 | ||||||||
Total
Assets
|
51,037,000 | (981,000 | ) | 50,056,000 | ||||||||
Deferred
Tax Liability
|
- | 1,869,000 | 1,869,000 | |||||||||
Income
Taxes Payable
|
- | 101,000 | 101,000 | |||||||||
Total
Liabilities
|
12,864,000 | 1,971,000 | 14,835,000 | |||||||||
Retained
Earnings (deficit)
|
15,253,000 | (2,952,000 | ) | 12,301,000 | ||||||||
Total
Stockholder's Equity
|
38,173,000 | (2,952,000 | ) | 35,221,000 | ||||||||
Total
Liabilities and Shareholder's Equity
|
51,037,000 | (981,000 | ) | 50,056,000 | ||||||||
For
the Year Ended December 31, 2007
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||||
Deferred
Tax Asset-non current
|
897,000 | (637,000 | ) | 260,000 | ||||||||
Total
Assets
|
43,724,000 | (637,000 | ) | 43,087,000 | ||||||||
Deferred
Tax Liability
|
- | 1,506,000 | 1,506,000 | |||||||||
Income
Taxes Payable
|
592,000 | 211,000 | 803,000 | |||||||||
Total
Liabilities
|
11,304,000 | 1,716,000 | 13,020,000 | |||||||||
Retained
Earnings (deficit)
|
9,818,000 | (2,352,000 | ) | 7,466,000 | ||||||||
Total
Stockholder's Equity
|
32,420,000 | (2,353,000 | ) | 30,067,000 | ||||||||
Total
Liabilities and Shareholder's Equity
|
43,724,000 | (637,000 | ) | 43,087,000 | ||||||||
For
the Year Ended December 31, 2006
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||||
Deferred
Tax Asset-non current
|
517,000 | (302,000 | ) | 215,000 | ||||||||
Total
Assets
|
36,677,000 | (302,000 | ) | 36,375,000 | ||||||||
Deferred
Tax Liability
|
- | 2,270,000 | 2,270,000 | |||||||||
Income
Taxes Payable
|
535,000 | (631,000 | ) | (96,000 | ) | |||||||
Total
Liabilities
|
8,761,000 | 1,639,000 | 10,400,000 | |||||||||
Retained
Earnings (deficit)
|
5,981,000 | (1,941,000 | ) | 4,040,000 | ||||||||
Total
Stockholder's Equity
|
27,916,000 | (1,941,000 | ) | 25,975,000 | ||||||||
Total
Liabilities and Shareholder's Equity
|
36,677,000 | (302,000 | ) | 36,375,000 |
Consolidated Statements of Operations
|
||||||||||||
For the Year Ended December 31, 2008
|
As Previously
Reported
|
Adjustments
|
As Restated
|
|||||||||
Provision
for income taxes
|
2,415,000 | 601,000 | 3,016,000 | |||||||||
Net
income
|
5,435,000 | (601,000 | ) | 4,834,000 | ||||||||
Basic
Earnings Per Share
|
0.41 | (0.04 | ) | 0.37 | ||||||||
Dilute
Earnings Per Share
|
0.38 | (0.03 | ) | 0.34 | ||||||||
For
the Year Ended December 31, 2007
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||||
Provision
for income taxes
|
1,706,000 | 411,000 | 2,117,000 | |||||||||
Net
income
|
3,837,000 | (411,000 | ) | 3,426,000 | ||||||||
Basic
Earnings Per Share
|
0.30 | (0.04 | ) | 0.26 | ||||||||
Dilute
Earnings Per Share
|
0.28 | (0.03 | ) | 0.25 | ||||||||
For
the Year Ended December 31, 2006
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||||
Provision
for income taxes
|
2,307,000 | 583,000 | 2,890,000 | |||||||||
Net
income
|
5,156,000 | (583,000 | ) | 4,573,000 | ||||||||
Basic
Earnings Per Share
|
0.41 | (0.05 | ) | 0.36 | ||||||||
Dilute
Earnings Per Share
|
0.38 | (0.04 | ) | 0.34 |
Consolidated Statement of Cash Flows
|
||||||||||||
For the Year Ended December 31, 2008
|
As Previously
Reported
|
Adjustments
|
As Restated
|
|||||||||
Net
income
|
5,435,000 | (601,000 | ) | 4,834,000 | ||||||||
Deferred
Tax Asset
|
(234,000 | ) | (981,000 | ) | 747,000 | |||||||
Deferred
Tax Liability
|
- | 1,869,000 | 1,869,000 | |||||||||
Income
Taxes Payable
|
(592,000 | ) | 101,000 | (491,000 | ) | |||||||
For
the Year Ended December 31, 2007
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||||
Net
income
|
3,837,000 | (411,000 | ) | 3,426,000 | ||||||||
Deferred
Tax Asset
|
(390,000 | ) | (637,000 | ) | 247,000 | |||||||
Deferred
Tax Liability
|
- | 1,506,000 | 1,506,000 | |||||||||
Income
Taxes Payable
|
57,000 | 211,000 | 268,000 | |||||||||
For
the Year Ended December 31, 2006
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||||
Net
income
|
5,156,000 | (583,000 | ) | 4,573,000 | ||||||||
Deferred
Tax Asset
|
(597,000 | ) | (302,000 | ) | (295,000 | ) | ||||||
Deferred
Tax Liability
|
- | 2,270,000 | 2,270,000 | |||||||||
Income
Taxes Payable
|
(364,000 | ) | (631,000 | ) | (995,000 | ) |
First Quarter
|
Second Quarter
|
Third Quarter
|
Fourth Quarter
|
|||||||||||||
2009
|
||||||||||||||||
Revenue
|
$ | 33,693,000 | $ | 40,699,000 | $ | 45,006,000 | $ | 46,220,000 | ||||||||
Gross
Profit
|
25,639,000 | 30,948,000 | 34,235,000 | 34,503,000 | ||||||||||||
Operating
Income
|
4,028,000 | 4,774,000 | 5,563,000 | 5,000,000 | ||||||||||||
Net
Income
|
2,498,000 | 2,985,000 | 3,434,000 | 3,045,000 | ||||||||||||
Earnings
per common share - diluted
|
0.17 | 0.20 | 0.23 | 0.21 | ||||||||||||
2008
(Restated)
|
||||||||||||||||
Revenue
|
$ | 25,169,000 | $ | 27,537,000 | $ | 27,281,000 | $ | 25,458,000 | ||||||||
Gross
Profit
|
19,069,000 | 20,860,000 | 20,759,000 | 19,425,000 | ||||||||||||
Operating
Income
|
2,062,000 | 2,409,000 | 2,396,000 | 1,332,000 | ||||||||||||
Net
Income
|
1,252,000 | 1,431,000 | 1,448,000 | 703,000 | ||||||||||||
Earnings
per common share - diluted
|
0.09 | 0.10 | 0.10 | 0.05 | ||||||||||||
2007
(Restated)
|
||||||||||||||||
Revenue
|
$ | 20,089,000 | $ | 22,041,000 | $ | 21,846,000 | $ | 19,803,000 | ||||||||
Gross
Profit
|
15,031,000 | 16,678,000 | 16,323,000 | 14,283,000 | ||||||||||||
Operating
Income
|
1,914,000 | 1,445,000 | 1,557,000 | 799,000 | ||||||||||||
Net
Income
|
1,176,000 | 877,000 | 865,000 | 508,000 | ||||||||||||
Earnings
per common share - diluted
|
0.09 | 0.06 | 0.06 | 0.04 |
No.
|
|||
3.1
|
Certificate
of Incorporation of the Company and amendments thereto
|
||
3.2
|
By-Laws
of the Company- Amended
|
||
10.1
|
1993
Stock Option Plan of the Company as amended*
|
||
10.3
|
Lease
relating to the Company's Owings Mills, Maryland
facility**
|
||
10.4
|
Employment
agreement with Bradley T. MacDonald***
|
||
10.5
|
Employment
agreement with Bradley T. MacDonald signed February 8,
2006
|
||
10.6
|
Employment
agreement with Michael S. McDevitt signed February 8,
2006
|
||
10.7
|
Employment
agreement with Margaret MacDonald signed February 8,
2006
|
||
10.8
|
Employment
agreement with Brendan N. Connors signed February 8,
2006
|
||
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
|
*
|
Filed
as an exhibit to and incorporated by reference to the
Registration Statement
on Form SB-2 of the Company, File No.
33-71284-NY.
|
**
|
Filed
as an exhibit to and incorporated by reference to the Registration
Statement
on Form S-4 of the Company, File No.
33-81524.
|
***
|
Filed
as an exhibit to 10KSB, dated April 15, 1999 of the Company, file No.
000-23016.
|
BRADLEY T. MACDONALD
|
Bradley
T. MacDonald
|
Executive
Chairman of the Board
|
Dated:
March 30, 2010
|
Name
|
Title
|
Date
|
|||
/s/ BARRY B. BONDROFF, CPA
|
Director
|
March
30, 2010
|
|||
Barry B. Bondroff, CPA
|
|||||
/s/ CHARLES P. CONNOLLY
|
Director
|
March
30, 2010
|
|||
Charles P. Connolly
|
|||||
/s/ JASON L. GROVES
|
Director
|
March
30, 2010
|
|||
Jason L. Groves
|
|||||
/s/ GEORGE J. LAVIN, ESQ.
|
Director
|
March
30, 2010
|
|||
George J. Lavin, Esq.
|
|||||
/s/ BRADLEY T. MACDONALD
|
Chairman of the Board,
|
March
30, 2010
|
|||
Bradley T. MacDonald
|
Director
|
||||
/s/ MICHAEL C. MACDONALD
|
Director
|
March
30, 2010
|
|||
Michael C. MacDonald
|
|||||
/s/ SR. CATHY T. MAGUIRE
RSM
|
Director
|
March
30, 2010
|
|||
Sr. Cathy T. Maguire, RSM
|
|||||
/s/ JOHN P. MCDANIEL
|
Director
|
March
30, 2010
|
|||
John P. McDaniel
|
|||||
/s/ MICHAEL S. MCDEVITT
|
Director
|
March
30, 2010
|
|||
Michael S. McDevitt
|
|||||
/s/ JERRY D. REECE
|
Director
|
March
30, 2010
|
|||
Jerry D. Reece
|
|||||
/s/ JEANNETTE M. MILLS
|
Director
|
March
30, 2010
|
|||
Jeannette M. Mills
|
|||||
/s/ REV. DONALD F. REILLY,
OSA
|
Director
|
March
30, 2010
|
|||
Rev. Donald F. Reilly, OSA
|
|||||
/s/ MARGARET SHEETZ
|
Director
|
March
30, 2010
|
|||
Margaret Sheetz
|
|
|