Greetings, ladies and gentlemen, and welcome to the Mannatech Incorporated Fourth Quarter and Year-end 2006 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Sam Caster, Chairman and CEO of Mannatech. Thank you Mr. Caster, you may begin.

Thank you. Well, good morning, everyone. This is Sam Caster, Chairman and CEO of Mannatech and I do welcome you to our fourth quarter 2006 earnings conference call. With me today are Steve Fenstermacher, our Chief Financial Officer and Gary Spinell, our Vice President of Treasury and Investor Relations. Before we discuss the quarter, I will turn the microphone over to Gary Spinell to read the Safe Harbor statement.

Thank you, Sam. During this conference call we may make forward-looking statements, which could involve future events or future financial performance. Forward-looking statements generally can be identified by the use of phrases or terminology; such as, may, believe, and plan or other similar words or the negative of such terminology. We caution listeners that such forward-looking statements are subject to certain events, risks, uncertainties and other factors and speak only as of today. We also refer our listeners to review our SEC submission. Thanks, and now I'll turn the call back over to Sam.Samuel L. Caster: Thanks, Gary. Well, let's start with the fact that we are pleased with our record quarter sales and encouraged by strengthening sales trend. On the heels of a soft third quarter sales, the 5.3% growth in the fourth quarter indicates that we are experiencing upward sales momentum. Both our fourth quarter sales of $106.8 million and our annual sales of $410.1 million are new records for Mannatech. We are seeing results from the various incentive programs and sales initiatives that we've implemented over the previous quarters. These programs in conjunction with the launches of two key new proprietary products have helped to generate incremental sales and higher pack sales. We are retaining an industry high, 74% auto order rate. On a regional basis, our domestic markets, which include the United States and Canada, saw sales rebound. Just as important, two of our key international markets, Australia and Japan, also demonstrated sales improvement over the third quarter. Japan demonstrated strong growth, up 30% over third quarter results. We are particularly encouraged by our Australia results, which indicate a strengthening trend there also. In addition, Korea, which continues to be a stellar market for growth in the fourth quarter, was 57% higher than in the third…

Thanks Sam, and good morning to everyone on the call. As Sam mentioned, Mannatech is excited about our positive sales performance in the fourth quarter of 2006. As we told you on our third quarter call, we have invested in the business to ensure that we would again show a positive comparison after the small negative in the September quarter and we saw our sales respond. Our balance sheet is still strong with more than $70 million in cash and investments and essentially no long-term debt. Our financial position is well established with equity, comprising most of the capital structure. The costs associated with spurring our sales volume appeared in all major areas of the P&L in the fourth quarter. Cost of goods sold, commissions and operating expenses; the cost of goods sold ratio was 14.7% of sales, essentially even with the fourth quarter of 2005, but up somewhat versus our 2006 third quarter. We absorbed some costs related to our new product introductions, which impacted the quarter. Some startup batches, skin care component items, some packaging items, etcetera. We also saw our inbound freight go up, reflecting the higher petroleum and fuel costs, which we have all seen recently. Most of these impacts were one-time or expected to be temporary in nature outside of the freight costs, so our cost of goods may return to a more normal rate in the future. Our cost rate in the second quarter of 2006 was 14.1% and the third quarter it was 13.5%. Our cost of goods sold rate for the year of 2006 was 14.3%, favorable to 2005 by 6/10th of one point. We have discussed on past calls our ongoing efforts to obtain higher quality product components with more economical prices, and these efforts are continuing. This improvement in our…

Thanks, Steve. You know, as always, my commitment remains strong to continue to return value to our shareholders. This past year, we have increased earnings per share of 15% and repurchased $14 million worth of stock. We just announced a dividend increase for the third consecutive year. At the same time, we worked diligently putting the final touches on the products, programs and systems for the next evolutionary step in Mannatech's future. I believe these new products and services are again the catalyst that will move our company into new growth. In January, company executives and our top sales leaders from every country came together at our annual leadership event. The attitudes were more positive than I have actually seen in several years. And I think this was critical because it’s been said that new sales in our industry are based on 10% skill and 90% attitude. So it appears to me that we may have turned the corner in this regard as the excitement level and activity continues to build. As we discussed on our last call, momentum is that magic energy that feeds on itself. In other words, success begets success, and I am excited about what I am seeing, and more importantly, what I am feeling from our field force. So, that concludes our call today, and we will now open it up for questions. Question-and-Answer Session

(Operator Instructions) Our first question comes from the line of Doug Lane with Avondale Partners. Please proceed with your question.

Yes. Hi. Good morning, everybody.

Hi, Doug.

Question, first one on the associates; you mentioned that the recruiting seems to be picking up and the mood and spirit seems to be heightening as well. Do you think in the March quarter that we will see the trailing 12 months new associate number improve in the December quarter? They have been kicking down lately?

Doug, this is Stephen. Good morning. I think it is too early to judge what we may see for the entire quarter. Remember, we also have essentially a week of systems downtime that will impact our results for the first quarter. What we can say is that we are encouraged by a number of different items, as Sam mentioned, including the movement of the PhytoMatrix product itself, the energy level that we are seeing results from the upcoming skin care launch and the activity and preparations from our associate leadership. And we are very encouraged, also, as you can tell from the Board level and management by the increase in the dividend rate. I don't think we want to comment specifically on expectations for the first quarter, but we are pleased with what we are seeing.

Okay. Fair enough. And then if you could help us get our arms around the margins here, we've seen margins, operating margins that is down year-over-year for the last two quarters, and you did explain particularly the fourth quarter today fairly thoroughly. How much of this sort of near-term spend behind the new product launch is going to spill over into 2007? And layering in the added depreciation expense from your systems investment, can you talk about when you think operating margins will start to improve year-over-year and just bigger picture should we be looking for an improvement in operating margins in 2007?

We have mentioned a couple of times in the past, Doug, the timing situations that we see impacting results in our first fiscal quarter each year. We have a great deal of incentive accrual in the first quarter for our annual travel incentive contest as the contest begins in the first week of January and continues into May. So the entire first quarter bears significant amount of incentive accrual as, we're putting that through the books. In addition, MannaFest occurs in March each year, so those costs are contained within the first quarter as well. The items that we spoke about impacting the fourth quarter, many of them were essentially onetime or short-term in nature. There will be some additional continuing costs for the skin care launch that hit the first quarter, since we are introducing at MannaFest here in a couple of weeks. The depreciation on the bulk of the costs associated with the GlobalView investment, however, will begin on April 1st, and so we'll see that impact in the second quarter. And that obviously is going to be a sizable amount of non-cash expense on the P&L, but in terms of many other costs contained in the fourth quarter and the first, some of them do tail off in the second.

So I mean, I know that you don't want to get too specific, but just directionally, Steve, here for the full year in '07, do you think operating margins will be the same, an improvement from '06, below '06, until you start to get through all the spending?

Well, we are planning on a successful year in 2007, Doug. We are pleased with what we have seen so far on the sales side and the momentum, and our plans are certainly for a successful 2007, so I think we will leave it at that.

Okay. Thank you.

Our next question comes from the line of Scott Van Winkle with Canaccord Adams. Please proceed with your question.

Good morning, everyone.

Hi, Scott.

A few questions, and I apologize; I missed a portion of the call. Have you continued to work on the relation's efforts you started a couple of quarters ago?

Say that again, Scott, I don’t read.

I apologize. Have you continued to work on the public relations efforts that you begun a couple of quarters ago, particularly the ads in the local paper in Dallas?

Yes, we have. We sponsored an organization called Up with People here in Dallas that we think was very positive, not only for our associates, but also for the community. So we continue to look for opportunities around not only the United States but around the world to continually build the image of our company and the things that we are actually doing and contributing out there. So, yeah, we are going to continue the efforts.

I am sure that you saw the issues affecting one of your competitors yesterday on circling the street and something earlier this year around a lawsuit on one of the major multi-level marketers. Have you heard anything from your distributors, well, this is more just for kind of an indication of the industry itself rather than particularly to you, but I would love to hear your thoughts, about any impact from some recent skepticism around the network marketing industry in retail?

You know, those types of things can go two ways. One is they can temporarily, whenever there is a negative article, put a glitch out there in overall recruiting I think for the industry. On the other hand, listen the people in our industry get what we are all about. They understand the significance of our sales effort. They understand the ability to educate consumers on new technologies that are pretty unique to the direct-selling industry. And so I think they look at a lot of this stuff as manipulation by someone who has an agenda or possibly a profit motive, as was indicated in the response from USANA. And I think our overall basis is, it has very little effect, I think on the industry itself, because we know the facts.

Great. Well, congratulations on the improved recruiting and keep it up. Thank you.

Thanks, Scott.

(Operator Instructions) Thank you. There are no further questions at this time. I would like to turn the call back over to management for closing comments.

Well, again, we are very excited about what we are seeing. You know, again attitude is 90% of moving an organization like this forward. I think on previous calls we have talked about the fact that we think our new product technologies and rollouts are having a big impact on picking momentum back up again, and I think we are seeing the initial signs of this, so we are very positive. We thank you guys for being on the call, and we will talk to you next quarter.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.