USANA Health Sciences Announces First Quarter 2011 Financial Results

    --  Net sales increase by 20.6% to $143.6 million
    --  Earnings per share increase by 12.9% to $0.70

SALT LAKE CITY--(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal first quarter ended April 2, 2011.

Financial Performance

Net sales in the first quarter of 2011 increased by 20.6% to $143.6 million, compared with $119.1 million in the first quarter of the prior year. This growth was due to higher product sales and an increased number of active Associates driven by the Company's BabyCare subsidiary in China. BabyCare in the first quarter added $5.7 million in sales and 11,000 Associates. Additionally, favorable changes in currency exchange rates added $4.2 million in sales.

Net earnings in the first quarter increased by 17.7% to $11.4 million, or $0.70 per share, compared with $0.62 per share in the first quarter of the prior year. This increase resulted from improved gross profit margins and lower relative Associate incentive expenses. Earnings per share gains, however, were partially offset by higher selling, general and administrative expenses and an increased number of diluted shares outstanding.

Regional Results

Net sales in the Asia Pacific region for the first quarter of 2011 increased by 42.6% to $83.5 million, compared with the first quarter of the prior year. This improvement was primarily due to strong growth in Hong Kong, the Philippines, South Korea and the addition of BabyCare. In the first quarter, the number of active Associates in this region increased by 18.2%, which was primarily the result of growth in Hong Kong and the Philippines, as well as the inclusion of 11,000 BabyCare Associates.

Chief Executive Officer, Dave Wentz said, "We held our annual Asia Pacific Convention in Hong Kong during the first quarter, where a record 7,800 USANA Associates attended to receive training and to learn about new regional products and incentive programs. Sales at this event, which was held during the second quarter last year, added $3 million dollars to the region. Most importantly, this event provided us with an opportunity to update our Associates on the integration of BabyCare. Another exciting announcement at this event was the introduction of our first phase of USANA-branded products through BabyCare. We plan to introduce additional products into that market as we receive the required regulatory approvals. Integrating and growing our China market will continue to be our most significant business objective for 2011."

During the first quarter of 2011, net sales in the North America region decreased by 0.8% to $60.0 million, compared with the first quarter of the prior year. The number of Active Associates in the North America region declined by 11.7%, compared with the first quarter of the prior year.

"Economic conditions in North America continue to present a challenging business environment for USANA, as well as for many other businesses in the direct selling industry," Wentz continued. "Although sales in this region have been flat during this economic recession, we continue to believe that North America is crucial to the long-term success of USANA. In an effort to improve our North America results, we have increased our brand awareness efforts, which we believe will make it easier for Associates to introduce our products and business opportunity."


Today we are reiterating financial guidance for 2011. We continue to project consolidated net sales to be between $530 million and $550 million and earnings per share to be between $2.85 and $2.95.

"Our first quarter financial results were consistent with our expectations," said Jeff Yates, Chief Financial Officer. "Beginning in the second quarter, we will implement certain strategic changes in Hong Kong, which are intended to promote growth in BabyCare's business in China. As we focus our efforts to grow China, we anticipate that sales in Hong Kong will decline. Our estimates suggest that we will begin to see meaningful growth in China by the end of 2011 as we introduce additional USANA products into that market and as our Associate leaders become more familiar with BabyCare. We continue to believe that China remains USANA's most significant and imminent growth opportunity."

Conference Call

USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, April 27, 2011 at 11:00 a.m. Eastern Time. Investors may listen to the call by accessing USANA's website at


USANA develops and manufactures high-quality nutritional, personal care, and weight-management products that are sold directly to Associates and Preferred Customers throughout the United States, Canada, Australia, New Zealand, Hong Kong, Japan, Taiwan, South Korea, Singapore, Mexico, Malaysia, the Philippines, the Netherlands, and the United Kingdom. Additionally, USANA's wholly owned subsidiary, BabyCare, Ltd., operates a direct selling business in China. More information on USANA can be found at

Safe Harbor

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Our actual results could differ materially from those projected in these forward-looking statements, which involve a number of risks and uncertainties, including global economic conditions generally, reliance upon our network of independent Associates, the governmental regulation of our products, manufacturing and marketing risks, adverse publicity risks, and risks associated with our international expansion. The contents of this release should be considered in conjunction with the risk factors, warnings, and cautionary statements that are contained in our most recent filings with the Securities and Exchange Commission.

USANA Health Sciences, Inc.

Consolidated Statements of Earnings

(In thousands, except per share data)


                                                Quarter Ended

                                                3-Apr-10   2-Apr-11

Net sales                                       $ 119,087  $ 143,566

Cost of sales                                     23,020     25,662

  Gross profit                                    96,067     117,904

Operating expenses

 Associate incentives                             54,118     64,807

 Selling, general and administrative              27,458     35,870

  Earnings from operations                        14,491     17,227

Other income                                      339        101

  Earnings before income taxes                    14,830     17,328

Income taxes                                      5,189      5,978

NET EARNINGS                                    $ 9,641    $ 11,350

Earnings per share - diluted                    $ 0.62     $ 0.70

Weighted average shares outstanding - diluted     15,513     16,217

USANA Health Sciences, Inc.

Consolidated Balance Sheets

(In thousands)

                                                As of      As of

                                                1-Jan-11   2-Apr-11



Current Assets

Cash and cash equivalents                       $ 24,222   $ 32,718

Inventories                                       34,078     33,790

Other current assets                              21,972     17,201

Total current assets                              80,272     83,709

Property and equipment, net                       57,568     56,800

Goodwill                                          16,930     16,930

Other assets                                      49,032     49,420

Total assets                                    $ 203,802  $ 206,859


Current liabilities

Accounts payable                                $ 6,445    $ 7,930

Other current liabilities                         51,179     46,376

Total current liabilities                         57,624     54,306

Other long-term liabilities                       1,012      972

Stockholders' equity                              145,166    151,581

Total liabilities and stockholders' equity      $ 203,802  $ 206,859

USANA Health Sciences, Inc.

Sales by Region


(In thousands)

                           Quarter Ended

                           3-Apr-10             2-Apr-11


  North America

  United States            $ 37,606   31.6  %   $ 37,036   25.8  %

  Canada                     17,560   14.7  %     17,327   12.1  %

  Mexico                     5,354    4.5   %     5,658    3.9   %

  North America Total        60,520   50.8  %     60,021   41.8  %

  Asia Pacific

  Southeast Asia/Pacific     24,533   20.6  %     24,694   17.2  %

  Greater China              28,263   23.7  %     52,111   36.3  %

  North Asia                 5,771    4.9   %     6,740    4.7   %

  Asia Pacific Total         58,567   49.2  %     83,545   58.2  %

  Consolidated             $ 119,087  100.0 %   $ 143,566  100.0 %

Active Associates by Region(1)


                           As of

                           3-Apr-10             2-Apr-11


  North America

  United States              56,000   27.5  %     49,000   23.0  %

  Canada                     25,000   12.2  %     24,000   11.3  %

  Mexico                     13,000   6.4   %     10,000   4.7   %

  North America Total        94,000   46.1  %     83,000   39.0  %

  Asia Pacific

  Southeast Asia/Pacific     44,000   21.6  %     40,000   18.8  %

  Greater China              57,000   27.9  %     82,000   38.5  %

  North Asia                 9,000    4.4   %     8,000    3.7   %

  Asia Pacific Total         110,000  53.9  %     130,000  61.0  %

  Total                      204,000  100.0 %     213,000  100.0 %

 (1) Associates are independent distributors of our products who
 also purchase our products for their personal use. We only count
 as active those Associates who have purchased product at any time
 during the most recent three-month period, either for personal
 use or for resale.

  Active Preferred Customers by Region(2)


                           As of

                           3-Apr-10             2-Apr-11


  North America

  United States              39,000   60.0  %     38,000   54.3  %

  Canada                     15,000   23.1  %     14,000   20.0  %

  Mexico                     3,000    4.7   %     3,000    4.3   %

  North America Total        57,000   87.8  %     55,000   78.6  %

  Asia Pacific

  Southeast Asia/Pacific     6,000    9.2   %     6,000    8.6   %

  Greater China              1,000    1.5   %     8,000    11.4  %

  North Asia                 1,000    1.5   %     1,000    1.4   %

  Asia Pacific Total         8,000    12.2  %     15,000   21.4  %

  Total                      65,000   100.0 %     70,000   100.0 %

 (2) Preferred Customers purchase our products strictly for their
 personal use and are not permitted to resell or to distribute the
 products. We only count as active those Preferred Customers who
 have purchased product at any time during the most recent
 three-month period.

    Source: USANA Health Sciences, Inc.