USANA Health Sciences Announces Fourth Quarter and Full Year Financial Results

2007 Marks the Sixth Consecutive Year of Record Sales and Earnings Q4 Net Sales Increased to a Record $108.7 Million; EPS Increased to $0.67 Company Adjusts 2008 Sales and EPS Guidance to Grow 7% to 10%

SALT LAKE CITY--(BUSINESS WIRE)--

USANA Health Sciences, Inc. (NASDAQ: USNA) today announced financial results for the fiscal fourth quarter and full-year ending December 29, 2007.

Financial Performance

Net sales in the fourth quarter of 2007 increased by 10.8% to $108.7 million, compared with $98.1 million in the fourth quarter of the prior year. Net sales growth for the fourth quarter of 2007 resulted from a 15% net increase in the number of active Associates, compared with the fourth quarter of the prior year, and from sales in Malaysia, which opened in January of 2007. Changes in foreign currency added $5.2 million of the year-over-year increase in net sales.

Earnings per share from continuing operations increased by 8.1% to $0.67 per share, compared with $0.62 per share in the fourth quarter of 2006. This increase was in part due to stock repurchases and to improved gross margins. This increase was partially offset by higher Associate Incentive and Selling, General, and Administrative expenses.

For the full-year ended December 29, 2007, consolidated net sales were $423.1 million, an increase of 15.9%, compared with $365.2 million for the full-year of 2006. Earnings per share from continuing operations increased by 18.7% to $2.67, compared with $2.25 for the full-year of 2006.

During the full-year 2007, the Company repurchased approximately 1.9 million shares for a cost of $79.6 million. No repurchases were made during the fourth quarter of 2007. As of the end of the fourth quarter, $50.3 million remains under the current stock buyback authorization.

Regional Results

During the fourth quarter of 2007, net sales in North America, increased by 3.7% to $67.9 million, compared with the fourth quarter of the prior year. Sales in the U.S., however, were lower both on a year-over-year and a consecutive quarter basis. The modest growth in this region was driven primarily by a 6.4% net improvement in the number of active Associates to approximately 100,000, compared with the same period last year. Compared with the third quarter of 2007, the number of active Associates in this region decreased in the fourth quarter by 4.8%.

"During the fourth quarter, we experienced softer than expected sales and Associate numbers in North America," said Dave Wentz, the Company's President. "We attribute this decline primarily to the toll that various false allegations have taken on our Associates during 2007. We believe that these challenges are now largely behind us. To combat these factors, we are planning to implement several new Associate-related initiatives that are designed to regain our momentum in the U.S., our largest and most mature market."

During the fourth quarter of 2007, net sales in the Asia Pacific region increased by 25.1% to $40.8 million, compared with the fourth quarter of the prior year. The growth in this region was led by double-digit, year-over-year growth in Hong Kong, Australia-New Zealand, and Japan. Sales in the Company's newest market, Malaysia, reached $4.5 million for the fourth quarter. The number of active Associates in the Asia Pacific region increased by 28.8% to 76,000, compared with 59,000 in the fourth quarter of the prior year. This increase was primarily driven by the opening of Malaysia, which had 11,000 active Associates at the end of 2007.

"The Asia Pacific region's contribution to USANA's sales growth continues to increase both on a year-over-year and a running quarter basis," continued Wentz. "Australia-New Zealand and Hong Kong, along with our newest market, Malaysia, continue to be the major growth drivers in this region. We remain focused on growing and strengthening our markets in this region throughout 2008."

Outlook

Today, the Company is providing financial guidance for the first quarter of 2008 and updating its guidance for the full-year 2008. Based on its current business trends, the Company believes that net sales for the first quarter of 2008 will be between $105 million and $109 million, with earnings per share expected to be between $0.63 and $0.66. For the full-year 2008, the Company is adjusting both its net sales and earnings per share guidance to 7% to 10% growth, compared with the full-year 2007.

Gilbert A. Fuller, the Company's executive vice president and chief financial officer, said, "In 2008, we will be taking a hard look at any potential opportunities that may result from the deteriorating economic condition in the U.S. We continue to believe that our home-based business model offers us flexibility in both up and down markets. While declining disposable income spending may be impacting us in the near-term, we believe that, in the long-run, our direct selling opportunity will attract individuals as a way to supplement their income. We also plan to add key staff and to complete our facilities expansion initiative during 2008 in preparation for our next phase of growth. We remain optimistic about the future growth of both sales and earnings in 2008."

Conference Call

USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, February 6, 2008 at 11:00AM Eastern Time. Investors may listen to the call by accessing USANA's website at http://www.usanahealthsciences.com.

About USANA

USANA develops and manufactures high quality nutritional, personal care, and weight management products that are sold directly to Preferred Customers and Associates throughout the United States, Canada, Australia, New Zealand, Hong Kong, Japan, Taiwan, South Korea, Singapore, Mexico, Malaysia, the Netherlands, and the United Kingdom. More information on USANA can be found at http://www.usanahealthsciences.com.

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 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
                                             -------------------------
                                              30-Dec-06     29-Dec-07
                                             -----------   -----------
                                             (Unaudited)   (Unaudited)

Net sales                                    $   98,121    $   108,748
Cost of sales                                    21,865         22,902
                                             -----------   -----------
    Gross profit                                 76,256         85,846

Operating expenses
  Associate incentives                           39,226         44,533
  Selling, general and administrative            19,213         23,726
  Research and development                          708            667
                                             -----------   -----------

    Earnings from operations                     17,109         16,920

Other income                                        712            283
                                             -----------   -----------
    Earnings from continuing operations
     before income taxes                         17,821         17,203

Income taxes                                      6,433          6,144
                                             -----------   -----------

  Income from continuing operations              11,388         11,059

Income (Loss) from discontinued operations         (249)             -

NET EARNINGS                                 $   11,139    $    11,059
                                             ===========   ===========

Earnings per share - diluted
  Continuing operations                      $     0.62    $      0.67
  Discontinued operations                    $    (0.01)   $         -
                                             -----------   -----------
  Net Earnings                               $     0.61    $      0.67
                                             ===========   ===========
Weighted average shares outstanding - diluted    18,405         16,586
                                             ===========   ===========

                     USANA Health Sciences, Inc.
                     Consolidated Balance Sheets
                            (in thousands)

                                          As of             As of
                                        30-Dec-06         29-Dec-07
                                      --------------   ---------------
                                                         (Unaudited)
ASSETS
Current Assets
 Cash and cash equivalents            $       27,029   $        12,865
 Inventories                                  22,483            19,439
 Other current assets                         11,103            14,295
                                      --------------   ---------------
   Total current assets                       60,615            46,599

Property and equipment, net                   30,323            52,061
 Goodwill                                      5,690             5,690
 Other assets                                  3,374             4,778
                                      --------------   ---------------
   Total assets                       $      100,002   $       109,128
                                      ==============   ===============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
 Accounts payable                     $       10,241   $         8,111
 Other current liabilities                    29,564            32,074
                                      --------------   ---------------
   Total current liabilities                  39,805            40,185
                                      --------------   ---------------

Long-term liabilities
 Line of Credit                                    -            28,000
 Other long-term liabilities                       -             2,305
Stockholders' equity                          60,197            38,638
                                      --------------   ---------------
    Total liabilities and
     stockholders' equity             $      100,002   $       109,128
                                      ==============   ===============
                      USANA Health Sciences, Inc.
                            Sales by Region
                             (in thousands)

                                             Quarter Ended
                                 -------------------------------------
                                     30-Dec-06           29-Dec-07
                                 -----------------   -----------------
                                    (Unaudited)         (Unaudited)
  Region
  -------------------------------
  North America
    United States                $ 42,234    43.0%   $ 41,697    38.3%
    Canada                         18,057    18.4%     20,462    18.8%
    Mexico                          5,180     5.3%      5,748     5.3%
                                 --------   ------   --------   ------
      North America Total          65,471    66.7%     67,907    62.4%

  Asia Pacific
    Australia-New Zealand          12,815    13.1%     14,652    13.5%
    Hong Kong                       5,189     5.3%      7,721     7.1%
    Japan                           2,019     2.0%      2,400     2.2%
    Taiwan                          5,742     5.9%      5,847     5.4%
    South Korea                     1,940     2.0%      1,689     1.6%
    Singapore                       4,945     5.0%      4,053     3.7%
    Malaysia                            -     0.0%      4,479     4.1%
                                 --------   ------   --------   ------
      Asia Pacific Total           32,650    33.3%     40,841    37.6%
                                 --------   ------   --------   ------

  Consolidated                   $ 98,121   100.0%   $108,748   100.0%
                                 ========   ======   ========   ======


                      Active Associates by Region

                                                 As of
                                 -------------------------------------
                                     30-Dec-06           29-Dec-07
                                 -----------------   -----------------
                                    (Unaudited)         (Unaudited)
  Region
  -------------------------------
  North America
    United States                  59,000    38.5%     61,000    34.6%
    Canada                         24,000    15.7%     26,000    14.8%
    Mexico                         11,000     7.2%     13,000     7.4%
                                 --------   ------   --------   ------
      North America Total          94,000    61.4%    100,000    56.8%

  Asia Pacific
    Australia-New Zealand          19,000    12.4%     21,000    11.9%
    Hong Kong                       9,000     5.9%     16,000     9.1%
    Japan                           4,000     2.6%      5,000     2.8%
    Taiwan                         14,000     9.2%     14,000     8.0%
    South Korea                     2,000     1.3%      2,000     1.1%
    Singapore                      11,000     7.2%      7,000     4.0%
    Malaysia                            -     0.0%     11,000     6.3%
                                 --------   ------   --------   ------
      Asia Pacific Total           59,000    38.6%     76,000    43.2%
                                 --------   ------   --------   ------
  Total                           153,000   100.0%    176,000   100.0%
                                 ========   ======   ========   ======


                  Active Preferred Customers by Region

                                                 As of
                                 -------------------------------------
                                     30-Dec-06           29-Dec-07
                                 -----------------   -----------------
                                    (Unaudited)         (Unaudited)
  Region
  -------------------------------
  North America
    United States                  50,000    64.1%     50,000    64.1%
    Canada                         18,000    23.1%     18,000    23.1%
    Mexico                          2,000     2.5%      2,000     2.6%
                                 --------   ------   --------   ------
      North America Total          70,000    89.7%     70,000    89.8%

  Asia Pacific
    Australia-New Zealand           7,000     9.0%      6,000     7.6%
    Hong Kong                          **     0.0%      1,000     1.3%
    Japan                           1,000     1.3%      1,000     1.3%
    Taiwan                             **     0.0%         **     0.0%
    South Korea                        **     0.0%         **     0.0%
    Singapore                          **     0.0%         **     0.0%
    Malaysia                            -     0.0%         **     0.0%
                                 --------   ------   --------   ------
      Asia Pacific Total            8,000    10.3%      8,000    10.2%
                                 --------   ------   --------   ------
  Total                            78,000   100.0%     78,000   100.0%
                                 ========   ======   ========   ======


  **Count of Active Preferred Customers is less than 500.

Source: USANA Health Sciences, Inc.