USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	January 3,		October 2,
	2004		2004
			(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	18,965	$	21,445
Inventories, net	14,069		16,195
Prepaid expenses and other current assets	3,294		3,353
Deferred income taxes	1,921		2,316

Total current assets	38,249		43,309

Property and equipment, net	20,195		23,689

Goodwill	4,267		5,690

Other assets	2,416		2,597
	$	65,127	$	75,285
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	5,215	$	8,029
Other current liabilities	14,704		18,618

Total current liabilities	19,919		26,647

Deferred income taxes	837		911

Stockholders’ equity
Common stock, $0.001 par value; authorized 50,000 shares, issued and outstanding 19,470 as of January 3, 2004 and 19,062 as of October 2, 2004	19		19


Additional paid-in capital	14,187		11,141
Retained earnings	28,935		35,193
Accumulated other comprehensive income	1,230		1,374

Total stockholders’ equity	44,371		47,727
	$	65,127	$	75,285

The accompanying notes are an integral part of these statements.

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(in thousands, except per share data)

	Quarter Ended
	(unaudited)
	September 27, 2003		October 2, 2004
	September 27, 2003		October 2, 2004

Net sales	$	52,506	$	68,673

Cost of sales	11,364		16,732

Gross profit	41,142		51,941

Operating expenses:
Associate incentives	20,332		26,210
Selling, general and administrative	11,926		13,141
Research and development	379		450

Total operating expenses	32,637		39,801

Earnings from operations	8,505		12,140

Other income (expense):
Interest income	42		56
Other, net	483		(569		)

Total other income (expense)	525		(513		)

Earnings before income taxes	9,030		11,627

Income taxes	2,974		3,631

Net earnings	$	6,056	$	7,996

Earnings per common share
Basic	$	0.32	$	0.42
Diluted	$	0.28	$	0.39

Weighted average common shares outstanding
Basic	19,057		19,052
Diluted	21,383		20,296

The accompanying notes are an integral part of these statements.

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(in thousands, except per share data)

	Nine Months Ended
	(unaudited)
	September 27,			October 2,
	2003			2004

Net sales	$	140,527		$	197,694

Cost of sales	31,001			47,985

Gross profit	109,526			149,709

Operating expenses:
Associate incentives	55,091			75,378
Selling, general and administrative	32,072			40,059
Research and development	1,086			1,635

Total operating expenses	88,249			117,072

Earnings from operations	21,277			32,637

Other income (expense):
Interest income	83			142
Interest expense	(48		)	—
Other, net	296			(507		)

Total other income (expense)	331			(365		)

Earnings before income taxes	21,608			32,272

Income taxes	7,628			10,650

Net earnings	$	13,980		$	21,622

Earnings per common share
Basic	$	0.74		$	1.13
Diluted	$	0.66		$	1.05

Weighted average common shares outstanding
Basic	18,923			19,209
Diluted	21,294			20,557

The accompanying notes are an integral part of these statements.

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

Nine Months Ended September 27, 2003 and October 2, 2004

(in thousands)

(unaudited)

												Accumulated Other Comprehensive Income (Loss)
					Additional Paid-in Capital
	Common Stock								Retained Earnings
	Shares		Value													Total

For the Nine Months Ended September 27, 2003

Balance at December 28, 2002	18,273		$	18	$	3,666			$	14,520		$		(111	)	$	18,093

Comprehensive income
Net earnings	—		—		—				13,980			—				13,980
Foreign currency translation adjustment	—		—		—				—			971				971

Comprehensive income																14,951

Common stock retired	(472	)	—		(1,835			)	(6,402		)	—				(8,237		)

Common stock issued under stock option plan, including tax benefit of $4,498	1,246		1		7,120				—			—				7,121

Balance at September 27, 2003	19,047		$	19	$	8,951			$	22,098		$		860		$	31,928

For the Nine Months Ended October 2, 2004

Balance at January 3, 2004	19,470		$	19	$		14,187		$	28,935		$	1,230			$	44,371

Comprehensive income
Net earnings	—		—		—				21,622			—				21,622
Foreign currency translation adjustment	—		—		—				—			144				144

Comprehensive income																21,766

Common stock retired	(760	)	—		(6,287			)	(15,364		)	—				(21,651		)

Common stock issued under stock option plan, including tax benefit of $2,287	352		—		3,241				—			—				3,241

Balance at October 2, 2004	19,062		$	19	$		11,141		$	35,193		$	1,374			$	47,727

The accompanying notes are an integral part of these statements.

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended
	September 27, 2003			October 2, 2004
	September 27, 2003			October 2, 2004
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Net earnings	$	13,980		$	21,622
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization	2,839			3,430
Gain on sale of property and equipment	(30		)	(1		)
Deferred income taxes	159			(341		)
Allowance for inventory valuation	1,068			1,173
Changes in operating assets and liabilities:
Inventories	(3,280		)	(3,741		)
Prepaid expenses and other assets	(1,396		)	253
Accounts payable	1,591			2,809
Other current liabilities	10,738			6,187

Total adjustments	11,689			9,769

Net cash provided by operating activities	25,669			31,391

Cash flows from investing activities
Acquisitions, net of cash acquired	(5,341		)	(2,140		)
Purchases of property and equipment	(2,948		)	(6,174		)
Proceeds from the sale of property and equipment	47			29

Net cash used in investing activities	(8,242		)	(8,285		)

(Continued)

The accompanying notes are an integral part of these statements.

	Nine Months Ended
	September 27, 2003			October 2, 2004

Cash flows from financing activities
Principal payments of long-term debt	(6,000		)	—
Proceeds from stock options exercised	2,623			954
Retirement of common stock	(8,237		)	(21,651		)
Decrease in line of credit	(2,913		)	—
Payments on capital lease obligations	(91		)	—

Net cash used in financing activities	(14,618		)	(20,697		)

Effect of exchange rate changes on cash and cash equivalents	840			71

Net increase in cash and cash equivalents	3,649			2,480

Cash and cash equivalents, beginning of period	6,686			18,965

Cash and cash equivalents, end of period	$	10,335		$	21,445

Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	65		$	—
Income taxes	1,644			6,280

Non-cash activities
In July 2003, the Company acquired Wasatch Product Development, Inc. for $5,016 in cash. In conjunction with the acquisition, certain liabilities were assumed, including $200 in income tax liabilities of the selling shareholders and $125 for professional fees directly associated with the acquisition.

In February 2004, the Company acquired FMG Productions, LLC for $2,060 in cash. In conjunction with the acquisition, liabilities totaling $80 were assumed for professional fees directly associated with the acquisition.

The accompanying notes are an integral part of these statements.

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

(unaudited)

Basis of Presentation

The unaudited interim consolidated financial information of USANA Health Sciences, Inc. and Subsidiaries (the “Company” or “USANA”) has been prepared in accordance with Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying interim consolidated financial information contains all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position as of October 2, 2004, and results of operations for the quarters and nine months ended September 27, 2003 and October 2, 2004. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2004. The results of operations for the quarter and nine months ended October 2, 2004 may not be indicative of the results that may be expected for the fiscal year ending January 1, 2005.

NOTE A — STOCK-BASED COMPENSATION

The Company has applied the disclosure provisions of Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — An Amendment of FASB Statement No. 123,” for the quarters and nine month periods ended September 27, 2003 and October 2, 2004. Issued in December 2002, SFAS No. 148 amends SFAS No. 123 “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. As permitted by SFAS No. 148, the Company continues to account for stock options using the intrinsic value method under APB Opinion No. 25, under which no compensation expense has been recognized. The following table illustrates the effects on net earnings and earnings per share as if the Company had applied the fair value recognition provisions of SFAS No. 123, as amended by SFAS No. 148, to stock-based compensation:

		Quarter Ended						Nine Months Ended
		September 27, 2003			October 2, 2004			September 27, 2003			October 2, 2004
		September 27, 2003			October 2, 2004			September 27, 2003			October 2, 2004
Net earnings	As reported	$	6,056		$	7,996		$		13,980	$	21,622

	Pro forma	$	5,860		$	7,516		$	13,556		$		20,438

Earnings per share - basic	As reported	$		0.32	$		0.42	$	0.74		$		1.13

	Pro forma	$		0.31	$		0.39	$	0.72		$		1.06

Earnings per share - diluted	As reported	$		0.28	$		0.39	$	0.66		$		1.05

	Pro forma	$		0.27	$		0.37	$	0.64		$		0.99

Weighted average assumptions used to determine the Black-Scholes fair value for options granted during the periods indicated:

	Quarter Ended						Nine Months Ended
	September 27, 2003			October 2, 2004			September 27, 2003			October 2, 2004
	September 27, 2003			October 2, 2004			September 27, 2003			October 2, 2004
Expected volatility	77		%	75		%	77		%	75		%
Risk free interest rate	3.60		%	3.57		%	3.67		%	3.93		%
Expected life	10.0 yrs.			5.6 yrs.			10.0 yrs.			9.1 yrs.
Expected dividend yield	0		%	0		%	0		%	0		%
Weighted average fair value of options granted*	$	28.77		$	27.69		$	25.04		$	29.30

*	All options during the periods indicated have been granted at the market value on the date of grant, which is established by averaging the closing price of the Company’s common stock over the five trading days preceding the date of grant.

Option pricing models require the input of highly subjective assumptions including the expected stock price volatility. Additionally, the Company’s employee stock options have characteristics significantly different from those of traded options, including long vesting schedules and changes in the subjective input assumptions that can materially affect the fair value estimate. Management believes the best assumptions available were used to value the options and that the resulting option values were reasonable as of the dates the options were granted.

NOTE B — INVENTORIES

Inventories consist of the following:

	January 3, 2004		October 2, 2004
	January 3, 2004		October 2, 2004
Raw materials	$	5,498	$	8,432
Work in progress	2,497		2,654
Finished goods	7,563		6,697
	15,558		17,783

Less allowance for inventory valuation	1,489		1,588
	$	14,069	$	16,195

NOTE C — PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

	January 3, 2004		October 2, 2004
	January 3, 2004		October 2, 2004
Prepaid expenses	$	1,376	$	697
Miscellaneous receivables, net	1,449		1,905
Other current assets	469		751
	$	3,294	$	3,353

NOTE D — PROPERTY AND EQUIPMENT

Cost of property and equipment and their estimated useful lives is as follows:

		January 3, 2004			October 2, 2004
	Years	January 3, 2004			October 2, 2004

Buildings	40	$		8,120	$	9,381
Laboratory and production equipment	5-7	6,879			8,063
Sound and video library	5	—			600
Computer equipment and software	3-5	18,702			22,177
Furniture and fixtures	3-5	2,227			2,492
Automobiles	3-5	180			201
Leasehold improvements	3-5	1,626			2,374
Land improvements	15	931			931

		38,665			46,219

Less accumulated depreciation and amortization		21,740			24,906

		16,925			21,313

Land		1,773			1,899

Deposits and projects in process		1,497			477

		$	20,195		$		23,689

NOTE E — OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

	January 3, 2004		October 2, 2004
	January 3, 2004		October 2, 2004

Associate incentives	$	2,692	$		2,477
Accrued employee compensation	4,186		3,729
Income taxes	1,255		4,041
Sales taxes	1,667		2,032
Associate promotions	29		346
Deferred revenue	1,404		2,020
Provision for returns and allowances	998		1,125
Accrued loss on foreign currency forwards	337		412
All other	2,136		2,436

	$	14,704	$	18,618

NOTE F — COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per share are based on the weighted average number of common shares outstanding for each period. Weighted average shares retired have been included as a reduction in the calculation of weighted average common shares outstanding for basic earnings per share. Diluted earnings per common share are based on shares outstanding (computed under basic EPS) and potentially dilutive shares using the treasury stock method. Shares included in diluted earnings per share calculations include stock options granted that are in the money but have not yet been exercised.

	For the Quarter Ended
	September 27, 2003			October 2, 2004
	September 27, 2003			October 2, 2004
Earnings available to common shareholders	$	6,056		$	7,996

Basic EPS
Shares
Common shares outstanding entire period	18,273			19,470
Weighted average common shares:
Issued during period	1,104			273
Canceled during period	(320		)	(691		)

Weighted average common shares outstanding during period	19,057			19,052

Earnings per common share - basic	$	0.32		$	0.42

Diluted EPS
Shares
Weighted average shares outstanding during period - basic	19,057			19,052
Dilutive effect of stock options	2,326			1,244
Weighted average shares outstanding during period - diluted	21,383			20,296

Earnings per common share - diluted	$	0.28		$	0.39

Options to purchase 190 shares of stock were not included in the computation of EPS for the quarter ended October 2, 2004 due to their exercise price being greater than the average market price of the shares. For the quarter ended September 27, 2003, all options were included in the computation of EPS.

	For the Nine Months Ended
	September 27, 2003				October 2, 2004
	September 27, 2003				October 2, 2004
Earnings available to common shareholders	$	13,980			$	21,622

Basic EPS
Shares
Common shares outstanding entire period	18,273				19,470
Weighted average common shares:
Issued during period	773				160
Canceled during period	(123			)	(421		)

Weighted average common shares outstanding during period	18,923				19,209

Earnings per common share - basic	$		0.74		$	1.13

	For the Nine Months Ended
	September 27, 2003		October 2, 2004
	September 27, 2003		October 2, 2004
Diluted EPS
Shares
Weighted average shares outstanding during period - basic	18,923		19,209
Dilutive effect of stock options	2,371		1,348
Weighted average shares outstanding during period - diluted	21,294		20,557
Earnings per common share - diluted	$	0.66	$	1.05

Options to purchase 193 shares of stock were not included in the computation of EPS for the nine months ended October 2, 2004 due to their exercise price being greater than the average market price of the shares. For the nine months ended September 27, 2003, all options to purchase shares of stock were included in the computation of EPS.

During the nine months ended October 2, 2004, the Company expended $21,651 to purchase 760 shares under the Company’s Share Repurchase Plan. The purchase of shares under this plan reduces the number of shares issued and outstanding.

NOTE G — SEGMENT INFORMATION

The Company’s operations are distinguished by markets served and method of distribution employed and are classified into two reportable business segments: Direct Selling and Contract Manufacturing. These operating segments are evaluated regularly by management in determining the allocation of resources and in assessing the performance of the Company. Management evaluates performance based on net sales and the amount of operating income or loss. Segment profit or loss is based on profit or loss from operations before income taxes. Interest income and expense, as well as income taxes, are not included in the Company’s determination of segment profit or loss in assessing the performance of a segment.

Direct Selling

The Direct Selling segment comprises the Company’s principal line of business: developing, manufacturing, and distributing nutritional and personal care products. Products are distributed through a network marketing system using independent distributors referred to as “Associates.” Products are also sold directly to “Preferred Customers” who purchase products for personal use and are not permitted to resell or distribute the products. Sales to Associates and Preferred Customers are reported for seven operating geographic regions including North America, Australia-New Zealand, Hong Kong, Japan, Taiwan, South Korea, and Singapore.

Contract Manufacturing

Operating activities for the Contract Manufacturing segment include the manufacture of premium personal care products, produced under the brand name of its customers, including manufacturing and packaging for the Company’s Sensé product line of skin and personal care products. These operations are located in Draper, Utah and sales are made to a limited number of customers.

Sales made by the Contract Manufacturing segment to one customer accounted for 82%, or approximately $2,316, of segment revenues for the quarter ended October 2, 2004. No other individual customer accounted for 10% or more of segment net revenues.

Financial information summarized by operating segment and geographic region for the quarters ended September 27, 2003 and October 2, 2004 is listed below:

	Net Sales from External Customers		Intersegment Sales			Earnings before Income Taxes
Quarter ended September 27, 2003:

Direct Selling

North America (1)	$	34,214	$	13,313		$	13,360
Australia - New Zealand	8,023		762			(989		)
Hong Kong	2,285		—			349
Japan (2)	1,750		—			(515		)
Taiwan	3,507		—			77
South Korea	2,071		—			(430		)

Segment Total	51,850		14,075			11,852

Contract Manufacturing	656		—			25

Reportable Segments Total	52,506		14,075			11,877

Unallocated and Other (3)	—		(14,075		)	(2,847		)

Consolidated Total	$	52,506	$	—		$	9,030

	Net Sales from External Customers		Intersegment Sales			Earnings before Income Taxes
Quarter ended October 2, 2004:

Direct Selling

North America (1)	$	43,648	$	11,416		$	11,440
Australia - New Zealand	9,056		911			642
Hong Kong	2,837		—			(173		)
Japan (2)	2,356		—			(233		)
Taiwan	3,903		—			6
South Korea	1,366		—			(276		)
Singapore	2,678		—			192

Segment Total	65,844		12,327			11,598

Contract Manufacturing	2,829		522			4

Reportable Segments Total	68,673		12,849			11,602

Unallocated and Other (3)	—		(12,849		)	25

Consolidated Total	$	68,673	$	—		$	11,627

Financial information summarized by operating segment and geographic region for the nine months ended September 27, 2003 and October 2, 2004 is listed below:

	Net Sales from External Customers		Intersegment Sales			Earnings before Income Taxes			Long-lived Assets			Total Assets
Nine months ended September 27, 2003:

Direct Selling

North America (1)	$	97,068	$	26,588		$	25,513		$	29,079		$	42,417
Australia - New Zealand	20,430		1,675			521			291			6,412
Hong Kong	6,280		—			921			187			1,915
Japan (2)	4,433		—			(2,034		)	1,179			3,502
Taiwan	9,589		—			1,563			487			3,432
South Korea	2,071		—			(430		)	895			3,545

Segment Total	139,871		28,263			26,054			32,118			61,223

Contract Manufacturing	656		—			25			5,262			6,461

Reportable Segments Total	140,527		28,263			26,079			37,380			67,684

Unallocated and Other (3)	—		(28,263		)	(4,471		)	(11,187		)	(14,571		)

Consolidated Total	$	140,527	$	—		$	21,608		$	26,193		$	53,113

	Net Sales from External Customers		Intersegment Sales			Earnings before Income Taxes			Long-lived Assets			Total Assets
Nine months ended October 2, 2004:

Direct Selling

North America (1)	$	126,349	$	32,337		$	33,458		$	37,426		$	65,600
Australia - New Zealand	25,803		2,495			348			207			4,173
Hong Kong	8,044		—			312			201			2,293
Japan (2)	6,748		—			(1,298		)	970			2,376
Taiwan	11,530		—			(556		)	314			2,523
South Korea	4,440		—			(986		)	789			1,881
Singapore	7,297		—			652			288			2,307

Segment Total	190,211		34,832			31,930			40,195			81,153

Contract Manufacturing	7,483		1,202			(120		)	5,988			10,891

Reportable Segments Total	197,694		36,034			31,810			46,183			92,044

Unallocated and Other (3)	—		(36,034		)	462			(14,207		)	(16,759		)

Consolidated Total	$	197,694	$	—		$	32,272		$	31,976		$	75,285

(1)		Includes results from the FMG subsidiary acquired in February 2004 and operations in Mexico initiated in March 2004.

(2)		Includes results from local operations in Japan. Direct U.S. export sales to Japan are included in the North America geographic region.

(3)		“Unallocated and Other” includes certain corporate items and eliminations that are not allocated to the operating segments.

Sensé - beautiful science^â

The Sensé product line includes premium, science-based personal care products that support healthy skin and hair by providing advanced topical nourishment, moisturization and protection. At our Annual International Convention held in September 2004, we announced the re-launch of the Sensé product line, now formulated with our patent-pending, self-preserving technology. This new technology uses a unique blend of botanicals, antioxidants, and active ingredients to keep products fresh, without adding parabens, the most common preservative used in cosmetics and skin care products. The Sensé product line will include all of the same products but will now be formulated with the new patent-pending technology. These products specifically include Perfecting Essence, Gentle Daily Cleanser, Hydrating Toner, Daytime Protective Emulsion SPF 15, Eye Nourisher, Night Renewal (Replenishing Crème), Serum Intensive (Skin Revival Complex), Rice Bran Polisher, Nutritious Crème Masque, Revitalizing Shampoo, Nourishing Conditioner, Firming Body Nourisher, Energizing Shower Gel, and Intensive Hand Therapy.

All Other

In addition to our principal product lines, we have developed and sell to Associates materials and online tools designed to assist them in building their business and selling products. These resource materials or sales aids include product brochures and business forms designed by us and printed by outside publishers. We periodically contract with authors and publishers to produce or provide books, tapes, and other items dealing with health topics and personal motivation, which are made available to Associates. We also write and develop our own materials for audio and videotapes, which are produced by FMG (our wholly owned subsidiary) and third parties. New Associates are required to purchase a starter kit containing USANA training materials that assist the Associates in starting and growing their business. Associates do not earn commissions on the sale of sales aids or starter kits.

The following table summarizes the approximate percentage of total product revenue for the Direct Selling segment contributed by major product line for the nine months ended as of the dates indicated:

	Sales By Product Line * Nine Months Ended
	Sales By Product Line * Nine Months Ended
	September 27, 2003		October 2, 2004
Product Line	September 27, 2003		October 2, 2004
USANA^® Nutritionals
Essentials **	39	%	39	%
Optimizers	34	%	34	%
Macro Optimizers	8	%	10	%
Sensé — beautiful science^®	14	%	13	%
All Other	5	%	4	%

* Product sales previously categorized as Combination Packs have been allocated to their respective product lines based on the weighted average price of the product components that comprise each pack.

** The Essentials category under the USANA^â Nutritionals product line includes USANA^â Essentials, HealthPak 100Ô, Body RoxÔ, and UsanimalsÔ.

Key Products

The following highlights sales data for our top-selling products as a percentage of Direct Selling segment product sales for the nine months ended October 2, 2004.

USANA^â Essentials	24	%
HealthPak 100Ô	11	%
Proflavanol^â	10	%

Results of Operations

West Coast Shipping Port Congestion. The financial press is reporting congestion at West Coast ports caused by increasing cargo volumes, a lack of capacity on the railroads, and a shortage of manpower. We have particularly felt the effects in our container shipments to Australia. The near-term solution has required additional use of airfreight to meet demand. Between now and February 2005, when congestion is expected to be relieved, we anticipate an additional two weeks of ocean transit time, thus potentially adding to required inventories associated with products in transit or additional cost for airfreight depending on evaluation of cost tradeoffs. Although we have rate agreements in place for international shipment, the steamship lines will begin adding $200 per 20 foot container and $400 per 40 foot container effective November 15, 2004. This additional fee applies to both imports and exports via Los Angeles/Long Beach ports. Our freight forwarders will continue to exercise flexibility in the selection of ports and carriers to provide the best service.

Quarters Ended September 27, 2003 and October 2, 2004

Net Sales. Net sales increased 30.8% to $68.7 million for the quarter ended October 2, 2004, an increase of $16.2 million from $52.5 million for the comparable quarter in 2003. The increase was comprised of $14.0 million and $2.2 million contributed by our Direct Selling and Contract Manufacturing segments, respectively.

The following table summarizes the growth (decline) in net sales by segment and geographic region for the quarters ended September 27, 2003 and October 2, 2004.

	Net Sales By Segment and Region (in thousands) Quarter Ended


									Change from Prior Year			Percent Change
Segment / Region	September 27, 2003				October 2, 2004				Change from Prior Year			Percent Change
Direct Selling
United States	$	23,444	44.7	%	$	28,827	42.0	%	$	5,383		23.0	%
Canada	10,770		20.5	%	12,553		18.3	%	1,783			16.6	%
Australia-New Zealand	8,023		15.3	%	9,056		13.2	%	1,033			12.9	%
Hong Kong	2,285		4.4	%	2,837		4.1	%	552			24.2	%
Japan	1,750		3.3	%	2,356		3.4	%	606			34.6	%
Taiwan	3,507		6.7	%	3,903		5.7	%	396			11.3	%
South Korea	2,071		3.9	%	1,366		2.0	%	(705		)	(34.0%	)
Singapore	—		0.0	%	2,678		3.9	%	2,678			N/A
Mexico	—		0.0	%	2,268		3.3	%	2,268			N/A
Segment Total	51,850		98.8	%	65,844		95.9	%	13,994			27.0	%

Contract Manufacturing	656		1.2	%	2,829		4.1	%	2,173			331.3	%

Utah		87-0500306
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)



	PART I. FINANCIAL INFORMATION

Item 1	Financial Statements
	Consolidated Balance Sheets
	Consolidated Statements of Earnings — Quarter Ended
	Consolidated Statements of Earnings — Nine Months Ended
	Consolidated Statement of Stockholders’ Equity and Comprehensive Income
	Consolidated Statements of Cash Flows
	Notes to Consolidated Financial Statements
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3	Quantitative and Qualitative Disclosures About Market Risk
Item 4	Controls and Procedures

	PART II. OTHER INFORMATION

Item 2	Changes in Securities and Use of Proceeds
Item 6	Exhibits and Reports on Form 8-K

Signatures

FORM 10-Q

Commission file number: 0-21116

FORM 10-Q

CONSOLIDATED BALANCE SHEETS

NOTE C — PREPAID EXPENSES AND OTHER CURRENT ASSETS

NOTE D — PROPERTY AND EQUIPMENT

Key Products

Results of Operations