USANA’s net sales for the first quarter of 2008 increased by 0.9% to $101.6 million, compared with $100.7 million in the first quarter of the prior year. This modest growth in net sales for the first quarter of 2008 resulted primarily from the benefits associated with stronger foreign currencies, offset by a decrease in the number of active Associates in North America. USANA’s earnings per share from continuing operations were $0.46 per share, compared with $0.64 per share in the first quarter of 2007.
This decrease in earnings per share for the quarter was due to higher overall operating costs. The lower growth in net sales during the first quarter was affected by disappointing results from new promotional activities, by macro-economic uncertainties in the U.S., and by the lingering effects of negative misinformation about the company that appeared in the mass media during 2007. The increase in operating costs included higher Associate incentives, higher overall wage expenses from an increase in human resources, higher costs associated with our regional events and the Asia Pacific Convention, higher accounting and legal expenses, and higher marketing costs, including an important investment in market research which the company believes will have a positive future return.