USANA Announces Q2 2007 Results

SALT LAKE CITY, Jul 17, 2007 (BUSINESS WIRE) -- USANA Health Sciences, Inc. (USNA) today announced financial results for the fiscal second quarter of 2007, ended June 30. The second quarter of 2007 represented the 20th consecutive quarter of record sales for the Company.

Financial Performance
Consolidated net sales in the second quarter of 2007 increased by 18.3% to $109.4 million, compared with $92.5 million in the second quarter of the prior year. Net sales in the Direct Selling segment increased by 19.8% to $107.4 million, compared with $89.6 million in the second quarter of the prior year. Net sales growth in the Direct Selling segment for the second quarter of 2007 resulted primarily from a 25.4% net increase in the number of active Associates, which includes those who have purchased products directly from the Company in the preceding three months, either for personal consumption or resale.

Earnings from operations in the second quarter of 2007 grew by 18.8% to $18.2 million, or 16.7% of net sales, compared with $15.3 million, or 16.6% of net sales, in the second quarter of the prior year. Earnings per share in the second quarter of 2007 increased by 19.7% to $0.66 per share, compared with $0.55 per share in the second quarter of the prior year. A higher-than-anticipated effective tax rate of 37.9% for the second quarter of 2007, reduced earnings per share by approximately $0.02.

For the six-month period ended June 30, 2007, consolidated net sales were $212.0 million, an increase of 17.3%, compared with $180.7 million in the first six months of 2006. Earnings per share increased 23.3% in the first six months of 2007 to $1.29, compared with $1.05 in the first six months of 2006.

During the second quarter of 2007, the Company repurchased approximately 1.6 million shares for an investment of $67.9 million. Due to this aggressive buyback, the total number of shares outstanding was reduced by approximately 9.0% from the first quarter of 2007 to 16.3 million shares, and the Company ended the second quarter of 2007 with a balance of $34.5 million on its line of credit.

"The strength of our network marketing business model was evident again this quarter as we witnessed the 20th consecutive quarter of record sales and strong operating results driven by the improvement in gross margins," said Dave Wentz, president of USANA. "USANA's continued repurchases of shares during the quarter are a strong indication that management and the Board believe in the long-term prospects and health of the Company."

Regional Results
During the second quarter of 2007, net sales in North America, the Company's most mature region, increased by 11.2% to $68.2 million, compared with the second quarter of the prior year. This growth was driven primarily by a 15.6% net improvement in the number of active Associates in this region to 104,000. Along with double-digit growth in the U.S., sales in Mexico increased by 33.2% over the second quarter of last year to bolster the results in the North America region.

"Our efforts to increase Associate activity in North America are working," continued Wentz. "We are pleased to have achieved double-digit growth in the number of active Associates in this region and will continue to give extra attention to ensure that our Associate leaders have all of the tools and resources necessary to sell our outstanding products and share in the success of our home-based business."

During the second quarter of 2007, net sales in the Asia Pacific region increased by 38.5% to $39.3 million, compared with the second quarter of the prior year. The growth in this region was led by double-digit, year-over-year growth in nearly all markets. Malaysia continues to show steady growth as a new market, contributing $4.5 million of incremental revenue in the second quarter, a 45.4% increase, compared with the first quarter. The number of active Associates in the Asia Pacific region increased by 42.3% to 74,000, compared with 52,000 in the second quarter of the prior year. The number of Associates in our newest market, Malaysia, grew to 11,000 in just its second quarter of operations.

"We are pleased with our early success in Malaysia," continued Wentz. "The rollout of this new market has been the smoothest in our history and we will continue to work closely with our local management to ensure Malaysia's ongoing contribution to our consistent growth in the Asia Pacific region."

Outlook
Today, the Company is providing financial guidance for the third quarter of 2007 and is updating its financial guidance for the full year 2007. Based on its current business circumstances, the Company believes that net sales for the third quarter of 2007 will be between $105 million and $107 million, a growth rate of 12% to 14%, compared with the prior year third quarter. Notably, this guidance includes an even smaller portion of sales from third-party contract manufacturing, due to the expected sale of that business sometime during the third quarter. The Company believes that earnings per share for the third quarter of 2007 will be $0.65 to $0.67, a growth rate of 18% to 22%, compared with 2006. Additionally, the Company is adjusting its full-year 2007 guidance and believes that net sales will be $425 million to $430 million, a growth rate of 14% to 15% year-over-year. This annual sales guidance includes the estimated reduction of revenue due to the expected sale of the third-party contract manufacturing business. According to these estimates, the Company anticipates annual earnings per share to be $2.60 to $2.64, a growth rate of 18% to 20%, compared with 2006. These earnings per share estimates assume an effective tax rate of 37.0% for 2007.

Gilbert A. Fuller, the Company's executive vice president and chief financial officer, said, "We are optimistic that our persistent and strategic focus on our Associates will continue to return strong results, as it did during the second quarter. Operationally, our business model is very strong, and we will continue to look for opportunities to return value to our shareholders. Also, we will continue to take aggressive action to address the misinformation concerning our company that has appeared recently in the media. We remain committed to offering the finest nutritional products and home-based business in the industry."

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.

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