USANA Announces Record 3Q Results

USANA Health Sciences Inc. announced record net sales of $68.7 million for the third quarterended Oct. 2, 2004. Net sales increased 30.8% from the prior-year period. The company reportedrecord operating income for the quarter of $12.1 million, compared to $8.5 million in the comparable2003 period. The company also achieved record operating margin of 17.7% in the third quarter,executives said. Net earnings in the third quarter were $8.0 million, up from $6.1 million in the thirdquarter of 2003.

USANA’s total number of active Associates increased in the third quarter of 2004 to 111,000, up from87,000 in the third quarter of 2003. Preferred Customers increased to 60,000.

For the nine-month period ended Oct. 2, 2004, net sales were $197.7 million, up 40.7% from thesame period of 2003. Net earnings for the nine-month period were $21.6 million, a 54.7% increaseover the same period of 2003.

“The U.S. market continues to lead the way,” said Dave Wentz, USANA’s president, “with net salesgrowth of 23% compared to the third quarter of last year. Canada reported strong net sales in thequarter, up nearly 17% over last year’s third quarter. The number of active Associates worldwidegrew 27.6% compared to last year, reflecting our continued effort to recognize, develop and supportour sales leaders. We’re pleased with the consistent growth our company has been able to generateduring the past two years, and we believe we are well positioned to grow in 2005.”

Commenting on USANA’s financial performance, Gilbert A. Fuller, chief financial officer, noted,”The third quarter marked the ninth consecutive quarter of record sales. We achieved year-over-yeardouble-digit growth in all our markets except South Korea. Our largest market, the U.S., continued toexcel, with sales of $28.8 million, compared to $23.4 million in the third quarter of 2003. Operatingmargin in the quarter improved 150 basis points to 17.7%, compared to last year’s third quarter.We continue to gain incremental operating leverage through top-line growth and internal cost controls.

“Looking ahead to the remainder of 2004, we still expect net sales for full year 2004 to approach$270 million. We previously announced that we expected earnings per share for the full year 2004of $1.42 to $1.44. Now we expect that earnings per share for the full year will be as much as $1.46.

“As we take our first look at 2005, we believe that net sales will grow between 15% and 18%, whichincludes revenue from the proposed opening of one new market before the end of the third quarter of2005. We expect earnings per share in 2005 to grow between 20% and 25%. These preliminary 2005estimates exclude any sales from our potential entry into China. Our time frame for opening Chinaremains uncertain because the regulations that will govern network marketing in the region have notyet been finalized.”