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USANA Announces Record Results for 2nd Quarter
Nu Skin Reports Record 2nd Quarter Results
Avon Reports Second Quarter Earnings
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USANA
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months of 2005 of $18.5 million, an increase of 35.6 percent, compared with net earnings of $13.6 million in the first six months of 2004. Earnings per share increased 41 percent in the first six months of 2005 to $0.93, compared with $0.66 in the first six months of 2004.

During the second quarter, the company,through its current share buyback program, purchased and retired 353,000 shares for an investment of $15 million. Approximately $25 million remains under the share buyback authorization.

"We are pleased to report our 12th consecutive quarter of record net sales," said Dave Wentz, President of USANA. "On a year over year basis, we achieved double-digit growth in all but one of our 12 markets. Mexico was a particularly strong performer in the quarter, posting sales gains of over 76 percent and associate growth of 80 percent, compared with the same period in the prior year. In addition, Taiwan and Singapore both posted impressive revenue growth of 38 percent. In line with sales, the number of active associates grew to 125,000, an increase of 20 percent, compared with the second quarter of last year. Furthermore, sales grew sequentially in all of our markets.

"We continue to execute our strategy to increase sales in our existing markets," continued Wentz. "In the third quarter, we will begin an initiative of increasing the investment in our associates. We believe this initiative will bring additional associates into the business and accelerate our top-line growth. We also continue to prepare for opening a new market, which we now believe will occur in the fourth quarter."

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Nu Skin Reports Record 2nd Quarter Results
Nu Skin Enterprises, Inc. (NUS-NYSE) announced revenue of $310.1 million for the second quarter of 2005, which constitutes the largest-revenue quarter in company history and a 9 percent increase over the same period last year. Earnings per share for the quarter increased 14 percent to $0.32. During the quarter, the company experienced steady improvement in Japan, solid year-over-year growth in the United States and sequential growth in Mainland China.

Financial Results
For the quarter ended June 30, 2005, Nu Skin Enterprises' revenue was $310.1 million, an increase of 9 percent over revenue of $284.2 million in the second quarter of 2004. Net income for the quarter was $22.8 million and earnings per share were $0.32, compared to net income of $20.3 million and earnings per share of $0.28 for the same period in 2004. Revenue for the quarter was positively impacted 3 percent by foreign currency fluctuations.

For the six months ended June 30, 2005, revenue increased 9 percent over prior-year results to $599.4 million, while net income improved to $40.5 million compared to $34.8 million in the prior year. Earnings per share for the first half of 2005 improved 21 percent to $0.57, up from $0.47 in 2004. Revenue in the first six months of the year was positively impacted 3 percent by favorable foreign currency fluctuations.

"Our results for the second quarter were driven by growth in nearly all markets and an impressive 29 percent increase in Pharmanex revenue," said President and Chief Executive Officer Truman Hunt. "Japan maintained its steady improvement, returning a 1 percent year-over-year increase in local currency revenue as we moved forward with expansion of our Pharmanex BioPhotonic Scanner program. In the United States, our ongoing focus on the Scanner and other product initiatives, including the launch of g3, a nutrient-dense fruit drink, led to year-over-year growth of 10 percent. China achieved a 9 percent sequential increase in revenue, primarily as a result of improved customer retention. During the quarter, we also opened a flagship store in Beijing.

"Our monthly product subscription programs continue to grow, generating 42 percent of total revenue in the quarter. We processed a record 448,000 subscription orders in June, an increase of 61 percent over the prior year. Our effort to increase subscription orders has significantly improved customer retention," Hunt said.

Regional Results
North Asia Second-quarter revenue in North Asia reached $171.2 million, up 7 percent compared to the same period in 2004. Local currency revenue in Japan was up 1 percent, while South Korea experienced year-over-year revenue growth of 22 percent in local currency. The executive distributor count in the region was up slightly year over year, while the number of active distributors increased 10 percent.

Greater China Revenue in Greater China increased 8 percent to $64.1 million for the second quarter, with Taiwan and Hong Kong posting year-over-year local-currency gains of 13 and 15 percent, respectively. As expected, year-over-year Mainland China results were down slightly, but were up 9 percent sequentially. The executive distributor count in the region was up 8 percent when compared to the second quarter of 2004, while active distributors decreased 6 percent.

North America Revenue in North America was $39.2 million, a 9 percent improvement over the second quarter of 2004. The executive and active distributor counts in North America improved 12 percent and 10 percent, respectively, over prior year results.

South Asia/Pacific Revenue in South Asia/Pacific improved 6 percent and reached $21.7 million in the second quarter, with Malaysia, Singapore and Brunei posting an increase of 11 percent. The region's second quarter executive count increased 1 percent and the active distributor count increased 9 percent, compared to the same period in 2004.

Other Markets Revenue from the company's other markets increased 53 percent to $13.9 million in the second quarter. This year-over-year improvement resulted from revenue increases of 39 percent in Europe and 173 percent in Latin America, where rapid growth continues in Mexico and Brazil. The executive and active distributor counts in the company's other markets increased 49 and 62 percent, respectively, compared to the second quarter of 2004.

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Avon Reports Second
Quarter Earnings
Avon Products, Inc. (AVP-NYSE) reported that earnings in the second quarter 2005 increased to $.69 per share, including a $.20-per-share tax benefit ($.03 per share more than initially anticipated) primarily from settlements of prior-year audits that were completed in the second quarter. These earnings compare with guidance of $.66 per share. In the second quarter 2004, earnings were $.49 per share, including a tax benefit of $.05 per share.

Avon said that revenue in the second quarter 2005 grew 6 percent (2 percent in local currencies) to $2.0 billion-on top of 13 percent growth in the year-ago period. Revenue in the quarter was below expectations due to two factors which each impacted top line growth by approximately two points: an unexpected temporary decline in China as Beauty Boutique owners reacted with concern to the imminent resumption of direct selling in that country; and lower-than-anticipated revenue growth in Central and Eastern Europe resulting from under performance of several key marketing offers as well as delayed expansion into new geographies within Russia.

Total Beauty sales in the second quarter 2005 rose 7 percent, active Representatives grew 6 percent and units increased 2 percent, respectively, versus the prior year. Operating profit increased 6 percent, in line with revenue growth, and operating margin was 17.3 percent, including the impact of lower corporate expenses that resulted primarily from the reversal of accruals for 2005 performance-based compensation plans. Net income in the second quarter 2005 was $328.6 million, compared with $232.3 million a year ago.

Second Quarter Regional Highlights
U.S. second quarter performance was in line with the company's expectations, with revenue and operating profit decreasing 6 percent and 14 percent, respectively. Beauty sales declined 11 percent due to continued weak customer purchase frequency in an environment of stepped-up competitive activity. Reflecting ongoing, planned category repositioning, Beauty Plus sales increased 5 percent and Beyond Beauty sales declined 3 percent. Units and active Representatives in the quarter were down 12 percent and 2 percent, respectively. U.S. operating margin was 18.6 percent.

In Europe, revenue in the second quarter increased 12 percent on top of 28 percent revenue growth in the year-ago period. In local-currency terms, revenue was up 6 percent, with gains in units and active Representatives of 10 percent and 9 percent, respectively. Central and Eastern Europe grew 16 percent with revenue in Russia increasing 17 percent, continuing strong market out performance but below the company's planned levels. Europe's second quarter operating profit grew 10 percent, and operating margin was 22.4 percent.

In Latin America, broad-based strength across most of the region contributed to second-quarter revenue growth of 17 percent (10 percent in local currencies) with strong results in Brazil and Venezuela, in particular, and a solid increase in Mexico's Beauty sales offsetting softness in several non-core categories in that market. Active Representatives and units in the region both grew 9 percent. Operating profit increased by 13 percent, and operating margin was 25.0 percent.

In Asia Pacific, revenue was flat (down 2 percent in local currency) and units declined 7 percent as the region's performance was impacted by a 19 percent decline in China's revenue due to the direct-selling transition issues. Asia Pacific active Representatives in the quarter grew 4 percent. Operating profit declined 23 percent, versus the year-ago quarter, primarily as a result of the China revenue decline. Operating margin in the region was 14.3 percent.

In commenting on the company's second quarter results, Andrea Jung, Avon's Chairman and Chief Executive Officer, said, "While the U.S. and Latin America performed in line with our expectations, the situation in China was clearly unexpected. We are moving rapidly to assure our Beauty Boutique owners that they will have an opportunity to earn as much or more with Avon in our future model, and believe this will be a transitional issue. We continue to feel privileged to have been chosen as the first company authorized to conduct a direct-selling test and our optimism about the long-term $1 billion opportunity in China remains unchanged. In Central and Eastern Europe, where our top line momentum continues to be strong and we remain confident in our beauty leadership position, we have significantly enhanced our marketing offering and implemented aggressive plans to accelerate order growth in the back half of the year."

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