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Hebalife Announces Record 3rd Quarter Net Sales of $401 Million
Alticor Sales Rise for the Sixth Consecutive Year
Natural Health Trends Quarterly Sales Reach $58 Million
November Stock Watch

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Herbalife Announces Record 3rd Quarter Net Sales of $401 Million
All Regions Report Net Sales Growth in the Quarter

Herbalife Ltd. (HLlF—NYSE) reported record third-quarter net sales of $401.0 million, an increase of 25.4 percent compared to the same period of 2004. All of the company’s regions—the Americas, Asia Pacific, Europe, and Japan—achieved net sales growth of 55.7 percent, 21.2 percent, 2.8 percent, and 7.0 percent, respectively, compared to the same period of 2004. Michael O. Johnson, the company’s chief executive officer, said, “Reflecting strong and unified distributor leadership, coupled with the implementation of numerous strategic initiatives throughout our 60 markets, we are pleased to report record net sales for the quarter, and more importantly, revenue growth across all of the company’s four regions for the first time in over 7 years.” Additionally, during the quarter, the number of new distributor supervisors increased 24.5 percent versus the third quarter of 2004. The company’s high-level President’s Team expanded to 819 members during the third quarter of 2005, up 11 percent versus the third quarter of 2004. These distributor statistics coupled with the addition of one new Chairman’s Club member, reflects strength in the company’s independent distributor organization.

Financial Performance
For the quarter ended September 30, 2005, the company reported net income of $27.1 million, or $0.37 per diluted share compared to net income of $11.5 million, or $0.21 per diluted share in 2004. The stronger than expected revenue growth during the last several quarters, and management’s outlook that a mid-teens revenue growth rate will continue throughout 2006, had a significant impact on the company’s worldwide transfer pricing and tax structure, resulting in an adjustment in the third quarter of its full year 2005 effective tax rate. During the quarter the company’s effective tax rate was 49.1 percent, reflecting the impact of increasing the full year rate. In addition to the effective tax rate adjustment, the third quarter 2005 figures include a favorable non-cash, pre-tax royalty expense adjustment of $4.0 million, or $0.03 per diluted share, related to a change in estimate of the provision for uncollectible royalty override receivables. Excluding the royalty expense adjustment, net income would be $0.34 per diluted share.

For the nine months ended September 30, 2005, the company reported net income of $63.2 million, or $0.87 per diluted share, up 173.6 percent compared to net income of $23.1 million, or $0.42 per diluted share reported for the same period in 2004. Excluding the effect of recapitalization transaction expenses of $14.2 million and $15.4 million in the first quarters of 2005 and 2004 respectively, the $5.5 million non-cash tax charge associated with moving its China subsidiary within the global corporate structure in the second quarter of 2005, and the favorable $4.0 million royalty expense adjustment, the company’s net income would be $80.6 million or $1.11 per diluted share.

Third-Quarter 2005 Highlights
In addition to record sales growth, Herbalife made progress executing the company’s key strategies during the quarter. Branding efforts continued to gain traction. During the quarter, the company announced event sponsorships such as the Association of Volleyball Professionals (AVP) Tour, London Triathlon, Hong Kong Dragon Boat Races, J.P. Morgan Chase Open, Nautica Malibu Triathlon, and the Laguna Phuket Triathlon. In addition, the company announced sponsorships of athletes such as Elaine Youngs, Rachel Wacholder, Jason Ring, Stein Metzger, Olly Freeman, Lucilla Perrotta, and Daniela Gatelli. The company also entered into a multi-year agreement with the Anschutz Entertainment Group (AEG), providing Herbalife with naming rights at a variety of global venues that host events focused on healthy, active lifestyles. “We are proud of the strategic sponsorships and alliances formed with organizations like the AVP and AEG. These relationships enhance the Herbalife brand and provide our distributors access to events where they can retail and sample our products as well as recruit new distributors,” Johnson said.

Continuing to expand its presence in China, the company opened stores in four key provinces: Fujian, Jiangsu, Liaoning, and Shandong. These stores represent a test launch to prepare for the larger scale expansion expected throughout 2006. Greg Probert, the company’s president and chief operating officer, said, “We are excited with the level of distributor support for our strategic plans related to the China marketplace and very pleased with the progress our China management team has made executing these initiatives. We will continue our expansion in an efficient and planned manner.” The company anticipates officially applying for its direct selling license in December this year and remains optimistic that the company will receive its license in 2006.

Regional Performance
The Americas, comprising 45.1 percent of worldwide sales, reported net sales of $180.7 million in the third quarter, up 55.7 percent versus the same period of 2004. Excluding currency fluctuations, net sales increased 46.3 percent. The performance was driven by continued strong sales growth in Mexico, up 132.2 percent, Brazil, up 71.2 percent, and the United States, up 15.1 percent versus the third quarter of 2004. Total supervisors for the third quarter increased 26.4 percent versus the same period of 2004. On a year-to-date basis, the Americas reported net sales of $488.1 million, up 42.1 percent versus the first nine months of 2004. Excluding currency fluctuations, net sales increased 36.6 percent.

Europe, comprising 32.7 percent of worldwide sales, reported net sales of $131.2 million in the third quarter, up 2.8 percent versus the same period of 2004. Excluding currency fluctuations, net sales increased 2.3 percent. Net sales in two of the region’s key markets, Germany and the Netherlands, which were down 14.7 percent and 15.3 percent, respectively, were offset by growth in other markets such as Spain, up 17.1 percent, France, up 28.7 percent, and South Africa, up 72.2 percent compared to the same period of 2004. Total supervisors in the region decreased 8.2 percent versus the third quarter of 2004. On a year-to-date basis, the region reported net sales of $417.6 million, up 4.0 percent versus the first nine months of 2004. Excluding currency fluctuations, net sales increased 0.9 percent.

Asia Pacific, comprising 16.2 percent of worldwide sales, reported net sales of $65.1 million in the third quarter, up 21.2 percent versus the same period of 2004 due to strong sales in Korea, up 67.0 percent and Taiwan, up 34.1 percent. Excluding currency fluctuations, net sales increased 14.7 percent. Total supervisors for the third quarter increased 13.4 percent versus the same period of 2004. On a year-to-date basis, the Asia Pacific region reported net sales of $180.9 million, up 21.4 percent versus the first nine months of 2004. Excluding currency fluctuations, net sales in the region increased 14.9 percent.

Japan, comprising 6.0 percent of worldwide sales, reported net sales of $24.0 million in the third quarter, up 7.0 percent versus the same period of 2004. This represents the first year-over-year quarterly net sales growth since the first quarter of 1999. Probert added, “We are extremely pleased with the return to positive sales growth in this very important region, which we attribute to unified distributor leadership, strong country management, and new product introductions.” Excluding currency fluctuations, net sales increased 8.2 percent. Total supervisors declined 23.2 percent versus the third quarter of 2004. On a year-to-date basis, Japan reported net sales of $71.1 million, down 3.8 percent versus the first nine months of 2004. Excluding currency fluctuations, net sales decreased 4.9 percent.

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Alticor Sales Rise for the Sixth Consecutive Year

Alticor Inc. and its family of companies reported sales of $6.4 billion for the performance year ending August 31, 2005. Sales rose 3.6 percent in 2005, marking the company’s sixth straight year of growth.

More than half of Alticor’s global affiliates showed a strong increase in sales, offsetting slower growth in the China market and a slight decrease in North American sales. A portion of Alticor’s overall sales increase was due to the positive impact of the strengthening dollar.

European markets posted 18 percent growth, while Japan continued its turnaround with a second straight year of increased sales.

Alticor Chairman Steve Van Andel said “This was a strong, solid year. Our long-term goal is to find growth in our mature markets and our newer ones. We achieved that this year, which is a sign of the hard work taking place in all of our global markets.”

Alticor President Doug DeVos said “Our strength reflects the continuing worldwide appeal of owning your own business. We’re grateful for our outstanding employees, and for hardworking, motivated people who sell our products and services around the world. They are the ones who have made us leaders in direct selling for 46 years.”

Alticor operates primarily through Amway Corp., a global leader in direct selling; Quixtar Inc., a North American Web-based business opportunity; and Access Business Group LLC, a product development, manufacturing and logistics provider to Amway, Quixtar and other companies. Alticor employs more than 13,000 worldwide.

Highlights
The company saw Amway posting regional increases in Latin America, Europe, Japan, Southeast Asia and Greater China.

In North America, Quixtar, established in 1999, introduced new products and reported its third straight year of sales surpassing the billion-dollar mark.

Product sales were paced by Nutrilite® nutrition supplements, Artistry® cosmetics and the introduction of the new Atmosphere™ Air Purifier. Together, health and beauty products accounted for 60 percent of sales.

Amway
Amway strengthened its position as a global leader in the $92 billion direct selling industry with 43 of 57 markets posting sales increases over last year.

The company again noted strong performances from its Asian markets, led by 27 percent sales growth in Taiwan, and 4.2 percent sales growth in the larger Japan market. Sales for Amway China Co. Ltd. (ACCL) remained above the $2 billion mark for the second consecutive year. ACCL remains Amway’s top market, followed by Japan, South Korea and Thailand.

ACCL’s accomplishment in 2005 is significant, given yearlong uncertainty over the status of proposed regulations that formally legalize direct selling in the country. New direct selling regulations were formally published by the Chinese government in August. ACCL has flourished during the years since 1998, when China first banned direct sales but allowed ACCL and a few selected direct sellers to operate through both retail outlets and salesmen. The affiliate uses a network of over 180,000 sales representatives who introduce its products to customers. It operates more than 170 retail shops nationwide.

“Despite the uncertainty, ACCL performed admirably,” said Van Andel. “We continue to examine our future options in China in light of the new rules, which have yet to go in effect. We are very optimistic that China will continue to be our strongest performing market.”

European results were boosted by Russia’s strong debut last March. Strong performances were recorded in Eastern Europe, driven by the 2003 launch in the Ukraine, along with high growth in Turkey, Poland and Romania. High growth also was recorded in Scandinavia, Greece, the United Kingdom and Italy.

The Latin American region also experienced a sales growth of 8 percent from the previous year. The region was led by strong performances in Mexico and Central America.

“Amway entered into new and exciting territory with the opening of Russia in 2005, and our established markets showed promising gains,” said DeVos. “Amway continues to be a potent global force for providing consumers with outstanding products, and it is attractive for aspiring entrepreneurs seeking a solid business opportunity.”

Quixtar
With sales still over $1 billion despite a 3 percent sales decrease, the North American business unit had numerous highlights. Among them were the launch of the NAO™ (Never Accept Ordinary) color cosmetics brand, which targets a new generation of creative, progressive women. Quixtar’s continuing success in health and beauty is reflected in its No. 1 ranking in online Health & Beauty sales by Internet Retailer, and No. 14 overall for e-commerce sales.

Quixtar also rolled out new products in the health category, including XS® Sports Nutrition drinks, and reformulated the flagship health product Nutrilite® Double X Multivitamins to deliver more plant concentrates and antioxidant protection. It also announced new Partner Store affiliations with Barnes & Noble and eToys.com.

“Excellent new products in the health and beauty categories continue to drive Quixtar’s leadership on the Internet,” said DeVos. “We expect that new products coupled with reenergized IBOs will drive renewed growth in the U.S. and Canadian markets going forward.”

Access Business Group
Access Business Group enjoyed another solid year in 2005. Its third-party product development, manufacturing and logistics sales for the year exceeded $125 million in revenues, an increase of more than 9 percent over 2004.

Al Koop, chief operating officer for Access Business Group, said, “We continue to aggressively make our operations at home more efficient and valuable through contract work. And in the last few years, more companies are starting to hear about our high-quality manufacturing and logistic services, and our highly skilled and experienced workforce. As a result, we’re getting more third-party contracts. Plus, our sibling companies Quixtar and Amway are doing a great job with launching new and innovative products that we are able to manufacture.”

Alticor companies had more than 70 patents issued last year, bringing their total to more than 600.

Access’ inter-company sales to Amway and Quixtar are not included in Alticor’s global reported sales.

Other Company Developments
Alticor employees, IBOs and sales representatives, friends and industry colleagues were deeply saddened by the death of co-founder Jay Van Andel. Van Andel, who died in December 2004 at age 80, founded Amway in 1959 with longtime friend and business partner Rich DeVos. Van Andel’s oldest son, Steve, is chairman of Alticor, and the family continues to be well represented on Alticor’s board of directors.

Alticor’s “One by One Campaign for Children” recorded greater accomplishments in its third year of operation. Amway, Quixtar and Alticor employees have volunteered 303,000 hours to improve the lives of young people worldwide. To date, more than $26 million has been spent globally on a wide range of initiatives benefiting more than 4.6 million disabled, orphaned and disadvantaged children.

In October 2005, Alticor officially broke ground on its 340-room JW Marriott Hotel in downtown Grand Rapids. The upscale hotel is being built across from The Amway Grand Plaza Hotel. The JW Marriott—Grand Rapids is expected to welcome its first guests in fall 2007.

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Natural Health Trends Quarterly Sales Reach $58 Million

Natural Health Trends Corp. (BHIP—NASDAQ NMS), an international direct selling company, recently announced its financial results for the third quarter ended September 30, 2005.

Net sales in the third quarter of 2005 were approximately $58.1 million, up 43 percent from the $40.5 million for the comparable period a year ago. For the nine months ended September 30, 2005, net sales rose 56 percent to approximately $150.8 million compared to $96.9 million for the same period during 2004.

For the third quarter of 2005, the company recorded net income of approximately $0.1 million, or $0.01 per fully diluted share.

The growth in sales was largely due to significant increase in the Hong Kong-based business, which recorded approximately $37.7 million net sales in the three months ended September 30, 2005, up from $23.8 million during the comparable period last year. Sales growth in 2005 over 2004 was also attributable to a 5 percent product price increase in January 2005 and an increase in the number of independent distributors. As of September 30, 2005, the operating subsidiaries of Natural Health Trends Corp. had approximately 169,000 active distributors, compared to 133,000 at the end of 2004 and 101,000 a year ago.

At the end of the third quarter, the company had on its balance sheet deferred revenue of approximately $13.5 million, of which $4.9 million pertained to product orders and $7.1 million to enrollment package revenue. During April 2005, the company launched a new product line, Gourmet Coffee Cafe, with its coffee machines and coffee and tea pods, in the North American market. Since the Gourmet Coffee Cafe is a very different product than the company’s other products, relevant accounting rules require that none of the revenue generated from the sale of the coffee machines be recognized until sufficient experience on the product has been established. As a result, deferred revenue also includes approximately $1.5 million of Gourmet Coffee Cafe product shipped through September 30, 2005.

Gross profit margin for the third quarter was 77.6 percent of revenue, versus 78.1 percent for the same period a year ago. The percentage of revenue declined over a year ago, mainly due to significant revenue being deferred from the second into the third quarter a year ago related to the Hong Kong market. Gross margin in the third quarter improved from the 75.1 percent in the second quarter as the company is in the process of reducing certain duplicated logistic processes for its Hong Kong-based business.

Distributor commissions were 50.1 percent of net sales for the three months ended September 30, 2005 compared with 43.0 percent of net sales for the same period in the prior year. A year ago, due to special events in Hong Kong that occurred in the second quarter, approximately $6 million of the revenue recognized in the third quarter had its associated commissions already recorded in the second quarter. Distributor commissions of 50.1 percent in the third quarter were lower than the 55.3 percent in the second quarter, mainly due to scaling back local promotional programs in Hong Kong.

Robert H. Hesse, the Interim Chief Executive Officer of Natural Health Trends Corp., said, “Our strong sales momentum continued in the third quarter. As a cautionary note, we should point out that we are not immune to the uncertainty created by China’s pending adoption of the direct selling laws, as other direct selling companies have experienced. The opening of our Japanese operations is our most important event in the fourth quarter, and we are expecting a significant impact from the beginning.”

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