Stories in this section:
USANA Reports Record 3rd Qtr Sales
Tupperware 3rd Quarter EPS HIGHER Than Expected
Avon Reports Third Quarter Earnings of $0.35 Per Share
Relìv Posts 18% Increase in NET SALES
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USANA Reports Record 3rd Quarter Sales

USANA Health Sciences Inc. (USNA— NASDAQ) announced strong financial results for the third fiscal quarter of 2005 (ended Oct. 1, 2005). The company achieved record net sales of $82.2 million, representing a growth of 20 percent compared with the $68.7 million in net sales of the third quarter of 2004. These thirdquarter results were driven both by strong net sales growth in the United States and yearover- year net sales growth in all but one of the company’s 12 markets.

Earnings from operations in the third quarter of 2005 grew 20.4 percent to $14.6 million, or 17.8 percent of net sales, compared with $12.1 million, or 17.7 percent of net sales, in the third quarter of 2004. The company achieved record net earnings in the third quarter of 2005 of $10.0 million, an increase of 25.6 percent, compared with net earnings of $8.0 million in the third quarter of 2004. Earnings per share in the third quarter of 2005 increased to $0.51 per share, an increase of 31 percent, compared with $0.39 per share in the third quarter of 2004. During the third quarter of 2005, the company’s estimated tax rate was adjusted on a year-to date basis to 34 percent, which is lower than the 35 percent tax rate that the company had previously forecasted for the full year. This lower tax rate increased earnings per share in the quarter by approximately $0.02.

For the nine-month period ended Oct. 1, 2005, net sales were $240.8 million, an increase of 21.8 percent, compared with $197.7 million in the comparable period of 2004. Earnings from operations for the first nine months of 2005 were $42.9 million, an increase of 31.5 percent, compared with $32.6 million in the comparable period of 2004. The company achieved net earnings in the first nine months of 2005 of $28.5 million, an increase of 31.9 percent, compared with net earnings of $21.6 million in the comparable period of 2004. Earnings per share increased 37.1 percent in the first nine months of 2005 to $1.44, compared with $1.05 in the comparable period of 2004.

Convention Drives Sales
“During the third quarter, we continued to grow sales and earnings, driven partially by the strength of our sold-out Annual International Convention in September,” said Dave Wentz, President of USANA. “During the convention, we introduced several new products and sales tools, including our RESET™ Weight Management Program, which were well received by our associates. In addition to RESET, we introduced a variety of other products and sales tools, including Nutrimeal™ sampling packs, a True Health DVD, and a reformulation of our Usanimals™ children’s vitamins.

“Buoyed by the success of the convention, U.S. sales, which represented nearly 43 percent of total sales, grew 22 percent compared with last year,” continued Wentz. “In addition, our year-over-year sales grew in all but one of our markets, and we achieved double-digit growth in many of our markets. Mexico remained a strong performer during the quarter, with sales growth of 52 percent, compared with last year. Although the third quarter is typically our slowest quarter of the year, the number of active associates increased by 14.4 percent year over year to 127,000.”

Gilbert A. Fuller, USANA’s Chief Financial Officer, said, “We achieved another quarter of strong sales and earnings growth that was driven by continued growth in our existing markets. Although our third quarter is customarily our weakest quarter, our sales increased slightly on a sequential basis and net earnings grew by 5 percent.

“To update our guidance,” Fuller continued, “we expect our net sales in the fourth quarter of 2005 to be $86 million to $88 million, an increase of as much as 17.2 percent, compared with $75.1 million in the fourth quarter of last year. We also expect our earnings per share in the fourth quarter of 2005 to be $0.50 to $0.52. These estimates are based on our assumption that we will obtain approval to open our planned new market in the fourth quarter of 2005. As a result, we believe our net sales for the full year will be between $327 million and $329 million. This represents full-year sales growth between 20 percent and 21 percent, compared with 2004. Finally, we now believe our earnings per share for 2005 will be between $1.94 and $1.96, representing growth of 28 percent to 30 percent, compared with 2004.

“Looking ahead to 2006, we expect to grow net sales between 15 percent and 20 percent, and earnings per share between 15 percent and 20 percent. This earnings-per-share estimate assumes a tax rate for 2006 of 35.5 percent, but excludes an estimated $0.10 per share reduction due to the required expensing of stock options beginning in 2006,” concluded Fuller.

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Tupperware 3rd Quarter EPS HIGHER Than Expected

Tupperware Corporation (TUP— NYSE) announced third quarter earnings per share of 4 cents versus its previous outlook of about breakeven.

“We were pleased to see positive movement in both sales force size and average active sales force this quarter, which led to third quarter pro forma earnings ahead of our expectations. Worth noting, Germany, our largest market, had improved sales force trends. Additionally, we continued to have strong sales growth in our emerging markets of Russia and China,” said Rick Goings, Chairman and Chief Executive Officer. “The steps necessary to close the Sara Lee Direct Selling acquisition, including the related financing, are being completed as expected, and we anticipate a closing date in the fourth quarter,” Goings continued.

Third Quarter Segment Highlights Europe
Sales increased 2 percent as reported and in local currency. European profit was down $6.1 million as reported and $6.2 million in local currency, but modestly ahead of the Company’s expectation. The decrease versus 2004 was primarily due to promotional investments and manufacturing-related costs. Europe’s return on sales for full year 2005 is still expected to be over 20 percent.

Asia Pacific
Sales were up 6 percent as reported and 4 percent in local currency. Asia Pacific profit was in line with sales at up $0.4 million as reported and $0.1 million in local currency.

Latin America
Sales increased 11 percent as reported and 5 percent in local currency, driven by a sales force size advantage of 8 percent and an increase in the average active sales force of 4 percent. All markets contributed sales and profit improvements during the quarter, although the trend in Mexico has softened.

North America
Sales were down 8 percent and included a $3 million benefit due to a shift in the promotional calendar that moved sales forward into the third quarter. The loss was reduced by 56 percent or $4.2 million due to value chain improvements and a $1.4 million positive impact from reduction of LIFO inventory reserve requirements. Sales force acceptance of the new compensation plan is going well and is in line with Company expectations.

BeautiControl North America
Sales were up 22 percent, in line with average active sales force growth. Profit was about flat with last year due to fulfillment and capacity costs associated with recent record growth and a less advantageous mix of sales.

Year-to-Date Actual Results
• Sales up 6 percent as reported and 4 percent in local currency.
• EPS up 3 cents including 5 cents favorable foreign exchange.
• Excluding land sales and re-engineering and financing costs, EPS up 18 cents to 95 cents.

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Avon Reports Third Quarter Earnings of $0.35 Per Share
Avon Products Inc. (AVP—NYSE) recently reported that earnings in the third quarter 2005 were $0.35 per share, compared with 2004 third-quarter earnings of $0.37 per share. Avon said that revenue in the third quarter 2005 grew 4 percent (flat in local currencies) to $1.9 billion. Active representatives rose 4 percent and units were flat versus the prior year. Total beauty sales in the quarter rose 5 percent.

Operating profit decreased 6 percent, mainly due to gross margin declines caused by unfavorable pricing and product mix and higher consumer and strategic spending. Operating margin was 13.1 percent. Net income in the third quarter 2005 was $163.8 million, compared with $176.9 million a year ago.

Third-Quarter Regional Highlights
U.S. third-quarter revenue decreased 6 percent, with continued lower customer purchase frequency and ongoing competitive intensity. The company also believes that its U.S. business was affected by the impact of higher fuel costs on Avon’s Representatives and their customers. Units and active representatives in the quarter were down 2 percent and 4 percent, respectively.

Sales of beauty products in the United States decreased 6 percent. Beauty Plus sales increased 14 percent, primarily due to the launch of a foundations business, and Beyond Beauty sales declined 29 percent, in part reflecting ongoing, planned category repositioning. United States operating profit was 11 percent lower year over year due to unfavorable product mix and the revenue decline. Operating margin was 13.1 percent.

In Europe, revenue in the third quarter increased 8 percent (6 percent in local currencies) and active representatives rose 6 percent. Units were 2 percent lower than the year-ago period. Central and Eastern Europe grew 16 percent with revenue in Russia increasing 19 percent. Europe’s third-quarter operating profit grew 4 percent, half the rate of the region’s revenue growth, due to unfavorable pricing and product mix, higher manufacturing overhead and costs to develop the company’s global ERP system in the region. Operating margin was 17.4 percent.

In Latin America, third-quarter revenue grew 14 percent (4 percent in local currencies) as solid results in Brazil and Venezuela, in particular, more than offset a 4 percent decline in Mexico. Active representatives rose 8 percent and units grew 4 percent. Operating profit decreased by 3 percent due to the impact of unfavorable pricing and product mix, increased administrative expenses and higher consumer and strategic investments. Operating margin was 22.6 percent.

In Asia Pacific, revenue decreased 3 percent (5 percent in local currencies) and units declined 8 percent, as the region’s performance was impacted by revenue declines in China and Japan. China’s revenue was 16 percent lower year over year as Avon’s Beauty Boutique owners in that country continued to reduce the size of their orders in connection with the anticipated resumption of direct selling.

Active representatives in the Asia Pacific region declined 3 percent in the quarter. Operating profit was 18 percent lower versus the year-ago quarter, primarily as a result of the region’s revenue decline and also due to higher investments in China related to the implementation of direct selling and increased advertising. Operating margin was 14.5 percent.

Outlook
For the full-year 2005, Avon continues to project an earnings-per-share increase of lowto- mid single digits, compared with 2004 earnings of $1.77 per share. 2005’s expectation includes $0.20 per share of tax benefits, primarily from settlements of prior-year audits, partially offset by an impact of $0.02 per share from a revised higher effective rate, both of which were disclosed in the second quarter 2005. 2004’s earnings per share included non-recurring tax benefits of $0.11 per share. Full-year revenues are expected to increase mid-single digits (up slightly in local currencies), and full-year operating profit is anticipated to be flat to down somewhat. Fullyear cash flow from operations is projected to be in the range of $800 million. The company noted that its guidance does not include the cost of any steps that it might take during the balance of the year to reduce its enterprise expense base.

The company expects consolidated fourthquarter local-currency revenue growth to be flattish compared with the prior-year quarter. U.S. revenue trends show a weakening from the third quarter’s growth rate, primarily driven by further deterioration of consumer activity that reflects the effect of higher fuel costs and the impact of Hurricane Katrina. The company said it will discuss action plans to address the underlying causes of the continuing broad-based weakness in its business at an upcoming investor meeting on November 15, 2005.

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Relìv Posts 18% Increase
in NET SALES

Relìv International, Inc. (RELV—Nasdaq), a manufacturer and international network marketer of nutritional supplements and other food technology products, recently announced its results of operations for the three months ended September 30, 2005 and for the first nine months of the year.
For the third quarter 2005, the company reported a 32 percent increase in net income available to common shareholders, which reached $1.67 million or $0.10 per share (diluted)—compared to $1.26 million, or 0.07 per share (diluted) in the same period last year. Relìv worldwide net sales advanced 18 percent, to total $28.6 million for the third quarter of 2005, compared to $24.17 million in the third quarter 2004.

Through the first nine months of 2005, Relìv has reported a 39 percent increase in net income available to common shareholders compared to the same period in 2004. The 2005 nine-month net income figure reached $5.7 million, or $0.35 per share (diluted). Net sales for the period also showed an increase—rising 20 percent, to $86.1 million, compared to $71.5 million during the first nine months of 2004.

The United States, the company’s largest geographic market, continues to set the pace for Relìv’s financial performance. U.S. net sales grew 25 percent in the third quarter 2005 compared to the same period last year. This growth was partially offset by mixed results from the company’s international markets. Relìv reported that sales nearly doubled in the United Kingdom in the third quarter 2005 compared to the prior year period, reflecting the impact of a new management team put in place earlier in the year.

However, sales declined in other international operations compared to the same period in the prior year. Robert L. Montgomery, President and Chief Executive Officer of Relìv, said, “We are very pleased with the growth performance we continue to see in the United States. For well over three years in a row now, our largest market has generated sales growth of at least 20 percent every quarter, when compared to the prior year period. That’s a remarkable run—made all the more remarkable by the fact that it’s been achieved without acquisitions or the need to enter new lines of business. Now the challenge is to extend that success to our international markets.” Montgomery noted that management changes— including new business leaders in the United Kingdom, a recently appointed national sales manager in Australia and some restructuring in Mexico—should help the company implement its business development system more consistently in international markets.

“Our success in the United States proves that the Relìv system can be a powerful growth engine,” Montgomery said. “We are committed to taking the steps necessary to ensure that this proven strategy is used to produce consistent results in all of our markets worldwide.”

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