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Herbalife Announces Record 2nd Qtr Net Sales
Royal BodyCare Reports Higher Earnings
Natural Health Trends: Sales Up 182%
August Stock Watch

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Herbalife Announces Record
2nd Quarter Net Sales
Herbalife Ltd. (HLF—NYSE) reported record second-quarter net sales of $384.7 million, an increase of 18.7 percent compared to the same period of 2004. Additionally, the number of new Distributor Supervisors increased 13.9 percent versus the second quarter of 2004. The company’s high-level President’s Team expanded to 797 members during the second quarter of 2005, up 9.6 percent from the second quarter of 2004. The company’s regions, the Americas, Asia Pacific, and Europe, achieved net sales growth of 43.7 percent, 13.6 percent, and 3.3 percent, respectively, while Japan’s net sales declined 6.3 percent compared to the second quarter of 2004. Michael O. Johnson, the company’s Chief Executive Officer, said, “We believe the second quarter results reflect the positive impact from the implementation of our strategic initiatives, and we are encouraged by the outlook in our core markets.”

Financial Performance
For the quarter ended June 30, 2005, the company reported net income of $22.8 million, or $0.32 per diluted share compared to net income of $12.1 million, or $0.22 per diluted share in 2004. Excluding the effect of a non-cash tax charge of $5.5 million associated with moving the company’s China subsidiary within the global structure during the second quarter of 2005, the company’s net income rose 133.9 percent to $28.3 million compared to $12.1 million in the second quarter of 2004.

For the six months ended June 30, 2005, the company reported net income of $36.1 million, or $0.50 per diluted share, up 210.7 percent compared to net income of $11.6 million, or $0.21 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, and 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, the company’s net income rose 106.7 percent to $55.8 million for the six month period.

Regional Performance
The Americas reported net sales of $166.8 million in the second quarter, up 43.7 percent versus the same period of 2004. Excluding currency fluctuations, net sales increased 37.7 percent. The performance was driven by continued strong sales growth in Mexico, up 127.0 percent, Brazil, up 72.0 percent, and the United States up 12.8 percent versus the second quarter of 2004. Total supervisors for the second quarter increased 23.4 percent versus the same period of 2004. On a year-to-date basis, the Americas reported net sales of $307.4 million, up 35.2 percent versus the first six months of 2004. Excluding currency fluctuations, net sales increased 31.6 percent.

Europe reported net sales of $141.8 million in the second quarter, up 3.3 percent versus the same period of 2004. Excluding currency fluctuations, net sales decreased 3.0 percent. These results were expected due to the difficult comparatives associated with the Billion Dollar Challenge, a promotion that concluded during the second quarter of 2004.

Asia Pacific reported net sales of $55.8 million in the second quarter, up 13.6 percent versus the same period of 2004 due to strong sales in Korea, up 33.6 percent and Taiwan, up 11.7 percent. Excluding currency fluctuations, net sales increased 6.9 percent. Total supervisors for the second quarter increased 16.9 percent versus the same period of 2004. On a year-to-date basis, the Asia Pacific region reported net sales of $115.8 million, up 21.5 percent versus the first six months of 2004. Excluding currency fluctuations, net sales in the region increased 15.1 percent.

Japan reported net sales of $20.2 million in the second quarter, down 6.3 percent versus the same period of 2004. On a year-over-year basis, this quarter represents the region’s third consecutive quarter of decelerating net sales declines. Excluding currency fluctuations, net sales decreased 8.1 percent. Total supervisors declined 26.7 percent versus the second quarter of 2004. On a year-to-date basis, Japan reported net sales of $47.1 million, down 8.5 percent versus the first six months of 2004. Excluding currency fluctuations, net sales decreased 10.6 percent.

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Royal BodyCare Reports
Higher Earnings

Royal BodyCare, Inc. (ROBE—OTCBB) reported sales of $5,358,000 in the quarter ended June 30, 2005, a 14 percent increase over sales of $4,716,000 in the same period of the previous year. Net earnings were $380,000 in the quarter ended June 30, 2005 or $.02 per share, an increase of 167 percent over the net earnings of $142,000 or $.01 per share in the same period of the previous year.

On June 30, 2005, the company held finished products in the amount of $1,298,000 at its sales prices, ordered and paid in full by international customers, awaiting only their shipping instructions. In accordance with current accounting principles, neither the sales revenue nor any net earnings on these products were included in the results reported above. On June 30, 2005 the company also held new orders in the amount of $2,189,000 at its sales prices, which were being manufactured. Clinton Howard, the company’s CEO, stated, “Higher earnings resulted from the growth of our international and medical products businesses, controlling expenses and modernizing our current product line.”

In May, a licensee began sales of RBC products in Romania as contemplated in a previously announced agreement to expand distribution into Eastern Europe.

The company signed a license agreement with a French company, Institute De Prevention Du Viellissement, granting it exclusive rights to sell Microhydrin® in France. Sales began after a laboratory in Paris confirmed that Microhydrin was a potent nutritional antioxidant. Microhydrin is RBC’s largest selling product.

Microhydrin is manufactured by the company’s proprietary process bonding silica and other minerals to form geometric nanoscale structures, known as clathrates. They range in shape from pyramidal, cubical, or hexagonal to spherical, and in approximate sizes from 3 nanometers to 100 nanometers. They can enclose or adsorb nutrients. Under specific conditions they combine like bunches of grapes to form nanoclusters which are then treated electronically with negative charges that remain stable in a dry state as Microhydrin powder. When ingested, Microhydrin begins to release its electrons and continues this antioxidant activity for hours in the gastrointestinal tract and while being absorbed into the blood stream. Microhydrin has been shown, in independent in vitro studies, to scavenge even the most dangerous oxidized free radicals, protecting human cells from free radical damage which is known to induce the signs and symptoms of aging.

RBC formulates, manufactures, and markets proprietary nutritional supplements, including its line of NanoCeuticals™ sold by independent distributors in North America, and licensees in other countries, shipped from its Las Colinas headquarters in Irving, Texas, and from its branch office in Vancouver, BC, Canada.

MPM Medical, Inc., a wholly owned RBC subsidiary (MPM), develops and markets a line of research-based wound care and oncology care products sold over-the-counter, and by prescription, through wholesale distributors, pharmacies, hospitals, clinics, cancer centers and nursing homes, serviced by manufacturer’s representatives and company sales representatives. During the first half of this year, MPM acquired three new distributors in the United States. The company also signed an agreement granting exclusive marketing rights to a wholesale distributor to sell MPM products in Uruguay.

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Natural Health Trends:
Sales Up 182%
Natural Health Trends Corp. (BHIP—NASDAQ NMS) announced its financial results for the second quarter ended June 30, 2005. Net sales in the second quarter of 2005 were approximately $49.9 million, up 182 percent from the $17.7 million for the comparable period a year ago. This increase was largely due to significant growth in the Hong Kong based business, which recorded approximately $32.0 million net sales in the three months ended June 30, 2005, up from $2.9 million during the comparable period last year. For the six months ended June 30, 2005, net sales rose 64 percent to approximately $92.7 million compared to $56.4 million for the same period during 2004.

For the second quarter of 2005, the company recorded a net loss of approximately $2.2 million, or $0.32 per fully diluted share. In the second quarter of 2004, the company had a net loss of $6.7 million, or $1.24 per fully diluted share.

Mark Woodburn, President of Natural Health Trends Corp., said, “Our loss in the quarter relates directly to the company’s aggressive investments in growing our business in our most promising markets: China, Japan, Mexico and the United States. Spending for our market and product expansion is expensed as they are incurred, even though the benefits do not occur in the same quarter.”

The growth in sales 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 June 30, 2005, the operating subsidiaries of Natural Health Trends Corp. had approximately 152,000 active distributors, compared to 133,000 at the end of 2004 and 101,000 a year ago.

At the end of the second quarter, the company had deferred revenue of approximately $13.7 million of which $7.5 million pertained to product orders and $6.2 million to enrollment package revenue. During April 2005, the company launched a new product line, Gourmet Coffee Cafe, with its coffee machines, 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.

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