Financial Report

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USANA Reports Record Fourth Quarter and Year Results

USANA Health Sciences Inc. (USNA-Nasdaq) announced record financial results for the fiscal fourth quarter and for the fiscal year of 2005 (ended Dec. 31, 2005). Net sales in the fourth quarter increased 15.7 percent to $86.9 million, compared with $75.1 million in the fourth quarter of the prior year. Net sales growth for the fourth quarter of 2005 was driven by a 16.7 percent increase in the number of active associates, compared to the fourth quarter of the prior year.

Earnings from operations in the fourth quarter of 2005 grew 26.4 percent to $15.4 million, or 17.8 percent of net sales, compared with $12.2 million, or 16.3 percent of net sales, in the fourth quarter of the prior year. The company achieved record net earnings in the fourth quarter of 2005 of $10.5 million, an increase of 14.5 percent, compared with net earnings of $9.2 million in the fourth quarter of the prior year. Earnings per share in the fourth quarter of 2005 improved to $0.54 per share, an increase of 17.4 percent, compared with $0.46 per share in the fourth quarter of the prior year. Earnings per share in the quarter included an increase of approximately $0.01 per share due to a lower than expected effective tax rate.

For the 2005 fiscal year, the company achieved record net sales of $327.7 million, an increase of 20.1 percent from $272.8 million for 2004. Earnings from operations for 2005 were $58.4 million, an increase of 30.1 percent, compared with $44.8 million in 2004. USANA also reported record net earnings for 2005 of $39.0 million, or $1.98 per share, an increase of 26.7 percent from the $30.8 million, or $1.51 per share, for 2004.

"Our fourth quarter performance illustrates the continued growth potential of our core operations," said Dave Wentz, President of USANA. "Although we did not open any new international markets during 2005, we still achieved record sales and profits. Strong associate growth, including 18.6 percent growth in the United States, compared with the fourth quarter of 2004, is the primary driver of our record fourth quarter sales. We continue to place a significant amount of effort on retaining and developing associate leaders, which drives the growth of our top line.

"While we expected to open one new market in the fourth quarter of 2005," continued Wentz, "the government registration process in that target country has delayed this opening. We hope to initiate operations there sometime during 2006. Despite this delay, we believe there are significant growth opportunities in our 12 existing markets, and we expect 2006 to be another record year. In addition, although the Chinese government has not approved multilevel marketing, we believe the direct selling opportunity there could be significant."

"With respect to guidance," said Gilbert A. Fuller, Chief Financial Officer, "we expect net sales in the first quarter of 2006 to be in the range of $87 million to $89 million, compared with $76.6 million in the first quarter of last year, a growth rate of 14 percent to 16 percent. We expect earnings per share in the first quarter of 2006 to be between $0.54 and $0.56, excluding the expensing of equity compensation. After the adjustment for expensing of equity compensation, we expect earnings per share to be between $0.51 and $0.53 for the first quarter of 2006.

"For the full year 2006, we reiterate our previous guidance and expect to grow net sales between 15 percent and 20 percent over 2005. Additionally, we expect earnings per share growth for the full year 2006 to be between 15 percent and 20 percent, excluding the expensing of equity compensation. This earnings per share estimate also assumes a tax rate for 2006 of 35.5 percent, compared with the 33.7 percent tax rate for 2005, which translates to a reduction of approximately $0.06 per share," concluded Fuller.

USANA develops and manufactures high-quality nutritionals and personal care and weight management products that are sold directly to preferred customers and associates throughout the United States, Canada, Australia, New Zealand, Hong Kong, Japan, Taiwan, South Korea, Singapore, Mexico, the Netherlands and the United Kingdom.