Financial Report

Stories in this section:
USANA Reports Record Fourth Quarter and Year Results
Nu Skin Enterprises Reports Year-End and Fourth Quarter Results
Oriflame 2005 Sales Up 14%
February Stock Watch

Nu Skin Enterprises Reports Year-End
and Fourth Quarter Results

Nu Skin Enterprises Inc. (NUS-NYSE) recently reported year-end and fourth quarter results in line with recent guidance. The company posted record annual revenue of $1.18 billion, a 4 percent improvement over the prior year. Net income for 2005 was $74.0 million and earnings per share were $1.04, compared to net income of $77.7 million and earnings per share of $1.07 in 2004. For the fourth quarter, reported revenue declined 5 percent to $290.7 million, primarily due to a 4 percent negative impact from foreign currency fluctuations. Net income for the quarter was $15.8 million, which yielded earnings per share of $0.22, compared to net income of $22.0 million and earnings per share of $0.31 for the fourth quarter of 2004.

"While 2005 was a record-revenue year, we can do better," said President and Chief Executive Officer Truman Hunt. "Growth in the United States, South Korea and other markets was offset by declines in China and Japan in the second half of 2005. Improving trends during the fourth quarter in China lead us to believe that the implementation of the recently published direct selling regulations will be well received by our sales representatives. We also believe that upcoming enhancements to our compensation plan in Japan will offset the negative impact of last year's changes."

Commenting on Nu Skin's 2006 outlook, Chief Financial Officer Ritch Wood said, "Assuming a yen rate of 118 to the dollar, we project 2006 revenue of $1.14 to $1.20 billion. In 2005, the average yen rate was 110 to the U.S. dollar. If the yen rate stays at its current level of 118 in 2006, reported revenue would be negatively impacted by approximately $40 million. In 2006, we expect earnings per share of $0.90 to $0.96, which includes approximately $0.08 per share of stock option expenses not included in 2005.

"We expect first quarter revenue of $263 to $270 million, assuming a yen rate of 118 to the U.S. dollar. The average yen rate in the first quarter of 2005 was 105. Therefore, reported first quarter revenue for 2006 will be negatively impacted an estimated $16 million as a result of the strengthening of the dollar. Excluding the restructuring charges, first quarter earnings per share are anticipated to be $0.13 to $0.15, which reflects the impact of stock option expenses of $0.02 per share and the Japan convention expense of $0.04 to $0.05 per share. Including the $0.27 to $0.35 per share restructuring charges, we anticipate reporting a loss of $0.12 to $0.22 per share in the first quarter," concluded Wood.

Nu Skin Enterprises, Inc. is a direct selling company involved in the person-to-person distribution and sale of premium quality personal care products, nutritional supplements, and technology products.