Exhibit 99.1 USANA Reports Record Second Quarter Results SALT LAKE CITY--(BUSINESS WIRE)--July 20, 2004-- -- Net Sales up 43%; EPS increased 80% over Q2 2003 -- 2004 Guidance Raised USANA Health Sciences Inc. (NASDAQ: USNA) today announced record financial results for the second quarter ended July 3, 2004. Net sales for the quarter were $67.2 million, up 43% from $47.2 million in the second quarter of 2003. The total number of active Associates increased 35% to 104,000 in the second quarter of 2004, compared to 77,000 in the second quarter of 2003. Net earnings in the second quarter were $7.4 million, up 70% from $4.3 million in the second quarter of 2003. Earnings per share increased for the second quarter to $0.36 per share, up 80% from $0.20 per share during the second quarter of 2003. For the six-month period ended July 3, 2004, net sales were $129 million, up 47% from $88 million for the same period in 2003. Net earnings for the first six months of 2004 were $13.6 million, up 72% from $7.9 million for the same period in 2003. Earnings per share for the six-month period ended July 3, 2004 were $0.66, up 78% from $0.37 for the same period in 2003. "The overall strength of the business continues to be driven by our growing Associate base," said Dave Wentz, USANA's president. "We continue to see the same positive growth trends in our direct selling model and were pleased to achieve robust top-line growth. In the second quarter, we increased the number of active Associates by 35% compared to last year, reflecting an improvement in recruiting and leadership levels. We will continue to pursue our major strategic initiatives, which include expanding our Associate base, enhancing retention, and building associate commitment to the business opportunity available through our science-based nutritional products. "During the second quarter we made key leadership changes in both Korea and Japan. We have not performed up to expectations in these two significant markets, but are confident that, with the recent management changes performance will improve," concluded Wentz. Commenting on USANA's financial performance, Gilbert A. Fuller, chief financial officer, noted, "We were encouraged to see another quarter of double-digit, year-over-year sales growth in each of our markets. The U.S. continues to post strong sales, up 27% compared to last year, benefiting from the synergies associated with the opening of the Mexico market. In addition, the number of Associates in the U.S. increased 25% compared to last year. Mexico completed its first full quarter of sales and, with all our key products registered and in-country, this important new market is off to a good start. "We were also pleased to see our operating performance improve in the second quarter," continued Fuller. "We acquired Wasatch, our personal care products manufacturing subsidiary, in the third quarter of 2003 and achieved $3.1 million in sales in the second quarter of 2004, which was higher than anticipated. The construction efforts at our Wasatch facility are now complete, and we expect to begin integrating the manufacturing of our personal care products there in the third quarter. "We continued to generate strong cash flow from operations. Since the first of the year, we have invested approximately $15 million in share repurchases. At the end of the second quarter of 2004, we had $13.8 million in cash and no debt. "Looking ahead, we expect third quarter net sales to approach $69 million, with earnings per share between $0.36 and $0.38. In addition, our outlook for the year has been increased. We now expect net sales to approach $270 million and earnings per share between $1.42 and $1.44." USANA executives will hold a conference call and live webcast to discuss this announcement with investors on July 21, 2004 at 11 a.m. EDT. Investors may listen to the call by accessing USANA's Web site at http://www.usanahealthsciences.com and by clicking on the "Investors" icon. About USANA USANA develops and manufactures high-quality nutritional and personal care products that are sold directly to Associates and Preferred Customers throughout the United States, Canada, Australia, New Zealand, Hong Kong, Japan, Taiwan, South Korea, Singapore, Mexico, the Netherlands and the United Kingdom. More information on USANA can be found at http://www.usanahealthsciences.com. Safe Harbor This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Actual results could differ materially from those projected in the forward-looking statements, which involve a number of risks and uncertainties, including reliance upon the company's independent Associate network, government regulation of products, manufacturing and marketing, and risks associated with international expansion. The contents of this release should be considered in conjunction with the risk factors, warnings and cautionary statements contained in USANA's most recent filings with the Securities and Exchange Commission. USANA Health Sciences Inc. Consolidated Statements of Earnings (In thousands, except per share data) Quarter Ended Six Months Ended --------------------- ---------------------- 28-Jun-03 3-Jul-04 28-Jun-03 3-Jul-04 ---------- ---------- ---------- ----------- (Unaudited)(Unaudited)(Unaudited)(Unaudited) Net sales $47,157 $67,246 $88,021 $129,021 Cost of sales 10,417 16,195 19,637 31,253 ---------- ---------- ---------- ----------- Gross profit 36,740 51,051 68,384 97,768 Operating expenses Associate incentives 18,662 25,556 34,759 49,168 Selling, general and administrative 10,574 13,656 20,146 26,918 Research and development 373 607 707 1,185 ---------- ---------- ---------- ----------- Earnings from operations 7,131 11,232 12,772 20,497 Other income (expense) (228) (1) (194) 148 ---------- ---------- ---------- ----------- Earnings before income taxes 6,903 11,231 12,578 20,645 Income taxes 2,554 3,818 4,654 7,019 ---------- ---------- ---------- ----------- NET EARNINGS $4,349 $7,413 $7,924 $13,626 ========== ========== ========== =========== Earnings per share - diluted $0.20 $0.36 $0.37 $0.66 ========== ========== ========== =========== Weighted average shares outstanding - diluted 21,450 20,523 21,247 20,688 ========== ========== ========== =========== USANA Health Sciences Inc. Consolidated Balance Sheets (in thousands) As of As of 3-Jan-04 3-Jul-04 ---------- ---------- (Unaudited) ASSETS Cash and cash equivalents $18,965 $13,798 Inventories, net 14,069 13,574 Other current assets 5,215 5,327 ---------- ---------- Total current assets 38,249 32,699 Property and equipment, net 20,195 24,062 Goodwill 4,267 5,690 Other assets 2,416 2,498 ---------- ---------- Total assets $65,127 $64,949 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $5,215 $4,103 Other current liabilities 14,704 15,197 ---------- ---------- Total current liabilities 19,919 19,300 Other long-term liabilities 837 772 Stockholders' equity 44,371 44,877 ---------- ---------- Total liabilities and stockholders' equity $65,127 $64,949 ========== ========== USANA Health Sciences Inc. Sales by Market (in thousands) Quarter Ended ------------------------------------- 28-Jun-03 3-Jul-04 ------------------ ------------------ (Unaudited) (Unaudited) Region United States $21,884 46.4% $27,821 41.4% Canada 11,271 23.9% 12,378 18.4% Australia-New Zealand 7,084 15.0% 8,471 12.6% Hong Kong 2,105 4.5% 2,750 4.1% Japan 1,445 3.1% 2,176 3.2% Taiwan 3,368 7.1% 3,898 5.8% Korea - 0.0% 1,804 2.7% Singapore - 0.0% 2,612 3.9% Mexico - 0.0% 2,216 3.3% Wasatch - 0.0% 3,120 4.6% ---------- ------- ---------- ------- $47,157 100.0% $67,246 100.0% ========== ======= ========== ======= Active Associates by Market As of ------------------------------------- 28-Jun-03 3-Jul-04 ------------------ ------------------ (Unaudited) (Unaudited) Region United States 32,000 41.5% 40,000 38.5% Canada 18,000 23.4% 20,000 19.2% Australia-New Zealand 12,000 15.6% 13,000 12.5% Hong Kong 4,000 5.2% 5,000 4.8% Japan 3,000 3.9% 4,000 3.8% Taiwan 8,000 10.4% 8,000 7.7% Korea - 0.0% 3,000 2.9% Singapore - 0.0% 6,000 5.8% Mexico - 0.0% 5,000 4.8% ---------- ------- ---------- ------- 77,000 100.0% 104,000 100.0% ========== ======= ========== ======= Active Preferred Customers by Market As of ------------------------------------- 28-Jun-03 3-Jul-04 ------------------ ------------------ (Unaudited) (Unaudited) Region United States 30,000 60.0% 36,000 61.0% Canada 15,000 30.0% 16,000 27.1% Australia-New Zealand 4,000 8.0% 5,000 8.5% Hong Kong 1,000 2.0% 1,000 1.7% Japan (a) 0.0% (a) 0.0% Taiwan (a) 0.0% 1,000 1.7% Korea - 0.0% (a) 0.0% Singapore - 0.0% (a) 0.0% Mexico - 0.0% (a) 0.0% ---------- ------- ---------- ------- 50,000 100.0% 59,000 100.0% ========== ======= ========== ======= (a) Count of Active Preferred Customers is less than 500. CONTACT: USANA Health Sciences Inc., Salt Lake City Riley Timmer, 801-954-7100 investor.relations@us.usana.com