Exhibit 99
USANA Reports 16th Consecutive Quarter of Record Net Sales;
Q2 Net Sales Reached $93.9 Million; EPS of $0.55
($0.59 Excluding Equity-Based Compensation Expense)
SALT LAKE CITY--(BUSINESS WIRE)--July 18, 2006--USANA Health
Sciences Inc. (NASDAQ: USNA) today announced record net sales for the
fiscal second quarter of 2006 (ended July 1). Consolidated net sales
in the second quarter of 2006 increased 14.5% to $93.9 million,
compared with $82.0 million in the second quarter of the prior year.
This is the highest level of quarterly sales recorded in the company's
history. Net sales growth for the second quarter of 2006 was driven
primarily by a 13.6% increase in the number of Active Associates,
compared with the second quarter of the prior year.
Financial Performance
Earnings from operations in the second quarter of 2006 grew 4.1%
to $15.4 million, or 16.4% of net sales, compared with $14.7 million,
or 18.0% of net sales, in the second quarter of the prior year.
Earnings from operations in the second quarter of 2006 were reduced by
$1.2 million due to the required expensing of equity-based
compensation. The company achieved net earnings in the second quarter
of 2006 of $10.3 million, an increase of 8.4%, compared with net
earnings of $9.5 million in the second quarter of the prior year.
Excluding the expense of equity-based compensation, this increase in
net earnings would have been 17.0%. Earnings per share in the second
quarter of 2006 improved to $0.55 per share, an increase of 14.6%,
compared with $0.48 per share in the second quarter of the prior year.
Excluding the expense of equity-based compensation, this increase in
earnings per share would have been 22.9%.
During the second quarter of 2006, the company's estimated tax
rate was adjusted on a year-to-date basis to 34.8%, which is lower
than the 35.5% 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 $0.01. During the second quarter, the
company, through its share buyback program, purchased and retired
approximately 800,000 shares with an investment of $30.1 million.
Approximately $10.7 million remains available under the current share
buyback authorization.
For the six-month period ended July 1, 2006, consolidated net
sales were $183.6 million, an increase of 15.7%, compared with $158.6
million in the first six months of 2005. Earnings from operations for
the first six months of 2006 were $29.9 million, an increase of 5.5%,
compared with $28.3 million for the same period in 2005. Earnings from
operations for the first six months of 2006 were reduced by $2.2
million due to the required expensing of equity-based compensation.
The company achieved net earnings in the first six months of 2006 of
$19.9 million, an increase of 7.8%, compared with net earnings of
$18.5 million in the first six months of 2005. Excluding the expense
of equity-based compensation, this increase in net earnings would have
been 15.9%. Earnings per share increased 11.8% in the first six months
of 2006 to $1.04, compared with $0.93 in the first six months of 2005.
Excluding the expense of equity-based compensation, this increase in
earnings per share would have been 20.4%.
"We are pleased with our strong sales results which continue to be
driven by our consistent growth of Active Associates," said Dave
Wentz, president of USANA. "In North America, second quarter sales
grew by 19%, compared with last year. We believe this growth in our
most mature region reflects the continued interest in our products and
the business opportunity that USANA offers its Associates. The
engagement and effort of our Associate leaders in North America has
been one of the driving forces behind this success. Additionally,
interest in our low-glycemic, macro optimizer products remained strong
and was a growth driver in the second quarter, as this product group
reached 14.1% of product sales."
Regional Results
Net sales in North America, the company's most mature region,
increased 19.0%, compared with the second quarter of 2005. Excluding
the positive impact of currency fluctuations, this sales increase
would have been 15.8%. This growth was driven by particularly strong
sales in the United States, the company's largest market, and in
Canada. Sales during the second quarter were up 20.4% in the United
States, and up 17.8% in Canada, compared with the second quarter of
last year. Mexico also aided the growth in this region, improving
11.8% over the second quarter of last year. The number of Active
Associates in North America increased 16.9% to 90,000, compared with
77,000 in the second quarter of 2005.
In the Pacific Rim region, net sales improved 4.8% over the second
quarter of last year. Excluding the negative impact of currency
fluctuations, this sales increase would have been 7.7%. This increase
was primarily attributable to growth in the Australia-New Zealand
market, which was up 9.3%, and in South Korea, which was up 33.2%,
over the second quarter of last year. The number of Active Associates
in the Pacific Rim region increased 8.3% to 52,000, compared with
48,000 in the second quarter of 2005. "During the second quarter, we
achieved 8.5% sequential quarterly sales growth in the Pacific Rim,
which was the strongest increase achieved in that region in the last
four quarters," continued Wentz. "We remain very optimistic about our
growth prospects in this region, as we continue to focus on providing
science-based products and a unique home-based business opportunity."
Outlook
The company continues to wait for government approval for its
business license in its planned new market. Due to the uncertainty of
obtaining this license, the company has decided to remove any
potential revenue in that market from its 2006 guidance.
"We are updating our full year guidance and issuing third quarter
guidance, neither of which includes any sales from our planned new
market," said Gilbert A. Fuller, executive vice president and chief
financial officer. "Accordingly, we expect net sales in the third
quarter of 2006 to be in the range of $94 million to $96 million,
compared with $82.2 million in the third quarter of last year, a
growth rate of 14% to 17%. We expect earnings per share in the third
quarter of 2006 to be between $0.55 and $0.57, including the
adjustment for expensing of equity-based compensation, a growth rate
of 8% to 12%. Excluding the expensing of equity-based compensation, we
expect earnings per share in the third quarter of 2006 to be between
$0.60 and $0.62, a growth rate of 18% to 22%.
"For the full year 2006," continued Fuller, "excluding entry into
a new market, we now believe that net sales growth will range between
15% and 17%, compared with 2005. Additionally, we expect earnings per
share growth for the full year 2006 to be between 17% and 20%,
excluding the impact of expensing equity-based compensation. We expect
equity-based compensation to decrease our earnings per share for the
full year 2006 by approximately $0.18. This earnings per share
estimate also assumes a tax rate for 2006 of 34.8%, compared with the
33.7% tax rate for 2005. While we are disappointed that the opening of
our new market has taken longer than planned, we are pleased with our
ability to continue to generate strong growth in our existing markets.
We continue to believe that we are well-positioned to capitalize on
excellent long-term growth opportunities, both in new and existing
markets," concluded Fuller.
Conference Call
USANA will hold a conference call and webcast to discuss this
announcement with investors on Wednesday, July 19, 2006, at 11 a.m.
EST. 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 nutritionals,
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. 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 these forward-looking statements, which involve a
number of risks and uncertainties, including reliance upon our network
of independent Associates, the governmental regulation of our
products, manufacturing and marketing risks, and risks associated with
our international expansion. The contents of this release should be
considered in conjunction with the risk factors, warnings, and
cautionary statements that are contained in our 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
--------------------- ----------------------
2-Jul-05 1-Jul-06 2-Jul-05 1-Jul-06
---------- ---------- ---------- -----------
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Net sales $82,015 $93,911 $158,593 $183,562
Cost of sales 19,499 22,276 37,509 43,614
---------- ---------- ---------- -----------
Gross profit 62,516 71,635 121,084 139,948
Operating expenses
Associate incentives 31,911 37,454 61,461 72,882
Selling, general and
administrative 15,168 17,991 30,017 35,617
Research and
development 689 830 1,288 1,562
---------- ---------- ---------- -----------
Earnings from
operations 14,748 15,360 28,318 29,887
Other income (expense) (67) 336 98 631
---------- ---------- ---------- -----------
Earnings before
income taxes 14,681 15,696 28,416 30,518
Income taxes 5,138 5,352 9,945 10,614
---------- ---------- ---------- -----------
NET EARNINGS $9,543 $10,344 $18,471 $19,904
========== ========== ========== ===========
Earnings per share -
diluted $0.48 $0.55 $0.93 $1.04
========== ========== ========== ===========
Weighted average shares
outstanding - diluted 19,821 18,884 19,896 19,056
========== ========== ========== ===========
USANA Health Sciences Inc.
Consolidated Balance Sheets
(in thousands)
As of As of
31-Dec-05 1-Jul-06
--------- -----------
(Unaudited)
ASSETS
Cash and cash equivalents $10,579 $9,173
Inventories 22,223 20,458
Other current assets 9,028 8,580
--------- -----------
Total current assets 41,830 38,211
Property and equipment, net 23,302 23,777
Goodwill 5,690 5,690
Other assets 2,886 2,612
--------- -----------
Total assets $73,708 $70,290
========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $4,955 $6,303
Other current liabilities 21,601 24,479
--------- -----------
Total current liabilities 26,556 30,782
Other long-term liabilities 1,414 69
Stockholders' equity 45,738 39,439
--------- -----------
Total liabilities and stockholders' equity $73,708 $70,290
========= ===========
USANA Health Sciences Inc.
Sales by Segment and Region
(in thousands)
Quarter Ended
-------------------------------
2-Jul-05 1-Jul-06
-------------------------------
(Unaudited) (Unaudited)
Region
- ------
North America
United States $33,067 40.3% $39,818 42.4%
Canada 15,287 18.6% 18,010 19.2%
Mexico 3,910 4.8% 4,373 4.6%
-------------------------------
North America Total 52,264 63.7% 62,201 66.2%
Pacific Rim
Australia-New Zealand 11,241 13.7% 12,291 13.1%
Hong Kong 3,377 4.1% 3,480 3.7%
Japan 2,620 3.2% 2,417 2.6%
Taiwan 5,381 6.6% 5,034 5.4%
South Korea 1,323 1.6% 1,762 1.9%
Singapore 3,606 4.4% 3,892 4.1%
-------------------------------
Pacific Rim Total 27,548 33.6% 28,876 30.8%
-------------------------------
Segment Total 79,812 97.3% 91,077 97.0%
-------------------------------
Contract Manufacturing 2,203 2.7% 2,834 3.0%
-------------------------------
Consolidated $82,015 100.0% $93,911 100.0%
===============================
Active Associates by Region
As of
-------------------------------
2-Jul-05 1-Jul-06
-------------------------------
(Unaudited) (Unaudited)
Region
- ------
North America
United States 46,000 36.8% 57,000 40.1%
Canada 22,000 17.6% 23,000 16.2%
Mexico 9,000 7.2% 10,000 7.1%
-------------------------------
North America Total 77,000 61.6% 90,000 63.4%
Pacific Rim
Australia-New Zealand 16,000 12.8% 18,000 12.7%
Hong Kong 5,000 4.0% 6,000 4.2%
Japan 4,000 3.2% 4,000 2.8%
Taiwan 12,000 9.6% 13,000 9.2%
South Korea 2,000 1.6% 2,000 1.4%
Singapore 9,000 7.2% 9,000 6.3%
-------------------------------
Pacific Rim Total 48,000 38.4% 52,000 36.6%
-------------------------------
Total 125,000 100.0% 142,000 100.0%
===============================
Active Preferred Customers by Region
As of
-------------------------------
2-Jul-05 1-Jul-06
-------------------------------
(Unaudited) (Unaudited)
Region
- ------
North America
United States 41,000 62.1% 48,000 64.0%
Canada 18,000 27.3% 18,000 24.0%
Mexico 1,000 1.5% 2,000 2.7%
-------------------------------
North America Total 60,000 90.9% 68,000 90.7%
Pacific Rim
Australia-New Zealand 5,000 7.6% 6,000 8.0%
Hong Kong (a) 0.0% (a) 0.0%
Japan 1,000 1.5% 1,000 1.3%
Taiwan (a) 0.0% (a) 0.0%
South Korea (a) 0.0% (a) 0.0%
Singapore (a) 0.0% (a) 0.0%
-------------------------------
Pacific Rim Total 6,000 9.1% 7,000 9.3%
-------------------------------
Total 66,000 100.0% 75,000 100.0%
===============================
(a) Count of Active Preferred Customers is less than 500.
CONTACT: USANA Health Sciences Inc.
Riley Timmer, 801-954-7100 (Investor Relations)
investor.relations@us.usana.com