Edgar Filing: USANA HEALTH SCIENCES INC

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-21116

USANA HEALTH SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Utah		87-0500306
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

3838 West Parkway Blvd., Salt Lake City, Utah 84120

(Address of principal executive offices, Zip Code)

(801) 954-7100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares outstanding of the registrant’s common stock as of November 1, 2013 was 13,872,365.

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USANA HEALTH SCIENCES, INC.

FORM 10-Q

For the Quarterly Period Ended September 28, 2013

INDEX

		Page

PART I. FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Comprehensive Income — Quarter Ended	4
	Condensed Consolidated Statements of Comprehensive Income — Nine Months Ended	5
	Condensed Consolidated Statement of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8-13
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14-23
Item 3	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4	Controls and Procedures	24

PART II. OTHER INFORMATION

Item 6	Exhibits	25-26

Signatures		27

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)

	As of		As of
	December 29,		September 28,
	2012		2013

ASSETS
Current assets
Cash and cash equivalents	$	70,839	$	115,349
Inventories	36,481		45,671
Prepaid expenses and other current assets	25,225		35,105
Total current assets	132,545		196,125

Property and equipment, net	61,751		60,432

Goodwill	17,890		18,105
Intangible assets, net	42,085		42,078
Deferred tax assets	5,956		3,562
Other assets	7,128		11,031
	$	267,355	$	331,333


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	7,040	$	8,061
Other current liabilities	63,804		74,474
Total current liabilities	70,844		82,535

Deferred tax liabilities	10,001		9,022
Other long-term liabilities	938		1,127

Stockholders’ equity
Common stock, $0.001 par value; Authorized — 50,000 shares, issued and outstanding 13,821 as of December 29, 2012 and 13,860 as of September 28, 2013	14		14
Additional paid-in capital	43,822		52,848
Retained earnings	134,800		179,741
Accumulated other comprehensive income	6,936		6,046
Total stockholders’ equity	185,572		238,649
	$	267,355	$	331,333

The accompanying notes are an integral part of these statements.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

	Quarters Ended
	September 29,			September 28,
	2012			2013

Net sales	$	165,175		$	173,691
Cost of sales	30,343			31,491

Gross profit	134,832			142,200

Operating expenses:
Associate incentives	70,406			76,361
Selling, general and administrative	40,342			41,145

Total operating expenses	110,748			117,506

Earnings from operations	24,084			24,694

Other income (expense):
Interest income	64			119
Other, net	203			(43		)

Other income (expense), net	267			76

Earnings before income taxes	24,351			24,770

Income taxes	6,861			8,017

Net earnings	$	17,490		$	16,753

Earnings per common share
Basic	$	1.22		$	1.22
Diluted	$	1.18		$	1.16

Weighted average common shares outstanding
Basic	14,365			13,751
Diluted	14,884			14,393

Comprehensive income:

Net earnings	$	17,490		$	16,753

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	1,312			1,371
Tax benefit (expense) related to foreign currency translation adjustment	(402		)	(552		)

Other comprehensive income (loss), net of tax	910			819

Comprehensive income	$	18,400		$	17,572

The accompanying notes are an integral part of these statements.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

	Nine Months Ended
	September 29,			September 28,
	2012			2013

Net sales	$	480,196		$	531,909
Cost of sales	85,633			93,657

Gross profit	394,563			438,252

Operating expenses:
Associate incentives	209,316			224,017
Selling, general and administrative	115,150			126,527

Total operating expenses	324,466			350,544

Earnings from operations	70,097			87,708

Other income (expense):
Interest income	173			278
Other, net	4			(311		)

Other income (expense), net	177			(33		)

Earnings before income taxes	70,274			87,675

Income taxes	22,288			28,933

Net earnings	$	47,986		$	58,742

Earnings per common share
Basic	$	3.27		$	4.31
Diluted	$	3.19		$	4.16

Weighted average common shares outstanding
Basic	14,673			13,636
Diluted	15,064			14,132

Comprehensive income:

Net earnings	$	47,986		$	58,742

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	1,156			(1,070		)
Tax benefit (expense) related to foreign currency translation adjustment	(334		)	180

Other comprehensive income (loss), net of tax	822			(890		)

Comprehensive income	$	48,808		$	57,852

The accompanying notes are an integral part of these statements.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Nine Months Ended September 28, 2013

(in thousands)

(unaudited)

											Accumulated
					Additional						Other
	Common Stock				Paid-in			Retained			Comprehensive
	Shares		Value		Capital			Earnings			Income (Loss)			Total

Balance at December 29, 2012	13,821		$	14	$	43,822		$	134,800		$	6,936		$	185,572
Net earnings								58,742						58,742
Other comprehensive income (loss), net of tax											(890		)	(890		)
Equity-based compensation expense					6,113									6,113
Common stock repurchased and retired	(414	)			(4,284		)	(13,801		)				(18,085		)
Common stock issued under equity award plans, including tax benefit of $6,769	453				7,223									7,223
Tax impact of canceled vested equity awards					(26		)							(26		)

Balance at September 28, 2013	13,860		$	14	$	52,848		$	179,741		$	6,046		$	238,649

The accompanying notes are an integral part of these statements.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended
	September 29,			September 28,
	2012			2013

Cash flows from operating activities
Net earnings	$	47,986		$	58,742
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization	6,608			6,870
(Gain) loss on sale of property and equipment	(106		)	(23		)
Equity-based compensation expense	8,184			6,113
Excess tax benefits from equity-based payment arrangements	(2,779		)	(7,570		)
Common stock awarded to Associates	100			—
Deferred income taxes	2,255			1,196
Changes in operating assets and liabilities:
Inventories, net	4,462			(9,999		)
Prepaid expenses and other assets	(9,223		)	(9,153		)
Accounts payable	(1,063		)	1,048
Other liabilities	7,199			17,369

Net cash provided by operating activities	63,623			64,593

Cash flows from investing activities
Increase in notes receivable	—			(3,363		)
Proceeds from sale of property and equipment	148			47
Purchases of property and equipment	(6,811		)	(6,306		)

Net cash used in investing activities	(6,663		)	(9,622		)

Cash flows from financing activities
Proceeds from equity awards exercised	309			454
Excess tax benefits from equity-based payment arrangements	2,779			7,570
Repurchase of common stock	(35,501		)	(18,085		)
Borrowings on line of credit	1,842			—
Payments on line of credit	(599		)	—

Net cash used in financing activities	(31,170		)	(10,061		)

Effect of exchange rate changes on cash and cash equivalents	458			(400		)

Net increase in cash and cash equivalents	26,248			44,510

Cash and cash equivalents, beginning of period	50,353			70,839

Cash and cash equivalents, end of period	76,601			115,349

Supplemental disclosures of cash flow information

Cash paid during the period for:
Interest	$	11		$	—
Income taxes	25,008			25,554

The accompanying notes are an integral part of these statements.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

(unaudited)

NOTE A — ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION

USANA Health Sciences, Inc. develops and manufactures high-quality nutritional and personal care products that are sold internationally through a global network marketing system, which is a form of direct selling. The Consolidated Financial Statements include the accounts and operations of USANA Health Sciences, Inc. and its wholly-owned subsidiaries (collectively, the “Company” or “USANA”) in two geographic regions: Americas and Europe and Asia Pacific, which is further divided into three sub-regions; Southeast Asia Pacific, Greater China, and North Asia. Americas and Europe includes the United States, Canada, Mexico, Colombia, the United Kingdom, France, Belgium, and the Netherlands. Southeast Asia Pacific includes Australia, New Zealand, Singapore, Malaysia, the Philippines, and Thailand; Greater China includes Hong Kong, Taiwan and China; and North Asia includes Japan and South Korea. All significant intercompany accounts and transactions have been eliminated in this consolidation.

The condensed balance sheet as of December 29, 2012, derived from audited financial statements, and the unaudited interim consolidated financial information of the Company have been prepared in accordance with Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission. Certain information and footnote disclosures that are normally included in financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying interim consolidated financial information contains all adjustments, consisting of normal recurring adjustments that are necessary to state fairly the Company’s financial position as of September 28, 2013 and results of operations for quarters and nine months ended September 29, 2012 and September 28, 2013. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2012. The results of operations for the quarters and nine months ended September 28, 2013, may not be indicative of the results that may be expected for the fiscal year 2013 ending December 28, 2013.

NOTE B — INTANGIBLE ASSETS

Goodwill and indefinite-lived intangible assets are tested annually for impairment, or more frequently if impairment indicators are present. Such indicators of impairment include, but are not limited to, changes in business climate, and operating or cash flow losses related to such assets. Goodwill and indefinite lived intangible assets are not amortized. Definite lived intangibles are amortized over their related useful lives.

During the third quarter of 2013, the annual test for impairment was performed. The result of this test indicated that there was not an impairment of the value of goodwill or indefinite-lived intangible assets for any reporting unit.

NOTE C — CONTINGENCIES

The Company is involved in various lawsuits, claims, investigations and other legal matters from time to time that arise in the ordinary course of conducting business, including matters involving our products, intellectual property, relationships with suppliers, distributors, relationships with competitors, employees and other matters. While complete assurance cannot be given to the outcome of these proceedings, management does not currently believe that any of these matters, individually or in the aggregate, will have a material adverse effect on our financial condition, liquidity or results of operations.

On July 23, 2013, the Company disclosed that the Securities and Exchange Commission is conducting a formal investigation, which appears to involve possible issues regarding trading in the Company’s stock during late 2012 by certain of the Company’s directors, including the Chairman. The Company, as well as certain of its directors and executives, have received subpoenas from the SEC to produce documents related to this matter. The Company and its directors are cooperating with the SEC in this matter. In the opinion of management, based upon advice of counsel, the likelihood of an adverse outcome against the Company in this matter is remote. As such, management believes that the ultimate outcome of the SEC investigation will not have a material impact on the Company’s financial position or results of operations.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE D —LONG-TERM DEBT AND LINE OF CREDIT

The Company has a line of credit with Bank of America. Interest is computed at the bank’s Prime Rate or LIBOR, adjusted by features specified in the Credit Agreement. The collateral for this line of credit is the pledge of the capital stock of certain subsidiaries of the Company, set forth in a separate pledge agreement with the bank. On July 18, 2013, the Company entered into an amended credit agreement, which increased the amount that it may borrow under the credit facility to $75,000. The only other modification to the amended credit agreement was that any new or existing bank guarantees are considered a reduction of the overall availability of credit and part of the covenant calculation. This resulted in a $3,400 reduction in the available borrowing limit in the third quarter of 2013 due to existing normal course of business guarantees in certain markets. The Credit Agreement contains restrictive covenants based on adjusted EBITDA and a debt coverage ratio.

There was no outstanding debt on this line of credit at December 29, 2012 or at September 28, 2013. The Company will be required to pay any balance on this line of credit in full at the time of maturity in April 2016 unless the line of credit is replaced or terms are renegotiated.

NOTE E — INVENTORIES

Inventories consist of the following:

	December 29,		September 28,
	2012		2013

Raw materials	$	9,228	$	12,142
Work in progress	7,703		7,771
Finished goods	19,550		25,758

	$	36,481	$	45,671

NOTE F — COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per share are based on the weighted-average number of shares outstanding for each period. Shares that have been repurchased and retired during the periods specified below have been included in the calculation of the number of weighted-average shares that are outstanding for the calculation of basic earnings per share based on the time they were outstanding in any period. Diluted earnings per common share are based on shares that are outstanding (computed under basic EPS) and on potentially dilutive shares. Shares that are included in the diluted earnings per share calculations under the treasury stock method include equity awards that are in-the-money but have not yet been exercised.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE F — COMMON STOCK AND EARNINGS PER SHARE — CONTINUED

The following is a reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share for the periods indicated:

	Quarter Ended
	September 29,			September 28,
	2012			2013

Net earnings available to common shareholders	$	17,490		$	16,753

Basic EPS

Shares
Common shares outstanding entire period	14,940			13,821
Weighted average common shares:
Issued during period	229			344
Canceled during period	(804		)	(414		)

Weighted average common shares outstanding during period	14,365			13,751


Earnings per common share from net earnings - basic	$	1.22		$	1.22

Diluted EPS

Shares
Weighted average common shares outstanding during period - basic	14,365			13,751

Dilutive effect of in-the-money equity awards	519			642

Weighted average common shares outstanding during period - diluted	14,884			14,393


Earnings per common share from net earnings - diluted	$	1.18		$	1.16

Equity awards for 522 and 15 shares of stock were not included in the computation of diluted EPS for the quarters ended September 29, 2012, and September 28, 2013, respectively, due to the fact that their effect would be anti-dilutive.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE F — COMMON STOCK AND EARNINGS PER SHARE — CONTINUED

	Nine Months Ended
	September 29,			September 28,
	2012			2013

Net earnings available to common shareholders	$	47,986		$	58,742

Basic EPS

Shares
Common shares outstanding entire period	14,940			13,821
Weighted average common shares:
Issued during period	107			154
Canceled during period	(374		)	(339		)

Weighted average common shares outstanding during period	14,673			13,636


Earnings per common share from net earnings - basic	$	3.27		$	4.31

Diluted EPS

Shares
Weighted average common shares outstanding during period - basic	14,673			13,636

Dilutive effect of in-the-money equity awards	391			496

Weighted average common shares outstanding during period - diluted	15,064			14,132


Earnings per common share from net earnings - diluted	$	3.19		$	4.16

Equity awards for 1,357 and 445 shares of stock were not included in the computation of diluted EPS for the nine months ended September 29, 2012, and September 28, 2013, respectively, due to the fact that their effect would be anti-dilutive.

The Company has a stock repurchase plan in place that has been authorized by the Board of Directors. During the first nine months of 2012, the Company repurchased and retired 877 shares of common stock for a total of $35,501, at an average market price of $40.48 per share. During the first nine months of 2013, the Company repurchased and retired 414 shares of common stock for a total investment of $18,085, at an average market price of $43.68 per share. The excess of the repurchase price over par value is allocated between additional paid-in capital and retained earnings on a pro-rata basis. As of September 28, 2013, the remaining approved repurchase amount under the stock repurchase plan was $13,622. There currently is no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE G — SEGMENT INFORMATION

USANA operates as a direct selling company that develops, manufactures, and distributes high-quality nutritional and personal care products that are sold through a global network marketing system of independent distributors (“Associates”). As such, management aggregates its operating segments into one reportable segment as management believes that the Company’s segments exhibit similar long-term financial performance and have similar economic characteristics. Performance for a region or market is evaluated based on sales. No single Associate accounted for 10% or more of net sales for the periods presented. The table below summarizes the approximate percentage of total product revenue that has been contributed by the Company’s nutritional and personal care products for the periods indicated.

	Quarter Ended				Nine Months Ended
	September 29,		September 28,		September 29,		September 28,
	2012		2013		2012		2013

USANA® Nutritionals	80	%	79	%	79	%	80	%
USANA Foods	12	%	13	%	12	%	12	%
Sensé — beautiful science®	6	%	6	%	7	%	6	%

Selected financial information for the Company is presented for two geographic regions: Americas and Europe and Asia Pacific, with three sub-regions under Asia Pacific. Individual markets are categorized into these regions as follows:

· Americas and Europe — United States, Canada, Mexico, Colombia (1), the United Kingdom, France (2), Belgium (2), and the Netherlands.

· Asia Pacific —

· Southeast Asia Pacific — Australia, New Zealand, Singapore, Malaysia, the Philippines, and Thailand (2)

· Greater China — Hong Kong, Taiwan and China(3)

· North Asia — Japan and South Korea

(1) The Company commenced operations in Colombia at the beginning of the third quarter of 2013

(2) The Company commenced operations in Thailand, France, and Belgium at the end of the first quarter 2012.

(3) The Company’s business in China is that of BabyCare, its wholly-owned subsidiary.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE G — SEGMENT INFORMATION - CONTINUED

Selected Financial Information

Financial information by geographic region is presented for the periods indicated below:

	Quarter Ended				Nine Months Ended
	September 29,		September 28,		September 29,		September 28,
	2012		2013		2012		2013

Net Sales to External Customers

Americas and Europe	$	62,490	$	66,294	$	183,586	$	197,215
Asia Pacific
Southeast Asia Pacific	35,709		40,230		102,232		113,014
Greater China	59,722		59,768		173,127		200,141
North Asia	7,254		7,399		21,251		21,539
Asia Pacific Total	102,685		107,397		296,610		334,694

Consolidated Total	$	165,175	$	173,691	$	480,196	$	531,909

The following table provides further information on markets representing ten percent or more of consolidated net sales and long-lived assets, respectively:

	Quarter Ended				Nine Months Ended
	September 29,		September 28,		September 29,		September 28,
	2012		2013		2012		2013

Net sales:
Hong Kong	$	44,944	$	21,554	$	132,298	$	109,089
United States	39,991		39,282		115,577		118,329
China	N/A		29,788		N/A		66,772

	As of
	December 29,		September 28,
	2012		2013
Long-lived Assets:
China	$	59,130	$	60,827
United States	46,559		48,969
Australia	15,121		13,324

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of USANA’s financial condition and results of operations is presented in six

sections:

· Overview

· Customers

· Current Focus and Recent Developments

· Results of Operations

· Liquidity and Capital Resources

· Forward-Looking Statements and Certain Risks

This discussion and analysis should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and Notes thereto that are contained in this quarterly report, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations that are included in our Annual Report on Form 10-K for the year ended December 29, 2012, and our other filings, including Current Reports on Form 8-K, that have been filed with the Securities and Exchange Commission (“SEC”) through the date of this report.

Overview

We develop and manufacture high-quality, science-based nutritional and personal care products that are distributed internationally through a network marketing system, which is a form of direct selling. Our customer base is comprised of two types of customers: “Associates” and “Preferred Customers.” Associates are independent distributors of our products who also purchase our products for their personal use. Preferred Customers purchase our products strictly for their personal use and are not permitted to resell or to distribute the products. As of September 28, 2013, we had approximately 245,000 active Associates and approximately 71,000 active Preferred Customers worldwide. For purposes of this report, we only count as active customers those Associates and Preferred Customers who have purchased from us at any time during the most recent three-month period, either for personal use or for resale.

We have ongoing operations in the following markets, which are grouped and presented as follows:

· Americas and Europe — United States, Canada, Mexico, Colombia(1), the United Kingdom, France(2), Belgium(2), and the Netherlands

· Asia Pacific

· Southeast Asia Pacific — Australia, New Zealand, Singapore, Malaysia, the Philippines, and Thailand(2)

· Greater China — Hong Kong, Taiwan, and China (3)

· North Asia — Japan and South Korea

(1) We commenced operations in Colombia at the beginning of the third quarter of 2013.

(2) We commenced operations in Thailand, France, and Belgium at the end of the first quarter of 2012.

(3) Our business in China is that of BabyCare, our wholly-owned subsidiary.

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Our primary product lines consist of USANAâ Nutritionals, USANA Foods, and Sensé — beautiful scienceâ (Sensé), which is our line of personal care products. The USANA Nutritionals product line is further categorized into two separate classifications: Essentials and Optimizers. The following tables summarize the approximate percentage of total product revenue that has been contributed by our major product lines and our top-selling products for the current and prior-year periods indicated:

	Nine Months Ended
	September 29,		September 28,
Product Line	2012		2013
USANA® Nutritionals
Essentials	28	%	27	%
Optimizers	51	%	53	%
USANA Foods	12	%	12	%
Sensé — beautiful science®	7	%	6	%
All Other	2	%	2	%

Key Product
USANA® Essentials	18	%	18	%
Proflavanol®	12	%	12	%

Other top-selling products include our BiOmega-3™, HealthPak 100™, and CoQuinone® 30.

We believe that our ability to attract and retain Associates and Preferred Customers to sell and consume our products is positively influenced by a number of factors. Some of these factors include: the general public’s heightened awareness and understanding of the connection between diet and long-term health, the aging of the worldwide population as older people generally tend to consume more nutritional supplements, and the growing desire for a secondary source of income or small business ownership.

We believe that our high-quality products and our financially rewarding Associate Compensation Plan are the key components to attracting and retaining Associates. We strive to ensure that our products are formulated with the latest science in nutrition research and to keep our product lines relatively compact, which we believe simplifies the selling and buying process for our Associates and Preferred Customers. We also periodically make changes to our Compensation Plan in an effort to ensure that our plan is among the most rewarding in the industry, to encourage behavior that we believe leads to a more successful business for our Associates, and to ensure that our plan provides us with leverage to grow sales and earnings. For example, during the second quarter of 2012 we modified the Matching Bonus component of our Compensation Plan, changing it from a short-term incentive to a long-term incentive. We now refer to this bonus as our Lifetime Matching Bonus, which was fully phased in during the fourth quarter of 2012. Further, during the third quarter of 2013 we made several enhancements to our Compensation Plan, which are designed to simplify the plan and make it more rewarding for both new and established Associates. These enhancements are discussed further under the Recent Developments section. We believe that the changes we have made to our Compensation Plan over the last two years will help facilitate long-term growth for both our Associates and the Company.

To further support our Associates in building their businesses, we sponsor meetings and events throughout the year, which offer information about our products and our network marketing system. These meetings are designed to assist Associates in their business development and to provide a forum for interaction with our Associate leaders and members of our management team. We also provide low cost sales tools, including online sales, business management, and training tools, which we believe are an integral part of building and maintaining a successful home-based business for our Associates. Although we provide training and sales tools, we ultimately rely on our Associates to sell our products, attract new customers to purchase our products, and educate and train new Associates.

Because we have operations in multiple markets, with sales and expenses being generated and incurred in multiple currencies, our reported U.S. dollar sales and earnings can be significantly affected by fluctuations in currency exchange rates. In general, net sales and gross profit are affected positively by a weakening of the U.S. dollar and negatively by a strengthening of the U.S. dollar. Currency

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fluctuations, however, have the opposite effect on our Associate incentives and selling, general and administrative expenses. During the nine months ended September 28, 2013, net sales outside of the United States represented approximately 78% of consolidated net sales. In our net sales discussions that follow, we approximate the impact of currency fluctuations on net sales by translating current year sales at the average exchange rates in effect during the comparable periods of the prior year.

Customers

Because we utilize a direct selling model for the distribution of our products, the success and growth of our business is primarily based on our ability to attract new Associates and retain existing Associates to sell and consume our products. Notably, sales to Associates account for the majority of our product sales, representing 91% of product sales during the nine months ended September 28, 2013. Additionally, it is important to attract and retain Preferred Customers as consumers of our products. Increases or decreases in product sales are typically the result of variations in product sales volumes relating to fluctuations in the number of active Associates and Preferred Customers purchasing our products. The number of active Associates and Preferred Customers is, therefore, used by management as a key non-financial measure.

The tables below summarize the changes in our active customer base by geographic region. These numbers have been rounded to the nearest thousand as of the dates indicated.

Active Associates By Region

	As of			As of			Change from		Percent
	September 29, 2012			September 28, 2013			Prior Year		Change
Americas and Europe	79,000	32.6	%	82,000	33.5	%	3,000		3.8	%

Asia Pacific:
Southeast Asia Pacific	58,000	24.0	%	60,000	24.4	%	2,000		3.4	%
Greater China	97,000	40.1	%	94,000	38.4	%	(3,000	)	(3.1	)%
North Asia	8,000	3.3	%	9,000	3.7	%	1,000		12.5	%
Asia Pacific Total	163,000	67.4	%	163,000	66.5	%	—		0.0	%

	242,000	100.0	%	245,000	100.0	%	3,000		1.2	%

Preferred Customers By Region

	As of			As of			Change from		Percent
	September 29, 2012			September 28, 2013			Prior Year		Change
Americas and Europe	52,000	81.2	%	58,000	81.7	%	6,000		11.5	%

Asia Pacific:
Southeast Asia Pacific	6,000	9.4	%	8,000	11.3	%	2,000		33.3	%
Greater China	5,000	7.8	%	3,000	4.2	%	(2,000	)	(40.0	)%
North Asia	1,000	1.6	%	2,000	2.8	%	1,000		100.0	%
Asia Pacific Total	12,000	18.8	%	13,000	18.3	%	1,000		8.3	%

	64,000	100.0	%	71,000	100.0	%	7,000		10.9	%

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Current Focus and Recent Developments

Our primary objective, both on a short- and long-term basis, is to strengthen and grow our active customer counts throughout the world. To this end, we continue to execute our Personalization initiative and growth strategies in North America and Greater China, as well as introduce additional market-specific strategies in each of our regions.

We began the year with the implementation of a price reduction in several of our mature markets. This initiative was intended to make our products and business opportunity more equitable across all of our markets. As a follow-up to this pricing initiative, in the second quarter we implemented a worldwide policy, which focuses on cross-border purchasing by our customers. With the Internet allowing consumers to research and purchase products online, we have experienced cross-border purchasing by customers in various markets in an effort to get desired formulations, favorable pricing, and products that are not available in their home markets. We believe that it is in the best long-term interest of the Company, and our customers, to have customers focus on purchasing products that are approved and offered in their home market. As we anticipated, this policy negatively impacted our financial results by an estimated $5.9 million during the third quarter, with our Greater China region being impacted the most by these changes. While we believe that these policy changes will add pressure to our results in the short-term, we believe that they are essential to the long-term success of our Associates and the Company.

In August we held our 2013 Annual International Convention, where we announced and implemented several strategic changes to our business. These changes include (i) simplification of our pricing structure and Compensation Plan, (ii) a 10% price discount on products ordered through our monthly Auto Order program, (iii) a 10% reward from the amount of a customer’s initial product order credited on the subsequent two Auto Orders, and (iv) increased payout under our Compensation Plan. We increased the payout under our Compensation Plan in several ways, including: (i) paying higher compensation to newer Associates, (ii) increased compensation for Associates who grow their business through our Auto Order program, (iii) simplifying the commission qualification requirements under the plan, resulting in more Associates earning compensation with us, (iv) simplifying our rank advancement system to make it easier for Associates to advance in our business, and (v) adding new recognition benefits for Associate leaders. Although we anticipate that these changes will, in the short-term, create pressure on our operating results, we believe that they will be a catalyst to drive long-term growth in both customers and sales.

Finally, during the third quarter we continued our international expansion efforts by commencing operations in our newest market, Colombia. We believe that Colombia will be a solid contributor to our Americas region as well as an ideal entrance into South America.

Results of Operations

Summary of Financial Results

Net sales for the third quarter of 2013 increased 5.2%, or $8.5 million, compared with the third quarter of 2012. This increase in net sales for the quarter came from growth in both Southeast Asia Pacific and the Americas and Europe. In general, sales increases during the quarter were the combined result of a higher number of active Associates and Preferred Customers in several of our markets, and higher sales volume per Associate from an increased number of our Associate leaders who are actively selling our products and building sales organizations. Our newest market, Colombia, also contributed $1.4 million to net sales during the quarter. These improvements were partially offset by (i) the world-wide policy changes we implemented in the second quarter, which we estimate reduced net sales by $5.9 million, (ii) the 10% Auto Order discount discussed above, which reduced net sales by $3.1 million, (iii) currency fluctuations, which reduced net sales by $2.0 million, and (iv) price adjustments at our international convention and earlier this year, which reduced net sales by approximately $1.5 million.

Net earnings for the third quarter of 2013 decreased 4.2%, to $16.8 million, compared with the third quarter of 2012. This decrease was due primarily to higher Associate Incentives expense resulting from the enhancements that we made to our Compensation Plan in August, which included a one-time payment of approximately $4.5 million in connection with one of the changes, and a discount on all Auto Orders.

Going forward, we anticipate that (i) the 10% Auto Order discount will reduce net sales by approximately 4% in the short term, and (ii) Associate Incentives expense will approximate 43.5% of net sales.

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Quarters Ended September 29, 2012 and September 28, 2013

Net Sales

The following table summarizes the changes in our net sales by geographic region for the quarters ended as of the dates indicated:

	Net Sales by Region
	(in thousands)
	Quarter Ended								Change from		Percent
	September 29, 2012				September 28, 2013				Prior Year		Change
Americas and Europe	$	62,490	37.8	%	$	66,294	38.2	%	$	3,804	6.1	%

Asia Pacific:
Southeast Asia Pacific	35,709		21.6	%	40,230		23.2	%	4,521		12.7	%
Greater China	59,722		36.2	%	59,768		34.4	%	46		0.1	%
North Asia	7,254		4.4	%	7,399		4.2	%	145		2.0	%
Asia Pacific Total	102,685		62.2	%	107,397		61.8	%	4,712		4.6	%

	$	165,175	100.0	%	$	173,691	100.0	%	$	8,516	5.2	%

Americas and Europe: The net sales increase in this region was due to sales growth in every market, other than the United States where sales were essentially flat, and the addition of our newest market, Colombia. Net sales for the region were reduced by $1.5 million from the Auto Order discount discussed earlier in this report. Net sales in Canada increased year-over-year despite the price decreases implemented earlier this year and a negative impact from changes in currency exchange rates. The increase in net sales in Canada was due primarily to a 4.5% increase in the number of active Associates, and a 7.7% increase in the number of Preferred Customers. Net sales in Mexico increased 23.1% due to a 16.7% increase in the number of active Associates and a 25% increase in the number of active Preferred Customers.

Asia Pacific: The net sales increase in this region was driven by growth in Southeast Asia Pacific and was reduced by $1.6 million from Auto Order discounts. Net sales growth in Southeast Asia Pacific was driven by 110.1% growth in Singapore and 17.8% growth in Malaysia. Sales were nearly flat in Australia/New Zealand despite an estimated $2.6 million reduction due to price decreases implemented earlier this year, and the negative impact from changes in currency exchange rates. These improvements were the result of increased sales volume per Associate, as well as a 13.3% increase in the number of active Associates in Australia/New Zealand and a 50.0% increase in Singapore. Further, the number of active Preferred Customers increased 25.0% in Australia/New Zealand, and 100% in Singapore. Our results in Singapore also benefited by approximately $2.9 million from sales of our global MyHealthPak product as sales of this customizable product throughout our Asia Pacific region are serviced through Singapore. Sales in the Philippines were essentially flat and were negatively impacted by the typhoon and political unrest that occurred in this market during the quarter.

Sales in Greater China were essentially flat and included a 260% increase in China, and a 29.6% increase in Taiwan, both of which were offset by a large decrease in Hong Kong. These changes were reflective of changes in the number of active Associates in each of these markets. We believe that the world-wide policy changes that we introduced in the second quarter negatively impacted our results primarily in Hong Kong. While we believe that these policy changes will add pressure to our results in the short-term, we believe they are essential to the long-term success of our Associates and the Company.

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Gross Profit

Gross profit increased slightly to 81.9% of net sales for the third quarter of 2013 from 81.6% for the third quarter of 2012. This increase can primarily be attributed to production efficiencies related to higher production levels, favorable changes in product mix, and overall lower cost of raw materials. These benefits were partially offset by (i) the negative impact of changes in currency exchange rates, (ii) increased pressure on net sales related to price decreases at the beginning of the year and the Auto Order discount that was introduced in August, and (iii) higher freight costs.

Associate Incentives

Associate incentives increased 140 basis points to 44.0% of net sales for the third quarter of 2013 when compared with the third quarter of 2012. This increase was due to (i) the recent enhancements that we made to our Compensation Plan, which included a one-time payout of approximately $4.5 million due to a change in how we calculate Associate commissions, and (ii) the Auto Order discount. This increase was partially offset by a lower payout under our new Lifetime Matching Bonus program and decreased spending on contests and promotions. As previously mentioned, we expect Associate incentives expense to approximate 43.5% of net sales going forward.

Selling, General and Administrative Expenses

Selling, general and administrative expenses as a percentage of net sales decreased 70 basis points due to leverage gained on higher net sales, a decrease in spending on our 2013 Annual International Convention compared with 2012 when we celebrated our 20th Anniversary, and improved credit card discount rates.

In absolute terms, our selling, general and administrative expense increased $0.8 million due higher overall spending to support growing sales and spending associated with the launch of our Colombia operations.

Income Taxes

Our effective income tax rate during the third quarter of 2013 was 32.4%, compared with 28.2% in the third quarter of 2012. This increase was due to a one-time tax benefit from a prior-year tax return true-up recognized in the third quarter of 2012.

Diluted Earnings Per Share

Diluted earnings per share decreased 1.7%, while net earnings decreased 4.2%. The impact of decreased net earnings on diluted earnings per share was partially offset by a lower number of diluted shares outstanding, which was the result of share repurchases over the last twelve months.

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Nine Months Ended September 29, 2012 and September 28, 2013

Net Sales

The following table summarizes the changes in our net sales by geographic region for the periods ended as of the dates indicated:

	Net Sales by Region
	(in thousands)
	Nine Months Ended								Change from		Percent
	September 29, 2012				September 28, 2013				Prior Year		Change
Americas and Europe	$	183,586	38.2	%	$	197,215	37.1	%	$	13,629	7.4	%

Asia Pacific:
Southeast Asia Pacific	102,232		21.3	%	113,014		21.2	%	10,782		10.5	%
Greater China	173,127		36.1	%	200,141		37.6	%	27,014		15.6	%
North Asia	21,251		4.4	%	21,539		4.1	%	288		1.4	%
Asia Pacific Total	296,610		61.8	%	334,694		62.9	%	38,084		12.8	%

	$	480,196	100.0	%	$	531,909	100.0	%	$	51,713	10.8	%

Americas and Europe: The net sales increase in this region during the first nine months of 2013 included growth in most markets due to: (i) increased sales volume per Associate, (ii) growth in the average number of active Associates in Mexico where net sales increased $6.0 million, or 30.9%, and (iii) growth in the average number of active Preferred Customers. Net sales in Canada were nearly flat despite an estimated $4.6 million reduction due to price decreases implemented earlier this year.

Asia Pacific: The net sales increase in this region during the first nine months of 2013 was driven by growth in Greater China and Southeast Asia Pacific, which was primarily the result of an increase in the average number of active Associates in the first half of the year. The increase also included an estimated $7.0 million in incremental sales generated ahead of the worldwide policy changes that we implemented during the second quarter as previously discussed.

These improvements were partially offset by two events that contributed to sales during the first nine months of 2012 that did not occur in 2013, namely: (i) an estimated $11.0 million surge in sales ahead of price increases, and (ii) an estimated $4.0 million from the short-term promotion that we offered in connection with the introduction of our Lifetime Matching Bonus.

Gross Profit

Gross profit for the first nine months of 2013 increased slightly to 82.4% of net sales compared with 82.2% in the prior year. This increase can be attributed to production efficiencies, partially offset by the negative impact of a change in sales mix by market and added pressure from price changes that have taken place during 2013.

Associate Incentives

Associate incentives expense decreased 150 basis points to 42.1% of net sales for the first nine months of 2013 when compared with the same period of the prior year. This decrease was due to lower payout under our new Lifetime Matching Bonus program and lower spending on contests and promotion, partially offset by increased spending from the enhancements we made to our Compensation Plan in August, which included a one-time payout of approximately $4.5 million.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses as a percentage of net sales remained relatively flat in the first nine months of 2013 compared with the same period in 2012. In absolute terms, our selling, general and administrative expense increased $11.4 million. This increase is related to higher overall spending to support growing sales, with the largest increase coming from a $6.0 million increase in wages and benefits.

Income Taxes

Our effective income tax rate was 33.0% for the first nine months of 2013, compared with 31.7% for the same period in 2012. This increase was due to a one-time tax benefit from a prior-year tax return true-up recognized in 2012.

Diluted Earnings Per Share

Diluted earnings per share increased 30.4% during the first nine months of 2013 when compared with the same period in the prior year. This increase was due to higher net earnings and a lower number of diluted shares outstanding, which was the result of share repurchases by the Company over the last twelve months.

Liquidity and Capital Resources

We have historically met our working capital and capital expenditure requirements by using both net cash flow from operations and by drawing on our line of credit. Our principal source of liquidity is our operating cash flow. Although we are required to maintain cash deposits with banks in some of our markets, there are currently no material restrictions on our ability to transfer and remit available funds among our international markets. The repatriation of $7.7 million that relates to earnings considered indefinitely reinvested in certain of our markets would result in a tax liability to the Company.

Operating cash flow

We typically generate positive cash flow due to our strong operating margins. Net cash flow from operating activities totaled $64.6 million in the first nine months of 2013, compared with $63.6 million in the same period of the prior year. Items affecting year-over-year changes in cash flow from operating activities include: (i) higher net earnings, and (ii) changes in other liabilities during 2013, which resulted from an increase in accrued expenses due to higher sales and net earnings. These increases were partially offset by increased inventory levels, which can be attributed to stock levels necessary to support growing sales in certain markets, incorporating longer lead times into our operating processes, and inventories to support Colombia.

Line of credit

We have a long-standing relationship with Bank of America. For the last few years, we have maintained a $60.0 million credit facility pursuant to a credit agreement with Bank of America, which expires in April 2016. On July 18, 2013, we entered into an amended credit agreement, which increased the amount that we may borrow under the credit facility to $75.0 million. The only other modification to the amended credit agreement was that any new or existing bank guarantees are considered a reduction of the overall availability of credit and part of the covenant calculation. This resulted in a $3.4 million reduction in the available borrowing limit in the quarter due to existing normal course of business guarantees in certain markets. We did not otherwise draw on this line of credit at any time during the first nine months of 2013, and, as of September 28, 2013, there was no actual outstanding balance on our line of credit.

The agreement for this credit facility contains restrictive covenants, which require us to maintain a consolidated rolling four-quarter adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) equal to or greater than $60.0 million, and a ratio of consolidated funded debt to adjusted EBITDA of no greater than 2.0 to 1.0, calculated on results at the end of each quarter. The adjusted EBITDA under this agreement is modified for certain non-cash expenses. As of September 28, 2013, we were in compliance with these covenants. Management is not aware of any issues currently impacting Bank of America’s ability to honor their commitment to extend credit under this facility.

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Working capital

Cash and cash equivalents increased to $115.3 million at September 28, 2013, from $70.8 million at December 29, 2012. The net increase in cash and cash equivalents was due primarily to cash provided by operating activities, and was reduced by share repurchases as discussed below. Net working capital increased to $113.6 million at September 28, 2013, from $61.7 at December 29, 2012. This increase in net working capital was primarily generated by the increase in cash and cash equivalents, but was also affected by the increase in inventory discussed above, as well as increased prepaid expenses and other current assets. Partially offsetting these improvements was an increase in other current liabilities, which was due primarily to higher accruals associated with overall growth of the Company’s operations.

Of the $115.3 million cash and cash equivalents held at September 28, 2013, $63.8 million was held in the United States, and $51.5 million was held by international subsidiaries. Of the $70.8 million held at December 29, 2012, $38.6 million was held in the United States, and $32.2 million was held by international subsidiaries.

As previously reported, we had planned to invest as much as $25 million in capital expenditures during 2013, which is meaningfully higher than our typical annual capital investment. Planned investments in China and international development are the primary catalysts to expected capital spending in 2013. Due to delayed timing on certain of these investments, much of this additional investment will occur in 2014.

Share repurchase

We have a share repurchase plan that has been ongoing since the fourth quarter of 2000. The objective of this plan is to return value to our shareholders. Our Board of Directors has periodically approved additional dollar amounts for share repurchases under the plan. Share repurchases are made from time-to-time, in the open market, through block trades or otherwise, and are based on market conditions, the level of our cash balances, general business opportunities, and other factors. During the first nine months of 2013, we repurchased and retired 414 thousand shares of common stock for a total investment of $18.1 million, at an average market price of $43.68 per share. As of September 28, 2013, the remaining approved repurchase amount under the plan was $13.6 million. There currently is no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases.

Summary

We believe that current cash balances, future cash provided by operations, and amounts available under our line of credit will be sufficient to cover our operating and capital needs in the ordinary course of business for the foreseeable future. If we experience an adverse operating environment or unusual capital expenditure requirements, additional financing may be required. No assurance can be given, however, that additional financing, if required, would be available or on favorable terms. We might also require or seek additional financing for the purpose of expanding into new markets, growing our existing markets, or for other reasons. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders.

Forward-Looking Statements and Certain Risks

The statements contained in this report that are not purely historical are considered to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. These statements represent our expectations, hopes, beliefs, anticipations, commitments, intentions, and strategies regarding the future. They may be identified by the use of words or phrases such as “believes,” “expects,” “anticipates,” “should,” “plans,” “estimates,” and “potential,” among others. Forward-looking statements include, but are not limited to, statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding our financial performance, revenue, and expense levels in the future and the sufficiency of our existing assets to fund our future operations and capital spending needs. Readers are cautioned that actual results could differ materially from the anticipated results or other expectations that are expressed in these forward-looking statements for the reasons that are detailed in our most recent Annual Report on Form 10-K. The fact that some of these risk factors may be the same or similar to those in our past SEC reports means only that the risks are present in multiple periods. We believe

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that many of the risks detailed here and in our other SEC filings are part of doing business in the industry in which we operate and will likely be present in all periods reported. The fact that certain risks are common in the industry does not lessen their significance. The forward-looking statements contained in this report are made as of the date of this report, and we assume no obligation to update them or to update the reasons why our actual results could differ from those that we have projected. Among others, risks and uncertainties that may affect our business, financial condition, performance, development, and results of operations include:

· Our ability to attract and maintain a sufficient number of Associates;

· Our dependence upon a network marketing system to distribute our products and the activities of our independent Associates;

· The integration of BabyCare’s operations and expansion of our business in China through BabyCare;

· Unanticipated effects of changes to our Compensation Plan;

· Our planned expansion into international markets, including delays in commencement of sales or product offerings in any new market, delays in compliance with local marketing or other regulatory requirements, or changes in target markets;

· General economic conditions, both domestically and internationally;

· Potential political events, natural disasters, or other events that may negatively affect economic conditions;

· Potential effects of adverse publicity regarding the Company, nutritional supplements, or the network marketing industry;

· Reliance on key management personnel;

· Extensive government regulation of the Company’s products, manufacturing, and network marketing system;

· Potential inability to sustain or manage growth, including the failure to continue to develop new products;

· An increase in the amount of Associate incentives;

· Our reliance on the use of information technology;

· The effects of competition from new and established network and direct selling organizations in our key markets;

· The adverse effect of the loss of a high-level sponsoring Associate, together with a group of leading Associates, in that person’s downline;

· The loss of product market share or Associates to competitors;

· Potential adverse effects of customs, duties, taxation, and transfer pricing regulations, including regulations governing distinctions between and Company responsibilities to employees and independent contractors;

· The fluctuation in the value of foreign currencies against the U.S. dollar;

· Our reliance on outside suppliers for raw materials and certain manufactured items;

· Shortages of raw materials that we use in certain of our products;

· Significant price increases of our key raw materials;

· Product liability claims and other risks that may arise with our manufacturing activity;

· Intellectual property risks;

· Liability claims that may arise with our “Athlete Guarantee” program;

· Continued compliance with debt covenants;

· Disruptions to shipping channels that are used to distribute our products to international warehouses;

· The introduction of new laws or changes to existing laws, both domestically and internationally; or

· The outcome of regulatory and litigation matters.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to information presented from that presented for the year ended December 29,2012.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information that is required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods that are specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding any required disclosure. In designing and evaluating these disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a- 15(e) under the Exchange Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 28, 2013.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 28, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 6. EXHIBITS

Exhibit
Number		Description

3.1		Amended and Restated Articles of Incorporation (Incorporated by reference to Report on Form 8-K, filed April 25, 2006)

3.2		Bylaws (Incorporated by reference to Report on Form 8-K, filed April 25, 2006)

4.1		Specimen Stock Certificate for Common Stock, no par value (Incorporated by reference to Registration Statement on Form 10, File No. 0-21116, effective April 16, 1993)

10.1		2002 USANA Health Sciences, Inc. Stock Option Plan (Incorporated by reference to Registration Statement on Form S-8, filed July 18, 2002)*

10.2		Form of employee or director non-statutory stock option agreement under the 2002 Stock Option Plan (Incorporated by reference to Report on Form 10-K, filed March 6, 2006)*

10.3		Form of employee incentive stock option agreement under the 2002 Stock Option Plan (Incorporated by reference to Report on Form 10-K, filed March 6, 2006)*

10.4		Credit Agreement, dated June 16, 2004, by and between Bank of America, N.A. and USANA Health Sciences, Inc. (Incorporated by reference to Report on Form 10-Q for the period ended July 3, 2004)

10.5		Amendment dated May 17, 2006 to Credit Agreement dated June 16, 2004 (Incorporated by reference to Report on Form 10-Q for the period ended September 30, 2006)

10.6		Amendment dated April 24, 2007 to Credit Agreement dated June 16, 2004 (Incorporated by reference to Report on Form 10-Q for the period ended March 31, 2007)

10.7		USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (Incorporated by reference to Report on Form 8-K, filed April 25, 2006)*

10.8		Form of Stock Option Agreement for award of non-statutory stock options to employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (Incorporated by reference to Report on Form 8-K, filed April 26, 2006)*

10.9		Form of Stock Option Agreement for award of non-statutory stock options to directors who are not employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (Incorporated by reference to Report on Form 8-K, filed April 26, 2006)*

10.10		Form of Incentive Stock Option Agreement for employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (Incorporated by reference to Report on Form 8-K, filed April 26, 2006)*

10.11		Form of Stock-Settled Stock Appreciation Rights Award Agreement for employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (Incorporated by reference to Report on Form 8-K, filed April 26, 2006)*

10.12		Form of Stock-Settled Stock Appreciation Rights Award Agreement for directors who are not employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (Incorporated by reference to Report on Form 8-K, filed April 26, 2006)*

10.13		Form of Deferred Stock Unit Award Agreement for grants of deferred stock units to directors who are not employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (Incorporated by reference to Report on Form 8-K, filed April 26, 2006)*

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10.14		Form of Indemnification Agreement between the Company and its directors (Incorporated by reference to Report on Form 8-K, filed May 24, 2006)*

10.15		Form of Indemnification Agreement between the Company and certain of its officers (Incorporated by reference to Report on Form 8-K, filed May 24, 2006)*

10.16		Share Purchase Agreement, dated as of August 16, 2010, among USANA Health Sciences, Inc., Petlane, Inc., Yaolan
		Ltd., and BabyCare Holdings Ltd. (Incorporated by Reference to Report on Form 8-K, filed August 16, 2010)

10.17		Amended and Restated Credit Agreement, dated as of April 27, 2011 (Incorporated by reference to Report on Form 8-K, filed April 28, 2011)

10.18		Form of Executive Confidentiality, Non-Disclosure and Non-Solicitation Agreement (Incorporated by reference to Quarterly Report on Form 10-Q for the period ended October 1, 2011, filed November 9, 2011)*

10.19		Separation and Release of Claims Agreement dated as of December 21, 2012 by and between USANA Health Sciences, Inc. and Roy Truett (incorporated by reference to Report on Form 8-K/A, filed December 26, 2012)*

10.20		Amendment to Confidentiality, Non-Disclosure and Non-Solicitation Agreement dated as of December 21, 2012 by and between USANA Health Sciences, Inc. and Roy Truett (incorporated by reference to Report on Form 8-K/A, filed December 26, 2012)*

10.21		Amendment to Amended and Restated Credit Agreement, dated as of July 18, 2013 (Incorporated by reference to Report on Form 8-K, filed July 23, 2013)

31.1		Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

32.2		Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

* Denotes a management contract or compensatory plan or arrangement.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

USANA HEALTH SCIENCES, INC.

Date: November 7, 2013	/s/ Paul A. Jones
	Paul A. Jones
	Chief Financial Officer (Principal Financial and Accounting Officer)