Richard Strulson - Chief Compliance Officer Greg Probert - CEO Steve Bunker - CFO :

Gregg Hillman - First Wilshire Securities Management Nelson Obus - Wynnefield Capital

Greetings and welcome to the Nature’s Sunshine Products Fourth Quarter and full year 2015 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] It is now my pleasure to introduce to your host Richard Strulson, General Counsel and Chief Compliance Officer of Nature’s Sunshine Products. Mr. Strulson, you may begin sir.

Thank you. Good afternoon, everyone. And thanks to all of you for joining our conference call to discuss our fourth quarter and our full year 2015 financial results. This call is available for replay in a live webcast that we posted on our Web site at www.naturessunshine.com in the Investors section. The press release which was issued this afternoon at approximately 4:00 pm Eastern Time and the information on this call contains certain forward-looking statements, which are based on a number of assumptions that are subject to change and involve known and unknown risks, uncertainties or other factors which may not be under the Company’s control. These statements are often characterized by terminologies such as believe, hope, may, anticipate, expect, will, and other similar expressions. Forward-looking statements are not guarantees of future performance and the actual results, performance or achievement of the Company may be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, but are not limited to those factors disclosed in the Company’s Annual Report on Form 10-K, under the caption Risk Factors and other reports filed with the Securities and Exchange Commission. The press release and the information on this call speak only as of today’s date and the Company disclaims any duty to update the information provided herein and therein. I’ll now turn the call over to Greg Probert, Chairman and CEO of Nature’s Sunshine Products.

Thanks Rich. Good afternoon everyone and thank you for joining and your participation in today’s call. Joining me today is Steve Bunker, our Executive Vice President, CFO and Treasurer. Despite the micro factors weighing on our topline, 2015 was a pivotal year for Nature’s Sunshine as we put the pieces into place to help generate long term growth and improve profitability. Namely we achieved progress through the successful submission of our direct selling license application in China through our joint venture with Fosun Pharma. Solid execution in four of our top five global markets including NSP United States and NSP Canada, which both posted their sixth consecutive quarters of year-over-year in local currency sales growth. The return to growth in our key market of Synergy Korea as well as continued growth in Synergy Japan and Synergy Indonesia. The introduction of 43 new products, two of which ProArgi-9+ and CardioxLDL are patent-pending. And the grand opening of our new multimillion dollar R&D lab, the Hughes Center for Research and Innovation. Further, we successfully realized $10 million of annualized operating income improvement, by the end of the year reduction of SG&A expenses, streamlining of operations and the implementation of price increases in certain markets. Now turning to some key highlights for the year. 2015 net sales of $325 million were down 6.7% on a local currency basis as broader declines in NSP Russia, Central and Eastern Europe steepened. Excluding the declines in NSP Russia, Central and Eastern Europe, revenue was basically flat with the prior year. Now turning to our segment results. NSP Americas fourth quarter sales of $43.1 million increased by 1.1% year-over-year in local currency and represented 54% of total Company sales. As mentioned, NSP U.S. and NSP Canada, both achieved their sixth consecutive quarters of year-over-year local currency growth…

Thanks Greg, and good afternoon everyone. Net sales in the quarter were $80.0 million down 7.7% from $86.7 million in the same quarter last year. On a local currency basis, net sales decreased 3.2% year-over-year. The decrease was primarily driven by a $3.8 million reduction in net sales revenues in the NSP Russia, Central and Eastern Europe segment coupled with a $3.8 million unfavorable impact from foreign currency exchange rate fluctuations. Excluding the net sales revenue declines in NSP Russia, Central and Eastern Europe, net sales for the remaining business segments increased by 1.2% year-over-year in local currency. Cost of sales were $21.8 million down from $23.5 million in the year ago period. Cost of sales increased slightly as a percentage of net sales in the fourth quarter by 0.1% to 27.2% as compared to the prior year quarter. The strengthening of the U.S. dollar against the local currencies in many of our foreign markets increased cost of sales by approximately 1.3% in the fourth quarter of 2015 which made our products manufactured in the U.S. more expensive in those markets. This increase was mostly offset by increased inventory reserves in the fourth quarter of 2014. As a result, gross margin fell slightly to 72.8% compared to 72.9% in the year ago period, primarily as a result of the decline in revenue and the increased cost of sales percentage during the fourth quarter. Volume incentives accounted for 36.4% of net sales in the fourth quarter a slight decrease from 36.6% of net sales in the same period last year. The decrease was primarily due to market mix changes from declines in the NSP Russia, Central and Eastern Europe market which are higher sales commission rates than our global average. Volume incentives are a significant part of our network marketing program…

Thank you. We will now been conducting a question-and-answer session. [Operator Instruction] And our first question comes from Gregg Hillman of First Wilshire Securities Management. Please go ahead.

Hey Greg, about IN.FORM in Columbia, Mexico and the other country, is that the same as in the United States when you train your distributors, I mean train people? Or is that like a different IN.FORM?

:

Okay so when you gave the figure of like 1,400 people that have been trained, former or health coaches and 430 groups, does that include the groups in Columbia or is that --?

No, that’s U.S. only.

Okay but you do have group going in Columbia, and the three other factors you mentioned you have --?

Yes, we do. We have them going in Mexico, Ecuador and Columbia as well. Which -- those are obviously our three biggest markets in Latin America and comprise a significant amount of our Latin American revenue. And as well as Canada. So if you look at our top five markets in the Americas region we have launched IN.FORM in all five of those.

And you’re getting tracking in that the system, the model works in other countries too? The health coach?

Yes, I think I quoted some facts in Mexico that despite losing a significant amount of our products that represent over a quarter of our revenue, through IN.FORM and the traction we’re getting, we’re able to minimize that decline and had we not had IN.FORM our decline would have been much bigger. So we are getting significant traction and in spite of regulatory losses in the other side of our business.

Okay. And then similarly on synergy you are trying to use a consistent model across the countries now in synergy, is that correct?

Right that’s correct. And I think I have talked about that in prior quarters, so the daily method of operation that we have in Asia which is the reason that you saw pretty phenomenal growth in countries like Korea and Japan, Indonesia, where they do have a unified system we’ll be looking to do that not only in Europe but also in North America and we hope to -- implementing that and one product system will stop the decline in those regions and show growth similar to what we’re seeing in Asia.

And how is that different than IN.FORM, the product sort of weight loss, how is it different? You don’t have health coaches in those countries, right?

No, we do it through more of a traditional direct selling model, but it's not just similar in the fact that the new program that we’re launching is again built around, it's a holistic program built around metabolic dysfunction supported by gut health and improving the gut biome. So the philosophy that we’re using is the same and it's actually the same philosophy we’re using from a product standpoint in China.

And then ProArgi-9+ would just be an overlay over that and once you get that going the distributors would also be selling ProArgi-9+?

ProArgi-9+ will be a component of the system and so I think right now it's a standalone product and it's a fantastic product and as I mentioned we have a patent pending on it, so it's our number one selling product in Synergy. As you know many other companies have ProArgi-9 type products, we’re very proud of the fact that our proprietary blend is significantly more bio-available and because of that we filed for a patent in U.S. patent and therefore we think it’s a cornerstone of any program we do going forward. But we want to incorporate it into a holistic program as opposed just looking at as a standalone SKU.

[Operator Instructions] Our next question comes from Nelson Obus of Wynnefield Capital. Please go ahead.

I am looking at the part of the press release that gives an account of managers in the various geographical areas. And the question really relates to the cyclical versus countercyclical component of the business, focusing specifically on NSP Russia, Central and Eastern Europe. Because if you look at that, the managers are slightly down in NSP Americas, slightly down in Synergy worldwide but they’re actually up in Russia, Central and Eastern Europe. Now the only thing I can conclude there is that there may be a countercyclical aspect, but I don’t know would you comment on that?

Ok, yes, Hi Nelson this is Steve. With respect to NSP Russia, Central and Eastern Europe, we’ve been doing a lot with respect to some of the kits and the kits is with respect to, I think Greg alluded to the different kits that we’ve added there and that’s helped us to retain some of the customers and after a pretty good decline in customers over the last couple of years this has been the first quarter where we’ve had the year-over-year growth in a couple of years. And so we’ve been able to do some discounting, do some strategic things with the kits that has driven some increases in the managers most recently and the customers.

So it's specific it's not macro, although I could understand if you can’t get a job in a normal manner you might want to become a manager, I mean especially if you make it easy for people, I would suspect that that might help. And my last question was as far as the information technology upgrade, and I know it's evolved a little bit as we’ve gone forward, but how much more do we need to invest in that to get it to where you hoped it to be, or you hope that will be?

Nelson we’re really on the tail end of the spending. We spent $16.7 million last year and close to $20 million the year before. Most of the work with consultants is completed we have -- and the knowledge transfer has been done to the Company with our internal people very involved with the consultants through that process. And so as we move forward this year we’ll see the spending probably closer to the $5 million range and with a lot of the work done internally to go forward with the implementation in January of 2017.

And just to clarify this, whatever we spent or let's just say -- again what was the number we spent this year for that?

Just over $16 million.

Is that $16 million in net cash provided by operating activities of 10.1, or is it apart from that? :

It's not in the cash from operating activities, it's in the cash flow from investing activities under purchase of property, plant and equipment.

So it's been capitalized a little bit.

Yes, it's capitalized.

Okay, so it's not flowed through. But we’re going to see an end to that, good enough and we’ll see where it takes us. Good. Thanks.

And our next question is a follow up from Gregg Hillman of First Wilshire Securities Management. Please go ahead.

I was wondering if you could talk about China a little more, number one in terms of what hurdles remain regulatory wise to finally get your license and then once you do to get your license, are you going to open it up to distributors in other counties to go in there and start down lines, also can you maybe talk about the product focus when you do open up in China?

On the license we are proceeding as expected so we have gottenthrough central authority and now we are looking at provisional authority –that will take a few months we think. So again we are at the later stages of the process and as we said we expect to get our license and launch the business in Q3 of this year. So everything is proceeding along nicely and as anticipated. When we open in China, we don’t allow people from outside China distributors to go into China. So that’s not something we are looking at, and I think your last question was on the product strategy, so, there we are using a product strategy of a 30 day purity, which is sort of a detox, cleansing and Nutribiome building kit which will then go into kits built around system philosophy, so we have a weight loss kit, a immune kit, a skin care kit and a cardio vascular kit. So again it’s a kitted program more than a product strategy and we think it will be very vibrant and best in class products, including a couple of our patented products, included in those systems. So we are very excited about the product strategy and we are very excited to get our direct selling license.

How are you going to recruit the direct sellers to begin with, where are the beginning people going to come from?

Well, we are going to track distributors like any direct selling company does. I mean we are painting a great picture of a company that has been around for 43 years, we are stable company, we have a rich heritage of quality. Now with our Hughes Center we have side space innovation. And I think it’s just we have a compelling compensation plan, we have a compelling digital strategy and so I think it's like -- you do in any country, in any direct selling is you paint a great vision and a great company and you offer a better mouse trap and you attract distributors and leaders.

And you will be advertising use normal media, to attract people to meetings where you talk about the opportunity?

No, as always this is the people-to-people, belly-to-belly selling opportunity and networking.

Okay, so you are going to start recruiting people that are already experienced in MLNs in China.

: Well, I think we’ll do both like we always do. You attract experienced people, as well as attracting new people to the business.

Okay, okay. Thanks very much.

And ladies and gentlemen, it's showing that there are no further questions. I would like to turn the floor back over to Greg Probert for any closing comments. End of Q&A: :

: Well thanks again for your support and for participating in today’s call. Just to let you know in late March we will be presenting a Sidoti's Emerging Growth Conference in New York and we hope to see many of you there. Thank you and have a great day.

And ladies and gentlemen this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.