Good morning, ladies and gentlemen. And thank you for standing by. Welcome to the USANA Health Sciences Fourth Quarter Earnings Conference Call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions). As a reminder this conference is being recorded today, Tuesday, February 24, 2009. I would now like to turn the conference over to Riley Timmer, Vice President of Finance. Please go ahead, sir.

Thank you. Good morning, everyone. We appreciate you joining us this morning. Today's conference call is being broadcast live via webcast and can be accessed directly from our website at www.usanahealthsciences.com. Shortly following the call a replay will be available on our website. As a reminder during the course of this conference call, management will make forward-looking statements regarding future events or the future financial performance of our company. Those statements involve risks and uncertainties that could cause actual results to differ perhaps materially from the results projected in such forward-looking statements. We caution you that these statements should be considered in conjunction with the disclosures including specific risk factors and financial data contained in our most recent filings with the SEC. Let me now turn the call over to Jeff Yates, our Chief Financial Officer.

Thank you, Riley. And good morning, everyone. I am pleased to be accompanied by Dr. Fred Cooper, our President and Chief Operating Officer today. Following my remarks Fred will disuses the top-line results, key indicators and the fundamental drivers of our business. Yesterday after the close of market we issued final results for the fourth quarter and full year of 2008. We also filed a Form 8-K disclosing that we will restate our financials for 2006 and 2007 due to adjustments arising from an IRS tax audit. In our January preliminary conference call and release, we addressed the IRS tax audit and mentioned that it was ongoing. Recently we settled the outstanding issues relating to this audit and we will now restate our historical financials to reflect the results of this settlement. The impact of this negotiated settlement improved the results we announced in our preliminary release just a few weeks ago. The press release issued yesterday, reflects these restated financial results. Our results will also be disclosed in detail in our 2008, Form 10-K, which we will file shortly. It's important to note that these restated numbers are not material to the income statement. We determine to restate, because the cumulative impact of the taxes payable was material to our 2007 and 2008 balance sheets. As such, the restatement primarily, resulted in an increase to current liabilities and corresponding reduction in stockholders equity. Now, turning to our final quarterly results. Net sales in the 14-week fourth quarter were $111.1 million, an increase of 2.1%, compared with a $108.7 million reported in the fourth quarter of 2007. It was noted in both our preliminary and final earnings releases that the significant strengthening of the U.S. dollar resulted in a $10 million reduction to our top-line. Excluding this dramatic change in…

Thanks Jeff. Good morning, everyone. I want to begin by discussing some regional and operational results, and then provide you with some insight regarding our 2009 strategies going forward. Net sales during the fourth quarter in North America, were down 1.3% compared with the fourth quarter of 2007. Now, this decline was primarily due to an 8.8% decline in Canadian net sales, which reduced by $4.2 million due to the strengthening U.S. dollar. This decrease was offset by an increase in sales of 1.6% in the U.S. and 4.6% increase in Mexico. Notably though, active associates in North America have increased to 107,000 and that's a 7% increase compared to the previous year. I'd like to talk about the results next in our Asia-Pacific region. During the fourth quarter of 2008, net sales in Asia-Pacific increased 7.8% to $44 million. The increase in this region was led primarily year-over-year from growth in our Hong Kong region, up 56%, and 43.8% in Malaysia. The number of our active associates in Asia-Pacific increased as well, up to 19.7% to 91,000 associates, compared with only 76,000 in the fourth quarter of 2007. Once again, Hong Kong and Malaysia were our main contributors to this growth. Additionally, the opening of the Philippines in January has really helped to build our momentum in the region. Remember, we selected this country because it was one of the top 25 direct selling markets globally, and also because we had strong ties with many of our current associate leaders in the Filipino communities worldwide. We expect this market to be a nice addition to the Asia-Pacific region going forward. Although our 2008 results were not as strong as expected, I remain optimistic for USANA in 2009. Our fundamental indicators are signaling that our strategies for long-term growth are…

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions). And our first question comes from Tim Ramey with D.A. Davidson and Company. Go ahead, please.

Good morning, guys.

Good morning.

Hi, Tim.

It looks like the, may be I'm reading this wrong but even if I normalize for the extra week and then normalized for foreign currency, it looked to me like the sales performance for associate was... you were losing effectiveness per associate. Do you think that's true, is it the leading edge of a curve and so may be that picks up? But even your sales forecast of 2% growth, even giving effect for the extra week and giving effect for the currency. I think we have to imply some kind of degradation of sales performance per associate. How do you react to that?

My take sir would be, first of all you are early in the curve as you denoted, right? Our fourth quarter results are out, it usually takes a bunch amongst to find out the proportion of the associates that have just been recruited that will continue on and progress up the rates in the commission plan. So when you have a disproportional number of new incomings relative to our stable base, it's going to appear that way initially.

So we had a decent associate recruiting performance also in the third quarter doing that at least on a year-over-year base?

Yes, not as good as fourth.

Yes, okay. So I shouldn't assume that this means that there is a reduction in effectiveness per associate?

No, the other item of this is that Platinum Pace Setter is a pretty motivating program to try to get our associates to talk to other customers. And in so doing there is also a desire to get more customers for the same wallet share on the initial purchase. So that also has a little bit of an impact on this.

Okay. And Jeff, on the subject to share repurchase you did note, even though your average purchase price was quite a bit above market, that it was accretive to earnings. What's your stance on share repurchase right now, I know you only have 10 million remaining. Would you recommend to the Board, that this is effective use of cash going forward or should we be husbanding resources more tightly in this environment?

I would say the latter, the outset Tim. It's important to maintain the cash to invest in any opportunity that we have but obviously the impact of the arbitration award and the payment of the settlement with the IRS has put a demand on the cash and so we'll probably hold off for a bit. But obviously, that remains an option for us later in the year.

Okay, thanks Jeff and Fred.

Thank you. (Operator Instructions). And our next question comes from Doug Lane with Jeffries and Company. Go ahead please.

Hi, good morning, everybody.

Hi, Doug.

Can you give us an update Fred on your view point, where you stand on China these days, you haven't mentioned it. In a little bit and I wondered where we stand in that market?

There hasn't been any changes in the laws in China to-date, that would help us get into China and use a multilevel marketing in our direct sales industry to able to go into there. So from that standpoint there isn't a change. However, we are looking into two items; one, better utilization of our Tianjin facility that we have in China now. And the second is we do all the time spend time exploring alternatives that might allow us to go into China with the key driver on this being in a way that will allow our associates to benefit from participation in China. When we can accomplish that goal and stay within the guidelines and the laws of China, we would like to get into China sooner rather than later.

I see, in the meantime are you looking to may be manufacture in China, because if I am, am I right that most of your product manufacturing is done in the United States and then shipped around the world?

Correct.

So the currency being what it is, that's sort of a double whammy for you. So I wanted if you were thinking about at least diversifying your manufacturing base and may be using China that way?

Actually in the short-term, it isn't going to be an option but in the long-term we are looking at the need ultimately to diversify in manufacturing. Not necessarily China but not excluding it either, but for the reasons that you speak of.

Okay, thank you.

Okay, thank you. And our next question comes from Scott Van Winkle with Canaccord Adams. Go ahead please.

Hi, Jeff. Can I go through some of the currency impact on earnings. What percent of your SG&A, non-volume incentive SG&A is in U.S. dollars?

Stick on, I'd look here Scott. It's a very high percentage probably 60 to 70%.

And all of your markets have international on the ground operations, is that correct?

The most part, yes. Service centers, and network development, and finance managers, yes.

And the volume incentives are paid in local currency in every case. Is there any change to the points per product sale depending on currency or it's just a straight math?

The points are similar throughout the world because of the seamlessnature of our program. But there are subtle differences obviously, and particularly in relation to price, because of different tax or duty or VAT requirements that we have. But the points are pretty consistent.

Okay. I am just, kind of back of the envelope here, kind of struggling to get to the guidance, even on the revenue guidance, even on the currency assumptions that are currently in place today. I would assume the expectations that you just had a very good quarter of distributor growth, to Tim's question earlier about the productivity on a distributor basis, not changing dramatically. According to Fred's answer, I would assume that you're looking at the fourth quarter and just tempering expectations from here a little bit, on the local currency basis, and implying currency?

Yeah. There is no question, Scott. Keep it in mind that what impact that we had benefited from over what six such years on a subtle but meaningful decline in the value of that dollar, reversed itself in probably six weeks. And predicting forward into that even further degradation of the foreign currency values in the January, albeit flattening, it's hard to predict against us. So there is no question that we would want to be conservative in our projections. That said the impact to the first three quarters considering the value of the currency today is significant. And particularly, as you compare that with the average rate that we exchanged at in Q1 of '08 Q2 and Q3 of '08, even through Q3 of '08. And so that assuming we don't have much change in currency, it's going to be tough to do, to get over those comparisons. Now obviously, with an increase in that rate because of the currencies that we trade in, that opportunity would be significant for us. We should see a nice lift from that. We are hoping that you'd be able to tell us where those currencies are going to go?

Yes, yes. Keep waiting.

Yes, indeed. We'll hold our breath though.

Hey, Fred I want to go back to that question about productivity on distributor basis, I understand where your comming from on that. But, if you see the preferred customer totals declining, wouldn't that lead you to believe that there is going to be a little less productivity on a per distributor basis that is offset hopefully in this economic environment, by better recruiting?

I wouldn't argue with that.

Good answer, okay. That's it. Thank you very much.

Thanks Scott.

Thank you. And we have a follow-up question from Tim Ramey. Go ahead please.

Welcome back Tim.

Sorry.

No, no, no.

I'm following up on Scott's question. I guess I really wanted to, and I'm sure he knows, and I need to catch up, the understanding of how currency impacts the associate incentive expense, because it seemed to me and may be Jeff, this was your answer, that this is really paid effectively in U.S. dollars. And so, the associates are now getting a slight currency benefit. Am I wrong on that? Is that how you answered that, is there a way to may be take some of that currency volatility out of the associate expense? If--

It's an excellent question Tim. Truth is that the commission rates that we pay to our associates in foreign countries is at a fixed rate, we establish a commission payout rate in a country typically near its opening, and have held those firm traditionally, in the organization for years. So they don't experience fluctuations as we do relative to our sales. Those commission rates on their local sales remain fixed. So it works for us in some exchanges, and it works against us in others.

So it's really working against you right now?

Indeed, indeed.

Okay. I mean is that the type of thing that is sacrosanct, because it's part of the compensation plan, or is that the type of thing the Board or that management can review?

We obviously are looking at it all the time. It's an important component to our compensation plan overall. And it does afford us the opportunity to adjust prices when necessary. It gives us the opportunity to adjust our model to accommodate those, and we are always looking at that. And obviously, at this point still doing so. We love the benefit that it provides us, and are dealing with the challenge that we currently have.

Okay, thank you.

You bet. Thanks Tim.

Thank you. And we have no further audio questions. I would like to turn the conference back over to Riley Timmer for any closing statements.

Thanks everybody for your questions. If you have any remaining questions, please feel free to contact Patrique Richards in Investor Relations at area code 801-954-7961. Thank you.

Ladies and gentlemen, this does concludes the USANA Health Sciences fourth quarter earnings conference call. If you'd like to listen to a replay of today's conference, please dial 800-405-2236 or 303-590-3000, with the pass code 11126618. ACT would like to thank you for your participation. And you may now disconnect.