Ladies and gentlemen, thank you for standing by and 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) This conference is being recorded today, Wednesday, February 09, 2011. I would now like to turn the conference over to Riley Timmer. Please go ahead, sir.

Good morning everyone. We appreciate you being on the call this morning to discuss our fourth quarter and full-year results. 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. Now, 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 that 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. Now, I’m joined this morning by Dave Wentz, our Chief Executive Officer; and Jeff Yates, our Chief Financial Officer. First, we’ll hear from Dave who will discuss our business activities during the quarter, as well as our plans for 2011, and then you’ll hear from Jeff who will discuss the financial details of the quarter. I will now turn the call over to Dave.

Thanks, Riley, and hello to everyone on the call. I appreciate you joining us to talk about yet another record year for USANA. I want to begin by thanking our management team, our employees, and of course, our independent associates worldwide for their tireless efforts to positively impact more lives in 2010 than ever before. As we look forward to 2011, I’ll begin by updating you on our activity in China and then discuss what we anticipate for China during 2011. Then, I’ll turn to North America and discuss our strategies for the New Year, which we believe will help us rejuvenate that region. Now, with regard to China, obviously we’re excited about our acquisition of BabyCare. As you know, China is the second largest direct-selling market in the world. We believe that in light of our rapid growth in Asia Pacific and the strength of our Asian associate base, China represents the most imminent and significant growth opportunity for USANA. Although, we will need to make meaningful investments in both capital and human resources in the short-term, we believe that our acquisition of BabyCare is the most efficient way for USANA to capitalize on this opportunity. I’d like to stress, however, that our acquisition of BabyCare and our plans for China represent a long-term growth strategy for USANA. While we understand the importance of reporting our progress in China quarterly, we are positioning ourselves in laying the foundation for a successful future in China. It’s absolutely critical that we did it right. We spent the first eight months of 2010 negotiating and finalizing the acquisition of BabyCare and the best possible returns for USANA. As Jeff will discuss in a moment, the small amount of debt that we used to fund this acquisition was repaid within three months of…

Thank you, Dave. And it's good to be riding shotgun with you today. Good morning, everyone. Thank you for joining us today. And along with Dave, I’m delighted this morning to report on a good quarter and another strong year for the company. As you have seen in our release, net sales for the fourth quarter were $137.5 million, which represents a 17.8% increase when compared with the $116.8 million we reported for the fourth quarter of 2009. This quarter’s sales included $4.1 million in sales from BabyCare, our newly acquired business in China. Additionally, favorable changes in Fx rates this quarter added nearly $3.6 million to our top line when comparing our results to the same period last year. For the full year of 2010, net sales increased 18.5% to $517.6 million, which marks the eighth consecutive year of record sales for USANA. Excluding BabyCare, sales increased by 16.8%. Additionally, favorable changes in currency rates accounted for $21 million of the $80.7 million increase year-over-year. Our growth in sales this quarter was primarily due to an overall increase in the number of active associates to 228,000. This represents an increase of 14.6% when compared to the fourth quarter of 2009 and is largely a result of continued growth in Hong Kong. Also, our acquisition of BabyCare in China added 12,000 associates. Excluding the addition of these BabyCare associates, active associates increased by 8.5%. Looking into our results regionally, sales in North America decreased 2%, coming in at $59.6 million for the fourth quarter, driven by a disappointing decrease in the number of active associates to 86,000. We believe that these decreases are due primarily to continued tough economic environment, particularly for the consumer segment, and an increasing number of our associate leaders based in North America building their businesses…

Thank you, sir. (Operator Instructions) And our first question is from the line of Tim Ramey with D.A. Davidson. Please go ahead. Timothy Ramey - D. A. Davidson & Company: Good morning. Jeff, I’m going bait you a little bit here, but this date a year ago, you gave sales guidance of 6.4% to 8.7% sales growth and of course, the year came in at 18.5%, and you just referred to your own guidance as conservative. I guess the two inescapable conclusions are you guys are either really bad at doing forecasts or really conservative. How would you characterize the 2010 performance versus your initial guidance? Was it you were conservative or things just really broke your way?

I think that there are a number of factors. Both are probably true. We wanted to be careful and as we’ve always been, present a cautious guidance, particularly early on for the year. We outperformed our expectations. We saw some nice momentum in anticipation of the China opening and we were pleased with that. Frankly, Tim, I hope to be able to beat the guidance for 2011 obviously. I wanted to be cautious coming out of the chute here with the impact that we have in those markets. And especially with the focus and objectives that we have to grow our North American markets, we’re going spend a lot of time there as well and are anticipating turnarounds in the markets we’ve been lagging and obviously have an opportunity to upgrade those projections as we get a little bit better view into our first and second quarter, but do apologize for guidance that we’ve given. But, as you know, we want to make sure that we’re being cautious as we come out of the gates. Timothy Ramey - D. A. Davidson & Company: And just a follow up, if I could, Jeff, the SG&A, you talked about the quarter and you said what your thoughts were on 2011, I missed it, but I note that one point change in SG&A on the 2011 forecast is about $0.22 a share on my model. I assume that’s where you’re tied, since gross margins are going to be up and since the associate incentive expense is going to be okay, I assume that's where we're talking about a little bit of pressure.

That's where we're talking about pressure. And as I had mentioned, the investment in growing the markets where we've been economically challenged and some of the distraction that we've experienced, we want to focus on that. Dave's tour is a good example of that focus. The investment and relationships with branding efforts from the athletes, as well as our attention to building the infrastructure and the model and the communications and the training and so forth for the China market, we’re going put some pressure on that SG&A line and believe that that will establish some foundations for future growth and anticipate fully a return to the more efficient model that you've experienced from us and we're known for since our inception. Timothy Ramey - D. A. Davidson & Company: And just a quick one for Dave, if I could. Dave, getting kind of feet on the ground in China proved to be disruptive in the near-term for both New Skin and Herbalife, but obviously extremely lucrative in the longer-term. Your stated strategy was you wanted to be a fast follower in China. You didn't want to be the first ones in. What do you think you’ve learned about the China opportunity having observed your larger brethren?

Well, that's a big question, but it's definitely been nice to learn from their mistakes and try to let them break ground. It's not like we're going to run out of people in China and the market will be saturated any time in my lifetime. So it's been nice to have them break ground and I think the government is also starting to become more comfortable with our business model of direct-selling in general over the years where they went from banning it to now starting to understand it better. And I think that makes the playing field a little easier for us coming in now, because they've learned more about it. They're not as fearful of it and they can see that companies can do a lot of good for their people. And so it's a better environment for us to go into now, where we don't have to waste hundreds of millions of dollars breaking new ground and fighting through those fears and trying to overcome them. We can get off and running. Once we get our products in there and registered, I think we can get off and running quickly. But our people want our products and so getting those products into the country is the transition period that we've been working through and waiting on that kept it from happening sooner, but it's a critical step before we can do it so we can do it right. Our people love our products and they want to see them in China. Jeff?

Yeah. One thing, Tim, that I would add to that and Dave emphasized it well in his remarks is that the relationships, as is evidenced by the people who have been over there for the last 18, 19 years and forged that ground, we’ve learned that relationships are essential to success in China and we're grateful that BabyCare has had longstanding very credible relationships with key regulatory officials, hence have helped us weather some of that challenge and navigate that landscape and we're pleased to see that they have been acknowledged in country with the license and the updating of their business, their operating license and so forth. And so we're anticipating the introduction of our products to be approved quickly and as quickly as it could be expected. And feel like we have learned from years of experience from others that that's key to the success for us in the country. Timothy Ramey - D. A. Davidson & Company: Thanks, Jeff. And I don't really believe you're bad forecaster, why should I?

Well, I appreciate your restating the strategy that you have noted and observed that we've declared over the last several years. We feel like we're executing a long-term plan. We're pleased with our progress. We understand that there are factors economically and in the marketplace that we need to address, but I think you've reiterated the points that we've been making for some time and we appreciate that acknowledgment and feel good about our progress. We're looking forward to an exciting yet challenging year, but really an extraordinary future. Timothy Ramey - D. A. Davidson & Company: Thanks.

Thank you. Our next question is from the line of Doug Lane, Jefferies & Company. Go ahead. Douglas Lane - Jefferies & Co: Hi, good morning everybody.

Good morning, Doug. Douglas Lane - Jefferies & Co: Jeff, can you help us understand, it's hard from the outside to get a feel for where the swing factors are in going into China. You mentioned that, expenses are a little higher and you've built more expenses into 2011 because of the BabyCare deal. Can you tell us maybe where specifically those expenses are higher than maybe what you’re looking at six months ago and what's your level of comfort that we won't come back in three or six months with even higher expenses? And then from a timing standpoint, do you think you can get done what you need to get done in six months before you start selling USANA products in the market or is there a risk that maybe actually 12 months. Just try to give us some understanding about what you're dealing with this in building up BabyCare here?

Sure. It's an excellent question. We've availed ourselves the opportunity over the last five months since the acquisition to evaluate their model, their messaging, their compensation plan, the product offering and so forth. Dave has done a nice job of describing what our plans are to integrate our products and sales philosophy and the opportunity that we present to the people of Greater China. I think we've laid some meaningful and effective plans. We've already begun executing those to give you some flavor of what plans that we've been considering. Obviously we need to train lots of people. Thousands of the consumers, thousands of associates throughout the other markets that we serve and to get our branding and messaging within that country established early on, get a strong presence, a strong awareness. We're going to be traveling quite a bit amongst the various provinces, holding several meetings in each of those areas to train as many people as possible on the opportunity. There are 12,000 associates over there right now and about that many consumers in the BabyCare model already who are beginning to understand what USANA has to offer them and the product offerings that we'll be modifying in their line. We have to help them understand. We need to help those who would be candidates for enrollment and participation in the BabyCare model, but with the USANA message want to recruit for them. We've got a lot of marketing websites, messaging, planning to communicate in that regard. We've got design and IT infrastructure to put into place. The brick and mortar infrastructure that we acquired at the acquisition is a positive and favorable position for us. We want to expand that. We're going to do that carefully only in those provinces and cities that would be most appropriate. We've got some communications and marketing efforts amongst our associates throughout the world who have an opportunity to influence people within the BabyCare model and/or have an opportunity themselves to, because of their dual citizenship, to operate a business there. We're planning to create infrastructure foundations capability early on knowing that the revenue curve will follow it soon enough, but we recognize that we got to get out in front of that in order to establish a strong presence in that country and a basis upon which we can build for the long-term. Douglas Lane - Jefferies & Co: And the timing aspect of the question, I mean, is this something that you're really comfortable can get done in six months or I mean, how confident are you that everything you need to get done, which sounds ambitious, can get done in the timeframe you've outlined?

Based on the intelligence we have, the experts we have working in the area, we believe that we'll have a phased in approach to products and that we will be phasing them over the next three to nine months. We will get our product line in there. Of course, you never know if there's some huge change in government sentiment in the next fit, but based on what we're seeing we're feeling very confident. Douglas Lane - Jefferies & Co: So the timing really here, Dave, is the approval process the biggest sort of unknown or out of your control part of the equation?

Yes, it's absolutely out of our control, but based on histories and expectations, we're feeling quite comfortable. Douglas Lane - Jefferies & Co: Okay. And then lastly, how does this – maybe I'm getting ahead of myself here, but you have your global convention every August and it's in Salt Lake City. Is that whole structure going to change? Is it going to be moving around, are you going to split the convention into U.S. and Asia? What's your plan with the convention going forward?

Well, currently we've had two conventions, one in Asia Pacific and one in Salt Lake for the last, I don't know how many years, because of the difficulty in traveling between the two areas, the expense, so we're having our Hong Kong convention in five weeks or so here, expecting over 8,000 people to be at that convention, which will be big or bigger than our Salt Lake convention. Then we'll have our Salt Lake convention back here in August and then we’ll go back to Asia Pacific. We're trying to do every six months, have a convention in one of the two regions. And it will move around Asia Pacific and it will always be in Salt Lake due to our headquarters here, but it will, for North America, it will always move around Asia and well, not always, but our plans are to have an AP convention March timeframe and a Salt Lake convention August timeframe going forward. Douglas Lane - Jefferies & Co: Okay. That makes sense. Thanks.

Thanks Doug.

(Operator Instructions) And our next question is from the line of Scott Van Winkle, Canaccord Genuity. Please go ahead.

In China. First, Jeff, you talked about forecasting timing and costs associated with the investments in Mainland China with BabyCare, but you’re also talking about kind of a revenue disruption. How do you forecast that? Is there experience or are you kind of taking a shot at it or have you talked to distributors? How does that plan come together as to what the impact might be on revenue as the transition occurs?

You broke out of the first part of that question there, Scott, but I'm gathering what do we base our forecasts and our projections on with respect to the transition in that market? Is that.

Yeah, more revenue than expenses.

Sure, sure. We anticipate, as is always the case with new market openings, there's always a period of time where we've got transition and people are trying to figure out what to do. We look to that experience from new markets that we've opened and we anticipate that those who have dual citizenship or qualified to operate in that country will move or change their focus and shift from Hong Kong business into BabyCare as well as from other markets. There are associates many of whom are simply product consumers that we know of, who are buying in Hong Kong for consumption only. We expect a shift to BabyCare for many of these people who we also anticipate will become entrepreneurs and build a BabyCare business. We anticipate that the average initial purchase per associate in BabyCare, which is about 40% lower than our other markets, as a result of that there will be a natural sales decrease at least early on or until our volumes increase. And given those factors as we evaluate the demographics of the market of the associates, the distributors, the consumers that are in play here, we model our best projections and taking the experience of market openings that we've had and in concert with our communication and marketing plans and our training plans, have come up with what we believe is a strong educated guess at what that transition will look like and how that market will evolve. And so with the visibility that we have from that experience and the plans laid, we feel pretty good about our early projections and hope that obviously we can beat those and lay up in store some nice growth that we hadn't planned for.

Great. And that 40% lower average purchase, is that driven by price point or a different model on personal sales volume?

Well, yes, they absolutely have a different compensation plan, a different model. So their initial price point is lower, but what we've seen is the longevity is better at BabyCare than Hong Kong, which means initially we'll get less dollars from each new person that comes in, but long-term that will catch up and cumulatively grow nicely, which is what we're excited about, because the potential in Hong Kong compared to the potential in China, there's no comparison there. So we'll have some initial disruption as we transition our focus, but the potential of China is just huge and gives us the ability to do so much more long-term.

And can you remind us when BabyCare received its license for direct selling, was there any negative impact or if I recall, didn't the business kind of take off once this transition began to direct selling?

Yes, the current associates they have were very excited, of course, to receive one of only 25 licenses and that will allow us for a lot more talking, a lot more confidence and credibility. And so they picked up their activity, but they're such a small company, such a small base that we're hoping that when we bring our expertise to it, we'll be able to completely dominate that growth curve. I don't know what the right terminology, but we believe, we think we can get it really going.

And over the next three to nine months as you register USANA products in China, are there specific products that you expect to or not expect to get in the market? What would the tool bag be for a USANA distributor in Mainland China in nine months from now?

Well, I can't let you know that until I let all of our distributors know, because they are waiting with anticipation to see what their product line is, but we've had that Tianjin facility in China for a number of years and we've been registering products, but we do need to get those transferred over to the BabyCare model and so that's what we've been working on. As in with all our markets, our products will follow the regulatory guidelines of that country. We've had to modify our products for almost every country we've gone into and so we'll be following the rules and regulations of China in launching those as quickly as we can to build up a good-sized product line that will support the business model. And we hope they will be very happy with what they see coming in the next three to nine months.

And beyond the focus obviously on the China transition this year and your efforts in the U.S., the book tour et cetera, are there specific incremental efforts in other markets? You had some comments about promotions. I wasn't sure if that was North America specific or more broadly. Is there anything incremental that's happening in other markets?

Not incremental from a cost standpoint, if that's what you're asking, or --

Well, I was thinking more kind of business development catalyst.

We're really hopeful that the eApprentice and Health & Freedom Solution tools that have recently come out, it takes a little while for adoption. The leaders have to get comfortable with them before they start training their people in a new way, but we've measured the results of people who take the training versus those that don't and we've seen an improvement. And so now that we can share those results with the leaders, more and more leaders will adopt, will almost likely adopt and help their teams perform to that higher productivity level. We need to get those completely translated and moved into all markets and that's going to take some time, all those video productions. It just takes awhile. Health & Freedom Solution is an easier way to do presentations. Number one fear is public speaking and so the idea of a new person getting up in front of the group and speaking is a fear that keeps them from doing anything. And so this tool will hopefully do the speaking for them in a way that makes them confident and comfortable and that more of them will start presenting than normally would and start presenting much sooner because their confidence level will be much sooner. So we're hoping those tools will have an impact and get that confidence building and that growth building.

That's a global effort. And then lastly, Jeff, I think you said and pardon me if I'm wrong, but you gave a SG&A as a percentage of sales figure for the fourth quarter. I think it was up year-over-year. Is that the case? Even if you had taken out Baby – I'm sorry, if you exclude BabyCare, I think you gave us an SG&A number that would have been up year-over-year as a percentage of revenue. Is that that accurate and if so why?

The 21.8 versus 21.0, so we were up slightly. We had a few costs that we advanced on this year, contributions and some miscellaneous marketing activities, none of which by themselves are significant in any way, but nothing really notable, but that in and of itself is not necessarily a trend. But we believe that we're managing that like we always have and outside of these investments in brand awareness and marketing and communications and promotions, WTA and so forth, which are largely incremental. The fundamental model still remains as we've managed it in the past.

Okay. Thank you very much.

Thanks, Scott.

Thank you. And I show there are no further questions at this time. I would like to turn the call back over to Riley Timmer for closing remarks.

Okay. Thank you everyone. We appreciate your participation on our call this morning. If you have any remaining questions, please feel free to call us. You can contact our Investor Relations department, you call Patrick at 801-954-7961. Thanks again.

Ladies and gentlemen, this concludes the USANA Health Sciences fourth quarter earnings conference call. If you would like to listen to a replay of today's conference, please dial 303-590-3030 or 1800-406-7325, followed by the access code of 4403365 and the pound sign. Thank you for your participation. You may now disconnect.