Good day, ladies and gentlemen, and thank you for standing by. Welcome to the USANA Health Sciences Second Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Wednesday, July 27, 2011. And I'd now like to turn the conference over to Mr. Patrique Richards, Manager of Investor Relations. Please go ahead, sir.

Good morning, everyone. We appreciate you joining us this morning to review our second quarter 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. 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. I'm joined this morning by Dave Wentz, our Chief Executive Officer; and Doug Hekking, our Chief Financial Officer. We'll hear first from Dave, who will discuss our business activities during the quarter, as well our plans for the remainder of the year. We will then hear from Doug, who will discuss our financial results and updated guidance. I will now turn the call over to Dave.

Thanks, Pat, and good morning, everyone. It's always nice to discuss yet another great quarter for USANA. This quarter's record top and bottom line results reflect the strength of our diversified business and the dedication of our employees and associates. I'll begin by updating you on management's activities during the quarter and then update you on our integration of the USANA brand in China, as well as our plans for North America. During the quarter, our management team has devoted most of their time to speaking with our sales force leaders to open communication lines and build-out relationships. Kevin Guest, President of North America; Roy Truett, Chief Operating Officer; Jim Bramble, Chief Legal Officer; Dan Macuga, VP of Marketing; Alan Bergstrom, VP of Customer Relations; and our Field Development Managers, Michelle, Belinda and Carlo and Laurie, have all led these efforts and discussions in North America. Similarly, our President of Asia Pacific, Deborah Woo, and her Regional Vice Presidents, Sherman, Kinghen[ph] and David have done the same in our Asia Pacific markets. These discussions were a priority for us in light of the changes in both management and strategy that occurred during the quarter. I've spent 19 years in the direct selling industry, building USANA and working with our independent associates. I understand very well that change can be confusing and distracting for a direct selling organization and that maintaining trust and belief between the independent sales force and management is critical. What we have learned through the years is the strength of this relationship and this partnership is directly correlated to the strength of the business. The recent management changes were the catalyst we needed to remind us how important communications efforts with the field are for the entire management and not just a few individuals. The idea sharing…

Thanks, Dave. Our second quarter financial performance was very strong and resulted in record financial results on both the top and bottom lines. I'll start by discussing the performance of the business during the quarter and then discuss our updated outlook for the year. For the quarter, we delivered record net sales of $148.9 million, an 18.2% increase over the prior year. We also delivered record earnings per share of $0.88, which represented a 27.5% increase year-over-year. Excluding the onetime recapture of equity compensation expense, diluted earnings per share still increased 18.8% over the prior year. Now Asia-Pacific region, net sales for the quarter increased by $25 million or 38.7% compared to the prior year. Net sales for this region totaled $89 million during the quarter, which represents 59.5% of our total sales. Keep in mind that we had our AP Convention during the first quarter of this year, compared to the second quarter of 2010. This obviously creates a timing issue as you compare the year-over-year top line performance for this region. Additionally, when we saw sales increase significantly in Hong Kong during the quarter for several weeks following the communication of our initial BabyCare integration strategy, as associates purchased in anticipation of these changes. We estimate that this added approximately $4 million to the top line for Hong Kong during the quarter. The net effect of these events provided a modest benefit to the current year quarter. Sales growth in this region was primarily due to 22.9% year-over-year increase in the number of active associates. On a sequential quarter basis, sales increased 6.1%, and associates increased by 6.9%. Hong Kong continues to drive this region where sales increased 44.8% over last year, and the number of active associates increased 21.2%. We were pleased by the year-over-year topline growth…

[Operator Instructions] Our first question comes from the line up Tim Ramey with D. A. Davidson & Co. Timothy Ramey - D.A. Davidson & Co.: Dave, I'm curious to know a little bit more about your thoughts on the competitive pressure. In my discussions with folks last night, it seemed like there's an awful lot of concern over the new startup Erics [ph] and you got, obviously, folks like Herbalife, Nu Skin, Sunrider, everybody else is big factors in China and big factors in Asia. Why the overemphasis or heightened concern over this startup?

Well I definitely think there is a lot of concern initially because the unknowns, due to the relationships and other factors that were new with the competitor, but as we've gone on with more and more, we're feeling better and better, that it won't be any different than any other competitor over the past years. We've lost hundreds of leaders over the years and that's just a normal course of business. But individuals leave, but they're not able to take organizations with them. And so even though we've had many competitors come along and take -- try to take a few leaders, the organizations have not followed because of the depth of our compensation plan and the leaders below. We're very confident that with all the leaders below who are staying, that they will maintain the organization and actually are inspired and motivated to work harder than ever. So we're excited that with the increased line to communications now with these leaders, between all the management team and they're invigorated, anxiousness to grow faster that hopefully they will build on this and creates momentum. Timothy Ramey - D.A. Davidson & Co.: That's the answer I hoped to hear from you. But you did cite increased competitive pressure, and so I mean what are you worried about? What's the focus right now?

Well we always don't know if there's something out there that we are unaware of. So far, things look great from our standpoint, but we are always cautious that there are other factors that we may not foresee but we're feeling extremely confident at this point and hopefully as the quarters progress, we can put this in our rearview mirror very quickly. Timothy Ramey - D.A. Davidson & Co.: Okay. And then just relative to the guidance. I mean it obviously stock's down because your guidance implies a huge deceleration of growth or no growth, actually declines in the second half versus 2010. Is that -- I mean, can you give us a little bit more sense of why you see your business declining year-over-year for the next 2 quarters?

Over the next 2 years? Timothy Ramey - D.A. Davidson & Co.: No, next 2 quarters.

Okay. I see what you're saying, sorry. We have a number of things that are unknown out there, with the transition in China, if there is any more to this competitor than we are aware of, and so we just want to be cautious. We feel confident. We had some unusual events in the first 2 quarters that definitely elevated those numbers higher than they normally would be, and so with the run rate, they skewed things a bit. But we're feeling this to be a strong year and to post that much growth during these tough economic times is really impressive to have yet another record year and continue to grow. In my mind, my job is to grow the company, and that's what we've been doing for -- this will be our 17th out of 19 years growing the company, and the guidance aspect isn't what decides things in the long run. What we have to do is continue to show quarter after quarter of strong results and that's my plan.

[Operator Instructions] Our next question comes from the line of John San Marco with Janney Capital Market.

Do you know what the percentage of your Hong Kong associates that are actually Chinese nationals? Do you know what that percentage is, by any chance?

No, we do not.

Okay. I mean ballpark? I mean it's pretty -- is it substantial? Or you can't even render a guess? A ballpark guess?

We definitely have a number of people who are building in Hong Kong. We do not have a percentage or have a number that we could point to with any accuracy.

Got it. Okay, that's fine. Are there any laws, Chinese laws that discourage -- that sort of limit what Chinese nationals can do with respect to multilevel marketing outside of their borders?

Jim, are you aware of any rules? Jim Bramble, our CLO.

Yes, this Jim Bramble, I'm the Chief Legal Officer. We currently have a majority of our Hong Kong associates can qualify to do business in China as well, but they have historically focused on building in Hong Kong as what they are doing now and of course our efforts are to gradually get them to start building in China but they're both, they have a legal ability to build on either market, the majority of those associates.

Okay. And what would preclude -- what about the minority? You implied minority, what precludes either a Hong Kong resident from participating in China or vice versa?

Well if an individual does not have residency in Hong Kong and the ability to build in Hong Kong, then they can only build in China. And that's one of the reasons that our initial approach was not successful or we thought it would not be successful is because those associates who are building in Hong Kong, who only build in Hong Kong, who will continue to build did in Hong Kong, would have had a competitive disadvantage. So that's why we've seen an increase in interest from our Hong Kong associates to continue building there without the restrictions and the hope for the continued -- the integration to be stronger in the future.

Okay. That's a helpful explanation. And then just really quickly on associate incentive comp. It's drifted upwards a couple of quarters. I heard you reference some, I think, what you said, called targeted incentives. Could you be more specific on kind of what the qualification levels are for those target incentives? How many people are benefiting? And then what impact do you think that has on your relative comp expense? I don't think it was that long ago when the target was to get down below or down to 44%, and now it seems to be headed in the other direction.

Yes. The promotions of the contest can be targeted at the masses or targeted at the leaders. We do different types to hit the different groups. And the key is to see that they have -- they change activity and create more growth, more sales. And so we can have some that go to everyone, just whether there are discounts or small promotions for the masses as we say. And then there are also some promotions that are just toward the top few percent to drive those who are opinion leaders and drive the strength of their organizations. So those promotions will be a mix of the 2. Doug, from a dollars and incentive standpoint, the goal is to drive activity.

Yes. And what we've seen just to put a little color on it is we've seen, for example, our matching bonus program be very successful in certain markets. In fact, the markets that we saw the most growth in really take advantage of the matching bonus in Hong Kong, the Philippines and South Korea. And so what we look to do is go back and provide incentives that are going to excite people in each of our markets. So we continually go out and look for those. As far as expectations for the remainder of the year, like we said in the script, we expect the second half of the year to be modestly higher than we saw in the first half of the year relative to net sales.

Economic times is a good time to be changing that percentage. We want to continue to motivate our sales force as much as possible and be a highly compensating company. We've done such a great job of managing SG&A and cogs that we can give to our leaders who are going to grow the company.

That makes sense to me. So just to be abundantly clear, the second, the third and fourth quarter, you guys would expect to be higher than 45.3%, I'm getting for the first half of the year?

Yes. We would expect that.

And I show no further questions in my queue at this time. Mr. Richards, please continue.

Thank you for your questions and for your participation on today's conference call. If you have any remaining questions, please feel free to contact me in Investor Relations at (801) 954-7961.

Thank you.