USANA Health Sciences Inc. Reports Operating Results (10-K)
Usana Hlth Sci has a market cap of $563.8 million; its shares were traded at around $37.07 with a P/E ratio of 11.6 and P/S ratio of 1. Usana Hlth Sci had an annual average earning growth of 17.7% over the past 10 years. GuruFocus rated Usana Hlth Sci the business predictability rank of 2.5-star.
Highlight of Business Operations:relationship with Dr. Mehmet Oz. Over the past 5 or 6 years, the world has witnessed the overwhelming rise in popularity of Dr. Oz and, now, he has become a nationally recognized part of American culture. In January 2012, Dr. Oz participated as a surprise guest on the USANA monthly leadership call and the response from our Associates was overwhelmingly positive. In February 2012, USANA participated in "The Health and Happiness Summit with Dr. Oz" at Radio City Music Hall in New York City. Dr. Wentz and Dave Wentz directly participated in this event and thousands of our Associates attended this event as well. Going forward, this relationship will include Dr. Oz's participation on future leadership calls and, more importantly, his participation at our Annual International Convention in August 2012. While branding efforts such as this have a global reach, the primary objective of this initiative is to grow sales and the number of Associates in North America.
Sales to customers outside the United States are transacted in the respective local currencies and are translated to U.S. dollars at weighted-average currency exchange rates for each monthly accounting period to which they relate. Most of our raw material purchases from suppliers and our product purchases from third-party manufacturers are transacted in U.S. dollars. Consequently, our sales and net earnings are affected by changes in currency exchange rates, with sales and earnings generally increasing with a weakening U.S. dollar and decreasing with a strengthening U.S. dollar. In our net sales discussions that follow, we approximate the impact of currency fluctuations on net sales by translating current year net sales at the average exchange rates in effect during the comparable prior year periods.
Income taxes were 34.5% of earnings before income taxes in 2011, compared to 33.7% in 2010. The income tax rate for 2010 was lower due to tax benefits related to changes in uncertain income tax positions, larger prior-year tax benefits, and the level of equity award exercises.
Income taxes totaled 33.7% of earnings before income taxes in 2010, compared to 34.2% in 2009. This decrease is primarily due to increased tax benefits from the deduction for qualified production activities and tax benefits recognized from stock option exercises in 2010.
As a U.S.-based, multi-national company, reporting in U.S. dollars, our net sales and earnings can be significantly affected by changes in currency exchange rates and it is difficult to estimate the impact that these changes may have on our future operating results. In general, our reported sales and earnings are affected positively by a weakening of the U.S. dollar and negatively by a strengthening of the U.S. dollar relative to the currencies in the countries where we have operations. During 2011, we received a benefit to net sales of approximately $15.0 million related to changes in currency exchange rates. Notably, however, this benefit took place during the first nine months of 2011. In 2012 changes in currency exchange rates may negatively impact net sales and produce more difficult year-over-year comparables for our operating results.
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