Nu Skin Enterprises Reports Record Quarterly Results

Company Increases 2010 Guidance

PROVO, Utah, July 28, 2010 /PRNewswire via COMTEX/ --

Nu Skin Enterprises, Inc. (NYSE: NUS) today announced record quarterly results, with revenue of $388.4 million for the second quarter, a 20 percent improvement over the prior-year period. Quarterly revenue was positively impacted 4 percent by foreign currency fluctuations. Earnings per share for the quarter were $0.50, a 43 percent improvement, or 39 percent when excluding prior-year restructuring charges of approximately $0.01.

"The introduction of our breakthrough ageLOC skin care system has been a huge success around the world, generating $150 million of revenue in the past three quarters," said Truman Hunt, president and chief executive officer. "We continue to build tremendous energy within our distributor force, as demonstrated by a 15 percent quarterly growth rate in executive distributors. In addition, our continued focus on operational efficiency resulted in a record 15.2 percent operating margin for the quarter, evidence of our ability to leverage revenue growth to improve profitability."

Regional Results

North Asia. Second-quarter revenue in North Asia grew 12 percent to $164.1 million, compared to $146.7 million for the same period in 2009. Revenue was positively impacted 7 percent by foreign currency fluctuations. Local-currency revenue increased 28 percent in South Korea, offsetting a 3 percent local currency decline in Japan. The number of executive and active distributors in the region was up 4 percent and 2 percent, respectively, compared to the prior year.

Americas. Second-quarterrevenue in the Americas was $62.4 million, compared to $62.2 million for the prior year. Revenue in the United States improved 3 percent, offsetting a local currency decline of 12 percent in Canada, and 19 percent in Latin America. The number of executive distributors in the region increased 3 percent compared to the prior year, while the number of active distributors declined 1 percent.

Greater China. Revenue in Greater China improved 53 percent to $80.6 million for the quarter, and was positively impacted 2 percent by foreign currency fluctuations. Local-currency revenue in both Mainland China and Taiwan improved 18 percent. Hong Kong revenue improved 162 percent, reflecting sales from the launch of the Nu Skin ageLOC(TM) Transformation System at the Greater China convention. The executive distributor count in the region increased 37 percent, and the number of active distributors improved 11 percent.

Europe. Second-quarter revenue in Europe was $35.3 million, a 10 percent improvement over the prior-year. Results in the region were negatively impacted approximately 5 percent by foreign currency fluctuations. Executive and active distributor counts in the region increased 16 percent and 15 percent, respectively, compared to the prior year.

South Asia/Pacific. Revenue in South Asia/Pacific was $45.9 million for the second quarter, a 60 percent improvement over the prior year. Regional results were driven by solid performances in all markets and were positively impacted 13 percent by foreign currency fluctuations. The region's second-quarter executive count improved 44 percent, while the active distributor count increased 10 percent.

Operational Performance

The company's operating margin improved to 15.2 percent, compared to 10.7 percent in the prior year. Gross margin also improved during the quarter to 82.5 percent, representing a 130 basis-point improvement, primarily as a result of sales of higher-margin ageLOC products. Selling expenses, as a percent of revenue, were 41.4 percent. This 120-basis-point decrease is due in part to convention fee income and higher sales aid revenue during the quarter which is non-commissionable. General and administrative expenses, as a percent of revenue, were 25.9 percent, a 160 basis-point improvement over the prior year as the company continues to leverage revenue growth to improve profitability.

The company's income tax rate for the quarter was 37.6 percent. Dividend payments during the quarter were $7.9 million and the company repurchased $29.1 million of its outstanding shares.


"Our strong first-half performance pushed us well ahead of our targets as we look to achieve another year of record results," said Hunt. "We continue to drive growth by innovating in all aspects of our business, particularly with respect to our products, business opportunity and improvement in operational efficiency.

"We posted solid results in nearly all of our markets. We are particularly pleased with the strength of the business in emerging markets, including China and Southeast Asia, which are providing an expanding platform for future success.

"On the product front, we are infusing our ageLOC science into nutritional solutions that target the internal sources of aging. And later this year, we will be taking the next step as we launch our first ageLOC nutritional product - ageLOC Vitality - in the United States, Europe and Japan. This product introduction will be a prelude to the global launch of a new Pharmanex flagship nutritional supplement in the fall of 2011. Our ability to address the sources of aging at the genetic level gives us a clear competitive advantage that we believe will continue to drive both growth and profitability," concluded Hunt.

"Based on the strength of our results in the first half of the year, we are increasing our 2010 projected revenue and earnings per share guidance to $1.47 to $1.49 billion and $1.90 to $1.96, respectively," said Ritch Wood, chief financial officer. "We expect currency to benefit revenue 1 to 2 percent for the year, while we project local-currency revenue growth of 9 to 10 percent. Assuming neutral currency impact for the third quarter, we project revenue in the $352 to $360 million range with earnings per share in the $0.45 to $0.48 range," concluded Wood.

The company's management will host a webcast with the investment community on July 29, 2010 at noon. (EDT). Those wishing to access the webcast, as well as the financial information presented during the call, can visit the Investor Relations page on Nu Skin Enterprises' website, An archive of the webcast will be available at this same URL through Aug. 14, 2010.

The Company

Nu Skin Enterprises, Inc. demonstrates its tradition of innovation through its comprehensive anti-aging product portfolio, independent business opportunity and corporate social responsibility initiatives. Nu Skin's scientific leadership in both skin care and nutrition has established Nu Skin as a premier anti-aging company, evidenced in its unique ageLOC(TM) science that addresses aging at its source. The company's anti-aging products feature the new ageLOC family of skin care products including ageLOC Future Serum and the ageLOC Edition Galvanic Spa(R) System II, as well as Tru Face(R) Essence Ultra and LifePak(R) Nano. A global direct selling company, Nu Skin operates in 50 markets worldwide and has more than 785,000 independent sales representatives. Nu Skin is traded on the New York Stock Exchange under the symbol "NUS." More information is available at

Please note: This press release, particularly the "Outlook" section, contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represent the company's current expectations and beliefs, including, among other things: (i) management's positive outlook for the company; (ii) management's expectations regarding the company's initiatives, strategies, development and launch of new products, and other innovation efforts; and (iii) management's projections regarding revenue, earnings per share, and the impact of foreign currency fluctuations for the year 2010 and for the third quarter of 2010 set forth in the "Outlook" section. The forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed herein. These risks and uncertainties include, but are not limited to: (a) challenging economic conditions globally; (b) the risk of foreign currency fluctuations and the currency translation impact on our business associated with these fluctuations; (c) uncertainty regarding the impact on our business of increased regulatory scrutiny of the direct selling industry in Japan and our efforts to increase distributor compliance efforts in this market;(d) an increase in complaints and general inquiries to consumer protection agencies in Japan regarding the activities of some distributors and the associated risks to the company's business if such increase results in further regulatory scrutiny; (e) regulatory risks associated with the company's tools and products, which could inhibit the company's ability to market a tool or product in a market if it is determined to be a medical device in any market, if distributors make unauthorized claims that would cause such products to be classified as drugs, or if the company is unable to obtain necessary product registrations in a timely manner; (f) continued regulatory scrutiny and investigations in Mainland China, which have from time to time in the past, and could in the future, negatively impact the company's business, including the interruption of sales activities in stores, loss of licenses, and the imposition of fines; (g) any failure of current or planned initiatives or products to generate interest among distributors and customers and generate sponsoring and selling activities on a sustained basis; (h) any failure of the implementation of business transformation initiatives to reduce overhead and drive growth, and any negative impact of such initiatives on the company's ability to effectively manage its operations; (i) adverse publicity related to the company's business, products, industry or any legal actions or complaints by distributors or others; (j) any prospective or retrospective increases in duties on our products imported into ourmarkets outside of the United States and any adverse results of tax audits or unfavorable changes to tax laws in our various markets; and (k) continued competitive pressures in the company's markets. The company's financial performance and the forward-looking statements contained herein are further qualified by a detailed discussion of associated risks set forth in the documents filed by the company with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K filed on March 1, 2010. The forward-looking statements set forth the company's beliefs as of the date of this release, and the company assumes no duty to update the forward-looking statements contained in this release to reflect any change except as required by law.

                        NU SKIN ENTERPRISES, INC.
              Consolidated Statements of Income (Unaudited)
           For the Second Quarters Ended June 30, 2010 and 2009
                 (in thousands, except per share amounts)

                                                    2010               2009
                                                    ----               ----
       North Asia                               $164,105           $146,712
       Americas                                   62,389             62,240
       Greater China                              80,642             52,753
       Europe                                     35,288             32,173
       South Asia/Pacific                         45,938             28,687
                                                  ------             ------
    Total revenue                                388,362            322,565

    Cost of sales                                 67,937             60,637
                                                  ------             ------

    Gross profit                                 320,425            261,928
                                                 -------            -------

    Operating expenses:
       Selling expenses                          160,739            137,242
       General and administrative expenses       100,525             88,674
       Restructuring charges                           ?              1,561
                                                     ---              -----
    Total operating expenses                     261,264            227,477
                                                 -------            -------

    Operating income                              59,161             34,451

    Other income (expense), net                   (7,287)               882
                                                  ------                ---
    Income before provision for income
     taxes                                        51,874             35,333
    Provision for income taxes                    19,482             13,219
                                                  ------             ------

    Net income                                   $32,392            $22,114
                                                 =======            =======

    Net income per share:
       Basic                                       $0.51              $0.35
       Diluted                                     $0.50              $0.35

    Weighted average common shares
       Basic                                      62,919             63,109
       Diluted                                    65,072             63,726

                       NU SKIN ENTERPRISES, INC.
             Consolidated Statements of Income (Unaudited)
        For the Six Month Periods Ended June 30, 2010 and 2009
               (in thousands, except per share amounts)

                                                     2010              2009
                                                     ----              ----
       North Asia                                $334,966          $286,530
       Americas                                   124,843           120,656
       Greater China                              138,327           100,223
       Europe                                      73,068            58,847
       South Asia/Pacific                          81,282            52,507
                                                   ------            ------
    Total revenue                                 752,486           618,763

    Cost of sales                                 132,770           114,443
                                                  -------           -------

    Gross profit                                  619,716           504,320
                                                  -------           -------

    Operating expenses:
       Selling expenses                           315,001           261,741
       General and administrative expenses        199,437           177,030
       Restructuring charges                            ?            10,947
                                                      ---            ------
    Total operating expenses                      514,438           449,718
                                                  -------           -------

    Operating income                              105,278            54,602

    Other income (expense), net                    (6,673)             (354)
                                                   ------              ----
    Income before provision for income
     taxes                                         98,605            54,248
    Provision for income taxes                     35,173            20,293
                                                   ------            ------

    Net income                                    $63,432           $33,955
                                                  =======           =======

    Net income per share:
       Basic                                        $1.01             $0.54
       Diluted                                      $0.98             $0.53

    Weighted average common shares
       Basic                                       62,698            63,221
       Diluted                                     64,904            63,585

                   NU SKIN ENTERPRISES, INC.
            Consolidated Balance Sheets (Unaudited)
                         (in thousands)

                                       June 30,        December 31,
                                             2010              2009
                                             ----              ----
    Current assets:
       Cash and cash equivalents         $172,674          $158,045
       Accounts receivable                 26,150            22,513
       Inventories, net                   113,819           105,661
       Prepaid expenses and other          51,372            51,724
                                           ------            ------
                                          364,015           337,943

    Property and equipment, net            88,979            79,356
    Goodwill                              112,446           112,446
    Other intangible assets, net           79,925            81,968
    Other assets                          127,202           136,736
                                          -------           -------
          Total assets                   $772,567          $748,449
                                         ========          ========

    Current liabilities:
       Accounts payable                   $28,385           $25,292
       Accrued expenses                   129,494           124,520
       Current portion of long-term
        debt                               32,809            35,400
                                           ------            ------
                                          190,688           185,212

    Long-term debt                        113,258           121,119
    Other liabilities                      65,129            66,431
                                           ------            ------
       Total liabilities                  369,075           372,762
                                          -------           -------

    Stockholders' equity:
       Class A common stock                    91                91
       Additional paid-in capital         247,077           232,219
       Treasury stock, at cost           (464,506)         (433,567)
       Retained earnings                  692,835           645,078
       Accumulated other
        comprehensive loss                (72,005)          (68,134)
                                          -------           -------
                                          403,492           375,687
                                          -------           -------
          Total liabilities and
           stockholders' equity          $772,567          $748,449
                                         ========          ========

                               NU SKIN ENTERPRISES, INC.
                    Distributor/Preferred Customer Growth by Market

                             As of June 30, 2010
                         Active*      Executive
                         -------      ---------

    North Asia            327,000        14,286
    Americas              169,000         5,528
    Greater China         114,000         8,398
    Europe                102,000         3,664
    South Asia/
     Pacific               74,000         3,630
                           ------         -----

    Total                 786,000        35,506
                          =======        ======

                                     As of June 30, 2009
                         Active*      Executive
                         -------      ---------

    North Asia            322,000        13,803
    Americas              171,000         5,385
    Greater China         103,000         6,129
    Europe                 89,000         3,173
    South Asia/
     Pacific               67,000         2,525
                           ------         -----

    Total                 752,000        31,015
                          =======        ======

                            % Increase
                         Active*      Executive
                         -------      ---------

    North Asia                1.6%          3.5%
    Americas                (1.2%)          2.7%
    Greater China            10.7%         37.0%
    Europe                   14.6%         15.5%
    South Asia/
     Pacific                 10.4%         43.8%

    Total                     4.5%         14.5%

    *  Active distributors include preferred customers and distributors
    purchasing products directly from the company during the quarter.

SOURCE Nu Skin Enterprises, Inc.

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