2023 ____________ Utah (I.R.S. Employer of incorporation or organization) Identification No.) Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company As of As of December 31, September 30, 2016 2017 ASSETS Current assets Cash and cash equivalents $ 175,774 $ 191,745 Inventories 64,810 63,334 Prepaid expenses and other current assets 37,277 31,373 Total current assets 277,861 286,452 Property and equipment, net 101,267 102,146 Goodwill 16,715 17,167 Intangible assets, net 34,349 34,728 Deferred tax assets 18,292 28,577 Other assets 22,158 21,581 $ 470,642 $ 490,651 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 9,040 $ 9,290 Other current liabilities 129,451 112,137 Total current liabilities 138,491 121,427 Deferred tax liabilities 5,499 5,249 Other long-term liabilities 1,365 1,163 Stockholders’ equity Common stock, $0.001 par value; Authorized — 50,000 shares, issued and outstanding 24,485 as of December 31, 2016 and 23,946 as of September 30, 2017 24 24 Additional paid-in capital 71,505 72,962 Retained earnings 265,405 293,921 Accumulated other comprehensive income (loss) (11,647 ) (4,095 ) Total stockholders’ equity 325,287 362,812 $ 470,642 $ 490,651 Quarter Ended Nine Months Ended October 1, September 30, October 1, September 30, 2016 2017 2016 2017 Net sales $ 254,219 $ 261,765 $ 753,182 $ 774,151 Cost of sales 44,979 47,135 133,869 133,691 Gross profit 209,240 214,630 619,313 640,460 Operating expenses: Associate incentives 112,816 116,010 335,541 350,195 Selling, general and administrative 60,591 67,263 176,986 193,653 Total operating expenses 173,407 183,273 512,527 543,848 Earnings from operations 35,833 31,357 106,786 96,612 Other income (expense): Interest income 338 571 1,099 1,644 Interest expense (46 ) (10 ) (424 ) (31 ) Other, net (24 ) 129 (684 ) 19 Other income (expense), net 268 690 (9 ) 1,632 Earnings before income taxes 36,101 32,047 106,777 98,244 Income taxes 6,003 8,278 28,618 29,858 Net earnings $ 30,098 $ 23,769 $ 78,159 $ 68,386 Earnings per common share Basic $ 1.24 $ 0.98 $ 3.24 $ 2.80 Diluted $ 1.20 $ 0.97 $ 3.12 $ 2.75 Weighted average common shares outstanding Basic 24,178 24,283 24,112 24,462 Diluted 25,050 24,588 25,050 24,871 Comprehensive income: Net earnings $ 30,098 $ 23,769 $ 78,159 $ 68,386 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment (341 ) 2,941 (2,643 ) 10,153 Tax benefit (expense) related to foreign currency translation adjustment (515 ) (625 ) 1,655 (2,601 ) Other comprehensive income (loss), net of tax (856 ) 2,316 (988 ) 7,552 Comprehensive income $ 29,242 $ 26,085 $ 77,171 $ 75,938 Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Shares Value Capital Earnings Income (Loss) Total Balance at December 31, 2016 24,485 $ 24 $ 71,505 $ 265,405 $ (11,647 ) $ 325,287 Net earnings 68,386 68,386 Other comprehensive income (loss), net of tax 7,552 7,552 Equity-based compensation expense 11,711 11,711 Common stock repurchased and retired (865 ) (1 ) (10,129 ) (39,870 ) (50,000 ) Common stock issued under equity award plans 326 1 1 Tax withholding for net-share settled equity awards (125 ) (125 ) Balance at September 30, 2017 23,946 $ 24 $ 72,962 $ 293,921 $ (4,095 ) $ 362,812 2023 Nine Months Ended October 1, September 30, 2016 2017 Cash flows from operating activities Net earnings $ 78,159 $ 68,386 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation and amortization 9,930 11,797 (Gain) loss on sale of property and equipment 55 8 Equity-based compensation expense 13,963 11,711 Deferred income taxes (2,249 ) (12,801 ) Changes in operating assets and liabilities: Inventories (7,922 ) 4,556 Prepaid expenses and other assets (12,179 ) 6,352 Accounts payable 597 550 Other liabilities 1,386 (21,909 ) Net cash provided by (used in) operating activities 81,740 68,650 Cash flows from investing activities Additions to notes receivable (4 ) — Receipts on notes receivable 605 259 Proceeds from sale of property and equipment 3 16 Purchases of property and equipment (26,047 ) (9,168 ) Net cash provided by (used in) investing activities (25,443 ) (8,893 ) Cash flows from financing activities Repurchase of common stock (64,610 ) (50,000 ) Borrowings on line of credit 73,700 3,500 Payments on line of credit (72,500 ) (3,500 ) Payments related to tax withholding for net-share settled equity awards — (125 ) Deferred debt issuance costs (250 ) — Net cash provided by (used in) financing activities (63,660 ) (50,125 ) Effect of exchange rate changes on cash and cash equivalents (1,304 ) 6,339 Net increase (decrease) in cash and cash equivalents (8,667 ) 15,971 Cash and cash equivalents, beginning of period 143,210 175,774 Cash and cash equivalents, end of period $ 134,543 $ 191,745 Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 317 $ 9 Income taxes 41,114 40,532 Cash received during the period for: Income tax refund — 4,700 Non-cash investing activities: Credits on notes receivable 1,142 412 Accrued purchases of property and equipment 1,763 202 Netherlands). 2022. Fair Value Measurements Using Inputs December 31, 2016 Level 1 Level 2 Level 3 Money market funds included in cash equivalents $ 27,917 $ 27,917 $ — $ — Foreign currency contracts included in prepaid expenses and other current assets 4 — 4 — $ 27,921 $ 27,917 $ 4 $ — Fair Value Measurements Using Inputs September 30, 2017 Level 1 Level 2 Level 3 Money market funds included in cash equivalents $ 74,584 $ 74,584 $ — $ — Foreign currency contracts included in other current liabilities (37 ) — (37 ) — $ 74,547 $ 74,584 $ (37 ) $ — December 31, September 30, 2016 2017 Raw materials $ 26,186 $ 22,353 Work in progress 9,455 8,876 Finished goods 29,169 32,105 $ 64,810 $ 63,334 service period, for access to online customer service applications and annual account renewal fees for Associates, for which control is transferred over time as services are delivered and are recognized as revenue on a straight-line basis over the term of the respective contracts. The August 2025. Quarter Ended Nine Months Ended October 1, September 30, October 1, September 30, 2016 2017 2016 2017 Net earnings available to common shareholders $ 30,098 $ 23,769 $ 78,159 $ 68,386 Weighted average common shares outstanding - basic 24,178 24,283 24,112 24,462 Dilutive effect of in-the-money equity awards 872 305 938 409 Weighted average common shares outstanding - diluted 25,050 24,588 25,050 24,871 Earnings per common share from net earnings - basic $ 1.24 $ 0.98 $ 3.24 $ 2.80 Earnings per common share from net earnings - diluted $ 1.20 $ 0.97 $ 3.12 $ 2.75 Quarter Ended Nine Months Ended October 1, September 30, October 1, September 30, 2016 2017 2016 2017 2,309 2,035 2,236 2,091 three months ended October 1, 2022. Quarter Ended Nine Months Ended October 1, September 30, October 1, September 30, 2016 2017 2016 2017 USANA® Nutritionals 85 % 83 % 83 % 84 % USANA Foods 8 % 9 % 10 % 9 % Sensé — beautiful science® 6 % 6 % 6 % 6 % Quarter Ended Nine Months Ended October 1, September 30, October 1, September 30, 2016 2017 2016 2017 Net Sales to External Customers Asia Pacific Greater China $ 124,470 $ 131,273 $ 373,308 $ 399,713 Southeast Asia Pacific 54,351 52,310 154,335 151,381 North Asia 11,555 15,708 33,376 42,612 Asia Pacific Total 190,376 199,291 561,019 593,706 Americas and Europe 63,843 62,474 192,163 180,445 Consolidated Total $ 254,219 $ 261,765 $ 753,182 $ 774,151 Quarter Ended Nine Months Ended October 1, September 30, October 1, September 30, 2016 2017 2016 2017 Net sales: China $ 108,355 $ 116,174 $ 324,689 $ 352,462 United States $ 34,352 $ 34,183 $ 101,245 $ 93,219 As of December 31, September 30, 2016 2017 Long-lived assets: China $ 91,909 $ 94,938 United States $ 63,654 $ 61,384 Forward-looking statements in Part I, Item 2 may involve risks and uncertainties that could cause results to differ materially from those projected (refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements and Certain Risks” on page 1 and the risk factors provided in Part II, Item 1A for discussion of these risks and uncertainties). Nine Months Ended October 1, 2016 September 30, 2017 Product Line USANA® Nutritionals Essentials/CellSentials 20 % 19 % Optimizers 63 % 65 % USANA Foods 10 % 9 % Sensé — beautiful science® 6 % 6 % All Other 1 % 1 % Key Product USANA® Essentials 14 % 13 % Proflavanol® 13 % 12 % BiOmega-3™ 13 % 14 % active Customers purchasing our products. The number of active Associates and Preferred Customers is, therefore, used by management as a key non-financial indicator to evaluate our operational performance. Active Associates by Region As of As of Change from Percent October 1, 2016 September 30, 2017 Prior Year Change Asia Pacific: Greater China 263,000 57.7 % 281,000 60.7 % 18,000 6.8 % Southeast Asia Pacific 91,000 20.0 % 90,000 19.4 % (1,000 ) (1.1 )% North Asia 15,000 3.3 % 23,000 5.0 % 8,000 53.3 % Asia Pacific Total 369,000 81.0 % 394,000 85.1 % 25,000 6.8 % Americas and Europe (1) 87,000 19.0 % 69,000 14.9 % (18,000 ) (20.7 )% 456,000 100.0 % 463,000 100.0 % 7,000 1.5 % Active Preferred Customers by Region As of As of Change from Percent October 1, 2016 September 30, 2017 Prior Year Change Asia Pacific: Greater China 5,000 5.3 % 4,000 4.0 % (1,000 ) (20.0 )% Southeast Asia Pacific 15,000 16.0 % 16,000 16.0 % 1,000 6.7 % North Asia 10,000 10.6 % 11,000 11.0 % 1,000 10.0 % Asia Pacific Total 30,000 31.9 % 31,000 31.0 % 1,000 3.3 % Americas and Europe (1) 64,000 68.1 % 69,000 69.0 % 5,000 7.8 % 94,000 100.0 % 100,000 100.0 % 6,000 6.4 % results. partially offset by modest price increases. Additionally, unfavorable changes in currency exchange rates negatively impacted net sales by an estimated $4.7 million. 2022 Net Sales by Region (in thousands) Quarter Ended October 1, 2016 September 30, Change from Percent Currency Percent Asia Pacific Greater China $ 124,470 49.0 % $ 131,273 50.1 % $ 6,803 5.5 % $ 201 5.3 % Southeast Asia Pacific 54,351 21.4 % 52,310 20.0 % (2,041 ) (3.8 )% (1,197 ) (1.6 )% North Asia 11,555 4.5 % 15,708 6.0 % 4,153 35.9 % (243 ) 38.0 % Asia Pacific Total 190,376 74.9 % 199,291 76.1 % 8,915 4.7 % (1,239 ) 5.3 % Americas and Europe 63,843 25.1 % 62,474 23.9 % (1,369 ) (2.1 )% 1,198 (4.0 )% $ 254,219 100.0 % $ 261,765 100.0 % $ 7,546 3.0 % $ (41 ) 3.0 % Net Sales by Region (in thousands) Nine Months Ended October 1, 2016 September 30, Change Percent Currency Percent Asia Pacific Greater China $ 373,308 49.6 % $ 399,713 51.6 % $ 26,405 7.1 % $ (10,562 ) 9.9 % Southeast Asia Pacific 154,335 20.5 % 151,381 19.6 % (2,954 ) (1.9 )% (3,454 ) 0.3 % North Asia 33,376 4.4 % 42,612 5.5 % 9,236 27.7 % 598 25.9 % Asia Pacific Total 561,019 74.5 % 593,706 76.7 % 32,687 5.8 % (13,418 ) 8.2 % Americas and Europe 192,163 25.5 % 180,445 23.3 % (11,718 ) (6.1 )% (287 ) (5.9 )% $ 753,182 100.0 % $ 774,151 100.0 % $ 20,969 2.8 % $ (13,705 ) 4.6 % 2.7%, due to an 8.8% increase in active Customers. The decrease in constant currency net sales in Southeast Asia Pacific is largely the result of sales declines in the Philippines and Australia, which had local currency net sales declines of 38.1%, and 12.0%, due to a 33.3%, and 6.3% decrease in active Customers, respectively. The decrease in constant currency net sales in North Asia was primarily the result of a 7.2% decrease in local currency net sales in South Korea due to a 7.7% decrease in active Customers. active Customers, respectively. changes. unfavorable changes in currency exchange rates, and loss of leverage on lower net sales, partially offset by decreased inventory valuation adjustments, and the impact of modest price increases. United States on a delayed basis. If SAFE or other Chinese regulators introduce new regulations or change existing regulations which allow foreign investors to remit profits and dividends earned in China to other countries, our ability to remit profits or pay dividends from China to the United States may be limited in the future. prevailing economic climate is our top priority. We actively assess potential acquisition opportunities and investments in complementary ventures. While we continuously aim to preserve ample liquidity and ensure business continuity amid uncertainties, we also explore initiatives such as stock repurchases. These strategic decisions have the potential to impact our liquidity, enabling us to navigate these challenging times effectively. trade payables. this report. 2023 Issuer Period Total Average Total Number of Approximate Fiscal July (Jul. 2, 2017 through Aug. 5, 2017) 189 $ 56.83 189 $ 89,238 Fiscal August (Aug. 6, 2017 through Sep. 2, 2017) 676 $ 58.05 676 $ 50,000 Fiscal September (Sep. 3, 2017 through Sep. 30, 2017) 0 $ 0.00 0 $ 50,000 865 865 Exhibit Description Inline XBRL Instance Document Inline XBRL Taxonomy Extension Schema Document Inline XBRL Taxonomy Extension Calculation Linkbase Document Inline XBRL Taxonomy Extension Definition Linkbase Document Inline XBRL Taxonomy Extension Label Linkbase Document Inline XBRL Taxonomy Extension Presentation Linkbase Document USANA HEALTH SCIENCES, INC. G. Douglas Hekking Chief Financial Officer
______________________2017OR
______________________Utah87-050030687-0500306 (State or other jurisdiction
______________________offices, Zipoffices) (Zip Code)
______________________Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock USNA New York Stock Exchange and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No oLarge accelerated filer xx o oo o (Do not check if a smaller reporting company)o The number outstanding of the registrant’s common stock, as of November 3, 2017 was 23,992,549$0.001 par value.Auditor Name: KPMG LLP Auditor Location: Salt Lake City, Utah Auditor Firm ID: 185 PagePage 67-1516-2525252626272727272729As of
September 30,
2023As of
December 31,
2022ASSETS Current assets Cash and cash equivalents $ 307,081 $ 288,420 Inventories 60,081 67,089 Prepaid expenses and other current assets 23,298 28,873 Total current assets 390,460 384,382 Property and equipment, net 95,159 97,773 Goodwill 16,801 17,368 Intangible assets, net 29,462 32,432 Deferred tax assets 15,135 9,799 Other assets 54,131 54,795 $ 601,148 $ 596,549 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 9,321 $ 11,049 Other current liabilities 103,238 132,784 Total current liabilities 112,559 143,833 Deferred tax liabilities 4,747 4,071 Other long-term liabilities 13,448 14,173 Stockholders' equity Common stock, $0.001 par value; Authorized -- 50,000 shares, issued and outstanding 19,122 as of September 30, 2023 and 19,206 as of December 31, 2022 19 19 Additional paid-in capital 62,152 55,604 Retained earnings 428,447 391,636 Accumulated other comprehensive income (loss) (20,224) (12,787) Total stockholders' equity 470,394 434,472 $ 601,148 $ 596,549 Quarter Ended Nine Months Ended September 30,
2023October 1,
2022September 30,
2023October 1,
2022Net sales $ 213,365 $ 233,300 $ 699,927 $ 770,641 Cost of sales 42,529 46,560 134,374 147,460 Gross profit 170,836 186,740 565,553 623,181 Operating expenses: Associate incentives 89,926 98,090 298,376 336,914 Selling, general and administrative 63,303 66,020 198,325 201,204 Total operating expenses 153,229 164,110 496,701 538,118 Earnings from operations 17,607 22,630 68,852 85,063 Other income (expense): Interest income 2,733 918 6,732 2,330 Interest expense (43) (32) (117) (160) Other, net 234 (292) 375 (1,414) Other income (expense), net 2,924 594 6,990 756 Earnings before income taxes 20,531 23,224 75,842 85,819 Income taxes 9,184 8,295 28,820 29,264 Net earnings $ 11,347 $ 14,929 $ 47,022 $ 56,555 Earnings per common share Basic $ 0.59 $ 0.78 $ 2.44 $ 2.94 Diluted $ 0.59 $ 0.78 $ 2.43 $ 2.93 Weighted average common shares outstanding Basic 19,245 19,221 19,283 19,263 Diluted 19,372 19,252 19,376 19,325 Comprehensive income: Net earnings $ 11,347 $ 14,929 $ 47,022 $ 56,555 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment (1,933) (11,677) (8,236) (24,040) Tax benefit (expense) related to foreign currency translation adjustment 185 1,134 799 3,583 Other comprehensive income (loss), net of tax (1,748) (10,543) (7,437) (20,457) Comprehensive income $ 9,599 $ 4,386 $ 39,585 $ 36,098 Common Stock Additional
Paid-in
CapitalRetained
EarningsAccumulated
Other
Comprehensive
Income (Loss)Total Shares Value Balance at January 1, 2022 19,393 $ 19 $ 50,010 $ 344,637 $ 458 $ 395,124 Net earnings 56,555 56,555 Other comprehensive income (loss), net of tax (20,457) (20,457) Equity-based compensation expense 9,815 9,815 Common stock repurchased and retired (288) — (3,031) (22,351) (25,382) Common stock issued under equity award plans 93 — — Tax withholding for net-share settled equity awards (4,556) (4,556) Balance at October 1, 2022 19,198 $ 19 $ 52,238 $ 378,841 $ (19,999) $ 411,099 2017(in thousands)(unaudited)Common Stock Additional
Paid-in
CapitalRetained
EarningsAccumulated
Other
Comprehensive
Income (Loss)Total Shares Value Balance at December 31, 2022 19,206 $ 19 $ 55,604 $ 391,636 $ (12,787) $ 434,472 Net earnings 47,022 47,022 Other comprehensive income (loss), net of tax (7,437) (7,437) Equity-based compensation expense 10,952 10,952 Common stock repurchased and retired (180) — (1,446) (10,211) (11,657) Common stock issued under equity award plans 96 — — Tax withholding for net-share settled equity awards (2,958) (2,958) Balance at September 30, 2023 19,122 $ 19 $ 62,152 $ 428,447 $ (20,224) $ 470,394 Common Stock Additional
Paid-in
CapitalRetained
EarningsAccumulated
Other
Comprehensive
Income (Loss)Total Shares Value Balance at July 2, 2022 19,196 $ 19 $ 49,206 $ 363,912 $ (9,456) $ 403,681 Net earnings 14,929 14,929 Other comprehensive income (loss), net of tax (10,543) (10,543) Equity-based compensation expense 3,076 3,076 Common stock issued under equity award plans 2 — — Tax withholding for net-share settled equity awards (44) (44) Balance at October 1, 2022 19,198 $ 19 $ 52,238 $ 378,841 $ (19,999) $ 411,099 Common Stock Additional
Paid-in
CapitalRetained
EarningsAccumulated
Other
Comprehensive
Income (Loss)Total Shares Value Balance at July 1, 2023 19,298 $ 19 $ 59,970 $ 427,311 $ (18,476) $ 468,824 Net earnings 11,347 11,347 Other comprehensive income (loss), net of tax (1,748) (1,748) Equity-based compensation expense 3,670 3,670 Common stock repurchased and retired (180) — (1,446) (10,211) (11,657) Common stock issued under equity award plans 4 — — Tax withholding for net-share settled equity awards (42) (42) Balance at September 30, 2023 19,122 $ 19 $ 62,152 $ 428,447 $ (20,224) $ 470,394 Nine Months Ended September 30,
2023October 1,
2022Cash flows from operating activities Net earnings $ 47,022 $ 56,555 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation and amortization 9,790 10,101 Right-of-use asset amortization 5,734 6,057 (Gain) loss on sale of property and equipment 12 138 Equity-based compensation expense 10,952 9,815 Deferred income taxes (4,218) (8,314) Changes in operating assets and liabilities: Inventories 3,403 14,241 Prepaid expenses and other assets 5,116 1,160 Accounts payable (2,357) (2,742) Other liabilities (30,836) (23,572) Net cash provided by (used in) operating activities 44,618 63,439 Cash flows from investing activities Proceeds from the settlement of net investment hedges 3,775 4,555 Payments for net investment hedge (1,271) — Payments to acquire businesses — (6,532) Proceeds from sale of property and equipment 13 4 Purchases of property and equipment (7,170) (7,115) Net cash provided by (used in) investing activities (4,653) (9,088) Cash flows from financing activities Repurchase of common stock (11,599) (25,382) Borrowings on line of credit 750 11,000 Payments on line of credit (750) (11,000) Payments related to tax withholding for net-share settled equity awards (2,958) (4,556) Payments for contingent consideration (338) — Net cash provided by (used in) financing activities (14,895) (29,938) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (6,567) (17,702) Net increase (decrease) in cash, cash equivalents, and restricted cash 18,503 6,711 Cash, cash equivalents, and restricted cash at beginning of period 291,320 243,653 Cash, cash equivalents, and restricted cash at end of period $ 309,823 $ 250,364 Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets Cash and cash equivalents $ 307,081 $ 246,879 Restricted cash included in other assets 2,742 3,485 Total cash, cash equivalents, and restricted cash $ 309,823 $ 250,364 Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 5 $ 47 Income taxes 35,958 39,204 Cash received during the period for: Income tax refund 1,164 96 Non-cash investing and financing activities: Right-of-use assets obtained in exchange for lease obligations 4,963 5,108 Accrued purchases of property and equipment 1,384 204 Contingent consideration given to acquire businesses — 886 Accrued excise tax for repurchase of common stock 58 — —– ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATIONhigh-qualityhigh quality, science-based nutritional and personal care products that are sold internationally through a global network marketing system, which is a form of direct selling.products. The Condensed Consolidated Financial Statements (the “Financial Statements”) include the accounts and operations of USANA Health Sciences, Inc.the Company, which are grouped and its wholly-owned subsidiaries (collectively, the “Company” or “USANA”)presented in two geographic regions: (1) Asia Pacific, and (2) Americas and Europe. Asia Pacific is further divided into three sub-regions: (i) Greater China, (ii) Southeast Asia Pacific, and (iii) North Asia. The countries included in these regions and sub-regions are described below:includes- Hong Kong, Taiwan, and China; China. The Company’s business in China is conducted by BabyCare Holdings, Ltd., the Company’s wholly-owned subsidiary.includes– Australia, New Zealand, Singapore, Malaysia, the Philippines, Thailand, and Indonesia; Indonesia.includes– Japan and South Korea.includes the– United States, Canada, Mexico, Colombia, theand Europe (the United Kingdom, France, Germany, Spain, Italy, Romania, Belgium, and the Netherlands. All intercompany accounts and transactions have been eliminated in consolidation.2016,2022, derived from audited consolidated financial statements, and the unaudited interim condensed consolidated financial information of the Company have been prepared in accordance with the instructions to Form 10-Q and Article 10Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”).SEC. Accordingly, certain information and footnote disclosures that are normally included in financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. In the opinion of the Company’s management, the accompanying interim condensed consolidated financial information contains all adjustments, consisting only of normal recurring adjustments that are necessary to state fairly the Company’s financial position as of September 30, 20172023, and results of operations and cash flows for the quartersthree and nine months ended September 30, 2023 and October 1, 2016 and September 30, 2017. condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC.2022. The results of operations for the three and nine months ended September 30, 2017,2023, are not necessarily indicative of the results that may be expected for the fiscal year ending December 30, 2017.Recent Accounting PronouncementsAdopted accounting pronouncementsIn January 2017 the FASB issued an Accounting Standard Update (“ASU”) No. 2017-04, “Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment.” ASU 2017-04 simplifies the accounting for goodwill impairment by eliminating the Step 2 requirement to calculate the implied fair value2023.goodwill. Instead, under ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of each reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2017-04 effective for the quarter ended September 30, 2017 in conjunction with its annual goodwill impairment test. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements.Contents (Continued)—– ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION - CONTINUEDIssued accounting pronouncementsMay 2014,October 2021, the FASBFinancial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU No. 2014-09, “Revenue2021-08 requires an acquirer to recognize and measure contract assets and contract liabilities (deferred revenue) acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606).” Under this approach, the acquirer applies the revenue model as if it had originated the contracts. This is a departure from the current requirement to measure contract assets and contract liabilities at fair value at the acquisition date. ASU 2014-09 includes a five-step process by which entities will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which an entity expects to be entitled in exchange for those goods or services. The standard also will require enhanced disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB announced a decision to defer the effective date of this ASU. ASU 2014-092021-08 is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted for annual2022 and interim reporting periods beginning after December 15, 2016. The amendments maywithin those annual periods. ASU 2021-08 should be applied retrospectivelyprospectively to each prior period (full retrospective)business combinations occurring on or retrospectively with the cumulative effect recognized as ofafter the date of initial application (modified retrospective).adoption. Evaluation of this new standard is dependent on multiple circumstances including the timing and complexity of completed business combinations. The Company plans to adoptadopted ASU 2014-09 in2021-08 during the first quarter of 20182023 and apply the modified retrospective approach.The Company continues to evaluateadoption of the standard did not have an impact of this ASU on the specific areas that apply to the Company and their potential impact to its processes,condensed consolidated financial statements.financial reporting, disclosures, and controls. At this point, the Company has determined that the overall impact of adopting this ASU will not be material. This ASU will primarily involve updating revenue related internal control documentation and expanding revenue disclosures in our periodic filings. In addition to the documentation updates, the Company is considering a change in the timing for recognizing revenue on orders that have shipped but have not been delivered at period end. None of these changespronouncements had, or are expected to have, a material impact on the Company’sCompany's condensed consolidated financial statements.In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” ASU 2016-02 is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Additionally, the ASU will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The update requires lessees to apply a modified retrospective approach for recognition and disclosure, beginning with the earliest period presented. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently in the process of evaluating the impact of the ASU on the Company’s outstanding leases and expects that adoption will have an impact on the consolidated balance sheets related to recording right-of-use assets and corresponding lease liabilities.In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2017. The Company does not expect the adoption of ASU 2016-18 will have a material impact on its statement of cash flows.In May 2017 the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting.” ASU 2017-09 provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. ASU 2017-09 does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions, or award classification and would not be required if the changes are considered non-substantive. The ASU is effective for all annual and interim periods in fiscal years beginning after December 15, 2017. The Company does not expect the adoption of ASU 2017-09 will have a material impact on its consolidated financial statements.USANA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)(in thousands, except per share data)(unaudited)—– FAIR VALUE MEASURES···the dates indicated,September 30, 2023, and December 31, 2022, the following financial assets and liabilities were measured at fair value on a recurring basis using the type of inputs shown:September 30,
2023Fair Value Measurements Using Inputs Level 1 Level 2 Level 3 Money market funds included in cash equivalents $ 243,577 $ 243,577 $ — $ — Foreign currency contracts included in other current liabilities (66) — (66) — Deferred compensation liabilities included in other long-term liabilities (2,580) — (2,580) — December 31,
2022Fair Value Measurements Using Inputs Level 1 Level 2 Level 3 Money market funds included in cash equivalents $ 211,539 $ 211,539 $ — $ — Foreign currency contracts included in other current liabilities (3,150) — (3,150) — Deferred compensation liabilities included in other long-term liabilities (1,632) — (1,632) — Contingent consideration included in other current liabilities of ($338) and other long-term liabilities of ($548) (886) — — (886) goodwill, intangiblelong-lived assets, and property and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or tested at least annually for goodwill and indefinite-lived intangibles) such that a non-financial asset is required to be evaluated for impairment, an impairment charge is recordedrequired, a non-financial asset would be written down to reduce the carrying value to the fair value, if the carrying value exceeds the fair value. AtAs of September 30, 2023 and December 31, 2016 and September 30, 2017,2022, there were no non-financial assets measured at fair value on a non-recurring basis.USANA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)(in thousands, except per share data)(unaudited)NOTE B — FAIR VALUE MEASURES - CONTINUEDTheaccounts receivable,and restricted cash, notes receivable, and accounts payable.cash. The recorded values of cash equivalents accounts receivable,and restricted cash and accounts payable approximate their fair values, based on their short-term nature. Historically,September 30,
2023December 31,
2022Raw materials $ 20,886 $ 21,776 Work in progress 3,899 4,285 Finished goods 35,296 41,028 Inventories $ 60,081 $ 67,089 Noncurrent inventories $ 3,720 $ 3,479 notes receivable approximated fair value because the variable interest rates in the notes reflected current market rates. As of September 30, 2017, an impairmentsecurities was recorded on a note receivable (discussed in Note E)necessary based on the estimated fair valueobservable price change. During the three and nine months ended October 1, 2022, no observable price changes occurred. Additionally, no impairment of securities was recorded for the three and nine months ended September 30, 2023, and October 1, 2022.underlying collateralCompany’s sales are for products sold at a point in time and shipped to customers, for which control is transferred as a practical expedient,goods are delivered to the third-party carrier for shipment. The Company receives payment, primarily via credit card, for the sale of products at the time customers place orders and payment is required prior to shipment. Contract liabilities, which are recorded within the “Other current liabilities” line item in the condensed consolidated balance sheets, primarily relate to deferred revenue for product sales for customer payments received in advance of shipment, for outstanding material rights under the initial order program, and for services where control is considered to be a non-recurring fair value measurement using Level 2 inputstransferred over time as significant observable inputs exist for similar assets.NOTE C — INVENTORIESInventories consistedservices are delivered.following:D —E – REVENUE AND CONTRACT LIABILITIES - CONTINUEDQuarter Ended Nine Months Ended September 30,
2023October 1,
2022September 30,
2023October 1,
2022Other Revenue $ 715 $ 894 $ 2,196 $ 2,689 September 30,
2023December 31,
2022Contract liabilities at beginning of period $ 20,875 $ 19,635 Increase due to deferral of revenue at end of period 10,384 20,875 Decrease due to beginning contract liabilities recognized as revenue (19,734) (19,635) Contract liabilities at end of period $ 11,525 $ 20,875 2017.2023. The Company performed a qualitative assessment of each reporting unit and determined that it was not more-likely-than-not that the fair value of any reporting unit was less than its carrying amount. As a result, a quantitative goodwillno impairment test was not required and no impairments of goodwill werewas recognized.2017.2023. The Company performed a qualitative assessment of the indefinite-lived intangible asset and determined that isit was not more-likely-than-not that the fair value of the indefinite-lived intangible asset was less than the carrying amount. As a result, the quantitative impairment test was not required and no impairment was recognized.NOTE E — OTHER ASSETSOther assets consist primarily of land use rights related to a production facility in China and a secured loan to a former supplier of the Company’s nutrition bars. Theindefinite-lived intangible asset was recognized.extended non-revolving creditas borrower, and certain of its material subsidiaries as guarantors, entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A. (“Bank of America”) as Administrative Agent, Swingline Lender and Letter of Credit Issuer, and the other lenders party thereto. On August 10, 2022, the Company entered into the Second Amendment to the former supplierSecond Amended and Restated Credit Agreement ("Restated Credit Agreement"), which replaces the Eurodollar Rate, and LIBOR terms and provisions with the Bloomberg Short-Term Bank Yield Index rate ("BSBY").nutrition barsthe Company, and subject to allow itcertain conditions, the Company may request to acquire equipment thatincrease the aggregate commitment under the Credit Facility up to an additional $200,000.necessary to manufacture the USANA nutrition bars, which is secured by the equipment. This relationship was intended to provide improved supply chain stability for USANA and create a mutually beneficial relationship between the parties. Interest accrues at an annual interest rate of LIBOR plus 400 basis points. The note has a maturity date of February 1, 2024 and was to be repaid by a combination of cash payments and credits for the manufacture of USANA’s nutrition bars. There is no prepayment penalty. The total contractual unpaid principaloutstanding debt balance including accrued unpaid interest on the note receivable from this supplier as of December 31, 2016, and September 30, 2017 was $6,867 and $6,742, respectively.A loan is considered impaired when, based on current information and events; it is probable that the Company will be unable to collect the scheduled payments in accordance with the contractual terms of the loan. Factors considered in determining impairment include payment status, collateral value and the probability of collecting payments when due.USANA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)(in thousands, except per share data)(unaudited)NOTE E — OTHER ASSETS - CONTINUEDDuring the first half of 2017, the Company experienced challenges with the third-party supplier of the Company’s nutrition bars and subsequently determined to no longer use this supplier. The Company has evaluated the recoverability of the note receivable from this supplier, considering financial data of the third-party supplier, and the estimated fair value of the collateralized equipmentCredit Facility as of September 30, 2017. Based on this analysis,2023 and December 31, 2022. The obligations of the Company believes it is probable that the note receivable has been impaired. Accordingly, an impairment of $1,622 was recorded as determined by the difference between the notes receivable balance and the estimated fair value of the collateralized equipment as a practical expedient. The Company will continue to evaluate the recoverability of the note receivable in future periods.This third-party supplier is considered to be a variable interest entity; however, the Company is not the primary beneficiary due to the inability to direct the activities that most significantly affect the third-party supplier’s economic performance. Additionally, the Company does not absorb a majority of the third-party supplier’s expected losses or returns. Consequentially, the financial information of the third-party supplier is not consolidated. The maximum exposure to loss as a result of the Company’s involvement with the third-party supplier is limited to the carrying value of the note receivable due from the third-party supplier.NOTE F — LINE OF CREDITThe Company has a $75,000 line of credit with Bank of America. Interest is computed at the bank’s Prime Rate or LIBOR, adjusted by features specified inunder the Credit Agreement. The collateral for this line of credit isAgreement are secured by the pledge of the capital stock of certain subsidiaries of the Company, set forth pursuant to a Security and Pledge Agreement.a separate pledge agreement with the bank. On February 19, 2016, the Company entered into an Amended and Restated Credit Agreement with Bank of America, which extends the term ofthousands, except per share data)Agreement to April 27, 2021 and increasesFacility is computed at BSBY, adjusted by features specified in the Credit Agreement. The covenants require the Company’s consolidated rolling four-quarter adjustedconsolidated EBITDA covenant from $60,000(as defined in the Credit Agreement) to equal tobe $100,000 or greater than $100,000 and aits ratio of consolidated funded debt to adjustedconsolidated EBITDA ofto be equal to or less than 2.0 to 1.0 at the end of each quarter.adjustedCredit Agreement does not include any restrictions on the payment of cash dividends or share repurchases by the Company. Consolidated EBITDA under this agreement is modified for certain non-cash expenses. Part of the credit agreement is that any existing bank guaranteesand consolidated funded debt are considered a reduction of the overall availability of credit and part of the covenant calculation. This resulted in a $5,241, and $4,729 reduction in the available borrowing limit as of December 31, 2016 and September 30, 2017, respectively, due to existing normal course of business guarantees in certain markets.There was no outstanding debt on this line of credit at December 31, 2016 or at September 30, 2017. non-GAAP terms.line of creditCredit Facility in full at the time of maturity in April 2021 unless the line of credit is replaced or terms are renegotiated.G —H – CONTINGENCIES (Continued)G — CONTINGENCIES - CONTINUEDIn August 2014, a purported shareholder derivative lawsuit was filed in the Third Judicial District Court of Salt Lake County, State of Utah (James Robert Rawcliffe v. Robert Anciaux, et al.,) against certain of the Company’s directors and officers. The derivative complaint, which also names USANA as a nominal defendant but is asserted on USANA’s behalf, contains claims of breach of fiduciary duty, waste of corporate assets and unjust enrichment against the defendant directors and officers in connection with certain equity awards granted by the Compensation Committee of the Company’s Board of Directors in February 2014. In October 2014, the Company filed a motion to dismiss the complaint and, in March 2015, the court granted that motion and dismissed the complaint without prejudice. In May 2015, the plaintiffs filed an appeal with the Utah Supreme Court. The Supreme Court remanded the case to the Utah Court of Appeals. In December 2016, the Court of Appeals certified the case to the Utah Supreme Court, confirming the Company’s belief that this case addresses a new issue under Utah law. Subsequent to September 30, 2017, in October 2017 the Utah Supreme Court affirmed the trial court’s motion to dismiss the complaint.On February 7, 2017, the Company disclosed in a Current Report on Form 8-K filed with the SEC that it is conducting a voluntary internal investigation regarding its BabyCare operations in China. In connection with this investigation, the Company expects to continue to incur costs in conducting the on-going review and investigation, in responding to requests for information in connection with any government investigations and in defending any potential civil or governmental proceedings that are instituted against it or any of its current or former officers or directors. The Company has voluntarily contacted the SEC and the United States Department of Justice to advise both agencies that an internal investigation is underway and intends to provide additional information to both agencies as the investigation progresses. Because the internal investigation is ongoing, the Company cannot predict the duration, scope, or result of the investigation. One or more governmental actions could be instituted in respect of the matters that are the subject of the internal investigation, and such actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist orders, criminal penalties, or other relief.On February 13, 2017, a putative shareholder class action complaint was filed in the United States District Court for the District of Utah, with the plaintiff, Chi Wah, alleging that the Company failed to disclose that (i) the Company’s BabyCare subsidiary had engaged in improper reimbursement practices in China, (ii) these practices constituted violations of the Foreign Corrupt Practices Act (“FCPA”), (iii) as such, the Company’s China revenues were in part the product of unlawful conduct and unlikely to be sustainable, and (iv) the foregoing conduct, when it became known, was likely to subject the Company to significant regulatory scrutiny. The lawsuit names as defendants the Company; its former Co-Chief Executive Officer, David A. Wentz; and its Chief Leadership Development Officer, Paul A. Jones (formerly the Chief Financial Officer). On behalf of the plaintiff, and a putative class of purchasers of USANA stock between March 14, 2014 and February 7, 2017, the plaintiff asserts claims for violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. The plaintiff seeks, among other things, an award of damages, interest, reasonable attorney’s fees, expert fees, and other costs. The Company believes that the action is without merit, and intends to vigorously defend against all claims asserted. In September 2017, the Company filed a motion to dismiss the complaint.Chinese regulators regularly make inquiries about the business activities of direct sellers in China and have done so with the Company’s operating subsidiary in China, BabyCare, Ltd. There have been instances where inquiries or complaints about BabyCare’s business have resulted in the payment of fines by BabyCare. For instance, during the first quarter of 2017, an inquiry from a provincial-level regulator was received and promptly resolved by BabyCare. A fine was issued in a BabyCare Associate’s name and paid by BabyCare in connection with resolving this matter. The fine was not quantitatively material.USANA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)(in thousands, except per share data)(unaudited)NOTE H —J – COMMON STOCK AND EARNINGS PER SHAREare(“EPS”) is based on the weighted-average number of shares outstanding for each period. Shares that have been repurchased and retired during the periods specified below have been included in the calculation of the number of weighted-average shares that are outstanding for the calculation of basic earnings per shareEPS based on the time they were outstanding in any period. Diluted earnings per common share areEPS is based on shares that are outstanding (computed under basic EPS) and on potentially dilutive shares. Shares that are included in the diluted earnings per shareEPS calculations under the treasury stock method include equity awards that are in-the-money but have not yet been exercised.earnings per shareEPS and diluted earnings per shareEPS for the periods indicated:Quarter Ended Nine Months Ended September 30,
2023October 1,
2022September 30,
2023October 1,
2022Net earnings available to common shareholders $ 11,347 $ 14,929 $ 47,022 $ 56,555 Weighted average common shares outstanding - basic 19,245 19,221 19,283 19,263 Dilutive effect of in-the-money equity awards 127 31 93 62 Weighted average common shares outstanding - diluted 19,372 19,252 19,376 19,325 Earnings per common share from net earnings - basic $ 0.59 $ 0.78 $ 2.44 $ 2.94 Earnings per common share from net earnings - diluted $ 0.59 $ 0.78 $ 2.43 $ 2.93 Quarter Ended Nine Months Ended September 30,
2023October 1,
2022September 30,
2023October 1,
2022315 439 322 328 quarterthree months ended September 30, 2017,2023, the Company repurchased and retired 865180 shares for $50,000 under$11,657 including accrued excise tax of $58. There were no shares repurchased during the Company’s share repurchase plan.2016, and September 30, 2017,2022, the Company repurchased and retired 1,106180 shares and 865288 shares for $64,610$11,657 and $50,000, respectively$25,382, respectively, under the Company’sCompany's share repurchase plan. The excess of the repurchase price over par value is allocated between additional paid-in capital and retained earnings on a pro-rata basis. The purchase of shares under this plan reduces the number of shares outstanding in the above calculations.2017,2023, the remaining approvedauthorized repurchase amount under the stock repurchase plan was $50,000.$71,182. There currently is no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases. (Continued)I —K – SEGMENT INFORMATIONUSANAdirect sellingglobal direct-selling nutrition, personal health and wellness company that develops and manufactures and distributes high-qualityhigh quality, science-based nutritional, and personal care products thatproducts.sold throughidentified according to how business activities are managed and evaluated by the chief operating decision maker (“CODM”), our CEO. The CODM manages the business, allocates resources, makes operating decisions, and evaluates performance for a global network marketing system of independent distributors (“Associates”). As such, managementgeographic region or market based on net sales. The Company aggregates its direct-selling operating segments (“Direct-selling”) into one reportable segment, as management believes that the Company’s Direct-selling segments exhibit similar long-term financial performance and have similar economic characteristics. PerformanceThe CODM does not evaluate operating segments using asset information, accordingly, the Company does not report asset information by segment.a region or market is evaluated based on sales. purposes of reconciliation of net sales to the Company’s Condensed Consolidated Statements of Comprehensive Income.Quarter Ended Nine Months Ended September 30,
2023October 1,
2022September 30,
2023October 1,
2022Net Sales: Direct-selling $ 211,932 $ 230,996 $ 695,607 $ 768,337 All other 1,433 2,304 4,320 2,304 Consolidated Total $ 213,365 $ 233,300 $ 699,927 $ 770,641 nutritionalnutritionals, food, and personal care and skincare products for the periods indicated.Selected financial information forQuarter Ended Nine Months Ended September 30,
2023October 1,
2022September 30,
2023October 1,
2022USANA® Nutritionals 86 % 86 % 87 % 86 % 7 % 7 % 7 % 7 % Personal care and Skincare 6 % 6 % 5 % 6 % All Other 1 % 1 % 1 % 1 % Company is presented for two geographic regions: Asia Pacific, with three sub-regions under Asia Pacific, and Americas and Europe. Individual markets are categorized into these regions as follows:· Asia Pacific —· Greater China — Hong Kong, Taiwan and China(1)· Southeast Asia Pacific — Australia, New Zealand, Singapore, Malaysia, the Philippines, Thailand, and Indonesia· North Asia — Japan and South Korea· Americas and Europe — United States, Canada, Mexico, Colombia, the United Kingdom, France, Belgium, and the Netherlands.(1) The Company’s business in China is thatActive Nutrition line. (Continued)I —K – SEGMENT INFORMATION - CONTINUEDpresented for the periods indicatedlisted below:Quarter Ended Nine Months Ended September 30,
2023October 1,
2022September 30,
2023October 1,
2022Net Sales to External Customers Asia Pacific Greater China $ 106,609 $ 109,682 $ 359,178 $ 384,196 Southeast Asia Pacific 39,151 47,308 124,774 149,880 North Asia 24,244 25,667 79,381 84,409 Asia Pacific Total 170,004 182,657 563,333 618,485 Americas and Europe 43,361 50,643 136,594 152,156 Consolidated Total $ 213,365 $ 233,300 $ 699,927 $ 770,641 Quarter Ended Nine Months Ended September 30,
2023October 1,
2022September 30,
2023October 1,
2022Net sales: China $ 94,674 $ 97,443 $ 322,589 $ 346,086 South Korea $ 23,745 $ 25,099 $ 77,537 $ 82,439 United States $ 22,981 $ 26,942 $ 72,647 $ 79,803 As of September 30,
2023December 31,
2022Long-lived assets: United States $ 89,026 $ 89,150 China $ 76,104 $ 83,938 The following discussionanalysisAnalysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide an understanding of USANA’s financial condition, and results of operations and cash flows by reviewing certain key indicators and measures of performance.sections:· sections as follows:·· Current Focus and Recent Developments··· Forward-Looking Statements and Certain Risksincluded inof our Annual Report on Form 10-K for the year ended December 31, 2016,2022 (“2022 Form 10-K”), filed with the SEC on February 28, 2023, and our other filings, including the Current Reports on Form 8-K, that have been filed with the SEC through the date of this report.high-quality,high quality, science-based nutritional and personal care and skincare products that are distributed internationally primarily through a network marketing system, which is a form of direct selling. We have chosenuse this distribution method asbecause we believe it is more conducive to meeting our vision as a company, which is improvingto improve the overall health and nutrition of individuals and families around the world. Our customer base comprisesis primarily comprised of two types of customers: “Associates” and “Preferred Customers”Customers,” referred to together as “active Customers.” Our Associates also sell our products to retail customers. Associates share in our company vision by acting as independent distributors of our products in addition to purchasing our products for their personal use. Preferred Customers purchase our products strictly for their personal use and are not permitted to resell or to distribute the products. As of September 30, 2017, we had approximately 563,000 active Customers worldwide. For purposes of this report, weWe only count as active Customers those Associates and Preferred Customers who have purchased from us at any time during the most recent three-month period.We have ongoing operations in the following markets, which are grouped and presented as follows:· Asia Pacific· Greater China — Hong Kong, Taiwan, and China(1)· Southeast Asia Pacific — Australia, New Zealand, Singapore, Malaysia, the Philippines, Thailand, and Indonesia· North Asia — Japan and South Korea· Americas and Europe — United States, Canada, Mexico, Colombia, the United Kingdom, France, Belgium, and the Netherlands(1) Our business in China is that As of BabyCare, our wholly-owned subsidiary.Our primary product lines consist of USANAâ Nutritionals, USANA Foods, and Sensé — beautiful scienceâ (Sensé), which is our line of personal care products. The USANA Nutritionals product line is further categorized into two separate classifications: Essentials and Optimizers. The following tables summarize the approximate percentage of total product revenue that has been contributed by our major product lines and our top-selling products for the current and prior-year periods as indicated:We believe that our ability to attract and retain Associates and Preferred Customers to sell and consume our products is positively influenced by a number of factors, some of which include: the general public’s heightened awareness and understanding of the connection between diet and long-term health, and the growing desire for a secondary source of income and small business ownership.We believe that our high-quality products and our financially rewarding Associate Compensation Plan are the key components to attracting and retaining Associates. We periodically make changes to our Compensation Plan in an effort to ensure that our plan is among the most rewarding in the industry, to encourage behavior thatSeptember 30, 2023, we believe leads to a successful business for our Associates, and to ensure that our plan provides us with leverage to grow sales and earnings.To further support our Associates in building their businesses, we sponsor meetings and events throughout the year, which offer information about our products and our network marketing system. These meetings are designed to assist Associates in their business development and to provide a forum for interaction with our Associate leaders and members of our management team. We also provide low cost sales tools, including online sales, business management, and training tools, which we believe are an integral part of building and maintaining a successful home-based business for our Associates. Although we provide training and sales tools, we ultimately rely on our Associates to sell our products, attract newhad approximately 464,000 active Customers to purchase our products, and educate and train new Associates.Because weworldwide.currencies, ourcurrencies. Our reported U.S. dollar sales and earnings can be significantly affected by fluctuations in currency exchange rates. In general, our operating results are affected positively by a weakening of the U.S. dollar and negatively by a strengthening of the U.S. dollar. During the nine months ended September 30, 2017,2023, net sales outside of the United States represented 88.0%89.6% of consolidated net sales. In our net sales discussions that follow, we approximate the impact of currency fluctuations on net sales by translating current year sales at the average exchange rates in effect during the comparable periods of the prior year.Nine Months Ended September 30,
2023October 1,
2022Product Line USANA® Nutritionals Optimizers 71% 69% Essentials/CellSentials(1) 16% 17% USANA Foods(2) 7% 7% Personal care and Skincare 5% 6% All Other 1% 1% Key Product USANA® Essentials/CellSentials 10% 11% Proflavanol® 10% 10% Probiotic 10% 10% exclusively to a customer base of independent Associates and Preferred Customers, towe increase netour sales we must increase eitherby increasing the number or the productivity of our active Customers. Increasing the productivity of our active Customers, has not been ourthe amount they spend on average, or both. Our primary focus. Rather, we seekfocus continues to increasebe increasing the number of active Customers who use and sell our products.Customers. We believe this focus is more consistent with our vision of improving the overall health and nutrition of individuals and families around the world. Sales to Associates accountaccount for the majorityapproximately 52% of our productDirect-selling segment sales representing approximately 91% of product sales during the nine months ended September 30, 2017;2023, with the remainder of our sales arebeing to Preferred Customers. Increases or decreases in product sales are typically the result of variations in the volume of product sold relating to fluctuations in the number ofDuring the first quarter of 2017, we initiated our Preferred Customer Invitation Plan in the United States and pursuant to this invitation 16,000 active Associates in the United States became Preferred Customers. We are continuing to evaluate whether to offer the same invitation to Associates in our other markets around the world.tablestable below summarizesummarizes the changes in our active Customer base by geographic region. These numbers have beenregion, rounded to the nearest thousand as of the dates indicated.Total Active Customers by Region Change from
Prior YearPercent
ChangeAs of
September 30, 2023As of
October 1, 2022Asia Pacific: Greater China 230,000 49.6 % 213,000 44.9 % 17,000 8.0 % Southeast Asia Pacific 83,000 17.9 % 95,000 20.1 % (12,000) (12.6 %) North Asia 49,000 10.5 % 54,000 11.4 % (5,000) (9.3 %) Asia Pacific Total 362,000 78.0 % 362,000 76.4 % — — % Americas and Europe 102,000 22.0 % 112,000 23.6 % (10,000) (8.9 %) 464,000 100.0 % 474,000 100.0 % (10,000) (2.1 %) (1) Pursuant to the Preferred Customer Invitation Plan in the United States, 16,000 active Associates became Preferred Customers during the first quarter2017.ContentsCurrent Focus and Recent DevelopmentsOur primary objective is to increase the number of active Customers who use our products throughout the world. We have several strategies in place to support this objective, including:· Future product and technology innovation that supports our desire to personalize our customer’s overall experience with USANA that would encompass our product offering, Associate Compensation Plan, and online business environment;· Expansion in China, where we plan to continue devoting significant time and resources on growing this market;· Enhancing our information technology systems and infrastructure to support our growing active Customer base and to further improve our active Customers’ experience of doing business with us around the world as well as to prepare for future growth and expansion;· Development and offering of market-specific promotions to build momentum and grow sales and active Customer growth in each of our markets around the world;· Enhancing our Preferred Customer Program through our Preferred Customer Invitation Plan and additional strategies; and· Increasing our brand recognition, which includes our relationship as a Trusted Partner and Sponsor of The Dr. Oz Show, our partnership with the Women’s Tennis Association, and our sponsorship of the U.S. Ski Team; to make it easier for our Associates to talk about USANA with potential customers.In August 2017, at our International Convention we introduced Celavive® our new innovative skincare system formulated with our InCelligence® Technology. Celavive® was made available for purchase exclusively to convention attendees, which allowed us to get this new product line into the hands of our brand advocates prior to the official launch in 2018. We will officially launch the Celavive® line in select markets beginning in January 2018, and then systematically roll it out to other markets around the world.At our International Convention, we also announced that we will be expanding sales and operations into four additional European countries beginning in mid 2018. These new markets, Romania, Germany, Italy and Spain, will increase our global footprint from 20 to 24 markets worldwide.Regulation G, Conditions for Use of non-GAAP Financial Measures, and other SEC regulations define and prescribe the conditions for useinformation. Constantinformation is meaningful and local currencyuseful in understanding the activities and business metrics of our operations. Management believes these measures reflect an additional way of viewing aspects of our business that, when viewed with our U.S. GAAP results, provide a more complete understanding of factors and trends affecting our business. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes. We provide such non-GAAP financial information for informational purposes only. Readers should consider the information in addition but not instead of or superior to, our Consolidated Financial Statements prepared in accordance with U.S. GAAP, accompanying this report.earnings, EPS“local currency” net sales, and other currency-related financial information (collectively, “Financial Results”) are non-GAAPterms to discuss our financial measures that removeresults in a way we believe is helpful in understanding the impact of fluctuations in foreign-currency exchange rates and help facilitatefacilitating period-to-period comparisons of the Company’s Financial Resultsresults of operations and thus provideproviding investors an additional perspective on trends and underlying business results. ConstantChanges in our reported revenue and profits in this report include the impacts of changes in foreign currency Financial Resultsexchange rates. As additional information to the reader, we provide constant currency assessments in the tables and the narrative information in this MD&A to remove or quantify the impact of the fluctuation in foreign exchange rates and utilize constant currency results in our analysis of performance. Our constant currency financial results are calculated by translating the current period’s Financial Resultsfinancial results at the same average exchange rates in effect during the applicable prior-year period and then comparing this amount for the current period to the prior-year period’s Financial Results. A reconciliation of these non-GAAP financial measures accompanies any reference to them in the presentation in the accompanying financial statements and notes thereto. Management believes that the non-GAAP financial measures assist management and investors in evaluating, and comparing from period to period, results from ongoing operations in a more meaningful and consistent manner while also highlighting more meaningful trends in the results of operations. These measures are used in addition to and in conjunction with results presented in accordance with GAAP; investors should rely primarily on our GAAP results and use non-GAAP financial measures only supplementally in making investment decisions.2017 increased 3.0%2023 decreased 8.5% to $261.8$213.4 million, an increasea decrease of $7.5$19.9 million, compared with the thirdprior-year quarter. The decrease in net sales was primarily the result of a 2.1% decline in active Customers compared to the prior-year quarter, of 2016.2017 decreased 21.0% to $23.82023 were $11.3 million, a decrease of $6.3 million,24.0% compared with $14.9 million during the third quarter of 2016.prior-year quarter. The decrease in net earnings was mostly the result of decreased sales and higher selling general and administrativerelative operating expenses and a highercombined with an increase in effective tax rate.2016 and September 30, 2017our net sales by geographic region for the fiscal quarters ended as of the dates indicated:
2017
prior year
change
impact on
sales
change
excluding
currency
impactNet Sales by Region
(in thousands)
Quarter EndedChange from prior
yearPercent change Currency impact on
salesPercent change
excluding currency
impactSeptember 30, 2023 October 1, 2022 Asia Pacific Greater China $ 106,609 50.0 % $ 109,682 47.0 % $ (3,073) (2.8 %) $ (5,377) 2.1 % Southeast Asia Pacific 39,151 18.3 % $ 47,308 20.3 % (8,157) (17.2 %) (532) (16.1 %) North Asia 24,244 11.4 % $ 25,667 11.0 % (1,423) (5.5 %) 487 (7.4 %) Asia Pacific Total 170,004 79.7 % 182,657 78.3 % (12,653) (6.9 %) (5,422) (4.0 %) Americas and Europe 43,361 20.3 % 50,643 21.7 % (7,282) (14.4 %) 745 (15.9 %) $ 213,365 100.0 % $ 233,300 100.0 % $ (19,935) (8.5 %) $ (4,677) (6.5 %) increasedecline in net salesthis region is largely the result of lower active Customer counts in Greater China continues to be driven by growth in Mainland China, where local currency net sales increased 7.3% and the number of active Customers increased 8.7%. Net sales decreased in Southeast Asia Pacific as a result of changes in currency exchange rates and softer sales in the Philippines, which declined 10.2% on a year-over-year basis. TheNorth Asia sub-regions, partially offset by an increase in net salesactive Customer counts in North Asia continues to be driven by growth in South Korea, where constant currency net sales increased 41.8%, and the number of active Customers increased 39.1%.Americas and Europe: Net sales in this region were affected by local currency sales decreases of 7.1% in Canada, and 8.1% in Mexico. These decreases are primarily due to declines in the number of active Customers of 6.7% in Canada, and 10.0% in Mexico. Net sales in the U.S. were essentially flat with the prior year period as a result of an estimated $2.5 million in incremental product sales at our 2017 International Convention.Gross ProfitGross profit decreased 30 basis points to 82.0% of net sales for the third quarter of 2017, from 82.3% in the prior year. This decrease can be attributed to changes in sales mix by market, higher material costs in China, and increased scrap costs. These changes were offset by favorable changes in currency exchange rates in markets outside ofGreater China, as well as modest price increases throughout the annual price adjustments. With the exception of China, where products are manufactured in-market, changes in currency exchange rates affect the valuation of U.S. manufactured inventory that is transferred to international subsidiaries.Associate IncentivesAssociate incentives were essentially flat at 44.3% of net sales for the third quarter of 2017.Selling, General and Administrative ExpensesIn absolute terms, our selling, general and administrative expense increased $6.7 million during the third quarter of 2017 when compared with the same period of the prior year. This increase can be attributed to incremental expense associated with our 2017 International Convention, China and our internal investigation, continued investment in information technology systems and infrastructure, and an impairment charge related to our note receivable from a former third-party supplier.Income TaxesIncome taxes were 25.8% of earnings in the third quarter of 2017 compared with 16.6% of earnings in the prior year. The higher effective tax rate for the third quarter was primarily due to lower excess tax benefits from equity award exercises recognized during the current quarter compared to the prior-year quarter.Diluted Earnings Per ShareDiluted earnings per share decreased 19.2% in the third quarter of 2017 when compared with the prior-year quarter. This decrease was due to lower net earnings. These decreases were partially offset by a lower number of shares outstanding resulting from activity under our share buyback program.Nine Months Ended October 1, 2016 and September 30, 2017Net SalesThe following table summarizes the changes in our net sales by geographic region for the periods ended as of the dates indicated:
2017
from prior
year
change
impact on
sales
change
excluding
currency
impactChanges in net sales are primarily due to corresponding changes in active Customer counts unless specifically noted otherwise.Asia Pacific: The increase in net sales in Greater China continues to be driven by growth in Mainland China, where local currency net sales increased 12.2%. The decrease in net sales in Southeast Asia Pacific was the result of changes in currency exchange rates and softer sales in the Philippines, which declined 6.5%.region. The increase in constant currency net sales in North Asia continues to be driven by growthGreater China was primarily the result of a sales increase in South Korea,China, where local currency net sales increased 28.4%.Net salesThe decrease in this region were affectedis largely the result of lower active Customer counts in the region, partially offset by amodest price increases. The decrease in constant currency net sales decreaseis largely the result of 7.9%sales declines in the United States and a 4.8%Canada, which had local currency net sales declines of 20.0%, and 10.1%, due to a 14.0%, and 11.1% decrease in Canada.5010 basis points to 82.7%80.1% of net sales, for the nine months of 2017,up from 82.2%80.0% in the prior year. Thisprior-year quarter. The increase can primarily be attributed to favorable changes in currency exchange rates in markets outside of Chinadecreased scrap and freight charges as well as the annualmodest price adjustments, partially offset by an unfavorable shift in sales mix by market.Associate IncentivesAssociate incentives were 45.2% of net sales for the nine months of 2017, compared with 44.5% in the prior year. The increase in relative Associate incentives expense can be attributed to increased spending related to contests, promotions and reward trips during the first nine months of 2017.increases. These increases were partially offset by our annualunfavorable changes in currency exchange rates, higher material costs, and loss of leverage on lower sales.adjustment.Interms, ourterms. The relative increase is largely due to a loss of leverage on lower year-over-year net sales offset in part by a decline in variable selling, general and administrative costs. The decreased expense increased $16.7 millionin absolute terms can be primarily attributed to lower costs on meetings and events held during the nine monthscurrent quarter.2017 when compared withpre-tax earnings, up from 35.7% of pre-tax earnings in the same periodprior-year quarter as a result of an increase to the prior year.year-to-date effective tax rate estimate. This increase can primarily be attributed to our continued investmentsan unfavorable change in information technologythe mix of taxable income by market.infrastructure, costs associated withOctober 1, 2022Net Sales by Region
(in thousands)Change from prior
yearPercent change Currency impact on
salesPercent change
excluding currency
impactNine Months Ended September 30, 2023 October 1, 2022 Asia Pacific Greater China $ 359,178 51.3 % $ 384,196 49.9 % $ (25,018) (6.5 %) $ (21,146) (1.0 %) Southeast Asia Pacific 124,774 17.8 % $ 149,880 19.4 % (25,106) (16.8 %) (4,230) (13.9 %) North Asia 79,381 11.4 % $ 84,409 11.0 % (5,028) (6.0 %) (2,343) (3.2 %) Asia Pacific Total 563,333 80.5 % 618,485 80.3 % (55,152) (8.9 %) (27,719) (4.4 %) Americas and Europe 136,594 19.5 % 152,156 19.7 % (15,562) (10.2 %) 204 (10.4 %) $ 699,927 100.0 % $ 770,641 100.0 % $ (70,714) (9.2 %) $ (27,515) (5.6 %) our internal investigation,Taiwan where local currency net sales decreased 0.6% and higher5.3%, respectively. There were local currency declines in all markets in the Southeast Asia Pacific sub-region, most notable in the Philippines, Australia, and Malaysia, which had local currency net sales declines of 26.3%, 11.7%, and 4.5%, respectively. The decrease in constant currency net sales in North Asia was primarily the result of a local currency sales decline of 3.5% in South Korea.associated with our 2017 International Convention.were 30.4%increased to 38.0% of pre-tax earnings, inup from 34.1% of pre-tax earnings for the first nine months of 2017 compared with 26.8% of earnings in the prior year.ended October 1, 2022. The higher effective tax rate forincrease is due primarily to an unfavorable change in the first nine months was primarily duemix of pre-tax income by market.lower excess tax benefits received from equity award exercises during the current nine months$2.43 as compared to the prior year period.Diluted Earnings Per ShareDiluted earnings per share decreased 11.9% in$2.93 reported for the nine months of 2017 when compared with the same period of the prior year.ended 2022. This decrease was mostly duecan be attributed to lower net earnings. This decrease was partially offset by a lower number of shares outstanding resulting from activity under our share buyback program.both net cash flow from operations and by drawing fromon our line of credit. Our principal source of liquidity is our operating cash flow. Although we are required to maintain cash deposits with banks in certain of our markets, there are currently no material restrictions on our ability to transfer and remit funds among our international markets. NotwithstandingIn China, however, our compliance with Chinese accounting and tax regulations promulgated by the foregoing, if we were to repatriate the $19.6 millionState Administration of cumulative earnings that have been indefinitely reinvestedForeign Exchange (“SAFE”) results in certaintransfer and remittance of our markets at September 30, 2017, there would be a tax liabilityprofits and dividends from China to the Company of approximately $3.1 million.have historically generated positivebelieve our current liquidity is adequate to meet our cash flow due torequirements and sustain our strong operating margins. Netoperations through cash flow from operating activities totaled $68.7 millionoperations. Maintaining a capital structure that emphasizes sufficient liquidity and adaptability in the first nine months of 2017.increasedincreased to $191.7$307.1 million at as of September 30, 2017,2023, from $175.8 $288.4million atas of December 31, 2016. Of the $191.7 2022. Cash flow provided by operating activities was $44.6 million held at September 30, 2017, $43.3partially offset by cash used in financing activities of $14.9 million, was heldand cash used in the United States and $148.4 million was held by international subsidiaries. Of the $175.8 million ininvesting activities of $4.7 million.held at December 31, 2016, $20.1by market for the periods indicated:Cash and cash equivalents
(in millions)As of
September 30, 2023As of
December 31, 2022United States 182.1 114.1 China 85.9 129.8 All other markets 39.1 44.5 Total Cash and cash equivalents $ 307.1 $ 288.4 held$63.4 million for the first nine months of 2022. Net earnings combined with adjustments of non-cash items contributed positively to our net cash flows provided by operating activities, partially offset by cash used to pay the 2021 annual employee bonus, and a reduction in the United States and $155.7 million was held by international subsidiaries. Net working capital increased to $165.0 million at September 30, 2017, from $139.4 million at December 31, 2016.FG to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Report on Form 10-Q.report.Duringnine months ended September 30, 2017, we repurchased 865,000 sharesCondensed Consolidated Financial Statements included in Item 1 of our common stock for $50.0 million under our share repurchase plan, at an average market pricePart I of $57.78. At September 30, 2017, the remaining approved repurchase amount under the plan was $50.0 million. There currently is no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases.Off-Balance Sheet ArrangementsNone.thatour current cash balances, future cash provided by operations, and amounts available under our line of credit will be sufficient to cover our operating and capital needs in the ordinary course of business for the foreseeable future. If we experience an adverse operating environment or unanticipated and unusual capital expenditure requirements, additional financing may be required. No assurance can be given, however, that additional financing, if required, would be available to us at all or on favorable terms. We might also require or seek additional financing for the purpose of expanding into new markets, growing our existing markets, mergers and acquisitions, or for other reasons. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders.Forward-Looking Statements and Certain RisksThe statements contained in this report that are not purely historical are consideredbe “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Exchange Act. These statements represent our expectations, hopes, beliefs, anticipations, commitments, intentions, and strategies regarding the future. They may be identified by the use of words or phrases suchcritical accounting policies as “believes,” “expects,” “anticipates,” “should,” “plans,” “estimates,” and “potential,” among others. Forward-looking statements include, but are not limited to, statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations regarding our financial performance, revenue, and expense levels in the future and the sufficiency of our existing assets to fund our future operations and capital spending needs. Readers are cautioned that actual results could differ materially from the anticipated results or other expectations that are expressed in these forward-looking statements for the reasons that are detaileddisclosed in our most recent Annual Report on2022 Form 10-K. The fact that some of these risk factors may be the same or similar to thoseOur significant accounting policies are disclosed in our past SEC reports means only that the risks are present in multiple periods. We believe that many of the risks detailed here and in our other SEC filings are part of doing business in the industry in which we operate and will likely be present in all periods reported. The fact that certain risks are common in the industry does not lessen their significance. The forward-looking statements contained in this report are made as of the date of this report, and we assume no obligation to update them or to update the reasons why our actual results could differ from those that we have projected. Among others, risks and uncertainties that may affect our business, financial condition, performance, development, and results of operations include:· Our ability to attract and maintain a sufficient number of Associates;· Our dependence upon a network marketing system to distribute our products and the activities of our independent Associates;· The expansion of our business in China through BabyCare;· Unanticipated effects of changesCompensation Plan;· Our planned expansion into international markets, including delays in commencement of sales or product offerings in any new market, delays in compliance with local marketing or other regulatory requirements, or changes in target markets;· General economic conditions, both domestically and internationally;· Potential political events, natural disasters, or other events that may negatively affect economic conditions;· Potential effects of adverse publicity regarding the Company, nutritional supplements, or the network marketing industry;· Reliance on key management personnel;· Extensive government regulation of the Company’s products, manufacturing, and network marketing system;· Potential inability to sustain or manage growth, including the failure to continue to develop new products;· An increase in the amount of Associate incentives;· Our reliance on the use of information technology;· The effects of competition from new and established network and direct selling organizations in our key markets;· The adverse effect of the loss of a high-level sponsoring Associate, together with a group of leading Associates, in that person’s downline;· The loss of product market share or Associates to competitors;· Potential adverse effects of customs, duties, taxation, and transfer pricing regulations, including regulations governing distinctions between and Company responsibilities to employees and independent contractors;· The fluctuation in the value of foreign currencies against the U.S. dollar;· Our reliance on outside suppliers for raw materials and certain manufactured items;· Shortages of raw materials that we use in certain of our products;· Significant price increases of our key raw materials;· Product liability claims and other risks that may ariseConsolidated Financial Statements filed with our manufacturing activity;· Intellectual property risks;· Liability claims that may arise with our “Athlete Guarantee” program;· Continued compliance with debt covenants;· Disruptions to shipping channels that are used to distribute our products to international warehouses;· The introduction of new laws or changes to existing laws, both domestically and internationally; and· The outcome of the internal investigation into our China operations, as well as other regulatory and litigation matters.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThere Quantitative and Qualitative Disclosures About Market Risk been no material changes fromto the information presented fordisclosures on this matter made in our 2022 Form 10-K. For a discussion of our exposure to market risk, refer to our market risk disclosures set forth in the year ended December 31, 2016.section entitled “Quantitative and Qualitative Disclosures About Market Risk” in the 2022 Form 10-K.recognizedrecognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.due to a material weakness ininternal control over financial reporting described in Part II, Item 9A of our Form 10-K for the fiscal year ended December 31, 2016 (the “2016 Form 10-K”), our disclosure controls and procedures were not effective to provide reasonable assurance as of 2017.Other than with respect to the remediation efforts addressed below, there20172023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Remediation Efforts to Address Material WeaknessAs previously disclosed in Part II, Item 9AGH to the Condensed Consolidated Financial Statements included in Item 1 Part I of this Report on Form 10-Q.report.These risksOur material risk factors are described elsewheredisclosed in this Quarterly Report onPart I, Item 1A of our 2022 Form 10-Q and in the Company’s other filings with the SEC, including the 2016 Form 10-K.10-K. The risk factors identified in the Company’s 2016our 2022 Form 10-K have not changed in any material respect.Unregistered Sales UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSand Use of ProceedsThe following table presents information with respect to purchases of USANA common stock made by the Company during the three months ended September 30, 2017:Purchases of Equity Securities(amounts in thousands, except per share data)
Number of
Shares
Purchased
Price Paid
per Share
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans
or Programs ** The Company’sOur share repurchase plan has been ongoing since the fourth quarter of 2000, with the Company’s Board of Directors periodically approving additional dollar amounts for share repurchases under the plan. The Company beganAt September 30, 2023, the third quarter of 2017 with $35,390 remaining under the plan. As announced in a Current Report on Form 8-K filed with the SEC on July 25, 2017, the Board of Directors authorized an increase in the amount available for repurchaserepurchases under the plan was $71.2 million.totalRule 10b5-1 trading plan, or in other transactions as permitted by the rules of $100,000.the SEC. There is no requirement for future share repurchases, and there currently is no expiration date of the repurchase plan.approved repurchase amount.Item 3.DEFAULTS UPON SENIOR SECURITIESNone.Item 4.MINE SAFETY DISCLOSURESNone.Issuer Purchases of Equity Securities (amounts in thousands, except per share data) Period Total Number of Shares Purchased Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs Fiscal July (Jul. 2, 2023 through Aug. 5, 2023) — $— — $82,839 Fiscal August (Aug. 6, 2023 through Sep. 2, 2023) 166 $64.56 166 $72,052 Fiscal September (Sep. 3, 2023 through Sep. 30, 2023) 14 $62.89 14 $71,182 180 180 None.Exhibit
Number31.1 3.13.24.1Specimen Stock Certificate for Common Stock (incorporated by reference to Registration Statement on Form 10, File No. 0-21116, effective April 16, 1993)31.131.2 31.232.1 32.132.2 32.2101.INS 101.INS101.SCH 101.SCH101.CAL 101.CAL101.DEF 101.DEF101.LAB 101.LAB101.PRE 101.PRE104 Cover Page Interactive Data file (formatted as Inline XBRL and contained in Exhibit 101) USANA HEALTH SCIENCES, INC.Date: November 8, 20177, 2023/s/ G. Douglas Hekking
(Principal Financial Officer)