10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2016

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission file number: 001-35024

USANA HEALTH SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Utah	87-0500306
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

3838 West Parkway Blvd., Salt Lake City, Utah 84120

(Address of principal executive offices, Zip Code)

(801) 954-7100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the registrant has submitted electronically 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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

The number of shares outstanding of the registrant’s common stock as of May 6, 2016 was 11,971,998.

USANA HEALTH SCIENCES, INC.

FORM 10-Q

For the Quarterly Period Ended April 2, 2016

INDEX

		Page
	PART I. FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4	Controls and Procedures	24
	PART II. OTHER INFORMATION
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 6	Exhibits	26
Signatures		28

2

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)

	As of			As of
	January 2,			April 2,
	2016			2016
ASSETS
Current assets
Cash and cash equivalents	$	143,210		$	150,501
Inventories	66,119			67,554
Prepaid expenses and other current assets	34,935			25,349
Total current assets	244,264			243,404
Property and equipment, net	87,982			94,606
Goodwill	17,432			17,460
Intangible assets, net	38,269			37,984
Deferred tax assets	9,844			13,812
Other assets	25,446			24,461
	$	423,237		$	431,727
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	10,043		$	7,992
Other current liabilities	121,369			104,758
Total current liabilities	131,412			112,750
Line of credit - long term	—			66,000
Deferred tax liabilities	9,822			6,874
Other long-term liabilities	1,151			1,189
Stockholders’ equity
Common stock, $0.001 par value; Authorized — 50,000 shares, issued and outstanding 12,488 as of January 2, 2016 and 11,956 as of April 2, 2016	13			12
Additional paid-in capital	69,740			59,584
Retained earnings	214,875			187,663
Accumulated other comprehensive income	(3,776		)	(2,345		)
Total stockholders’ equity	280,852			244,914
	$	423,237		$	431,727

The accompanying notes are an integral part of these statements.

3

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

	Quarter Ended
	April 4,			April 2,
	2015			2016
Net sales	$	219,378		$	240,449
Cost of sales	38,364			42,920
Gross profit	181,014			197,529
Operating expenses:
Associate incentives	101,353			107,394
Selling, general and administrative	49,875			56,631
Total operating expenses	151,228			164,025
Earnings from operations	29,786			33,504
Other income (expense):
Interest income	154			438
Interest expense	—			(202		)
Other, net	14			(732		)
Other income (expense), net	168			(496		)
Earnings before income taxes	29,954			33,008
Income taxes	10,274			10,709
Net earnings	$	19,680		$	22,299
Earnings per common share
Basic	$	1.56		$	1.84
Diluted	$	1.50		$	1.77
Weighted average common shares outstanding
Basic	12,648			12,102
Diluted	13,085			12,591
Comprehensive income:
Net earnings	$	19,680		$	22,299
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	563			2,131
Tax benefit (expense) related to foreign currency translation adjustment	(220		)	(700		)
Other comprehensive income (loss), net of tax	343			1,431
Comprehensive income	$	20,023		$	23,730

The accompanying notes are an integral part of these statements.

4

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Three Months Ended April 2, 2016

(in thousands)

(unaudited)

												Accumulated
						Additional						Other
	Common Stock					Paid-in			Retained			Comprehensive
	Shares		Value			Capital			Earnings			Income (Loss)			Total
Balance at January 2, 2016	12,488		$	13		$	69,740		$	214,875		$	(3,776	)	$	280,852
Cumulative-effect of accounting change						934			(601		)				333
Balance at January 2, 2016, as adjusted	12,488		$	13		$	70,674		$	214,274		$	(3,776	)	$	281,185
Net earnings									22,299						22,299
Other comprehensive income (loss), net of tax												1,431			1,431
Equity-based compensation expense						4,609									4,609
Common stock repurchased and retired	(553	)	(1		)	(15,699		)	(48,910		)				(64,610		)
Common stock issued under equity award plans	21														—
Balance at April 2, 2016	11,956		$	12		$	59,584		$	187,663		$	(2,345	)	$	244,914

The accompanying notes are an integral part of these statements.

5

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended
	April 4,			April 2,
	2015			2016
Cash flows from operating activities
Net earnings	$	19,680		$	22,299
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	2,337			3,520
(Gain) loss on sale of property and equipment	25			39
Equity-based compensation expense	2,210			4,609
Excess tax benefits from equity-based payment arrangements	(910		)	—
Deferred income taxes	(577		)	(1,932		)
Changes in operating assets and liabilities:
Inventories	(5,753		)	(392		)
Prepaid expenses and other assets	890			1,033
Income tax payable related to tax benefit from equity award activity	910			—
Accounts payable	789			(2,081		)
Other liabilities	3,960			(13,624		)
Net cash provided by (used in) operating activities	23,561			13,471
Cash flows from investing activities
Additions to notes receivable	(1,547		)	(3		)
Receipts on notes receivable	—			49
Purchases of property and equipment	(5,842		)	(8,971		)
Net cash provided by (used in) investing activities	(7,389		)	(8,925		)
Cash flows from financing activities
Excess tax benefits from equity-based payment arrangements	910			—
Repurchase of common stock	—			(64,610		)
Borrowings on line of credit	—			71,000
Payments on line of credit	—			(5,000		)
Deferred debt issuance costs	—			(250		)
Net cash provided by (used in) financing activities	910			1,140
Effect of exchange rate changes on cash and cash equivalents	361			1,605
Net increase (decrease) in cash and cash equivalents	17,443			7,291
Cash and cash equivalents, beginning of period	111,126			143,210
Cash and cash equivalents, end of period	$	128,569		$	150,501
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	—		$	147
Income taxes	2,996			8,587
Non-cash investing activities:
Credits on notes receivable	55			505
Accrued purchases of property and equipment	910			2,655

The accompanying notes are an integral part of these statements.

6

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

(unaudited)

NOTE A — ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION

USANA Health Sciences, Inc. develops and manufactures high-quality nutritional and personal care products that are sold internationally through a global network marketing system, which is a form of direct selling. The Consolidated Financial Statements include the accounts and operations of USANA Health Sciences, Inc. and its wholly-owned subsidiaries (collectively, the “Company” or “USANA”) in two geographic regions: Asia Pacific, and Americas and Europe.  Asia Pacific is further divided into three sub-regions: Greater China, Southeast Asia Pacific, and North Asia. Greater China includes Hong Kong, Taiwan and China; Southeast Asia Pacific includes Australia, New Zealand, Singapore, Malaysia, the Philippines, Thailand, and Indonesia; North Asia includes Japan, and South Korea.  Americas and Europe includes the United States, Canada, Mexico, Colombia, the United Kingdom, France, Belgium, and the Netherlands.  All intercompany accounts and transactions have been eliminated in this consolidation.

The condensed consolidated balance sheet as of January 2, 2016, derived from audited consolidated financial statements, and the unaudited interim consolidated financial information of the Company have been prepared in accordance with Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission. 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 any 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 management, the accompanying interim 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 April 2, 2016 and results of operations for the three months ended April 4, 2015 and April 2, 2016.

The interim 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 January 2, 2016.  The results of operations for the three months ended April 2, 2016, may not be indicative of the results that may be expected for the fiscal year 2016 ending December 31, 2016.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” 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 2014-09 is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted for annual and interim reporting periods beginning after December 15, 2016.  The Company is currently evaluating the impact ASU 2014-09 will have on its consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.”  The ASU addresses concerns about the current accounting for consolidation of certain legal entities.  The ASU also provides guidance for identifying the primary beneficiary that varies depending on whether there is a single decision maker or shared power depending on whether the related parties are under common control with the reporting entity.  ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption.  The Company adopted ASU 2015-02 effective for the quarter ended April 2, 2016, however, there was no material impact to the Company’s consolidated financial statements.

7

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE A — ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION - CONTINUED

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.”  The ASU requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent.  The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2016.  Early adoption is permitted at the beginning of an interim or annual period and requires either a prospective or retrospective approach to adoption.  The Company elected to early adopt ASU 2015-17 during the quarter ended April 2, 2016.  As a result of the adoption, current deferred tax assets and current deferred tax liabilities were reclassified to noncurrent deferred taxes.  The adoption was on a prospective basis and therefore had no impact on prior periods.

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 evaluating the impact ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.”  ASU 2016-09 was issued as part of the FASB’s simplification initiative aimed at reducing costs and complexity while maintaining or improving the usefulness of financial information.  This update involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, statutory tax withholding requirements, and classification in the statement of cash flows.  This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period.  If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period, and the entity must adopt all of the amendments in the same period.  The Company elected to early adopt ASU 2016-09 during the quarter ended April 2, 2016.  Following is a summary of the changes resulting from adopting this ASU:

·Forfeitures — Estimating forfeitures as part of the compensation cost accrual is no longer required.  An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur.  The Company has elected to account for forfeitures when they occur.  The cumulative-effect of this change in election resulted in a decrease to retained earnings and an increase to additional paid-in capital of $934 as of the beginning of 2016. The tax effect of this adjustment increased the beginning balances for deferred tax assets and retained earnings by $333.

·Income Tax Accounting — Prior to adopting this ASU, all excess tax benefits resulting from exercise or settlement of share-based payment transactions were recognized in Additional paid-in capital (“APIC”) and accumulated in an APIC pool.  Any tax deficiencies were either offset against the APIC pool, or were recognized in the income statement if no APIC pool was available.  Under the new amendments, the APIC pool has been eliminated and all excess tax benefits and tax deficiencies are recognized as an income tax benefit or expense in the income statement prospectively.  Accordingly, prior periods have not been adjusted.  Additionally, the tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur.  An entity should also recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period.

8

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE A — ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION - CONTINUED

·Statement of Cash Flow Presentation — Historically, excess tax benefits on the statement of cash flows have been presented as a cash inflow from financing activities and a cash outflow from operating activities.  The ASU simplifies the presentation of excess tax benefits on the statements of cash flow requiring that excess tax benefits be classified along with other income tax cash flows as an operating activity.  As part of the transition, entities may elect the cash flow presentation changes using either a prospective or retrospective application.  The Company has elected to present the changes on a prospective basis, and as such, the excess tax benefits from equity-based payment arrangements in the Condensed Consolidated Statements of Cash Flows have not been adjusted for prior periods to conform with the current presentation.  The excess tax benefits from equity-based payment arrangements during the quarter ended April 2, 2016 totaled $574 and are reflected in net earnings of the operating activities section of the Condensed Consolidated Statements of Cash Flows.

NOTE B — FAIR VALUE MEASURES

The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are:

·Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

·Level 2 inputs are from other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

·Level 3 inputs are unobservable and are used to measure fair value in situations where there is little, if any, market activity for the asset or liability at the measurement date.

As of the dates indicated, the following financial assets and liabilities were measured at fair value on a recurring basis using the type of inputs shown:

			Fair Value Measurements Using
			Inputs
	January 2, 2016		Level 1		Level 2		Level 3
Money market funds included in cash equivalents	$	14,460	$	14,460	$	—	$	—
Foreign currency contracts included in Prepaid expenses and other current assets	33		—		33		—
	$	14,493	$	14,460	$	33	$	—

				Fair Value Measurements Using
				Inputs
	April 2, 2016			Level 1		Level 2			Level 3
Money market funds included in cash equivalents	$	61,406		$	61,406	$	—		$	—
Foreign currency contracts included in other current liabilities	(1,132		)	—		(1,132		)	—
	$	60,274		$	61,406	$	(1,132	)	$	—

9

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE B — FAIR VALUE MEASURES - CONTINUED

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the periods indicated.

The majority of the Company’s non-financial assets, which include goodwill, intangible 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 recorded to reduce the carrying value to the fair value, if the carrying value exceeds the fair value. At January 2, 2016 and April 2, 2016, there were no non-financial assets measured at fair value on a non-recurring basis.

The Company’s financial instruments include cash equivalents, accounts receivable, restricted cash, notes receivable, and accounts payable. The recorded values of cash equivalents, accounts receivable, restricted cash, and accounts payable approximate their fair values, based on their short-term nature. The carrying value of the notes receivable approximate fair value because the variable interest rates in the notes reflect current market rates.

NOTE C — INVENTORIES

Inventories consist of the following:

	January 2,		April 2,
	2016		2016
Raw materials	$	22,529	$	23,168
Work in progress	8,701		9,172
Finished goods	34,889		35,214
	$	66,119	$	67,554

NOTE D — OTHER ASSETS

Other assets consists primarily of a secured loan to a third-party supplier of the Company’s nutrition bars and land use rights related to a production facility under development in China.

The Company has extended non-revolving credit to its supplier of nutrition bars to allow them to acquire equipment that is necessary to manufacture the USANA nutrition bars.  This relationship provides improved supply chain stability for USANA and creates a mutually beneficial relationship between the parties.  Notes receivable are valued at their unpaid principal balance plus any accrued but unpaid interest, which approximates fair value.  Interest accrues at an annual interest rate of LIBOR plus 400 basis points. The note has a maturity date of February 1, 2024 and will be repaid by a combination of cash payments and credits for the manufacture of USANA’s nutrition bars.  There is no prepayment penalty.  Notes receivable from this supplier as of January 2, 2016, and April 2, 2016 were $8,339 and $7,939, respectively.

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.

The Company is building a state-of-the-art manufacturing and production facility in China, which is expected to become operational in the first half of 2016.  As part of this project, land use rights totaling $7,053, and $7,071 as of January 2, 2016 and April 2, 2016, respectively, have been purchased and are being amortized over 50 years.

10

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE  E — FOREIGN CURRENCY CONTRACTS

Derivative financial instruments are recognized as either assets or liabilities in the consolidated balance sheet at their respective fair values. As a matter of policy, the Company uses derivatives for risk management purposes. The Company does not use derivatives for speculative purposes. The Company uses foreign currency contracts to hedge the effects of fluctuations in exchange rates on intercompany transactions. Substantially all of these instruments have terms of 90 days or less. The Company does not designate any of its derivatives as qualifying hedges for accounting purposes. Changes in the fair value of derivative instruments are recognized currently through earnings.

The notional amount of the foreign currency contracts as of January 2, 2016 and April 2, 2016 was $7,488 and $68,196, respectively.  The fair values of derivative instruments in the condensed consolidated balance sheets are as follows:

		Asset /(Liability) Fair Value
	Balance Sheet	January 2,		April 2,
	Classification	2016		2016
Foreign currency contracts	Prepaid expenses and other current assets	$	33	$	—
	Other current liabilities	—		(1,132		)
		$	33	$	(1,132	)

The net gain (loss) recognized in the condensed consolidated statements of comprehensive income on derivative instruments not designated as hedges are as follows for the periods indicated: periods indicated:

		Quarter Ended
	Income Statement	April 4,		April 2,
	Classification	2015		2016
Foreign currency contracts	Other, net	$	64	$	(1,348	)

NOTE F — LINE OF CREDIT

On February 19, 2016, the Company entered into an Amended and Restated Credit Agreement (“Credit Agreement”), with Bank of America, which extends the term of the Credit Agreement to April 27, 2021.  The Credit Agreement also increases the amount the Company may borrow under the credit facility from $75,000 to up to $125,000, through October 31, 2016.  On November 1, 2016, the amount the Company may borrow will revert to $75,000 for the remainder of the agreement.  The only other modification to the Credit Agreement was an increase to the Company’s consolidated rolling four-quarter adjusted EBITDA covenant from $60,000 to equal to or greater than $100,000.

Interest is computed based on the bank’s Prime Rate or LIBOR, adjusted by features specified in the Credit Agreement. The collateral for this line of credit is the pledge of the capital stock of certain subsidiaries of the Company, set forth in a separate pledge agreement with the bank. Part of the credit agreement is that any existing bank guarantees are considered a reduction of the overall availability of credit and part of the covenant calculation. This resulted in a $4,153, and $4,130 reduction in the available borrowing limit as of January 2, 2016 and April 2, 2016, respectively, due to existing normal course of business guarantees in certain markets.

11

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE F — LINE OF CREDIT - CONTINUED

There was no outstanding debt on this line of credit at January 2, 2016.  At April 2, 2016, there was an outstanding balance of $66,000.  The Company will be required to pay any balance on this line of credit in full at the time of maturity in April 2021 unless the line of credit is replaced or terms are renegotiated.  Subsequent to the quarter ended April 2, 2016, the Company considered its liquidity needs and made a decision to repay the current outstanding balance on the line of credit within the next twelve months.

NOTE G — CONTINGENCIES

The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business, including matters involving our products, intellectual property, supplier relationships, distributors, competitor relationships, employees and other matters. The Company records a liability when a particular contingency is probable and estimable. The Company has not accrued for any contingency at April 2, 2016 as the Company does not consider any contingency to be probable nor estimable. The Company faces contingencies that are reasonably possible to occur; however, they cannot currently be estimated. While complete assurance cannot be given to the outcome of these proceedings, management does not currently believe that any of these matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, liquidity or results of operations.

In 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 Company’s case to the Utah Court of Appeals, which recently issued a briefing schedule for the parties.  In March, 2016, the plaintiffs filed their opening brief.  The Company will respond in May 2016. The Company believes that the claims in the complaint are without merit and will continue to vigorously defend this suit. The Company continues to believe, based on information currently available, that the final outcome of this suit will not have a material adverse effect on the Company’s business, results of operations or consolidated financial position.

12

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE H — COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per share are 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 share based on the time they were outstanding in any period. Diluted earnings per common share are based on shares that are outstanding (computed under basic EPS) and on potentially dilutive shares. Shares that are included in the diluted earnings per share calculations under the treasury stock method include equity awards that are in-the-money but have not yet been exercised.

The following is a reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share for the periods indicated:

	Quarter Ended
	April 4,		April 2,
	2015		2016
Net earnings available to common shareholders	$	19,680	$	22,299
Weighted average common shares outstanding - basic	12,648		12,102
Dilutive effect of in-the-money equity awards	437		489
Weighted average common shares outstanding - diluted	13,085		12,591
Earnings per common share from net earnings - basic	$	1.56	$	1.84
Earnings per common share from net earnings - diluted	$	1.50	$	1.77

Equity awards for the following shares were not included in the computation of diluted EPS due to the fact that

their effect would be anti-dilutive:

Quarter Ended
April 4,	April 2,
2015	2016
125	1,095

During the three months ended April 2, 2016, the Company repurchased and retired 553 shares, for $64,610, under the Company’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.

As of April 2, 2016, the remaining approved repurchase amount under the stock repurchase plan was $35,390.  There currently is no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE I — SEGMENT INFORMATION

USANA operates as a direct selling company that develops, manufactures, and distributes high-quality nutritional and personal care products that are sold through a global network marketing system of independent distributors (“Associates”).  As such, management aggregates its operating segments into one reportable segment as management believes that the Company’s segments exhibit similar long-term financial performance and have similar economic characteristics.  Performance for a region or market is evaluated based on sales.  No single Associate accounted for 10% or more of net sales for the periods presented.  The table below summarizes the approximate percentage of total product revenue that has been contributed by the Company’s nutritional and personal care products for the periods indicated.

	Quarter Ended
	April 4,		April 2,
	2015		2016
USANA® Nutritionals	81	%	82	%
USANA Foods	11	%	10	%
Sensé — beautiful science®	7	%	7	%

Selected financial information for the 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(2)

·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 that of BabyCare, its wholly-owned subsidiary.

(2)The Company commenced operations in Indonesia in the fourth quarter of 2015.

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USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share data)

(unaudited)

NOTE I — SEGMENT INFORMATION - CONTINUED

Selected Financial Information

Financial information by geographic region is presented for the periods indicated below:

	Quarter Ended
	April 4,		April 2,
	2015		2016
Net Sales to External Customers
Asia Pacific
Greater China	$	101,286	$	116,998
Southeast Asia Pacific	45,339		48,861
North Asia	9,229		10,560
Asia Pacific Total	155,854		176,419
Americas and Europe	63,524		64,030
Consolidated Total	$	219,378	$	240,449

The following table provides further information on markets representing ten percent or more of consolidated net sales and long-lived assets, respectively:

	Quarter Ended
	April 4,		April 2,
	2015		2016
Net sales:
China	$	83,810	$	100,499
United States	$	36,302	$	34,865

	As of
	January 2,		April 2,
	2016		2016
Long-lived Assets:
China	$	92,835	$	95,602
United States	$	57,797	$	59,433

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Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of USANA’s financial condition and results of operations is presented in six

sections:

·Overview

·Customers

·Current Focus and Recent Developments

·Results of Operations

·Liquidity and Capital Resources

·Forward-Looking Statements and Certain Risks

This discussion and analysis should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and Notes thereto that are contained in this quarterly report, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations that are included in our Annual Report on Form 10-K for the year ended January 2, 2016, and our other filings, including Current Reports on Form 8-K, that have been filed with the Securities and Exchange Commission (“SEC”) through the date of this report.

Overview

We develop and manufacture high-quality, science-based nutritional and personal care products that are distributed internationally through a network marketing system, which is a form of direct selling.  We have chosen this distribution method as we believe it is more conducive to meeting our vision as a company, which is improving the overall health and nutrition of individuals and families around the world.  Our customer base comprises two types of customers: “Associates” and “Preferred 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 April 2, 2016, we had approximately 437,000 active Associates and approximately 94,000 active Preferred Customers worldwide.  For purposes of this report, we 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(2)

·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 of BabyCare, our wholly-owned subsidiary.

(2)We commenced operations in Indonesia in the fourth quarter of 2015.

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:

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	Three months ended
	April 4, 2015		April 2, 2016
Product Line
USANA® Nutritionals
Essentials	23	%	20	%
Optimizers	58	%	62	%
USANA Foods	11	%	10	%
Sensé — beautiful science®	7	%	7	%
All Other	1	%	1	%
Key Product
USANA® Essentials	15	%	13	%
Proflavanol®	13	%	13	%
BiOmega-3™	12	%	13	%

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 that 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 new customers to purchase our products, and educate and train new Associates.

Because we have operations in multiple markets, with sales and expenses being generated and incurred in multiple currencies, 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 three months ended April 2, 2016, net sales outside of the United States represented 85.5% 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.

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Customers

Because we sell our products exclusively to a customer base of independent Associates and Preferred Customers, to increase net sales we must either increase the number or the productivity of our Associates and Preferred Customers.  Increasing the productivity of our Associates and Preferred Customers has not been our primary focus.  Rather, we seek to increase the number of Associates and Preferred Customers who use our products.  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 account for the majority of our product sales, representing approximately 92% of product sales during the three months ended April 2, 2016; the remainder of our sales are 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 of active Associates and Preferred Customers purchasing our products.  The number of active Associates and Preferred Customers is, therefore, used by management as a key non-financial measure.

The tables below summarize the changes in our active customer base by geographic region.  These numbers have been rounded to the nearest thousand as of the dates indicated.

	Active Associates by Region
	As of			As of			Change from	Percent
	April 4, 2015			April 2, 2016			Prior Year	Change
Asia Pacific:
Greater China	201,000	53.4	%	245,000	56.1	%	44,000	21.9	%
Southeast Asia Pacific	77,000	20.5	%	88,000	20.1	%	11,000	14.3	%
North Asia	12,000	3.2	%	15,000	3.4	%	3,000	25.0	%
Asia Pacific Total	290,000	77.1	%	348,000	79.6	%	58,000	20.0	%
Americas and Europe	86,000	22.9	%	89,000	20.4	%	3,000	3.5	%
	376,000	100.0	%	437,000	100.0	%	61,000	16.2	%

	Active Preferred Customers by Region
	As of			As of			Change from	Percent
	April 4, 2015			April 2, 2016			Prior Year	Change
Asia Pacific:
Greater China	4,000	4.6	%	5,000	5.3	%	1,000	25.0	%
Southeast Asia Pacific	12,000	14.0	%	13,000	13.8	%	1,000	8.3	%
North Asia	7,000	8.1	%	10,000	10.7	%	3,000	42.9	%
Asia Pacific Total	23,000	26.7	%	28,000	29.8	%	5,000	21.7	%
Americas and Europe	63,000	73.3	%	66,000	70.2	%	3,000	4.8	%
	86,000	100.0	%	94,000	100.0	%	8,000	9.3	%

Current Focus and Recent Developments

Our primary objective is to increase the number of Associates and Preferred Customers (referred to together as “customers”) who use our products throughout the world.  We have several strategies in place to support this objective, including:

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·Our focus on personalizing our customer’s overall experience with USANA, which includes personalizing our product offering, Associate Compensation Plan, and our online business environment;

·Our investment in increasing our brand recognition, which includes our relationship as a Trusted Partner and Sponsor of The Dr. Oz Show, our sponsorship of the U.S. Ski Team, and our partnership with the Women’s Tennis Association; to make it easier for our Associates to talk about USANA with potential customers;

·Our development and offering of market-specific incentives and promotions for our Associates to incent sales and customer growth around the world;

·Our focus on product innovation, information technology systems, and infrastructure to continue to improve our customers’ experience with us and to prepare for growth and expansion; and

·Our continued focus on expansion in China, where we plan to continue devoting significant time and resources on growing this market.  Our efforts in this regard include finalizing our new state-of-the-art manufacturing and production facility in Beijing, which we anticipate will become operational during the first half of 2016.

At our 2015 convention, we also introduced USANA’s new “MySmartTMFoods” line of products, which continues our philosophy and strategy of personalization.  MySmartTMFoods are science-based, healthy nutrition shakes, bars, nutritional boosters and flavor optimizers.  The nutrition profile of these products includes: high-quality, complete protein; clean and pure ingredients; low-glycemic impact; a beneficial macronutrient balance; gluten free; non-GMO; no trans fats; and an excellent source of fiber.  We made MySmartTMFoods available to our Associates for a limited time at our convention only, as a pre-launch opportunity to purchase and try the products.  We intend to officially launch MySmartTMFoods during the first half of 2016.

Results of Operations

Summary of Financial Results

Net sales for the first quarter of 2016 increased 9.6% to $240.4 million, an increase of $21.1 million, compared with the first quarter of 2015.  This increase was driven by higher product sales volume due in great part to strong customer growth.  This increase came despite the prior year quarter benefiting from: (i) continued momentum from an incentive program, which carried over several weeks into the first quarter of 2015 in China, and (ii) incremental sales of approximately $12 million that occurred following the announcement of our 2015 price adjustments in China.  This increase in net sales during the first quarter of 2016 was partially offset by unfavorable changes in currency exchange rates that reduced net sales for the quarter by $14.2 million.

Net earnings for the first quarter of 2016 increased 13.3% to $22.3 million, an increase of $2.6 million, compared with the first quarter of 2015.  The increase in net earnings was driven by higher net sales, lower relative associate incentives expense, and a lower effective tax rate.

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Quarters Ended April 4, 2015 and April 2, 2016

Net Sales

The following table summarizes the changes in our net sales by geographic region for the quarters ended as of the dates indicated:

	Net Sales by Region															Percent
	(in thousands)															change
	Quarter Ended								Change				Currency			excluding
	April 4, 2015				April 2, 2016				from prior  year		Percent change		impact on sales			currency  impact
Asia Pacific
Greater China	$	101,286	46.2	%	$	116,998	48.7	%	$	15,712	15.5	%	$	(5,328	)	20.8	%
Southeast Asia Pacific	45,339		20.7	%	48,861		20.3	%	3,522		7.8	%	(4,131		)	16.9	%
North Asia	9,229		4.2	%	10,560		4.4	%	1,331		14.4	%	(809		)	23.2	%
Asia Pacific Total	155,854		71.1	%	176,419		73.4	%	20,565		13.2	%	(10,268		)	19.8	%
Americas and Europe	63,524		28.9	%	64,030		26.6	%	506		0.8	%	(3,980		)	7.1	%
	$	219,378	100.0	%	$	240,449	100.0	%	$	21,071	9.6	%	$	(14,248	)	16.1	%

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 25.8% and the number of active Associates increased 23.3%.  The increase in local currency net sales in Southeast Asia Pacific was driven by continued growth in the number of new active Associates purchasing our products in every market.  The increase in local currency net sales in North Asia continues to be driven by growth in South Korea, where local currency net sales increased 26.6%, and both Associates and Preferred Customers increased 34.0%, and 26.6%, respectively.

Americas and Europe:  The increase in net sales in this region was again driven by growth in Canada and Mexico, where local currency net sales increased 22.1% and 16.9%, respectively.  The number of active Associates in Canada and Mexico increased 8.7% and 12.7%, while the number of Preferred Customers increased 13.3% and 13.9%, respectively.  Net Sales in the United States decreased $1.4 million or 4.0%, due to a decline in the number of active customers in this market.

Gross Profit

Gross profit decreased 30 basis points to 82.2% of net sales for the first quarter of 2016, from 82.5% in the prior year.  This reduction can be attributed to an unfavorable shift in currency exchange rates.  This reduction was partially offset by a favorable shift in product and sales mix by market and to a lesser extent by modest product price adjustments that occurred during the first quarter of 2016.

Associate Incentives

Associate incentives were 44.7% of net sales for the first quarter of 2016, compared with 46.2% in the first quarter of 2015.  This decrease can be primarily attributed to lower spending on contests and promotions.

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Selling, General and Administrative Expenses

Selling, general and administrative expense relative to net sales increased to 23.6% during the first quarter of 2016, compared with 22.7% in the first quarter of 2015.  This increase can be primarily attributed to costs associated with supporting our 2016 strategic initiatives, including (i) research and development investments to drive future product and technology innovation, (ii) investment in information technology systems and infrastructure to support our growing customer base and to further improve our customers’ experience around the world, and (iii) continued investment in Mainland China.  Additionally, equity compensation expense increased $2.4 million compared to the prior year quarter.

Income Taxes

Income taxes were 32.4% of earnings in the first quarter of 2016 compared with 34.3% of earnings in the first quarter of 2015.  The primary reason for the rate drop was the adoption of ASU 2016-09 “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, which requires excess tax benefits or tax deficiencies resulting from exercise or settlement of share-based payment transactions to be recognized as an income tax benefit or expense in the income statement prospectively.  This accounting change provided a 170 basis point rate tax benefit in the first quarter of 2016.  In addition, the first quarter of 2016 benefited from a federal research credit which was unavailable in the first quarter of 2015.

Diluted Earnings Per Share

Diluted earnings per share increased 18.0% in the first quarter of 2016 when compared with the prior year quarter.  This increase was the result of higher net earnings as discussed above, and due to a lower number of shares outstanding resulting from activity under our share buyback program.

Liquidity and Capital Resources

We have historically met our working capital and capital expenditure requirements by using both net cash flow from operations and by drawing from 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.  Notwithstanding the foregoing, if we were to repatriate the $18.2 million of cumulative earnings that have been indefinitely reinvested in certain of our markets at April 2, 2016, there would be a tax liability to the Company of approximately $3.1 million.

We have historically generated positive cash flow due to our strong operating margins.  Net cash flow from operating activities totaled $13.5 million in the first three months of 2016.  Items increasing cash flows from operations in the first three months of 2016 are higher net earnings, equity based compensation expense, and accrued incentives, reduced by employee compensation costs, and taxes payable.

Net cash flow from operating activities totaled $23.6 million in the first three months of 2015.  Items increasing cash flows from operations in the first three months of 2015 were higher net earnings, accrued incentives and deferred revenue, and taxes payable, reduced by employee compensation costs.

Cash and cash equivalents increased to $150.5 million at April 2, 2016, from $143.2 million at January 2, 2016.  Of the $150.5 million held at April 2, 2016, $8.5 million was held in the United States and $142.0 million was held by international subsidiaries.  Of the $143.2 million in cash and cash equivalents held at January 2, 2016, $16.2 million was held in the United States and $127.0 million was held by international subsidiaries.  Net working capital increased to $130.7 million at April 2, 2016, from $112.9 million at January 2, 2016.

We continue to expect that our new state-of-the-art manufacturing and production facility in China will become operational in first half of 2016.  Of the anticipated $40 million investment for this project, we have incurred $29.1 million through the end of the first quarter of 2016, $3.6 million of which was incurred during the first three months of 2016.

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We have extended non-revolving credit to the supplier of our nutrition bars to allow this supplier to modify its facility and acquire the necessary equipment to manufacture our bars.  Notes receivable from this supplier as of January 2, 2016 and April 2, 2016, were $8.3 million and $7.9 million, respectively, and are included as non-current other assets on the balance sheet.

Line of credit

We have a long-standing relationship with Bank of America.  On February 19, 2016, we entered into an Amended and Restated Credit Agreement (“Credit Agreement”), with Bank of America, which extends the term of the Credit Agreement to April 27, 2021.  The Credit Agreement also increases the amount we may borrow under the credit facility from $75.0 million to up to $125.0 million through October 31, 2016.  On November 1, 2016, the amount we may borrow will revert to $75.0 million pursuant to the Credit Agreement with the bank, which expires in April 2021.  The Amendment also increases our consolidated rolling four-quarter adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) covenant from $60.0 million to equal to or greater than $100.0 million.  Subsequent to the quarter ended April 2, 2016, we considered our liquidity needs and made a decision to repay the current outstanding balance on the line of credit within the next twelve months.

Bank guarantees are considered a reduction of the overall availability of credit.  As of April 2, 2016, such normal course of business bank guarantees reduced our available borrowing limit by $4.1 million.  During the quarter, we utilized our credit facility, and as of April 2, 2016, we had a balance of $66.0 million outstanding.

The Credit Agreement for this credit facility contains restrictive covenants, which require us to maintain a consolidated rolling four-quarter adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) equal to or greater than $100.0 million, and a ratio of consolidated funded debt to adjusted EBITDA of 2.0 to 1.0 at the end of each quarter.  The adjusted EBITDA under this agreement is modified for certain non-cash expenses.  As of April 2, 2016, we were in compliance with these covenants.  Management is not aware of any issues currently impacting Bank of America’s ability to honor their commitment to extend credit under this facility.

Share repurchase

We have a share repurchase plan that has been ongoing since the fourth quarter of 2000.  The objective of this plan is to return value to our shareholders.  Our Board of Directors has periodically approved additional dollar amounts for share repurchases under that plan.  Share repurchases are made from time-to-time, in the open market, through block trades or otherwise, and are based on market conditions, the level of our cash balances, general business opportunities, and other factors.  During the three months ended April 2, 2016, we repurchased 553,082 shares of common stock for a total investment of $64.6 million, at an average market price of $116.82 per share pursuant to a preset trading plan meeting the requirements of a Rule 10b5-1 under the Securities Exchange Act of 1934 as amended.  As of April 2, 2016, the remaining approved repurchase amount under the plan was $35.4 million.  There is currently no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases.

Summary

We believe that 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 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, 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.

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Forward-Looking Statements and Certain Risks

The statements contained in this report that are not purely historical are considered to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 (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 such 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 detailed in our most recent Annual Report on Form 10-K.  The fact that some of these risk factors may be the same or similar to those 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 changes to our Compensation 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;

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·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 arise 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 regulatory and litigation matters.

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the information presented for the year ended January 2, 2016.

Item 4.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information that is required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods that are specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding any required disclosure.  In designing and evaluating these disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of the end of the period covered by this report, our Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a- 15(e) under the Exchange Act).  Based on this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of April 2, 2016.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended April 2, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.   OTHER INFORMATION

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Repurchases

The following table presents information with respect to purchases of USANA common stock made by the Company during the three months ended April 2, 2016:

Issuer Purchases of Equity Securities

(amounts in thousands, except per share data)

Period	Total  Number of  Shares  Purchased	Average Price Paid  per Share		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 January
(Jan. 3, 2016 through Feb. 6, 2016)	366	$	122.33	366	$	55,212
Fiscal February
(Feb. 7, 2016 through Mar. 5, 2016)	187	$	106.03	187	$	35,390
Fiscal March
(Mar. 6, 2016 through Apr. 2, 2016)	0	$	0.00	0	$	35,390
	553			553

* The Company’s 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 began the first quarter of 2016 with $100,000, remaining under the plan.  As of May 6, 2016, the Company had $35,390 available under the share repurchase plan.  There is no requirement for future share repurchases, and there currently is no expiration date on the approved repurchase amount.

25

Item 6.EXHIBITS

Exhibit
Number	Description
3.1	Amended and Restated Articles of Incorporation (incorporated by reference to Current Report on Form 8-K, filed April 25, 2006)
3.2	Bylaws (incorporated by reference to Current Report on Form 8-K, filed April 25, 2006)
4.1	Specimen Stock Certificate for Common Stock (incorporated by reference to Registration Statement on Form 10, File No. 0-21116, effective April 16, 1993)
10.1	USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (incorporated by reference to Current Report on Form 8-K, filed April 25, 2006)*
10.2	Form of Stock Option Agreement for award of non-statutory stock options to employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (incorporated by reference to Current Report on Form 8-K, filed April 26, 2006)*
10.3	Form of Stock Option Agreement for award of non-statutory stock options to directors who are not employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (incorporated by reference to Current Report on Form 8-K, filed April 26, 2006)*
10.4	Form of Incentive Stock Option Agreement for award of incentive stock options to employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (incorporated by reference to Current Report on Form 8-K, filed April 26, 2006)*
10.5	Form of Stock-Settled Stock Appreciation Rights Award Agreement for award of stock-settled stock appreciation rights to employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (incorporated by reference to Current Report on Form 8-K, filed April 26, 2006)*
10.6	Form of Stock-Settled Stock Appreciation Rights Award Agreement for award of stock-settled stock appreciation rights to directors who are not employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (incorporated by reference to Current Report on Form 8-K, filed April 26, 2006)*
10.7	Form of Deferred Stock Unit Award Agreement for grants of deferred stock units to directors who are not employees under the USANA Health Sciences, Inc. 2006 Equity Incentive Award Plan (incorporated by reference to Current Report on Form 8-K, filed April 26, 2006)*
10.8	Form of Indemnification Agreement between the Company and its directors (incorporated by reference to Current Report on Form 8-K, filed May 24, 2006)*
10.9	Form of Indemnification Agreement between the Company and certain of its officers (Incorporated by reference to Report on Form 8-K, filed May 24, 2006)*
10.10	Share Purchase Agreement, dated as of August 16, 2010, among USANA Health Sciences, Inc., Petlane, Inc., Yaolan Ltd., and BabyCare Holdings Ltd. (Incorporated by Reference to Report on Form 8-K, filed August 16, 2010)
10.11	Amended and Restated Credit Agreement, dated as of April 27, 2011 (Incorporated by reference to Report on Form 8-K, filed April 28, 2011)
10.12	Form of Executive Confidentiality, Non-Disclosure and Non-Solicitation Agreement (incorporated by reference to Quarterly Report on Form 10-Q for the period ended October 1, 2011, filed November 9, 2011)*
10.13	Separation and Release of Claims Agreement dated as of December 21, 2012 by and between USANA Health Sciences, Inc. and Roy Truett (incorporated by reference to Report on Form 8-K/A, filed December 26, 2012)*

26

10.14	Amendment to Confidentiality, Non-Disclosure and Non-Solicitation Agreement dated as of December 21, 2012 by and between USANA Health Sciences, Inc. and Roy Truett (incorporated by reference to Report on Form 8-K/A, filed December 26, 2012)*
10.15	Amendment to Amended and Restated Credit Agreement, dated as of July 18, 2013 (Incorporated by reference to Report on Form 8-K, filed July 23, 2013)
10.16	USANA Health Sciences, Inc. 2015 Equity Incentive Award Plan (incorporated by reference to Report on Form 8-K, filed July 31, 2015)
10.17	Form of Stock-Settled Stock Appreciation Rights Award Agreement for employees under the USANA Health Sciences, Inc. 2015 Equity Incentive Award Plan (incorporated by reference to Report on Form 8-K, filed July 31, 2015)*
10.18	Form of Stock-Settled Stock Appreciation Rights Award Agreement for non-employee directors under the USANA Health Sciences, Inc. 2015 Equity Incentive Award Plan (incorporated by reference to Report on Form 8-K, filed July 31, 2015)*
10.19	Form of Restricted Stock Unit Award Agreement for employees under the USANA Health Sciences, Inc. 2015 Equity Incentive Award Plan (incorporated by reference to Report on Form 8-K, filed July 31, 2015)*
10.20	Form of Restricted Stock Unit Award Agreement for non-employee directors under the USANA Health Sciences, Inc. 2015 Equity Incentive Award Plan (incorporated by reference to Report on Form 8-K, filed July 31, 2015)
10.21	Form of Deferred Stock Unit Award Agreement for grants of deferred stock units to non-employee director under the USANA Health Sciences, Inc. 2015 Equity Incentive Award Plan (incorporated by reference to Report on Form 8-K, filed July 31, 2015)
10.22	Second Amendment to the Amended and Restated Credit Agreement and Amendment to loan documents (incorporated by reference to Report on Form 8-K, filed February 23, 2016)
31.1	Certification of Principal Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of Principal Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1	Certification of Principal Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (filed herewith)
32.2	Certification of Principal Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (filed herewith)

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Denotes a management contract or compensatory plan or arrangement.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

USANA HEALTH SCIENCES, INC.

Date: May 11, 2016	/s/ Paul A. Jones
	Paul A. Jones
	Principal Financial and Accounting Officer

28

EX-31.1

EXHIBIT 31.1

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

I, David A. Wentz, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of USANA Health Sciences, Inc. (the “Registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the the Registrant’s internal control over financial reporting.

Date: May 11, 2016	/s/ David A. Wentz
	David A. Wentz
	Principal Executive Officer

EX-31.2

EXHIBIT 31.2

PRINCIPAL FINANCIAL OFFICER CERTIFICATION

I, Paul A. Jones, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of USANA Health Sciences, Inc. (the “Registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the the Registrant’s internal control over financial reporting.

Date: May 11, 2016	/s/ Paul A. Jones
	Paul A. Jones
	Principal Financial and Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies that the Quarterly Report on Form 10-Q of USANA Health Sciences, Inc. for the period ended April 2, 2016 as filed May 11, 2016 with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of The Securities Exchange Act of 1934 (15 U.S.C. 78m) and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of USANA Health Sciences, Inc.

Date: May 11, 2016	/s/ David A. Wentz
	David A. Wentz
	Principal Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies that the Quarterly Report on Form 10-Q of USANA Health Sciences, Inc. for the period ended April 2, 2016 as filed May 11, 2016 with the Securities and Exchange Commission, fully complies with the requirements of Section 13(a) or 15(d) of The Securities Exchange Act of 1934 (15 U.S.C. 78m) and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of USANA Health Sciences, Inc.

Date: May 11, 2016	/s/ Paul A. Jones
	Paul A. Jones
	Principal Financial and Accounting Officer

XML

Document And Entity Information - shares	3 Months Ended
	Apr. 02, 2016	May. 06, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 02, 2016
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000896264
Entity Registrant Name	USANA HEALTH SCIENCES INC
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2016
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		11,971,998
Trading Symbol	usna

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Apr. 02, 2016	Jan. 02, 2016
Current assets
Cash and cash equivalents	$ 150,501	$ 143,210
Inventories	67,554	66,119
Prepaid expenses and other current assets	25,349	34,935
Total current assets	243,404	244,264
Property and equipment, net	94,606	87,982
Goodwill	17,460	17,432
Intangible assets, net	37,984	38,269
Deferred tax assets	13,812	9,844
Other assets	24,461	25,446
Total assets	431,727	423,237
Current liabilities
Accounts payable	7,992	10,043
Other current liabilities	104,758	121,369
Total current liabilities	112,750	131,412
Line of credit - long term	66,000
Deferred tax liabilities	6,874	9,822
Other long-term liabilities	1,189	1,151
Stockholders' equity
Common stock, $0.001 par value; Authorized -- 50,000 shares, issued and outstanding 12,488 as of January 2, 2016 and 11,956 as of April 2, 2016	12	13
Additional paid-in capital	59,584	69,740
Retained earnings	187,663	214,875
Accumulated other comprehensive income	(2,345)	(3,776)
Total stockholders' equity	244,914	280,852
Total liabilities and stockholder's equity	$ 431,727	$ 423,237

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Apr. 02, 2016	Jan. 02, 2016
Condensed Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000	50,000
Common stock, shares issued	11,956	12,488
Common stock, shares outstanding	11,956	12,488

XML

Condensed Consolidated Statements Of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 02, 2016	Apr. 04, 2015
Condensed Consolidated Statements Of Comprehensive Income [Abstract]
Net sales	$ 240,449	$ 219,378
Cost of sales	42,920	38,364
Gross profit	197,529	181,014
Operating expenses:
Associate incentives	107,394	101,353
Selling, general and administrative	56,631	49,875
Total operating expenses	164,025	151,228
Earnings from operations	33,504	29,786
Other income (expense):
Interest income	438	154
Interest expense	(202)
Other, net	(732)	14
Other income (expense), net	(496)	168
Earnings before income taxes	33,008	29,954
Income taxes	10,709	10,274
Net earnings	$ 22,299	$ 19,680
Earnings per common share
Basic	$ 1.84	$ 1.56
Diluted	$ 1.77	$ 1.50
Weighted average common shares outstanding
Basic	12,102	12,648
Diluted	12,591	13,085
Comprehensive income:
Net earnings	$ 22,299	$ 19,680
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	2,131	563
Tax benefit (expense) related to foreign currency translation adjustment	(700)	(220)
Other comprehensive income (loss), net of tax	1,431	343
Comprehensive income	$ 23,730	$ 20,023

XML

Condensed Consolidated Statement Of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Cummulative-effect of accounting change | Scenario, Adjustment [Member]		$ 934	$ (601)		$ 333
Balance, shares (Scenario, Previously Reported [Member]) at Jan. 02, 2016	12,488
Balance, shares (Scenario, Adjustment [Member]) at Jan. 02, 2016	12,488
Balance, shares at Jan. 02, 2016					12,488
Balance, value (Scenario, Previously Reported [Member]) at Jan. 02, 2016	$ 13	69,740	214,875	$ (3,776)	$ 280,852
Balance, value (Scenario, Adjustment [Member]) at Jan. 02, 2016	$ 13	70,674	214,274	(3,776)	281,185
Balance, value at Jan. 02, 2016					280,852
Net earnings			22,299		22,299
Other comprehensive income (loss), net of tax				1,431	1,431
Equity-based compensation expense		4,609			$ 4,609
Common stock repurchased and retired, shares	(553)				(553)
Common stock repurchased and retired, value	$ (1)	(15,699)	(48,910)		$ (64,610)
Common stock issued under equity award plans, shares	21
Balance, shares at Apr. 02, 2016	11,956				11,956
Balance, value at Apr. 02, 2016	$ 12	$ 59,584	$ 187,663	$ (2,345)	$ 244,914

XML

Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2016	Apr. 04, 2015
Cash flows from operating activities
Net earnings	$ 22,299	$ 19,680
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	3,520	2,337
(Gain) loss on sale of property and equipment	39	25
Equity-based compensation expense	4,609	2,210
Excess tax benefits from equity-based payment arrangements		(910)
Deferred income taxes	(1,932)	(577)
Changes in operating assets and liabilities:
Inventories	(392)	(5,753)
Prepaid expenses and other assets	1,033	890
Income tax payable related to tax benefit from equity award activity		910
Accounts payable	(2,081)	789
Other liabilities	(13,624)	3,960
Net cash provided by (used in) operating activities	13,471	23,561
Cash flows from investing activities
Additions to notes receivable	(3)	(1,547)
Receipts on notes receivable	49
Purchases of property and equipment	(8,971)	(5,842)
Net cash provided by (used in) investing activities	(8,925)	(7,389)
Cash flows from financing activities
Excess tax benefits from equity-based payment arrangements		910
Repurchase of common stock	(64,610)
Borrowings on line of credit	71,000
Payments on line of credit	(5,000)
Deferred debt issuance costs	(250)
Net cash provided by (used in) financing activities	1,140	910
Effect of exchange rate changes on cash and cash equivalents	1,605	361
Net increase (decrease) in cash and cash equivalents	7,291	17,443
Cash and cash equivalents, beginning of period	143,210	111,126
Cash and cash equivalents, end of period	150,501	128,569
Cash paid during the period for:
Interest	147
Income taxes	8,587	2,996
Non-cash investing activities:
Credits on notes receivable	505	55
Accrued purchases of property and equipment	$ 2,655	$ 910

XML

Organization, Consolidation, And Basis Of Presentation

3 Months Ended

Apr. 02, 2016

Organization, Consolidation, And Basis Of Presentation [Abstract]

Organization, Consolidation, And Basis Of Presentation

NOTE A – ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION

USANA Health Sciences, Inc. develops and manufactures high-quality nutritional and personal care products that are sold internationally through a global network marketing system, which is a form of direct selling. The Consolidated Financial Statements include the accounts and operations of USANA Health Sciences, Inc. and its wholly-owned subsidiaries (collectively, the “Company” or “USANA”) in two geographic regions: Asia Pacific, and Americas and Europe.  Asia Pacific is further divided into three sub-regions:Greater China, Southeast Asia Pacific, and North Asia. Greater China includes Hong Kong, Taiwan and China; Southeast Asia Pacific includes Australia, New Zealand, Singapore, Malaysia, the Philippines, Thailand, and Indonesia; North Asia includes Japan, and South Korea.  Americas and Europe includes the United States, Canada, Mexico, Colombia, the United Kingdom, France, Belgium, and the Netherlands.  All intercompany accounts and transactions have been eliminated in this consolidation.

The condensed consolidated balance sheet as of January 2, 2016,derived from audited consolidated financial statements, and the unaudited interim consolidated financial information of the Company have been prepared in accordance with Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission. 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 any 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 management, the accompanying interim 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 April 2, 2016 and results of operations for the three months ended April 4, 2015 and April 2, 2016. 

The interim condensedconsolidated 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 January 2, 2016.  The results of operations for the threemonths ended April 2, 2016, may not be indicative of the results that may be expected for the fiscal year 2016 ending December 31, 2016.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” 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 2014-09 is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted for annual and interim reporting periods beginning after December 15, 2016.  The Company is currently evaluating the impact ASU 2014-09 will have on its consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.”  The ASU addresses concerns about the current accounting for consolidation of certain legal entities.  The ASU also provides guidance for identifying the primary beneficiary that varies depending on whether there is a single decision maker or shared power depending on whether the related parties are under common control with the reporting entity.  ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption.  The Company adopted ASU 2015-02 effective for the quarter ended April 2, 2016, however, there was no material impact to the Company’s consolidated financial statements.

NOTE A – ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION - CONTINUED

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.”  The ASU requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent.  The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2016.  Early adoption is permitted at the beginning of an interim or annual period and requires either a prospective or retrospective approach to adoption.  The Company elected to early adopt ASU 2015-17 during the quarter ended April 2, 2016.  As a result of the adoption, current deferred tax assets and current deferred tax liabilities were reclassified to noncurrent deferred taxes.  The adoption was on a prospective basis and therefore had no impact on prior periods.

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 evaluating the impact ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.”  ASU 2016-09 was issued as part of the FASB’s simplification initiative aimed at reducing costs and complexity while maintaining or improving the usefulness of financial information.  This update involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, statutory tax withholding requirements, and classification in the statement of cash flows.  This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period.  If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period, and the entity must adopt all of the amendments in the same period.  The Company elected to early adopt ASU 2016-09 during the quarter ended April 2, 2016.  Following is a summary of the changes resulting from adopting this ASU:

· Forfeitures–Estimating forfeitures as part of the compensation cost accrual is no longer required.  An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur.  The Company has elected to account for forfeitures when they occur.  The cumulative-effect of this change in election resulted in a decrease to retained earnings and an increase to additional paid-in capital of $934 as of the beginning of 2016. The tax effect of this adjustment increased the beginning balances for deferred tax assets and retained earnings by $333.

· Income Tax Accounting– Prior to adopting this ASU, all excess tax benefits resulting from exercise or settlement of share-based payment transactions were recognized in Additional paid-in capital (“APIC”) and accumulated in an APIC pool.  Any tax deficiencies were either offset against the APIC pool, or were recognized in the income statement if no APIC pool was available.  Under the new amendments, the APIC pool has been eliminated and all excess tax benefits and tax deficiencies are recognized as an income tax benefit or expense in the income statement prospectively.  Accordingly, prior periods have not been adjusted.  Additionally, the tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur.  An entity should also recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period.   

NOTE A – ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION - CONTINUED

· Statement of Cash Flow Presentation –Historically, excess tax benefits on the statement of cash flows have been presented as a cash inflow from financing activities and a cash outflow from operating activities.  The ASU simplifies the presentation of excess tax benefits on the statements of cash flow requiring that excess tax benefits be classified along with other income tax cash flows as an operating activity.  As part of the transition, entities may elect the cash flow presentation changes using either a prospective or retrospective application.  The Company has elected to present the changes on a prospective basis, and as such, the excess tax benefits from equity-based payment arrangements in the Condensed Consolidated Statements of Cash Flows have not been adjusted for prior periods to conform with the current presentation.The excess tax benefits from equity-based payment arrangements during the quarter ended April 2, 2016 totaled $574 and are reflected in net earnings of the operating activities section of the Condensed Consolidated Statements of Cash Flows.

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Fair Value Measures

3 Months Ended

Apr. 02, 2016

Fair Value Measures [Abstract]

Fair Value Measures

NOTE B – FAIR VALUE MEASURES

The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are:

· Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

· Level 2 inputs are from other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

· Level 3 inputs are unobservable and are used to measure fair value in situations where there is little, if any, market activity for the asset or liability at the measurement date.

As of the dates indicated, the following financial assets and liabilities were measured at fair value on a recurring basis using the type of inputs shown:

		Fair Value Measurements Using
		Inputs
	January 2, 2016	Level 1	Level 2	Level 3
Money market funds included in cash equivalents	$                    14,460	$         14,460	$                  -	$                  -
Foreign currency contracts included in Prepaid expenses and other current assets	33	-	33	-
	$                    14,493	$         14,460	$                33	$                  -
		Fair Value Measurements Using
		Inputs
	April 2, 2016	Level 1	Level 2	Level 3
Money market funds included in cash equivalents	$                    61,406	$         61,406	$                  -	$                  -
Foreign currency contracts included in other current liabilities	(1,132)	-	(1,132)	-
	$                    60,274	$         61,406	$          (1,132)	$                  -

NOTE B – FAIR VALUE MEASURES - CONTINUED

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the periods indicated.

The majority of the Company's non-financial assets, which include goodwill, intangible 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 recorded to reduce the carrying value to the fair value, if the carrying value exceeds the fair value. At January 2, 2016 and April 2, 2016, there were no non-financial assets measured at fair value on a non-recurring basis.

The Company's financial instruments include cash equivalents,  accounts receivable, restricted cash, notes receivable, and accounts payable. The recorded values of cash equivalents, accounts receivable, restricted cash, and accounts payable approximate their fair values, based on their short-term nature. The carrying value of the notes receivable approximate fair value because the variable interest rates in the notes reflect current market rates.

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Inventories

3 Months Ended

Apr. 02, 2016

Inventories [Abstract]

Inventories

NOTE C – INVENTORIES

Inventories consist of the following:
	January 2,	April 2,
	2016	2016
Raw materials	$             22,529	$             23,168
Work in progress	8,701	9,172
Finished goods	34,889	35,214
	$             66,119	$             67,554

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Other Assets

3 Months Ended

Apr. 02, 2016

Other Assets [Abstract]

Other Assets

NOTE D – OTHER ASSETS

Other assets consists primarily of a secured loan to a third-party supplier of the Company’s nutrition bars and land use rights related to a production facility under development in China.

The Company has extended non-revolving credit to its supplier of nutrition bars to allow them to acquire equipment that is necessary to manufacture the USANA nutrition bars.  This relationship provides improved supply chain stability for USANA and creates a mutually beneficial relationship between the parties.  Notes receivable are valued at their unpaid principal balance plus any accrued but unpaid interest, which approximates fair value.  Interest accrues at an annual interest rate of LIBOR plus 400 basis points. The note has a maturity date of February 1, 2024 and will be repaid by a combination of cash payments and credits for the manufacture of USANA’s nutrition bars.  There is no prepayment penalty.  Notes receivable from this supplier as of January 2, 2016, and April 2, 2016 were $8,339 and $7,939, respectively.

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.

The Company is building a state-of-the-art manufacturing and production facility in China, which is expected to become operational in the first half of 2016.  As part of this project, landuse rights totaling $7,053, and $7,071as of January 2, 2016 and April 2, 2016, respectively, have been purchased and are being amortized over 50 years.

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Foreign Currency Contracts

3 Months Ended

Apr. 02, 2016

Foreign Currency Contracts [Abstract]

Foreign Currency Contracts

NOTE  E – FOREIGN CURRENCY CONTRACTS

Derivative financial instruments are recognized as either assets or liabilities in the consolidated balance sheet at their respective fair values. As a matter of policy, the Company uses derivatives for risk management purposes. The Company does not use derivatives for speculative purposes. The Company uses foreign currency contracts to hedge the effects of fluctuations in exchange rates on intercompany transactions. Substantially all of these instruments have terms of 90 days or less. The Company does not designate any of its derivatives as qualifying hedges for accounting purposes. Changes in the fair value of derivative instruments are recognized currently through earnings.

The notional amount of the foreign currency contracts as of January 2, 2016 and April 2, 2016 was $7,488 and $68,196, respectively.  The fair values of derivative instruments in the condensed consolidated balance sheets are as follows:

		Asset /(Liability) Fair Value
	Balance Sheet	January 2,	April 2,
	Classification	2016	2016
Foreign currency contracts	Prepaid expenses and other current assets	$                  33	$                     -
	Other current liabilities	-	(1,132)
		$                  33	$            (1,132)
The net gain (loss) recognized in the condensed consolidated statements of comprehensive income on
derivative instruments not designated as hedges are as follows for the periods indicated: periods indicated:
		Quarter Ended
	Income Statement	April 4,	April 2,
	Classification	2015	2016
Foreign currency contracts	Other, net	$                  64	$            (1,348)

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Line Of Credit

3 Months Ended

Apr. 02, 2016

Line Of Credit [Abstract]

Line Of Credit

NOTE F – LINE OF CREDIT

On February 19, 2016, the Company entered into an Amended and Restated Credit Agreement (“Credit Agreement”), with Bank of America, which extends the term of the Credit Agreement to April 27, 2021.  The Credit Agreement also increases the amount the Company may borrow under the credit facility from $75,000to up to $125,000, through October 31, 2016.  On November 1, 2016, the amount the Company may borrow will revert to $75,000 for the remainder of the agreement.  The only other modification to the Credit Agreement was an increase to the Company’s consolidated rolling four-quarter adjusted EBITDA covenant from $60,000 to equal to or greater than $100,000.

Interest is computed based on the bank's Prime Rate or LIBOR, adjusted by features specified in the Credit Agreement. The collateral for this line of credit is the pledge of the capital stock of certain subsidiaries of the Company, set forth in a separate pledge agreement with the bank. Part of the credit agreement is that any existing bank guarantees are considered a reduction of the overall availability of credit and part of the covenant calculation. This resulted in a $4,153, and $4,130 reduction in the available borrowing limit as of January 2, 2016 and April 2, 2016, respectively, due to existing normal course of business guarantees in certain markets.

NOTE F – LINE OF CREDIT - CONTINUED

There was no outstanding debt on this line of credit at January 2, 2016.  At April 2, 2016, there was an outstanding balance of $66,000.  The Company will be required to pay any balance on this line of credit in full at the time of maturity in April 2021 unless the line of credit is replaced or terms are renegotiated.Subsequent to the quarter ended April 2, 2016, the Company considered its liquidity needs and made a decision to repay the current outstanding balance on the line of credit within the next twelve months.

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Contingencies

3 Months Ended

Apr. 02, 2016

Contingencies [Abstract]

Contingencies

NOTE G – CONTINGENCIES

The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business, including matters involving our products, intellectual property, supplier relationships, distributors, competitor relationships, employees and other matters. The Company records a liability when a particular contingency is probable and estimable. The Company has not accrued for any contingency at April 2, 2016 as the Company does not consider any contingency to be probable nor estimable. The Company faces contingencies that are reasonably possible to occur; however, they cannot currently be estimated. While complete assurance cannot be given to the outcome of these proceedings, management does not currently believe that any of these matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, liquidity or results of operations.

In 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 Company's case to the Utah Court of Appeals, which recently issued a briefing schedule for the parties.  In March, 2016, the plaintiffs filed their opening brief.  The Company will respond in May 2016. The Company believes that the claims in the complaint are without merit and will continue to vigorously defend this suit. The Company continues to believe, based on information currently available, that the final outcome of this suit will not have a material adverse effect on the Company’s business, results of operations or consolidated financial position.

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Common Stock And Earnings Per Share

3 Months Ended

Apr. 02, 2016

Common Stock And Earnings Per Share [Abstract]

Common Stock And Earnings Per Share

NOTE H— COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per share are 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 share based on the time they were outstanding in any period. Diluted earnings per common share are based on shares that are outstanding (computed under basic EPS) and on potentially dilutive shares. Shares that are included in the diluted earnings per share calculations under the treasury stock method include equity awards that are in-the-money but have not yet been exercised.

The following is a reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share for the periods indicated:

	Quarter Ended
	April 4,	April 2,
	2015	2016
Net earnings available to common shareholders	$             19,680	$             22,299
Weighted average common shares outstanding - basic	12,648	12,102
Dilutive effect of in-the-money equity awards	437	489
Weighted average common shares outstanding - diluted	13,085	12,591
Earnings per common share from net earnings - basic	$                1.56	$                1.84
Earnings per common share from net earnings - diluted	$                1.50	$                1.77
Equity awards for the following shares were not included in the computation of diluted EPS due to the fact that
their effect would be anti-dilutive:
	Quarter Ended
	April 4,	April 2,
	2015	2016
	125	1,095

During the three months ended April 2, 2016, the Company repurchased and retired 553 shares, for $64,610, under the Company’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.

 As of April 2, 2016, the remaining approved repurchase amount under the stock repurchase plan was $35,390.  There currently is no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases.

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Segment Information

3 Months Ended

Apr. 02, 2016

Segment Information [Abstract]

Segment Information

NOTE I – SEGMENT INFORMATION

USANA operates as a direct selling company that develops, manufactures, and distributes high-quality nutritional and personal care products that are sold through a global network marketing system of independent distributors (“Associates”).  As such, management aggregates its operating segments into one reportable segment as management believes that the Company’s segments exhibit similar long-term financial performance and have similar economic characteristics.  Performance for a region or market is evaluated based on sales.  No single Associate accounted for 10% or more of net sales for the periods presented.  The table below summarizes the approximate percentage of total product revenue that has been contributed by the Company’s nutritional and personal care products for the periods indicated.

	Quarter Ended
	April 4,	April 2,
	2015	2016
USANA® Nutritionals	81%	82%
USANA Foods	11%	10%
Sensé – beautiful science®	7%	7%

Selected financial information for the 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(2)

· 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 that of BabyCare, its wholly-owned subsidiary.

(2)The Company commenced operations in Indonesia in the fourth quarter of 2015.

NOTE I – SEGMENT INFORMATION - CONTINUED

Selected Financial Information

Financial information by geographic region is presented for the periods indicated below:

	Quarter Ended
	April 4,	April 2,
	2015	2016
Net Sales to External Customers
Asia Pacific
Greater China	$           101,286	$           116,998
Southeast Asia Pacific	45,339	48,861
North Asia	9,229	10,560
Asia Pacific Total	155,854	176,419
Americas and Europe	63,524	64,030
Consolidated Total	$           219,378	$           240,449

The following table provides further information on markets representing ten percent or more of consolidated net sales and long-lived assets, respectively:

	Quarter Ended
	April 4,	April 2,
	2015	2016
Net sales:
China	$             83,810	$           100,499
United States	$             36,302	$             34,865
	As of
	January 2,	April 2,
	2016	2016
Long-lived Assets:
China	$             92,835	$             95,602
United States	$             57,797	$             59,433

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Organization, Consolidation, And Basis Of Presentation (Policy)

3 Months Ended

Apr. 02, 2016

Organization, Consolidation, And Basis Of Presentation [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” 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 2014-09 is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted for annual and interim reporting periods beginning after December 15, 2016.  The Company is currently evaluating the impact ASU 2014-09 will have on its consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.”  The ASU addresses concerns about the current accounting for consolidation of certain legal entities.  The ASU also provides guidance for identifying the primary beneficiary that varies depending on whether there is a single decision maker or shared power depending on whether the related parties are under common control with the reporting entity.  ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption.  The Company adopted ASU 2015-02 effective for the quarter ended April 2, 2016, however, there was no material impact to the Company’s consolidated financial statements.

NOTE A – ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION - CONTINUED

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.”  The ASU requires entities with a classified balance sheet to present all deferred tax assets and liabilities as noncurrent.  The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2016.  Early adoption is permitted at the beginning of an interim or annual period and requires either a prospective or retrospective approach to adoption.  The Company elected to early adopt ASU 2015-17 during the quarter ended April 2, 2016.  As a result of the adoption, current deferred tax assets and current deferred tax liabilities were reclassified to noncurrent deferred taxes.  The adoption was on a prospective basis and therefore had no impact on prior periods.

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 evaluating the impact ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.”  ASU 2016-09 was issued as part of the FASB’s simplification initiative aimed at reducing costs and complexity while maintaining or improving the usefulness of financial information.  This update involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, statutory tax withholding requirements, and classification in the statement of cash flows.  This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period.  If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period, and the entity must adopt all of the amendments in the same period.  The Company elected to early adopt ASU 2016-09 during the quarter ended April 2, 2016.  Following is a summary of the changes resulting from adopting this ASU:

· Forfeitures–Estimating forfeitures as part of the compensation cost accrual is no longer required.  An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur.  The Company has elected to account for forfeitures when they occur.  The cumulative-effect of this change in election resulted in a decrease to retained earnings and an increase to additional paid-in capital of $934 as of the beginning of 2016. The tax effect of this adjustment increased the beginning balances for deferred tax assets and retained earnings by $333.

· Income Tax Accounting– Prior to adopting this ASU, all excess tax benefits resulting from exercise or settlement of share-based payment transactions were recognized in Additional paid-in capital (“APIC”) and accumulated in an APIC pool.  Any tax deficiencies were either offset against the APIC pool, or were recognized in the income statement if no APIC pool was available.  Under the new amendments, the APIC pool has been eliminated and all excess tax benefits and tax deficiencies are recognized as an income tax benefit or expense in the income statement prospectively.  Accordingly, prior periods have not been adjusted.  Additionally, the tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur.  An entity should also recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period.   

NOTE A – ORGANIZATION, CONSOLIDATION, AND BASIS OF PRESENTATION - CONTINUED

Statement of Cash Flow Presentation – Historically, excess tax benefits on the statement of cash flows have been presented as a cash inflow from financing activities and a cash outflow from operating activities.  The ASU simplifies the presentation of excess tax benefits on the statements of cash flow requiring that excess tax benefits be classified along with other income tax cash flows as an operating activity.  As part of the transition, entities may elect the cash flow presentation changes using either a prospective or retrospective application.  The Company has elected to present the changes on a prospective basis, and as such, the excess tax benefits from equity-based payment arrangements in the Condensed Consolidated Statements of Cash Flows have not been adjusted for prior periods to conform with the current presentation.  The excess tax benefits from equity-based payment arrangements during the quarter ended April 2, 2016 totaled $574 and are reflected in net earnings of the operating activities section of the Condensed Consolidated Statements of Cash Flows.

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Fair Value Measures (Tables)

3 Months Ended

Apr. 02, 2016

Fair Value Measures [Abstract]

Schedule Of Assets And Liabilities Measured At Fair Value

		Fair Value Measurements Using
		Inputs
	January 2, 2016	Level 1	Level 2	Level 3
Money market funds included in cash equivalents	$                    14,460	$         14,460	$                  -	$                  -
Foreign currency contracts included in Prepaid expenses and other current assets	33	-	33	-
	$                    14,493	$         14,460	$                33	$                  -
		Fair Value Measurements Using
		Inputs
	April 2, 2016	Level 1	Level 2	Level 3
Money market funds included in cash equivalents	$                    61,406	$         61,406	$                  -	$                  -
Foreign currency contracts included in other current liabilities	(1,132)	-	(1,132)	-
	$                    60,274	$         61,406	$          (1,132)	$                  -

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Inventories (Tables)

3 Months Ended

Apr. 02, 2016

Inventories [Abstract]

Schedule Of Inventories

Inventories consist of the following:
	January 2,	April 2,
	2016	2016
Raw materials	$             22,529	$             23,168
Work in progress	8,701	9,172
Finished goods	34,889	35,214
	$             66,119	$             67,554

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Foreign Currency Contracts (Tables)

3 Months Ended

Apr. 02, 2016

Foreign Currency Contracts [Abstract]

Schedule Of Derivative Instruments In The Condensed Consolidated Balance Sheet

		Asset /(Liability) Fair Value
	Balance Sheet	January 2,	April 2,
	Classification	2016	2016
Foreign currency contracts	Prepaid expenses and other current assets	$                  33	$                     -
	Other current liabilities	-	(1,132)
		$                  33	$            (1,132)

Schedule Of Derivative Instruments Gain (Loss) In The Condensed Consolidated Statement Of Comprehensive Income

		Quarter Ended
	Income Statement	April 4,	April 2,
	Classification	2015	2016
Foreign currency contracts	Other, net	$                  64	$            (1,348)

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Common Stock And Earnings Per Share (Tables)

3 Months Ended

Apr. 02, 2016

Common Stock And Earnings Per Share [Abstract]

Schedule Of Common Stock And Earnings Per Share

	Quarter Ended
	April 4,	April 2,
	2015	2016
Net earnings available to common shareholders	$             19,680	$             22,299
Weighted average common shares outstanding - basic	12,648	12,102
Dilutive effect of in-the-money equity awards	437	489
Weighted average common shares outstanding - diluted	13,085	12,591
Earnings per common share from net earnings - basic	$                1.56	$                1.84
Earnings per common share from net earnings - diluted	$                1.50	$                1.77
Equity awards for the following shares were not included in the computation of diluted EPS due to the fact that
their effect would be anti-dilutive:
	Quarter Ended
	April 4,	April 2,
	2015	2016
	125	1,095

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Segment Information (Tables)

3 Months Ended

Apr. 02, 2016

Segment Information [Abstract]

Schedule Of Revenue Percentage By Product

	Quarter Ended
	April 4,	April 2,
	2015	2016
USANA® Nutritionals	81%	82%
USANA Foods	11%	10%
Sensé – beautiful science®	7%	7%

Schedule Of Revenues From External Customers By Geographical Areas

	Quarter Ended
	April 4,	April 2,
	2015	2016
Net Sales to External Customers
Asia Pacific
Greater China	$           101,286	$           116,998
Southeast Asia Pacific	45,339	48,861
North Asia	9,229	10,560
Asia Pacific Total	155,854	176,419
Americas and Europe	63,524	64,030
Consolidated Total	$           219,378	$           240,449

Consolidated Net Sales And Long Lived Assets

	Quarter Ended
	April 4,	April 2,
	2015	2016
Net sales:
China	$             83,810	$           100,499
United States	$             36,302	$             34,865
	As of
	January 2,	April 2,
	2016	2016
Long-lived Assets:
China	$             92,835	$             95,602
United States	$             57,797	$             59,433

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Organization, Consolidation, And Basis Of Presentation (Details) $ in Thousands	3 Months Ended
	Apr. 02, 2016 USD ($) item	Apr. 04, 2015 USD ($)	Jan. 02, 2016 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Geographic regions | item	2
Sub-geographical regions | item	3
Excess tax benefit from equity-based payment arrangements		$ 910
Scenario, Adjustment [Member]
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Cummulative-effect of accounting change			$ 333
Scenario, Adjustment [Member] | Additional Paid-in Capital [Member]
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Cummulative-effect of accounting change			$ 934
Restatement Adjustment [Member]
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Excess tax benefit from equity-based payment arrangements	$ 574

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Fair Value Measures (Narrative) (Details) - USD ($)	Apr. 02, 2016	Jan. 02, 2016
Fair Value Measures [Abstract]
Transfers of financial assets or liabilities	$ 0	$ 0
Non-financial assets	$ 0	$ 0

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Fair Value Measures (Schedule Of Assets And Liabilities Measured At Fair Value) (Details) - USD ($) $ in Thousands	Apr. 02, 2016	Jan. 02, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds included in cash equivalents	$ 61,406	$ 14,460
Foreign currency contracts included in Prepaid expenses and other current assets		33
Foreign currency contracts included in other current liabilities	(1,132)
Total financial assets and liabilities	60,274	14,493
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds included in cash equivalents	61,406	14,460
Total financial assets and liabilities	61,406	14,460
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency contracts included in Prepaid expenses and other current assets		33
Foreign currency contracts included in other current liabilities	(1,132)
Total financial assets and liabilities	$ (1,132)	$ 33

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Inventories (Details) - USD ($) $ in Thousands	Apr. 02, 2016	Jan. 02, 2016
Inventories [Abstract]
Raw materials	$ 23,168	$ 22,529
Work in progress	9,172	8,701
Finished goods	35,214	34,889
Inventories	$ 67,554	$ 66,119

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Other Assets (Details) - Non-revolving Credit Facility [Member] - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Apr. 02, 2016	Jan. 02, 2016
Other Assets [Line Items]
Receivable	$ 7,939	$ 8,339
Land-use rights	$ 7,071	$ 7,053
Amortization period	50 years
Maturity date	Feb. 01, 2024
LIBOR [Member]
Other Assets [Line Items]
Variable rate	4.00%

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Foreign Currency Contracts (Narrative) (Details) - USD ($) $ in Thousands	Apr. 02, 2016	Jan. 02, 2016
Foreign Currency Contracts [Member]
Derivatives, Fair Value [Line Items]
Notional amount	$ 68,196	$ 7,488

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Foreign Currency Contracts (Schedule Of Derivative Instruments In The Condensed Consolidated Balance Sheet) (Details) - Foreign Currency Contracts [Member] - USD ($) $ in Thousands	Apr. 02, 2016	Jan. 02, 2016
Derivatives, Fair Value [Line Items]
Asset / (liability) fair value	$ (1,132)	$ 33
Prepaid Expenses and Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Asset / (liability) fair value		$ 33
Other Current Liabilities [Member]
Derivatives, Fair Value [Line Items]
Asset / (liability) fair value	$ (1,132)

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Foreign Currency Contracts (Schedule Of Derivative Instruments Gain (Loss) In The Condensed Consolidated Statement Of Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Apr. 02, 2016	Jan. 02, 2016
Foreign Currency Contracts [Member] | Other, Net [Member] | Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative, Net gain (loss)	$ (1,348)	$ 64

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Line Of Credit (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Apr. 02, 2016	Jan. 02, 2016	Nov. 01, 2016	Feb. 19, 2016	Feb. 18, 2016
Line of Credit Facility [Line Items]
Adjusted EBITDA covenant					$ 60,000
Line of Credit [Member]
Line of Credit Facility [Line Items]
Credit facility					$ 75,000
Reduction in available borrowing limit	$ 4,130	$ 4,153
Outstanding debt	$ 66,000	$ 0
Maturity date	Apr. 01, 2021
Amended And Restated Credit Agreement [Member]
Line of Credit Facility [Line Items]
Credit facility				$ 125,000
Adjusted EBITDA covenant				$ 100,000
Amended And Restated Credit Agreement [Member] | Scenario, Forecast [Member]
Line of Credit Facility [Line Items]
Credit facility			$ 75,000

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Common Stock And Earnings Per Share (Narrative) (Details) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 02, 2016 USD ($) shares
Common Stock And Earnings Per Share [Abstract]
Shares repurchased and retired | shares	553
Value of shares repurchased and retired	$ 64,610
Remaining approved repurchase amount	$ 35,390

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Common Stock And Earnings Per Share (Schedule Of Common Stock And Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 02, 2016	Apr. 04, 2015
Common Stock And Earnings Per Share [Abstract]
Net earnings available to common shareholders	$ 22,299	$ 19,680
Weighted average common shares outstanding - basic	12,102	12,648
Dilutive effect of in-the-money equity awards	489	437
Weighted average common shares outstanding - diluted	12,591	13,085
Earnings per common share from net earnings - basic	$ 1.84	$ 1.56
Earnings per common share from net earnings - diluted	$ 1.77	$ 1.50
Equity awards for the following shares were not included in the computation of diluted EPS due to the fact that their effect would be anti-dilutive:	1,095	125

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Segment Information (Narrative) (Details)	3 Months Ended
	Apr. 02, 2016 item segment
Segment Information [Abstract]
Number of reportable segments | segment	1
Percentage of revenue from major customers, maximum	10.00%
Geographic regions	2
Sub-geographical regions	3

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Segment Information (Schedule Of Revenue Percentage By Product) (Details)	3 Months Ended
	Apr. 02, 2016	Apr. 04, 2015
USANA Nutritionals [Member]
Revenue from External Customer [Line Items]
Percentage of product revenue	82.00%	81.00%
USANA Foods [Member]
Revenue from External Customer [Line Items]
Percentage of product revenue	10.00%	11.00%
Sense - Beautiful Science [Member]
Revenue from External Customer [Line Items]
Percentage of product revenue	7.00%	7.00%

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Segment Information (Schedule Of Revenues From External Customers By Geographical Areas) (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2016	Apr. 04, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Net Sales to External Customers	$ 240,449	$ 219,378
Greater China [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net Sales to External Customers	116,998	101,286
Southeast Asia Pacific [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net Sales to External Customers	48,861	45,339
North Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net Sales to External Customers	10,560	9,229
Asia Pacific [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net Sales to External Customers	176,419	155,854
Americas And Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net Sales to External Customers	$ 64,030	$ 63,524

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Segment Information (Consolidated Net Sales And Long Lived Assets) (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2016	Apr. 04, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 240,449	$ 219,378
China [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	100,499	83,810
Long-lived Assets	95,602	92,835
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	34,865	36,302
Long-lived Assets	59,433	57,797
Americas And Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 64,030	$ 63,524