896264--3/8/2007--USANA_HEALTH_SCIENCES

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Forward-Looking Statements and Certain Risks As a network marketing company, we are dependent upon an independent sales force and we do not have direct control over the marketing of our products. If the number or productivity of independent Associates does not increase, our revenue will not increase. To increase revenue, we must increase the number and/or the productivity of our Associates. The violation of marketing or advertising laws by Associates in connection with the sale of our products or the promotion of our Compensation Plan could adversely affect our business. Network marketing is subject to intense government scrutiny and regulation, which adds to the expense of doing business and the possibility that changes in the law might adversely affect our ability to sell some of our products in certain markets. We may have or incur obligations relating to the activities of our distributors. Our distributors are subject to taxation, and in some instances, legislation or governmental agencies impose an obligation on us to collect taxes, such as sales taxes or value added taxes, and to maintain appropriate records. Our business is subject to the effects of adverse publicity and negative public perception. The loss of key management personnel would adversely affect our business. The beneficial ownership of a significant percentage of our common stock gives Dr. Wentz effective control and limits the influence of other shareholders on important policy and management issues. Our products and manufacturing activities are subject to extensive government regulation, which could limit or prevent the sale of our products in some markets. Our net sales are significantly affected by our success in growing existing markets, as well as opening new markets. As we continue to expand into international markets, our business becomes increasingly subject to political, economic, legal and other risks. Changes in these markets could adversely affect our business. An increase in the amount of incentives paid to Associates would reduce profitability. We are subject to risks associated with our reliance upon information technology systems. The loss of a significant Associate or downline organization could adversely affect our business. Our business is subject to the risks associated with intense competition from larger, wealthier, and more established competitors. Taxation and transfer pricing considerations affect our operations. Exchange rate fluctuations affect our foreign operations and could reduce our net sales and earnings. Disruptions to shipping channels that we use to distribute our products to international warehouses may adversely affect our margins and profitability in those markets. The inability to obtain adequate supplies of raw materials for products at favorable prices, or at all, or the inability to obtain certain products from third-party suppliers, could have a material adverse effect on our business, financial condition, and results of operations. Shortages of raw materials used in certain of our products may temporarily adversely affect our margins and our profitability related to the sale of those products. Nutritional supplement products may be supported by only limited availability of conclusive clinical studies. As a manufacturer we may be subject to product liability claims. Our business is subject to particular intellectual property risks. Our manufacturing activity is subject to certain risks. Our stock price has been volatile and subject to various market conditions. We may incur liability under our Athlete Guarantee program, if and to the extent participating athletes make a successful claim against USANA for testing positive for certain banned substances while taking USANA nutritional supplements.

Full 10-K form ▸

896264--3/8/2007--USANA_HEALTH_SCIENCES_INC