USANA Health Sciences Inc (USNA) 2009 Q4 法說會逐字稿

Welcome to the USANA Health Sciences fourth quarter and year-end earnings conference call on the 10th of February, 2010. Throughout today's recorded presentation all participants will be in a listen-only mode. (Operator Instructions.) I will now hand the conference over to Riley Timmer. Please go ahead.

Thank you. Good morning, everyone. We appreciate you joining us this morning to review our fourth quarter and full-year 2009 results. Today's conference call is being broadcast live via webcast and can be accessed directly from our web site at www.usanahealthsciences.com. Shortly following the call, a replay will be available on our web site.

Now, as a reminder, during the course of this conference call management will make forward-looking statements regarding future events or the future financial performance of our company. Those statements involve risks and uncertainties that could cause our end results to differ, perhaps materially from the results projected in such forward-looking statements. We caution you that these statements should be considered in conjunction with the disclosures, including specific risk factors and financial data contained in our most recent filings with the SEC.

Okay. Today I'm joined this morning by Dr. Fred Cooper, our President and Chief Operating Officer, Jeff Yates, our Chief Financial Officer, and Mark Wilson, Executive Vice President of Sales. Before I turn the call over to Jeff, I'm going to point out a few areas of importance that are salient to our results this quarter. First, 2008 included an extra week of sales due to the way our accounting year-end is structured. This occurs about every five to six years, and 2008 happened to be one of those 53-week years. Please keep this extra week in mind as we make comparisons to the fourth quarter and full-year 2008, as we had nearly $7 million of additional sales that week.

Also for the full-year 2009 sales were reduced by approximately $17.1 million, and earnings per share was reduced by about $0.10 due to unfavorable currency changes. However, for the first time in 2009, the fourth quarter included a benefit from changes in currency exchange rates. This benefit amounted to $6.5 million to our top line year-over-year. Additionally, the fourth quarter of 2008 reflected about $7 million in nonrecurring expense, which is loaded in the SG&A line. This equated to an EPS reductions of about $0.27.

With that, I'll turn the call over to Jeff to provide you with the financial results of the quarter and year.

Thank you, Riley. Good morning, everyone. I am delighted to be here with Fred and Mark again to talk about another great quarter for USANA. I'll begin by reviewing the details of the income statement and balance sheet and then introduce our initial guidance for 2010.

For the fourth quarter of 2009, net sales reached a record $116.8 million, compared with $111 million reported for the fourth quarter of 2008. As Riley pointed out, the fourth quarter of 2009 was a 13-week quarter compared to a 14-week fourth quarter in the prior year. Excluding this extra week of sales, net sales increased 12.2%.

For the full-year 2009, net sales increased 1.8% to $436.9 million, which marks the seventh consecutive year of record sales for USANA. It is also relevant to note we achieved this new record despite a $17.1 million negative impact to the top line from changes in currency and an extra week in sales in 2008. Excluding these two factors, sales in 2009 would have increased by 7.6% over the prior year. This growth was due to an overall increase in product sales, driven by higher average number of active associates.

Looking at our regional sales results, net sales for the fourth quarter in North America decreased by 9.3%, or $6.2 million, to $60.8 million compared with the prior year. Again, excluding the extra week of sales in 2008, net sales in North America decreased just 3.5%. This decrease was primarily due to a 9.3% decrease in the number of active associates in that market to 97,000. In a moment, Fred will discuss in greater detail our results and strategies for North America.

Needless to say, we are pleased with the overall performance in our Asia-Pacific region. During the fourth quarter net sales increased $11.9 million, or 27.1%. This increase resulted in a record $56 million in sales, driven primarily by an increase of 12.1% in the number of active associates to 102,000. This is the third consecutive quarter of record sales and number of associates for this region. This increase can be primarily attributed to growth in Hong Kong and the addition of 4,000 new associates in the Philippines. We continue to achieve double-digit sales growth in Hong Kong, Malaysia and South Korea, and this quarter we achieved double-digit growth in Australia, New Zealand and Japan. The addition of the Philippines, USANA's newest market, added $1.3 million in sales to our Asia-Pacific total for the quarter.

Looking to our bottom-line results, net earnings for the fourth quarter were $10.2 million or $0.66 per share, compared with $4.5 million or $0.29 per share in the fourth quarter of the prior year. If we exclude nonrecurring expense incurred in the fourth quarter of 2008, net earnings increased $1.5 million or 16.7%, and earnings per share increased $0.10 or 17.9%. The increase in net earnings and earnings per share resulted from decreased SG&A costs, improved gross profit margins, and currency benefits. These improvements were partially offset by higher associate incentive expense.

Now, let me describe in greater detail the major line items on our income statement. Gross profit margin for the fourth quarter increased as a percentage of net sales to 79.8%, compared with 79.1% for the fourth quarter of 2008. This increase can primarily be attributed to lower freight costs and higher sales prices on certain products.

Associate incentives for the fourth quarter of 2009 were 45.7% of sales, compared with 42.1% for the fourth quarter of last year. This increase was due to the full-year impact of compensation plan enhancements introduced at our 2008 international convention. As I have mentioned before, this expense is higher than our historical payout, but we believe that the enhancements are an important investment in our associates.

Selling, general and administrative expenses, excluding the nonrecurring expense, remained virtually flat in absolute dollars for the fourth quarter of 2009. I am indeed pleased with the efforts and response of our management team to control and manage our expenses over the last year. Other income and expense improved by $1.1 million in the fourth quarter of 2009. A large currency exchange loss was incurred in 2008.

Looking at the bottom-line for the full year, excluding nonrecurring expense, net earnings decreased $643,000 or 1.9%. This decrease in net earnings can primarily be attributed to unfavorable currency exchange rates and higher associate incentives expense. Earnings per share, however, increased by $0.05, or 2.4%, due to a lower number of average shares outstanding.

Now regarding the balance sheet, cash at the end of the fourth quarter was $13.7 million. During the quarter we paid down the balance on our line of credit by about $10 million to finish the year at $7 million. During the full Fiscal Year of 2009, we were able to reduce that debt by about $28 million. Capital expenditures for the fourth quarter totaled about $1.2 million and just over $4 million for the full-year 2009. We are expecting CapEx, for your information, in 2010 to be about -- or excuse me, to be between $4 million and $6 million.

Finally, let's discuss our guidance for the full year of 2010. When considering this guidance, I would remind you that our Asian markets have become a larger portion of our business over the last few years. That said, we have begun to experience some seasonality during the first quarter, when many of our Asian associates celebrate Chinese New Year. In fact, in the last three years the first quarter has consistently accounted for the smallest percentage of each year's sales respectively. We are expecting this trend to continue as our Asian associate numbers increase worldwide.

Following a solid fourth quarter, we are anticipating yet another record year for USANA in 2010. We project consolidated net sales to be between $465 million and $475 million. Additionally we estimate that earnings per share for 2010 will be between $2.45 and $2.55.

Now, to give you some insight into how we plan to achieve this, in 2010 our management team is incented to continue reducing our operating costs with a specific focus on improving operating margins. We will look at areas in our cost of goods, such as raw material sourcing. Also we will review current operating processes in our production facilities for leverage opportunities. Additionally we will look at the matching-bonus portion of commissions to ensure that this bonus is paid for the appropriate level of performance. We will also leverage the online tools that we developed over the last couple of years and continue to drive and incent our associates to conduct their USANA business via the Internet. We believe these are a few of the key areas of focus for improving our operating margins in 2010.

Once again, I'm optimistic and excited about our growth opportunities in all of our markets in 2010 and look forward to another great year. With that, I'll now turn the call over to Fred.

Thanks, Jeff. Good morning, everyone. As Jeff already mentioned, we're pleased about our fourth quarter results. Particularly our sales results in Asia-Pacific, which set a new quarterly record and helped us exceed last year's sales. As President of USANA, I'm responsible for all global sales, and I was hoping for better results in the US and in Canada, notwithstanding we had a slight trend reversal in Canada this year by posting a 2% growth. I want to begin by walking you through what I believe are the major challenges we're facing in these markets and conclude with specific tactics we're taking in 2010 to get our sales increased.

First, I believe the difficult economy, particularly the impact on consumer spending, has negatively affected USANA's customers over the last year in the US and in Canada. We're a market leader in premium nutritional supplements, with a significant portion of our sales coming from associates who are simply discount buyers. During these tough economic times, our data suggests a number of our consumers who buy our products with discretionary dollars are not continuing their purchasing. Saving more and spending less on discretionary items is the current consumer mentality unfortunately for many.

Second our base of Chinese associates is growing, not only in Asia but also in communities here in the US and in Canada and frankly worldwide. These associates are quite aggressive and quickly advancing in their leadership levels. Many of these Chinese leaders, who are based in the US and Canada, actually help to drive our sales and our associate growth in our Asia-Pacific regions. This is possible because our compensation plan allows associates to operate and earn commissions in any of our 14 markets. Hence their activity contributes to growth abroad and a decline locally.

I'm encouraged that we're seeing growth in the number of our associate leaders. These are the people who have the entrepreneurial vision it takes to be successful at a home-based business. These people are spreading the message to consumers and other like-minded individuals, which is typically an early indicator of future growth and success for USANA.

Now let me walk you through some of our strategies to grow the US and Canadian markets. We recently created a new position and hired a Vice President of US Field Development. This position was created to accomplish one fundamental objective, drive our sales in the US. This field position will serve as an executive resource to support, recognize and motivate our US leaders. Our expectation is that this experienced executive will help our associate leaders reach demographics where we have historically had low penetration. Furthermore, she will also help our rising generation of new leaders realize the benefits of building their local market, since building an international business is often ventured by our top leaders.

Similarly, a new position was created in Canada. We now have a general manager there who has expanded responsibilities where our primary focus is now on increasing sales in that market.

Next, in September of last year we rolled out a new online associate training system, and we call this the eApprentice. This training system is for the new associate, making training and network marketing both simple to use and easy to understand. Associates who take advantage of this advanced training tool will enter the business with more knowledge about the industry and a better understanding of USANA's products and compensation plan. This we believe will ultimately help them to grow their business faster. Our sales department is committed to training our associates of the advantages of using this system as part of their daily program.

In addition to this training system we're also in the process of developing a new interactive presentation for our associates to help them in prospecting. This new sales tool will help assist both our new and seasoned associates when they are presenting USANA to a prospect for the first time. As a simple, playable disc, associates can provide a duplicable, professional presentation, regardless of their competence or direct-sales experience level. We are optimistic that this new sales tool will provide energy and excitement in the field, which we believe will also help grow our business.

Finally, we're evaluating our rewards and recognition processes. We are currently doing an extensive evaluation regarding what behavioral activities are most attributable to an associate's business growth. Once we've identified the related variables, and they've been confirmed statistically, we plan to alter our incentive and recognition programs to match any discrepancies delivered based on our current methods. With these strategies in place we're optimistic that in 2010 it will be a year of growth in our US and Canadian market.

Now let's talk about our really rapidly growing Asia-Pacific region. Quarter after quarter, Asia continues to grow at a double-digit pace and is quickly becoming nearly half of our total sales. In fact, in the fourth quarter Hong Kong has now officially become our second largest market, just behind the US. Of our nine markets in this region, six reported local currency growth for both the full-year 2009 and for the fourth quarter when compared with last year. Our largest market in the Asia-Pacific region, Hong Kong, once again outpaced all other markets and was up more than 54% over last year. This is a great indicator of how our Chinese associate base is growing. These associates really understand and promote the new matching bonus, and their businesses are growing as a result.

Associate growth in the region was also considerable at 12.1%. More than 51% of associates worldwide are now located in this region. The additional compensation program of matching bonus is the greatest factor for the growth we're experiencing in our overseas markets. By increasing our payout to our associates, USANA's compensation plan is viewed as more profitable and thus more desirable than any of our competitors' compensation plans. This program allows our new associates to generate a check faster, which we believe is a distinct competitive advantage.

To sustain the momentum in this region, in May we will host our Asia-Pacific conference in Hong Kong. And we're excited about this event because the registration numbers suggest that attendance there could even surpass the number of associates who attended our international convention in Salt Lake City last year. At this event we have some announcements, and of course they're reserved as a surprise for our associates attending there to generate additional excitement in that region.

With that I'll now ask the operator to facilitate our question-and-answer period.

Thank you. (Operator Instructions.) Our first question comes from Tim Ramey from DA Davidson. Please go ahead.

Good morning, guys. Congratulations on a great quarter.

(Multiple voices.) Thank you, Tim.

Love to see the net cash position. And you guys have had a history of being active in share repurchase. Did I miss it? Did you do any in the fourth quarter? What's your attitude for share repurchase in 2010? I mean, my back-of-the-envelope calculation says, if you could fund a million share repurchase, that's about $0.18 accretive.

Indeed. During the fourth quarter, Tim, we did purchase a very small number of shares, about 21,000 shares during the quarter. Looking forward into 2010 we have a number of objectives. First and foremost, we will clearly pay down the remainder of our line and anticipate building a cash reserve. We -- as you know, we're conservative in our balance sheet. We've worked hard to strengthen that balance sheet during the strange economic times. We wanted to make sure that we had a very stable base. And clearly a reserve will help us and position us for whatever opportunities the Board would like to take advantage of in the coming year. We are hesitant, given the float, on a repurchase and would probably pull back from that at this point.

Okay. Thanks.

Thank you. The next question comes from [Per Osland] from Jefferies & Company. Please go ahead.

Thanks. Good morning, everybody. A question on East Asia. Obviously Hong Kong is doing very, very well. The sequential increase in active associates in the East Asia region was pretty stark. Was there anything in particular that led to that jump?

Yes. As I said in the comments, our matching bonus is the real motivating factor in that Asia-Pacific region. It really has excited a lot of network marketing interest for that region.

Okay. So even more so I guess than it has in the past. Because I think in the third quarter call you had relayed that that was an enthusiastically received bonus, but it seemed like the jump in associates here in the fourth quarter was really above and beyond what it's been.

Well, speaking conversationally, I'll take that as a compliment. We've put a lot of emphasis going out there to that region to talk about, explain, and extol the virtues of how you can create more wealth through that matching-bonus plan. And by having our executive team go over there and present this, it takes some time for everyone to get the message and kind of indoctrinate it as a culture to realize the importance of becoming Platinum PaceSetter and getting an earlier start in the business.

All right, that makes sense. And you've got the event coming up there in three months then too.

That doesn't hurt the excitement.

No, no, absolutely not. This might be a remedial question. You called out the impact of the 14th week of the 2008 fourth quarter on sales. Is there a similar impact on the associate counts in 2008, because they had extra time to qualify? Or is that not relevant?

Not relevant. No so --

(Multiple voices.) Okay. So it was a remedial question.

No, it wasn't remedial. It's important. In fact, appreciate you asking the question (inaudible). But it didn't make a difference for us.

Now that you've got a year in the books in the Philippines, how would you characterize kind of year one in terms of performance there versus histor -- versus your expectations, perhaps versus the market opening in Malaysia in 2007? And is there an impact there? Or are there learnings there that you apply to potential future market openings?

This is Mark Wilson. I'll answer that, as I'm responsible for Philippines. We're very pleased with the first year of Philippine sales. Not to mention they had some severe flooding and some other challenges there in the fourth quarter. We did over $6 million in sales. The market is excited. With our information we believe we're probably one of the most successful to launch in the Philippines in their first year. And we're quickly becoming the standard over there. So we're very excited. We're going to continue to grow that. And we're very optimistic about what's going to happen in that market.

Great. Okay. One last one for Jeff. On the sales outlook for 2010, $465 million to $475 million, is there an FX viewpoint in there, or are you kind of looking at that as sort of neutral at this point?

About a quarter of our growth we expect to come from favorable currency, about a 2% portion of that.

Okay, great.

That's based on our January run rate.

Excellent. Thank you very much.

Thank you. The next question comes from Scott Van Winkle from Canaccord Adams. Please go ahead.

Hi, thank you, guys. A couple of questions on the US. I guess if you had to rank top to bottom where your enthusiasm lies about the tactics you have in the US market, the new professional, could you do that? I mean, what should we think of what's going to be most impactful? Or is it just the big solution?

That's a great question. This is Mark again. We're certainly excited. I wouldn't hang everything on a hiring of a new person, because there's a lot of elements that go into this. But we've been spending time and focusing and realizing, as we're expanding, as Fred said, internationally, that we need to put a little more laser focused on the US and making sure that we're growing there. We had a lot of attention and excitement with expansions like Philippines, with some of our top leaders going and spending a significant amount of their time over there this year. Which, that has settled down now. They're starting to get some leadership there. You're going to start seeing them back home.

We have some great events planned. We have Las Vegas coming up here in a couple of weeks, which we have some great attendance planned for that, as well as some other meetings in Texas, East Coast. And even though the consumer base is conservative, we're seeing more excitement and more energy in our leadership, realizing that while the news is bleak out there in the economy right now, it's time to get back to work and get out and kind of start making some things happen here in the US.

So we're cautiously very optimistic, but we think that there's some positive things. And we have some plans this year to really put some time and attention, as Fred commented, a new simpler presentation for them that will hit mid-year. We have some other fun things with the training and some other aspects that we'll be launching this year to really put some fuel to the US and Canadian markets.

Have there been any changes in the leadership, maybe the success of one group, a little less in some others? Are there some things that some people are doing well and maybe others can emulate? I'm wondering if you're kind of sitting down with your council of leaders? And is -- I guess I'm just asking for what kind of feedback you hear from the leadership, and kind of what's working, what's not working, and is everybody kind of on the same page?

I don't know if you can ever get network marketing all on the same page. Just because of the dynamics of what you have. But we certainly are spending time with our independent distributor councils, not only in the US, but around the world and sharing best practices. We're involving each other with our Fortune 25 and others of what's working in different markets. Culturally, some things will work in some markets where they may not be so successful in others. We've actually tested a few things that Asia is doing that don't work really well over here. We didn't get the same response. That's not to say they're not great ideas, but I think certain areas respond to different promotions and ideas and philosophies a little differently.

But we have some -- again we're working with the leadership. They realize that we need to continue this growth in all of our markets, in our existing markets and believe that we have some good things. We've learned some things this last year, too. We've had some teams that came in strong and then fizzled quickly because of the dynamics of their short-term focus versus a long-term. And we're back to focusing with those that want to build strong, long-term businesses here in the US and Canada.

And something like a cultural difference, is that the reason that there's more success in some Asian markets on the matching bonus currently? Or is it kind of the level of momentum going into it that created self-fulfilling momentum in some of the markets where you already had it? Or why is it you can talk about that as being a key driver in one market and not in another?

Well, I think as Fred mentioned, you have some that have responded. And it takes time to adopt the culture of the change to these new programs and incentives. Some cultures have responded much stronger to the opportunity than others. That's not saying that they're not excited here in the US and Canada about this as well. But it -- there is some cultural differences to how they respond to this, and the dynamics of what they're doing is how aggressive they are.

But again, we had in Canada, for example, we had some negative press a year ago with La Facture that did a TV article on us. The leaders are now back working. They're working together. They're feeling more confident. And they feel like that's behind them. So that's a region that's always been very strong for us in the Quebec region. So I think you're going to start seeing some positive things from these markets.

And if I could ask a question that I think a lot of people on the call probably wonder the same thing is, you're coming off the Philippines success. Why isn't there more talk about the pipeline of new markets or new market entry? Do you feel that you kind of have to get your legs under a market before you move on to the next? Or doesn't the momentum of one kind of feed into the next launch?

Yes, great question. Certainly USANA continues to look at all markets for opportunities where we have an associate base, where people are interested. But in our approach, we really don't prefer to do kind of the shotgun approach of open 47 markets all at once. We want to do one market, do it very well, and then move on. And so from that particular standpoint, certainly there's -- we get pressure every day from markets all over the world to try to go and to enter those particular markets. But we take a lot of time to make sure all of the conditions are met that we believe USANA will be successful in that market before we move into it.

(Multiple voices.) And last question. Sorry for the long list of questions, but -- Jeff, obviously for you, but moving over to the model. So you're assuming a lot more earnings growth this year than revenue growth, particularly if you take out a little currency benefit. I assume that doesn't completely flow down to the bottom line. You're talking about supply chain and controlling margins and costs and things of that nature. Is that something that we should expect can continue? Is it -- are we going to see it all in 2010? Is there going to be more dry powder at the end? I'm wondering if -- can we consider 15 plus percent EPS growth, which I think the numbers back into on local currency growth in the mid single digits, where I think the numbers back into it. Is that a model that's going to work here for a couple of years? Not that you don't want to drive higher revenue growth, obviously. But how long can that continue?

Well, for us it's an ever-continuing focus. And you know that our reputation for running a lean and efficient model is something that is important to us. We anticipate sustaining that capability. We have a focus, a specific focus as I mentioned, that management is incented this year to continue to drive margin improvements in every component that contributes to it. And we absolutely would aspire to return to levels of growth that we've seen in the past. Our objective is to maintain that kind of a model going forward.

Now, clearly when we have opportunities to grow a certain market or to reinvest in markets that struggled a bit, we always have to make it a hard decision on what we're willing to spend to get back into that game again. And for us we want to maintain control over our spend, but also take advantage of opportunities. So our goal, as you have indicated so well, is to drive the model that we're accustomed to and to maintain that going forward.

And just pile one more on there. If I go back to the second quarter of 2005 -- I don't mean to date you here -- but an 18.2% operating margin. When you look back on that, when you guys were running at an 18 EBIT margin, do you look back and say that maybe that was too high and it kind of maybe impaired the investing in growth? Because that was coming off your peak growth levels. And then I -- that feeds into the next question. I assume that's not the target now. Maybe it's a 15% type of EBIT margin. Is there a balance at some number that you're comfortable saying that this is a target that we have internal?

Sure. And keep in mind that there are a number of factors that have changed since 2005. And you picked the perfect year for it. Keep in mind that the rules surrounding equity-based compensation changed. That was a cost that started -- we started to carry in our P&L from that year forward and continues. It's a significant cost. Secondly, the competitive environment has changed a bit. We -- I would absolutely agree with your point that we're probably resetting a bit.

Now our aspiration is to optimize our operating margins as well as we can. We've invested in our field. We think it's been a good investment. It's an important investment. We're committed to managing our gross profit margins. We try to buy right. We want to maintain the highest level of quality we possibly can. And our objective is to manage our spend -- our overhead as well. We run lean and will continue to do so.

So given all those factors, I think that we're emerging or coming into our model, but I think that there is an improvement in overall operating margins going into 2010, 2011 and 2012. We think that there is. Keep in mind that we also have leverage opportunity. Leverage opportunity at the top line, and leverage opportunity in our associate incentives, which is our significant expense in driving that top line. So we see it as an opportunity for improvement of significance, particularly coming with, now into a new year, with some tailwind for us on that. And so we're very optimistic we can improve our bottom-line.

Great. Thanks. Sorry for all the questions.

Thanks.

(Operator Instructions.) The next question comes from Rommel Dionisio from Wedbush Morgan. Please go ahead.

Yes, good morning. I want to just ask you guys, what do you think about an environment where unemployment is coming down a little bit? Does that sort of change your thoughts in terms of how to spend on recruiting or training tools, given that kind of economic environment, if that should continue?

That's a great question. And in this economy we've seen, it's probably been one of the hardest hit. We've always said that industry flourished during recessions or mild downturns when people are looking for opportunity. I think as it improves slightly it's going to help take a little bit of the burden and ease off that Fred had addressed, where we've seen some concern with people very conservative in their spending and in looking at this. So we think it's a great opportunity to get out there and continue to spread the message of the opportunity from the residual standpoint of building their own businesses. And that's a great opportunity for us as well as good nutrition and always looking for more consumers. So I think it's going to be a positive thing for us as things lighten just a little bit.

Okay. And congratulations on the quarter. Thanks.

Thank you, Rommel.

Thank you. Your next question comes from Mimi Noel from Sidoti & Company. Please go ahead.

Hi. Just a couple questions for me. First I wanted to ask Fred if he wouldn't mind elaborating on, I think it was the fifth point that you made, with what you're trying to do to rejuvenate the North American markets, particularly the evaluation of certain driving variables. Could you elaborate on that? Perhaps share some early findings?

I think you're referring to our recognition and incentives?

Yes. I think so. Yes. Finding out what works best in that regard.

Yes. We always assume in management that we know what motivates our field. We know that recognition plays a very, very important role in this business to drive people to build their business. But what types of things we recognize, how we incent them, what rewards we give them and accolades may or may not be the most motivating personally. So what we've done is we've done some extensive data mining in looking at all of the factors that help contribute to growth and success in individuals -- into individuals and their correlated success and growth rates. And then what we want to do is identify those factors and then incent, promote and emphasize to our field the importance of these characteristic measures. Perhaps some examples might serve to illustrate my point.

Please.

Perhaps part of building a successful business is the creation of new leaders. The increase in the number of preferred customers that you have spending, the size of the customer's wallet share when they purchase. Those type of factors, when we identify them as correlated to growth in individuals' business, we can now send out marketing messages, promotions, campaigns, sales tools, that assist in those specific attributes that help an individual grow their business effectively.

Forgive me if I'm being too presumptuous. I mean, it would seem like this is data that you had access to before and could have analyzed. Were your systems not that sophisticated? Why not do this two, three years ago?

Well, I --

With the momentum --

Yes, I don't know how to answer that. I would tell you I am so excited about USANA's systems. I believe -- I'm personally biased, because I have a heavy influence in that -- USANA has the finest systems in the industry. When I can calculate commissions in 14 countries worldwide in less than an hour, giving less than two and a half minute up-time real-time data to my associates in any information format they want, it rocks. It's just our incentives and contests had been working. They're great. But in our attempt to identify why it is Canadian sales aren't growing at the rate we want, and why aren't our US markets going crazy, we look at everything we do to try to improve ourselves and identify what factors could help contribute and drive growth.

Okay. Point taken. Thank you. The only other question really I had was for Jeff. I think you called out Australia in your prepared remarks on double-digit growth. What was the local currency revenue for the quarter?

Hold on. Just pulling it up here.

We'll grab that.

Which market was that question for?

Australia and New Zealand.

Thank you.

Quarter to quarter?

Year-over-year, right. (Multiple voices.) For the quarter.

Year-over-year, we had a decrease of about 13.8%.

Okay. Anything you can identify behind that? Not that it's your first or second biggest market, but more than 10% of revenue, something I keep an eye on personally.

I'm just looking up my details here. Hold on just a second.

Okay.

Local currency growth rate for the year.

It appears you were off to a strong start in the first half of the year, and then it just started to get more sluggish.

Current year-over-year or full-year year-over-year for Australia and New Zealand?

I'm looking at the fourth quarter year-over-year comparison on a local currency basis.

Okay. (Multiple voices.) Yes. The number I gave you was right. I thought I was looking at the year-over-year on the full year. But it's the quarter '09 versus quarter '08 is a 13.8% decrease in local currency.

But there's an extra week in there.

But we do have an extra week in there --

Tough comparable.

A little bit more difficult. I don't know what the specific 14th week --

You don't have the apples to apples, okay.

Yes, on that (multiple voices) specific Australian market with me here. We can give that to you that later.

Mimi, I can give you one thing. This is Mark Wilson. I've just taken over Australia - New Zealand, watching over that as Bill Duncan has retired. And one of the things we did in the fourth quarter is we moved some of the incentives and contests and things that we had traditionally done in the fourth quarter to this first quarter.

Okay.

We just had a big special, we just had our launch kickoff that we just held in January. I just returned from that. It was very positive, well-received. And we had great turnout. We had 1,200 to 1,400 people there in attendance. So it was well-attended. I think you're going to see some positive things there. That may be a little bit of an impact in shifting there just a little bit of some of their activity and anticipating. Because they tend to wait for these big events.

Sure. I would think so. That makes sense to me. And the insight is very helpful.

Mimi, Jeff.

Yes.

While we were looking up that quarter-to-quarter local currency change, you asked another question. I want to make sure that we answered it.

Well, I think Mark helped answer it. What I was also pointing out is that you got off to a strong start in the first half of the year on a local currency basis as it looks, but then things got really sluggish in the second half. And I just wondered if there was something behind that.

Mark addressed that.

yes, That was helpful. I'm all set for now. Thank you.

Thanks for the questions, Mimi.

Thank you. That concludes the question-and-answer session. I would now like to hand back to Fred Cooper for any closing remarks.

Thanks, everyone, for your questions and also for your attendance on the call today. If you have any remaining questions please feel free to contact Patrick Richards. He's in our investor relations at area code 801-954-7961. Thanks.

Thank you. This concludes the conference call. Thank you for participating. You may now disconnect.