USANA HEALTH SCIENCES INC

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

USANA Health Sciences, Inc. and subsidiaries ("the Company") is a global nutrition, personal health and wellness company that develops and manufactures high quality, science-based nutritional and personal care products. For financial reporting purposes, we categorize our operations intotwo reportable segments: Direct selling and Hiya direct-to-consumer, with the remaining operating segments that are not material included as a component of an other category.

On December 23, 2024, the Company entered into a merger agreement with Hiya Health Products, LLC ("Hiya"), a leading direct-to-consumer provider of high-quality children's health and wellness products, by which the Company acquired a 78.85% controlling ownership interest. Refer to Note B - Business Combinations for further discussion.

The Company's direct selling operations are grouped and presented intwo geographic regions: (1) Asia Pacific and (2) Americas and Europe. Asia Pacific is further divided into three sub-regions: (i) Greater China, (ii) Southeast Asia Pacific, and (iii) North Asia.

Asia Pacific

(1)Asia Pacific is organized into three sub-regions: Greater China, Southeast Asia Pacific, and North Asia. Markets included in each of these sub-regions are as follows:

(i)Greater China - Hong Kong, Taiwan, and China. Our business in China is conducted by BabyCare

(ii)Southeast Asia Pacific – Australia, New Zealand, Singapore, Malaysia, the Philippines, Thailand, Indonesia, and India(1)

(iii)North Asia – Japan and South Korea

Americas and Europe

(2)Americas and Europe – United States, Canada, Mexico, Colombia, and Europe (the United Kingdom, France, Germany, Spain, Italy, Romania, Belgium, and the Netherlands)

(1) We commenced operations in this market near the end of the fourth quarter of 2023.

Principles of Consolidation and Basis of Presentation

The accompanying Consolidated Financial Statements (the "Financial Statements") include the accounts and operations of the Company as well as amounts related to the redeemable noncontrolling interest. Refer to Note O - Redeemable Noncontrolling Interest for further detail concerning the accounting policies regarding the redeemable noncontrolling interest. The Company consolidates entities where it has a controlling financial interest. All inter-company accounts and transactions have been eliminated in consolidation. The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Use of Estimates

The preparation of 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 disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Intangible assets estimated and recognized as a result of the Company's acquisition of a 78.85% ownership interest in Hiya (the "Hiya Acquisition") are based upon assumptions and inputs which have inherent estimation uncertainty. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Fiscal Year

The Company operates on a 52/53-week year, ending on the Saturday closest to December 31. Fiscal years 2024, 2023, and 2022 were 52-week years. Fiscal year 2024 covered the period December 31, 2023 to December 28, 2024 (hereinafter 2024). Fiscal year 2023 covered the period January 1, 2023 to December 30, 2023 (hereinafter 2023). Fiscal year 2022 covered the period January 2, 2022 to December 31, 2022 (hereinafter 2022).

Fair Value Measurements

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 December 28, 2024 and December 30, 2023, the following financial assets and liabilities were measured at fair value on a recurring basis using the type of inputs shown:

There were no transfers of financial assets or liabilities between levels of the fair value hierarchy for the periods indicated.

The majority of the Company’s non-financial assets, which include long-lived assets, are not required to be carried at fair value on a recurring basis. However, if an impairment charge is required, a non-financial asset would be written down to fair value. As of December 28, 2024 and December 30, 2023, none of the Company's non-financial assets were measured at fair value.

Acquired assets, liabilities assumed, and redeemable noncontrolling interest of Hiya were measured at fair value at the date of acquisition. Refer to Note B, "Business Combinations".

Fair Value of Financial Instruments

As of December 28, 2024 and December 30, 2023, the Company’s financial instruments include cash equivalents, restricted cash, and line of credit. The recorded values of each approximate their fair values, based on their short-term nature.

Translation of Foreign Currencies

The functional currency of the Company’s foreign subsidiaries is the local currency of their country of domicile. Assets and liabilities of the foreign subsidiaries are translated into U.S. dollar amounts at month-end exchange rates. Revenue and expense accounts are translated at the weighted-average rates for the monthly accounting period to which they relate. Equity accounts are translated at historical rates. Foreign currency translation adjustments are accumulated as a component of other comprehensive income. Gains and losses from foreign currency transactions are included in the “Other, net” component of Other income (expense) in the Company’s consolidated statements of comprehensive income.

Business Combinations

The Company allocates the purchase price consideration of the assets acquired, liabilities assumed, and noncontrolling interest in the acquiree based on the acquisition date fair values. Additionally, the Company records goodwill for the excess of the total consideration given for the acquired business over the fair value of the identifiable net assets of the acquired business. Transaction costs attributable to the acquisition are expensed as incurred.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents. Cash equivalents as of December 28, 2024 and December 30, 2023 consisted primarily of money market fund investments and amounts receivable from credit card processors.

Amounts receivable from credit card processors and other forms of electronic payment are considered cash equivalents because they are both short-term and highly liquid in nature and are typically converted to cash within three days of the sales transaction. Amounts receivable from credit card processors as of December 28, 2024 and December 30, 2023 totaled $9,122 and $9,379, respectively.

Restricted Cash

The Company is required to maintain cash deposits with banks in certain subsidiary locations for various operating purposes. The most significant of these cash deposits relates to a deposit held at a bank in China, the balance of which was $2,740 as of December 28, 2024, and $2,826 as of December 30, 2023. This deposit is required for the application of direct selling licenses by the Ministry of Commerce and the State Administration of Market Regulation (“SAMR”) of the People’s Republic of China, and will continue to be restricted during the periods while the Company holds these licenses.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined using a standard costing system, which approximates the first-in, first-out method. The components of inventory cost include raw materials, labor, and overhead. Net realizable value is determined using various assumptions with regard to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning, and market conditions. A change in any of these variables could result in an adjustment to inventory.

Noncurrent inventories are inventories not expected to be sold within the normal operating cycle. The Company has defined the operating cycle as 52-weeks. Noncurrent inventories are classified in the "Other assets" line item in the Company's consolidated balance sheets. Noncurrent inventories are anticipated to be consumed beyond our normal operating cycle, but prior to obsolescence.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for credit losses for expected credit losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and our customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. The Company reviews its allowance for credit losses regularly. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Accounts receivable is included in the “Prepaid expenses and other current assets” line item in the Company’s consolidated balance sheets.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the differences between the financial statement assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income in the period that includes the enactment date. Deferred tax expense or benefit is the result of changes in deferred tax assets and liabilities.

The Company evaluates the probability of realizing the future benefits of its deferred tax assets and provides a valuation allowance for the portion of any deferred tax assets where the likelihood of realizing an income tax benefit in the future does not meet the “more-likely-than-not” criteria for recognition. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the Financial Statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company recognizes interest and penalties related to unrecognized tax benefits in income taxes.

Property and Equipment

Property and equipment are recorded at cost. Maintenance, repairs, and renewals, which neither materially add to the value of the property nor appreciably prolong its life, are charged to expense as incurred. Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to operations over the estimated useful lives of the related assets. The straight-line method of depreciation and amortization is followed for financial statement purposes. Leasehold improvements are amortized over the shorter of the life of the respective lease or the useful life of the improvements. Property and equipment are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period.

The Company capitalizes certain internal-use software development costs, consisting primarily of employee salaries and contractor costs, during the application development stage. Costs incurred for upgrades and enhancements that are expected to result in additional functionalities are also capitalized. These development costs are amortized using the straight-line method over an estimated useful life ofthree tofive years, and are reflected as part of Property and equipment, net on our consolidated balance sheets.

Leases

With the exception of the Company’s headquarters in Salt Lake City, Utah, and its facilities in New South Wales, Australia, and in Beijing and Tianjin, China, the Company leases its facilities. Each of the facility lease agreements is a non-cancelable operating lease generally structured with renewal options and expires prior to or during 2030. In connection with the production facilities in Beijing and Tianjin, China, the Company has prepaid land use rights, which represents a lease with the associated prepayment recorded as a Right-of-Use (“ROU”) asset. The Company also utilizes equipment under non-cancelable operating leases, expiring through 2026.

At contract inception, the Company determines whether an arrangement is or contains a lease and whether the lease should be classified as an operating or a financing lease. A contract is or contains a lease if the contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration. Control is determined based on the right to obtain all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. ROU assets for operating leases represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments.

Lease liabilities are recognized based on the present value of the unpaid lease payments over the lease term at the commencement date for leases exceeding 12 months. Unpaid lease payments include only the fixed lease component of the agreement, as well as any variable rate payments that depend on an index, initially measured using the index at the lease commencement date. Non-lease components are accounted for separately from the fixed lease component for all leases. Most of the Company’s leases do not provide an implicit rate that can readily be determined. Therefore, the applied discount rate is based on the Company’s incremental borrowing rate, which is determined using its credit rating and other information available as of the commencement date and is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Lease terms may include options to renew, which the Company factors into the determination of the lease term when it is reasonably certain that the Company will exercise that option. The ROU asset is measured at the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received.

Operating lease expense is recognized on a straight-line basis over the lease term and is included in “Cost of sales” and “Selling, general and administrative” line items in the Company’s consolidated statements of comprehensive income. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases is recognized on a straight-line basis over the lease term.

The Company monitors for events or changes in circumstances that require a reassessment of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the ROU asset unless doing so would reduce the ROU asset to an amount less than zero, in which case the remaining adjustment would be recorded in the consolidated statements of comprehensive income.

Goodwill

Goodwill represents the excess of the purchase price over the fair market value of identifiable net assets and noncontrolling interest of acquired companies. Goodwill is not amortized, but rather is tested at the reporting unit level at least annually for impairment or more frequently if triggering events or changes in circumstances indicate impairment. Initially, qualitative factors are considered to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Some of these qualitative factors may include macroeconomic conditions, industry and market considerations, a change in financial performance, entity-specific events, a sustained decrease in share price, and consideration of the difference between the fair value and carrying amount of a reporting unit as determined in the most recent quantitative assessment. If, through this qualitative assessment, the conclusion is made that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, a quantitative impairment analysis is performed. This analysis involves estimating the fair value of a reporting unit using widely accepted valuation methodologies including the income and market approaches, which requires the use of estimates and assumptions. These estimates and assumptions include revenue growth rates, discount rates, and determination of appropriate comparable entities. If the fair value of the reporting unit is less than its carrying amount, an impairment loss is recognized in an amount equal to the excess of the carrying amount over the fair value of the reporting unit, not to exceed the carrying amount of the goodwill. During 2024, 2023, and 2022, no impairment of goodwill was recorded.

Intangible Assets

Intangible assets represent amortized and indefinite-lived intangible assets primarily acquired in connection with business combinations. Amortized intangible assets are amortized over their related useful lives, using a straight-line or accelerated method consistent with the underlying expected future cash flows related to the specific intangible asset. Amortized intangible assets are reviewed for impairment whenever events or changes in circumstances exist that indicate the carrying amount of an asset may not be recoverable. When indicators of impairment exist, an estimate of undiscounted net cash flows is used in measuring whether the carrying amount of the asset or related asset group is recoverable.

Measurement of the amount of impairment, if any, is based upon the difference between the asset or asset group’s carrying value and fair value. Fair value is determined through various valuation techniques, including market and income approaches as considered necessary.

Indefinite-lived intangible assets are not amortized; however, they are tested at least annually for impairment or more frequently if events or changes in circumstances exist that may indicate impairment. Initially, qualitative factors are considered to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, through this qualitative assessment, the conclusion is made that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount, a quantitative impairment analysis is performed by comparing the indefinite-lived intangible asset’s carrying amount to its fair value. The fair value for indefinite-lived intangible assets is determined through various valuation techniques, including market and income approaches as considered necessary. The amount of any impairment is measured as the difference between the carrying amount and the fair value of the impaired asset. During 2024, 2023, and 2022, no impairment of indefinite-lived intangible assets was recorded.

Investment in Equity Securities

Equity securities (“securities”) without readily determinable fair value that are not eligible to be measured in accordance with the net asset value practical expedient qualify for an election to initially estimate fair value using the measurement alternative at its cost. During 2020, the Company entered into a strategic collaboration and made a minority investment in a privately held company, which totaled $20,000 and is included in the “Other assets” line item on the Company’s consolidated balance sheets. The Company, at the time of the investment, elected to apply the measurement alternative, which may be applied to an equity interest on an instrument-by-instrument basis. Dividends received are reported in earnings.

The value of the securities are remeasured to fair value if the securities are impaired or if observable price changes occur. These events are continually monitored and assessed at each reporting period. If a readily determinable fair value becomes available for the securities or observable price changes for the identical or a similar investment of the same issuer occur, the securities are remeasured at fair value as of the date the observable change occurred. Any resulting gains or losses on the securities for which the observable price changes occur will be recorded in net earnings. During 2024, no such observable price changes occurred. During 2023, the Company evaluated an observable price change related to equity securities without readily determinable fair values. No adjustment to the carrying value of the securities was necessary based on the observable price change.

At each reporting period a qualitative assessment is made to consider impairment indicators to determine whether the securities are impaired. Impairment indicators may include but are not limited to earnings performance, business prospects by the investee, cash flows from operations, working capital, and noncompliance with debt covenants. If this qualitative assessment indicates impairment, fair value is determined and an impairment loss equal to the difference between the fair value of the investment and its carrying amount is recognized in net income. During 2024, 2023, and 2022, no impairment of securities was recorded.

Nonqualified Deferred Compensation

In 2021, the Company created a non-qualified deferred compensation plan for a select group of management and highly compensated individuals. The plan permits the deferral of up to 50% of a participant's base salary and/or 80% of a participant's annual incentive bonus. The deferrals are held in an irrevocable rabbi trust (the "Rabbi Trust"), which has been established to administer the plan. The Rabbi Trust is intended to be used as a source of funds to match respective funding obligations to participants. The assets of the trust are subject to the claims of the Company's creditors in the event that the Company becomes insolvent. Consequently, the Rabbi Trust qualifies as a grantor trust for income tax purposes. The Company makes periodic payments into company-owned life insurance policies held in this Rabbi trust to fund the expected obligations arising under this plan. There are no contractual restrictions on the Company's ability to surrender a policy. The assets and liabilities of the plan are included in "Other assets" and "Other long-term liabilities" respectively in the consolidated balance sheets. Changes in the deferred compensation balances are recorded to compensation expense and reflected within the "Selling, general and administrative" line in the consolidated statements of comprehensive income. As of December 28, 2024 and December 30, 2023, the trustee held total assets of $4,336 and $2,962, and deferred compensation liabilities of $4,684, and, $3,137, respectively.

Self-Insurance

The Company is self-insured, up to certain limits, for employee group health claims. The Company has purchased stop-loss insurance for the United States markets on both an individual and an aggregate basis, which will reimburse the Company for individual claims in excess of $175 and aggregate claims that are greater than $13,635. A liability is accrued for all unpaid claims. Total self-insurance expense was $13,842, $14,501, and $13,413 in 2024, 2023, and 2022, respectively.

Derivative Financial Instruments

The Company’s risk management strategy includes the select use of derivative instruments to reduce the effects of volatility in foreign currency exchange exposure on operating results and cash flows. In accordance with the Company’s risk management policies, the Company does not hold or issue derivative instruments for trading or speculative purposes. The Company recognizes all derivative instruments as either assets or liabilities in the balance sheet at their respective fair values. When the Company becomes a party to a derivative instrument and intends to apply hedge accounting, the Company formally documents the hedge relationship and the risk management objective for undertaking the hedge, the nature of risk being hedged, and the hedged transaction, which includes designating the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge. The Company also documents how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness.

The Company periodically uses derivative instruments to hedge the foreign currency exposure of its net investment in foreign subsidiaries into U.S. dollars. Initially, the Company records derivative assets on a gross basis in its consolidated balance sheets. Subsequently the fair value of derivatives is measured for each reporting period. The effective portion of gains and losses attributable to these net investment hedges is recorded to foreign currency translation adjustment (“FCTA”) within accumulated other comprehensive income (loss) (“AOCI”) to offset the change in the carrying value of the net investment being hedged, and will subsequently be reclassified to net earnings in the period in which the hedged investment is either sold or substantially liquidated.

During 2024 and 2023, the Company entered into and settled a European option with notional amounts of $77,345 and $81,343, respectively. During 2022 the Company entered into and settled a forward contract with a notional amount of $98,930. Both the European options and the forward contract were designated as net investment hedges. The Company realized gains of $255, $2,504, and $4,555 in 2024, 2023, and 2022, respectively. These gains were recorded to FCTA within AOCI. The Company assessed hedge effectiveness under the forward rate method, determining the hedging instruments were highly effective. As of December 28, 2024 and December 30, 2023, there wereno derivatives outstanding for which the Company has applied hedge accounting.

Subsequent to December 28, 2024, on January 14, 2025 the Company entered into an option contract designated as a net investment hedge with a notional amount of $70,062.

Common Stock Share Repurchases

The Company has a stock repurchase plan in place that has been authorized by the Board of Directors. As of December 28, 2024, $61,703, inclusive of accrued excise tax, is available to repurchase shares under this 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. There currently is no expiration date on the remaining approved repurchase amount and no requirement for future share repurchases.

Revenue Recognition

Revenue is recognized when, or as, control of a promised product or service transfers to a customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products or services. Revenue excludes taxes that have been assessed by governmental authorities and that are directly imposed on revenue-producing transactions between the Company and its customers, including sales, use, value-added, and some excise taxes. Revenue recognition is evaluated through the following five-step process:

1)identification of the contract with a customer;

2)identification of the performance obligations in the contract;

3)determination of the transaction price;

4)allocation of the transaction price to the performance obligations in the contract; and

5)recognition of revenue when or as a performance obligation is satisfied.

Product Revenue

A majority of the Company’s sales are for products sold at a point in time and shipped to customers, for which control is transferred to the customer as goods are delivered to the third party carrier for shipment. The Company receives payment, primarily via credit card, for the sale of products at the time customers place orders and payment is required prior to shipment. The Company does not recognize assets associated with costs to obtain or fulfill a contract with a customer.

The Company’s product sales contracts include terms that could cause variability in the transaction price for items such as discounts, product promotions, credits, or sales returns, which are a reduction of revenue. Accordingly, the transaction price for product sales includes estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. At the time of sale, the Company estimates a refund liability for the variable consideration based on historical experience, which is recorded within the “Other current liabilities” line item in the consolidated balance sheets.

Initial product orders with a new direct selling customer may include multiple performance obligations related to sales discounts earned under the Company’s initial order reward program. Under this program, the customer receives an option to apply the discounts earned on the initial order to two subsequent Auto Orders, which conveys a material right to the customer. As such, the initial order transaction price is allocated to each separate performance obligation based on its relative standalone selling price and is recognized as revenue as each performance obligation is satisfied.

Associate incentives represent consideration paid to an Associate for distinct services provided in the sale of the Company's products and include all forms of commissions, and other incentives paid to our Associates. The Company may provide Associate incentive promotions which are earned by Associates for distinct services rendered. Associate incentive promotions are recorded as the incentives are earned by the Associates. With the exception of commissions paid to Associates on personal purchases, which are considered a sales discount and are reported as a reduction to net sales, Associate incentives are recorded as an operating expense. The amounts paid to Associates are commensurate with the fair value received for the distinct services rendered by Associates and are recorded as an operating expense when revenue for the goods is recognized.

Shipping and handling activities are performed upon delivery to the third party carrier for shipment. The Company accounts for these activities as fulfillment costs. Therefore, the Company recognizes the costs of these activities when revenue for the goods is recognized. Shipping and handling costs are included in cost of sales for all periods presented.

With respect to will-call orders, the Company periodically assesses the likelihood that customers will exercise their contractual right to pick up orders and revenue is recognized when the likelihood that customers will pick up orders becomes remote.

Other Revenue

Other types of revenue include fees, which are paid by the customer at the beginning of the service period, for access to online customer service applications and annual account renewal fees for Associates, for which control is transferred over time as services are delivered and are recognized as revenue on a straight-line basis over the term of the respective contracts.

The following table presents Other Revenue for the periods indicated:

Revenue Disaggregation

Disaggregation of revenue by geographical region and major product line is included in Note M – Segment Information.

Contract Balances

When the timing of our provision of goods or services is different from the timing of the payments made by our customers, we recognize either a contract asset (performance precedes contractual due date) or a contract liability (customer payment precedes performance).

Contract liabilities relate to deferred revenue for product sales for customer payments received in advance of shipment, for outstanding material rights under the initial order program, and for services where the performance obligations are satisfied over time as services are delivered. Contract liabilities are recorded as deferred revenue within the "Other current liabilities" line item in the consolidated balance sheets. The Company typically does not have contract assets based on the payment terms included in the Company’s contracts and the balance of contract assets was $0 at December 28, 2024 and December 30, 2023.

The following table provides information about contract liabilities from contracts with customers, including significant changes in the contract liabilities balances during the period.

Product Return Policy

All product orders that are unused and returned within the first 30 days following purchase are refunded at 100% of the sales price. All product orders that are unused and resalable are refunded up to one year from the date of purchase at 100% of the sales price. This standard policy differs for Hiya, for which returns are allowed only in specific situations. To be considered, a return must be unopened in its original packaging and postmarked within 10 days of the original delivery date. This standard policy also differs in a few of our international direct selling markets due to the regulatory environment in those markets. Depending upon the conditions under which product was returned, customers may either receive a refund based on their original form of payment, or credit on account for a product exchange. The Company monitors Associate activity to ensure that all such practices are in line with established Company policies. Product returns totaled approximately 0.6%,0.6%, and 0.7% of net sales in 2024, 2023, and 2022, respectively.

Associate Incentives

Associate incentives expenses include all forms of commissions, and other incentives paid to our Associates, less commissions paid to Associates on personal purchases, which are considered a sales discount and are reported as a reduction to net sales.

Selling, General and Administrative

Selling, general and administrative expenses include wages and benefits, depreciation and amortization, rents and utilities, Associate event costs, advertising and professional fees, marketing, and research and development expenses.

Equity-Based Compensation

The Company records compensation expense in the Financial Statements for equity-based awards based on the grant date fair value, which for restricted stock units is the closing market value of the Company’s common stock on the date of the grant. The grant date fair value of each stock-settled stock appreciation right is based upon the Black-Scholes option pricing model. The grant date fair value of each performance share unit is based upon a Monte-Carlo simulation in order to incorporate market conditions. Equity-based compensation expense for restricted stock units and stock-settled stock appreciation rights are recognized under the straight-line method over the period that service is provided, which is generally the vesting term. Equity-based compensation expense for performance stock units is recognized based on the achievement of certain performance and market conditions by specified target dates, subject to continued service through the applicable vesting dates. The probability of the awards meeting the performance condition is not included in the grant date fair value, but is estimated quarterly for expense recognition. The Company recognizes an adjustment to compensation expense based on revisions in probability assessments. The Company accounts for forfeitures as they occur. Further information regarding equity awards can be found in Note L – Equity-Based Compensation.

Advertising

Advertising costs are charged to expense as incurred and are presented as part of the “Selling, general and administrative” line item. Advertising expense totaled $4,967, $4,756, and $5,053, in 2024, 2023, and 2022, respectively.

Research and Development

Research and development costs are charged to expense as incurred and are presented as part of the “Selling, general and administrative” line item. Research and development expense totaled $11,571, $11,446, and $11,563 in 2024, 2023, and 2022, respectively.

Earnings Per Share

Basic earnings per common share ("EPS") are based on the weighted-average number of common shares that were outstanding during each period. Diluted EPS include the effect of potentially dilutive common shares calculated using the treasury stock method, which include in-the-money, equity-based awards that have been granted but have not been issued. When there is a loss, potential common shares are not included in the computation of diluted EPS, because to do so would be anti-dilutive.

Recent Accounting Pronouncements

Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The standard was intended to provide financial statement users with more disaggregated expense information about a public entity’s reportable segments. ASU 2023-07 requires incremental disclosures related to a public entity’s reportable segments including allowing the disclosure of multiple measures of segment profit or loss, requiring the disclosure of significant segment expenses, and requiring the qualitative disclosure of other segment items. ASU 2023-07 was adopted on a retrospective basis and did not have a material impact on the Company's financial position, results of operations, or cash flows as the standard only impacts financial statement footnote disclosures. For additional information, refer to Note M, "Segment Information".

Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard is intended to benefit investors by providing more detailed income tax disclosures. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact adoption of the standard will have on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04): Expense Disaggregation Disclosures. The standard is intended to provide investors with more decision-useful information about a public business entity's expenses by improving disclosures on income statement expenses through disclosure of disaggregated information about specific natural expense categories underlying certain relevant income statement expense line items that include one or more of five natural expense categories. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact that adoption of the standard will have on its consolidated financial statements.

No other recent accounting pronouncements had, or are expected to have, a material impact on the Company's consolidated financial statements.

NOTE B—BUSINESS COMBINATIONS

On December 23, 2024, the Company entered into a merger agreement with Hiya, a leading direct-to-consumer provider of high-quality children's health and wellness products, by which the Company acquired a 78.85% controlling ownership interest. The primary reasons for theacquisition was to broaden USANA's reach into the highly attractive direct-to-consumer channel driven by Hiya's powerful subscription model with runway for sustainable future growth. The total purchase price consideration for Hiya was $206,161 in cash, which is inclusive of a working capital adjustment relative to a targeted working capital amount in the merger agreement. The purchase price consideration is preliminary as the working capital adjustment is being finalized. The Company incurred acquisition-related costs of approximately $8,243 for the year ended December 28, 2024, which are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive income.

The fair value for the acquired trade name intangible asset was estimated utilizing an income approach, specifically the multi-period excess earnings method. The fair value for the acquired customer relationship intangible asset was estimated utilizing an income approach, specifically the with-and-without method. Both methods involve the use of significant estimates and assumptions including projected revenue growth rates, projected earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, and discount rates.

The following table summarizes the consideration transferred to acquire the 78.85% controlling ownership interest in Hiya and the estimated fair value of the assets acquired, liabilities assumed, and noncontrolling interest at the acquisition date:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of the noncontrolling interest of 21.15% was determined using the implied enterprise value based on the purchase price less a discount for lack of control. The Company recognized goodwill of $127,374. The goodwill reflects the expected future benefits of certain synergies and acquired assembled workforce and is expected to be deductible for income tax purposes. All of the goodwill was assigned to our Hiya direct-to-consumer segment. The revenue and earnings of the acquired business, since the acquisition date, have been included in the Hiya direct-to-consumer segment, and are not material to the consolidated results since the acquisition occurred near year end.

Acquired intangible assets are being amortized over the estimated useful lives on a straight-line basis. The following table summarizes the estimated fair value and weighted average useful lives:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following unaudited supplemental pro forma data presents consolidated information as if the Hiya Acquisition had been completed on January 1, 2023. The unaudited pro forma financial information includes adjustments to give effect to pro forma events that are directly attributable to the acquisition. The pro forma financial information includes adjustments to amortization for intangible assets acquired and acquisition costs. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of future periods. The unaudited pro forma financial information does not give effect to the potential impact of current financial conditions, future revenues, regulatory matters, or any anticipated synergies, operating efficiencies, or cost savings that may be associated with the acquisition. Consequently, actual results will differ from the unaudited pro forma financial information presented below:

NOTE C—INVENTORIES

As of December 28, 2024, noncurrent inventories consisted of $1,892 of raw materials and $796 of finished goods inventory. As of December 30, 2023, noncurrent inventories consisted of $2,051 of raw materials and $1,077 of finished goods inventory. Noncurrent inventories are included in the “Other assets” line item on the Company’s consolidated balance sheets.

NOTE D—PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consists of the following:

NOTE E—INCOME TAXES

Consolidated earnings before income taxes consists of the following for 2024, 2023, and 2022:

Income tax expense (benefit) included in income from continuing operations consists of the following:

The effective tax rate for 2024, 2023, and 2022 reconciled to the statutory U.S. Federal tax rate is as follows:

The effective tax rate for the year ended December 28, 2024 increased compared to the year ended December 30, 2023. The higher effective tax rate can be attributed to lower consolidated earnings partially due to costs associated with the Hiya Acquisition, China's increased relative share of taxable income, and a valuation allowance placed on deferred tax assets in India, partially offset by a change in U.S. tax law for foreign currency conversion of foreign branch operations.

The significant categories of deferred taxes are as follows:

The components of net deferred taxes are as follows:

As of December 28, 2024, the Company had foreign tax credit carryforwards of approximately $148,807. If unused, these carryforwards will expire between 2026 and 2034. The Company has generated excess foreign tax credits since the Tax Cuts and Jobs Act of 2017 was enacted on December 22, 2017. This is due to the U.S. tax rate being lower than most foreign taxing jurisdiction rates where the Company operates. Although the Company can claim foreign tax credits against U.S. source income due to overall domestic losses generated in previous years, the Company does not believe it will be able to use more foreign tax credits than it generates in a single year. The Company believes these foreign tax credit carryforwards will expire unused based on available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, available tax planning strategies, and available carryback opportunities. Similar with prior years, the Company continues to maintain a full valuation allowance on its foreign tax credit carryforwards. Valuation allowances are determined using a more-likely-than-not realization criteria and are based upon all facts and circumstances.

The Company recorded a $1,531 valuation allowance on mirrored deferred tax assets recorded in the United States, which offset deferred tax liabilities of foreign disregarded entities. These mirrored deferred tax assets represent future foreign tax credits. This valuation allowance is necessary because the Company is limited in its ability to utilize future foreign tax credits due to the U.S. tax rate being lower than most foreign taxing jurisdiction rates where the Company operates.

The Company also had $1,769 of Utah research credit carryforwards, and $2,375 of Federal research credit carryforwards as of December 28, 2024. If unused, the Utah research credit carryforwards expire between 2027 and 2038, and the Federal research credits expire between 2036 and 2044. Utah research credits are limited to Utah tax due and the Company has a history of generating more credits than it can use. Federal research credit carryforwards can only be used in a year when U.S. taxes are owed after foreign tax credits have been applied. Due to the lack of sufficient evidence to the contrary, the Company has placed a full valuation allowance on these credit carryforwards.

In addition, the Company had $7,626 of foreign operating loss carry forwards, $1,082 of which have an unlimited carryforward period. The deferred tax asset associated with these losses was $2,282 and a valuation allowance of $2,113 has been applied against this deferred tax asset. The 2024 deferred tax asset for state-tax-loss carryforwards was $67. If unused, some of the state-tax-loss carryforwards will expire between 2033 and 2043 and others can be carried forward indefinitely.

The total combined valuation allowance was $156,669 as of December 28, 2024. The 2024 valuation allowance represents a $19,417 net increase from 2023. If the Company determines that there is sufficient evidence to remove the valuation allowances addressed above, the valuation allowance will be released and the provision for income taxes will be reduced.

As of December 28, 2024, the cumulative amount of undistributed earnings of the Company’s non-U.S. subsidiaries held for indefinite reinvestment is approximately $4,000. If this amount were repatriated to the United States, the amount of incremental taxes would be approximately $400.

As of December 28, 2024, the Company reported $153 in "Other current liabilities" and $1,034 in "Other long-term liabilities" for a combined total of $1,187 in unrecognized tax benefits that would impact the effective tax rate if recognized. This compares $1,074 of unrecognized tax benefits in "Other long-term liabilities" as of December 30, 2023.

The following reconciliation provides the changes in unrecognized tax benefits for the years presented:

The Company accounts for interest and penalties associated with unrecognized tax benefits as a component of income tax expense. For the period ended December 28, 2024 and December 30, 2023, the Company reported $43 and $66, respectively, as income tax expense related to interest and penalties. As of December 28, 2024, the Company recorded $130 of "Other current liabilities" and $93 of "Other long-term liabilities" associated with interest and penalties for unrecognized tax benefits. This compares to $0 of "Other current liabilities" and $180 of "Other long-term liabilities" associated with interest and penalties reported as of December 30, 2023.

The Company files income tax returns in the United States and foreign jurisdictions. In general, the Company's tax filings are subject to examination for years ended on or after December 31, 2020. However, statutes of limitations in some markets may be as long as ten years for transfer pricing related issues.

NOTE F—PROPERTY AND EQUIPMENT

Cost of property and equipment and their estimated useful lives is as follows:

Depreciation of property and equipment was $13,152, $10,904, and $11,351, for the years ended 2024, 2023, and 2022, respectively.

NOTE G—OPERATING LEASES

The following table summarizes the classification of ROU assets and lease liabilities in the Company’s consolidated balance sheet:

NOTE G—OPERATING LEASES - CONTINUED

The components of lease expense were as follows:

These leases generally provide that property taxes, insurance, and maintenance expenses are the responsibility of the Company. Such expenses are not included in the operating lease amounts outlined in the table above or in the rent expense amounts that follow. The total rent expense was approximately $8,191, $8,755, and $8,258 for the years ended 2024, 2023, and 2022, respectively.

The following table presents supplemental lease information:

The following table presents weighted-average remaining lease term and weighted-average discount rate for the Company's operating leases:

The following table presents the maturity of the Company’s lease liabilities as of December 28, 2024:

NOTE H—GOODWILL AND INTANGIBLE ASSETS

The Company performed its annual goodwill impairment test during the third quarter of 2024. The Company performed a qualitative assessment of each reporting unit and determined that it was not more-likely-than-not that the fair value of any reporting unit was less than its carrying amount. As a result, no impairments of goodwill were recognized in 2024 and 2023.

NOTE H—GOODWILL AND INTANGIBLE ASSETS - CONTINUED

The Company also performed its annual indefinite-lived intangible asset impairment test during the third quarter of 2024. The Company performed a qualitative assessment of the indefinite-lived intangible assets and determined that it was not more-likely-than-not that the fair value of any indefinite-lived intangible asset was less than the carrying amount. As a result, no impairments of indefinite-lived intangible assets were recognized in 2024 and 2023.

The changes in the carrying amount of goodwill are as follows:

Intangible assets consist of the following:

NOTE H—GOODWILL AND INTANGIBLE ASSETS - CONTINUED

Aggregate amortization of intangible assets was $1,516, $1,835, and $1,723 for the years ended 2024, 2023, and 2022, respectively.

NOTE I—OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

NOTE J—LINE OF CREDIT

On August 25, 2020, the Company as borrower, and certain of its material subsidiaries as guarantors, entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A. (“Bank of America”) as Administrative Agent, Swingline Lender and Letter of Credit Issuer, and the other lenders party thereto. On August 28, 2024, the Company entered into the Third Amendment to the Second Amended and Restated Credit Agreement ("Restated Credit Agreement"), which replaces the Bloomberg Short-Term Bank Yield Index rate with the Secured Overnight Financing Rate ("SOFR") and amends certain other defined terms.

The Credit Agreement provides for a revolving credit limit for loans to the Company up to $75,000 (the “Credit Facility”). In addition, at the option of the Company, and subject to certain conditions, the Company may request to increase the aggregate commitment under the Credit Facility up to an additional $200,000.

There was $23,000 and $0 outstanding debt on the Credit Facility as of December 28, 2024 and December 30, 2023, respectively. The obligations of the Company under the Credit Agreement are secured by the pledge of the capital stock of certain subsidiaries of the Company, pursuant to a Security and Pledge Agreement.

NOTE J—LINE OF CREDIT - CONTINUED

Interest on revolving borrowings under the Credit Facility is computed at SOFR, adjusted by features specified in the Credit Agreement. The covenants require the Company’s rolling four-quarter consolidated EBITDA (as defined in the Credit Agreement) to be $100,000 or greater and its ratio of consolidated funded debt to consolidated EBITDA to be equal to or less than 2.0 to 1.0 at the end of each quarter. The Credit Agreement does not include any restrictions on the payment of cash dividends or share repurchases by the Company. Consolidated EBITDA and consolidated funded debt are non-GAAP terms.

The Company will be required to pay any balance on this Credit Facility in full at the time of maturity in August 2025.

The Company maintains local lines of credit across different markets to secure sufficient working capital. As of December 28, 2024 and December 30, 2023, the balance on these local lines of credit was $0 and $786, respectively.

NOTE K—COMMITMENTS AND CONTINGENCIES

Unconditional Purchase Obligations

The Company’s unconditional purchase obligations relating to IT-related services and advertising agreements were $6,746 and $8,018, as of December 28, 2024 and December 30, 2023, respectively that are generally paid within one year.

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 its 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 faces contingencies that are reasonably possible to occur; however, they cannot currently be estimated. While complete assurance cannot be given as 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. It is reasonably possible that a change in the contingencies could result in a change in the amount recorded by the Company in the future.

Employee Benefit Plan

In the United States, the Company sponsors an employee benefit plan under Section 401(k) of the Internal Revenue Code. This plan covers employees who are at least 18 years of age and have met aone-month service requirement. The Company makes a matching contribution equal to 100 percent of the firstone percent of a participant’s compensation that is contributed by the participant, and 50 percent of that deferral that exceedsone percent of the participant’s compensation, not to exceedsix percent of the participant’s compensation, subject to the limits of ERISA. In addition, the Company may make a discretionary contribution based on earnings. The Company’s matching contributions cliff vest attwo years of service. Contributions made by the Company to the plan in the United States were $2,422, $2,451, and $2,589 for the years ended 2024, 2023, and 2022, respectively.

The Company has employees in international countries that are covered by various defined contribution plans. These plans are administered based upon the legal requirements in the countries in which they are established.

NOTE L—EQUITY-BASED COMPENSATION

Total equity-based compensation expense was $14,779,$14,965, and $13,485 for fiscal years 2024, 2023, and 2022, of which, $221, $370, and $154, was related to liability-classified awards, respectively. The related tax benefit for these periods was $2,692, $2,507, and $2,556, respectively.

The following table shows the remaining unrecognized compensation expense on a pre-tax basis for all types of unvested equity awards that are outstanding and expected to vest, as of December 28, 2024. This table does not include an estimate for future grants that may be issued.

The remaining unrecognized compensation expense above is expected to be recognized over a weighted-average period of 1.7 years.

The Company's 2015 Equity Incentive Award Plan (the "2015 Plan") is currently the only plan under which equity awards are issued. The 2015 Plan allows for the grant of various equity awards including stock-settled stock appreciation rights, stock options, and restricted stock awards which include restricted stock units, deferred stock units, performance stock units, (collectively "restricted stock awards") and other types of equity-based awards to the Company’s officers, key employees, and non-employee directors.

Since the inception of the 2015 Plan,1,750 shares have been authorized. As of December 28, 2024, 4,613 awards had been granted under the 2015 Plan, of which 2,946 were stock-settled stock appreciation rights, and 1,667 were restricted stock awards. Of the 2,946 granted stock-settled stock appreciation rights, approximately 450 shares have been issued,24 awards are outstanding and the remaining have been returned to the plan. As of December 28, 2024, a total of 1,305 options and grants had been forfeited and added back to the number of shares available for issuance under the 2015 Plan.

Stock-Settled Stock Appreciation Rights

The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock-settled stock appreciation rights. The weighted-average fair value of stock-settled stock appreciation rights granted in 2024 and 2023 were $14.60 and$19.92, respectively. There wereno stock-settled stock appreciation rights granted in 2022.

Stock-settled stock appreciation rights granted to officers and key employees upon hire or promotion to such a position, or annually for existing participants, generally vest 25% each year on the anniversary of the grant date and expire 4.5 years from the date of grant.

The following table includes the weighted-average assumptions the Company used to calculate the fair value of stock-settled stock appreciation rights that were granted during the periods indicated.

(1)The Company utilizes historical volatility of the trading price of its common stock.

(2)Risk-free interest rate is based on the U.S. Treasury yield curve with respect to the expected life of the award.

(3)Depending upon the terms of the award, one of two methods will be used to calculate expected life:

(i)a weighted-average that includes historical settlement data of the Company’s equity awards and a hypothetical holding period, or (ii) the simplified method.

(4)The Company historically has not paid and currently has no plan to pay dividends.

(5)Exercise price is the closing price of the Company's common stock on the date of grant.

A summary of the Company’s stock-settled stock appreciation right activity is as follows:

• Aggregate intrinsic value is defined as the difference between the current market value at the reporting date (the closing price of the Company’s common stock on the last trading day of the period) and the exercise price of awards that were in-the-money. The closing price of the Company’s common stock at December 28, 2024 and December 30, 2023 was $35.69 and $53.60, respectively.

The total intrinsic value of stock-settled stock appreciation rights exercisedwas $0, $0, and $50, for the years ended 2024, 2023, and 2022, respectively. The total fair value of stock-settled stock appreciation rights that vestedwas $656,$1,009, and $983, for the years ended 2024, 2023, and 2022, respectively.

During the years ended 2024 and 2023, there wereno exercises of stock-settled stock appreciation rights. During the year ended 2022, certain employees elected to receive a net amount of shares upon the exercise of stock-settled stock appreciation rights in order to satisfy the Company’s tax withholding obligation. There wasno reduction to additional paid-in capital for the years ended 2024,2023, and 2022.

Restricted Stock Awards

Restricted stock awards include stock-settled and cash-settled restricted stock units, performance stock units granted to the Company’s officers and key employees, and deferred stock units granted to non-employee directors. Restricted stock units are granted to officers and key employees upon hire or promotion to such a position, or annually for existing participants, and generally vest 25% each year on the anniversary of the grant date. Awards of deferred stock units granted to non-employee directors generally vest 25% each quarter, commencing on the first vest date anniversary following the final vesting of the previous award. Upon vesting, holders of stock-settled restricted stock units and deferred stock units are entitled to receive shares of the Company’s common stock on aone-for-one basis. Holders of cash-settled restricted stock units are entitled to receive cash payments equivalent to the number of units held, valued at the closing market price on the vest date. The fair value of restricted stock units is determined based on the Company’s closing stock price on the date of grant. Cash-settled restricted stock units are accounted for as liability-classified awards and fair value is remeasured to the current fair value, which is the Company's closing stock price, at each reporting date until the award is settled at vesting. Restricted stock units are full-value shares at the date of grant, vesting over the periods of service, and do not have expiration dates. Performance stock units are granted to officers and key employees. The ultimate number of shares to be earned depends on the achievement of certain market and performance conditions, and continued service through the applicable vesting date, and do not have expiration dates.

A summary of the Company’s stock-settled restricted stock unit activity is as follows:

During the year ended 2024, certain employees elected to receive a net amount of shares upon the release of restricted stock units in order to satisfy the Company’s tax withholding obligation. This resulted in a reduction to additional paid-in capital of $3,223, $3,092, and $4,706 for the years ended 2024, 2023, and 2022, respectively, reflected as a financing activity in the Company’s consolidated statements of cash flows.

The total fair value of restricted stock units that vested was $9,309,$9,293, and $12,808, for the years ended 2024, 2023, and 2022, respectively.

A summary of the Company’s cash-settled restricted stock unit activity is as follows:

The weighted-average fair value of liability-classified awards outstanding was $60,$69, and $85 for the years ended 2024, 2023, and 2022, respectively.

The number of deferred stock units vested and unreleased totaled 8, for the years ended 2024, 2023, and 2022, respectively. There wereno deferred stock units that vested in 2024, 2023, and 2022.

During 2024, the Company grantedno performance stock units to officers and key employees. The performance stock units are subject to a cliff vesting at the end of athree-year period. The number of units that vest will vary between 0% -200% based on the achievement of market and performance conditions, over thethree-year service period. The fair value of the performance stock units is determined using a Monte-Carlo simulation model. A Monte-Carlo simulation model uses stock price volatility and other assumptions to estimate the probability of satisfying the market conditions and the resulting fair value of the award.

The weighted-average grant date fair value of performance stock units granted in 2023 was $40.05. There wereno performance stock units granted in 2024 or 2022. In 2024 and 2023, there was unrecognized compensation expense of $2,025 and $913 related to unvested performance stock units that are not probable of achieving the performance condition.

The following table includes the weighted-average assumptions the Company used to calculate the fair value of performance stock units that were granted during the periods indicated.

(1)The Company utilizes historical volatility of the trading price of its common stock.

(2)Risk-free interest rate is based on the U.S. Treasury yield curve with respect to the expected life of the award.

(3)The Company historically has not paid and currently has no plan to pay dividends.

The market condition is met if the Company achieves the target closing stock price on December 31, 2025, of $59.84. If the market condition is met, the number of earned performance stock units, as a percentage of the target number of performance stock units, is calculated based on the compound annual growth rate ("CAGR") of the Company's active Customers from fiscal year-end 2022 to fiscal year-end 2025. The payout as a percent of target shares will be determined based on the active Customer growth rate achieved by the Company as of fiscal year-end 2025, as illustrated in the table below. If the active Customer CAGR growth rate does not meet the performance condition according to the table below, the corresponding payout will be zero.

(1)Based on active Customer count of 490,000 at December 31, 2022. For purposes of this performance condition, "active Customer" is defined as active Customer in the Company’s direct selling operating segment (discussed further in Note M – Segment Information below), excluding customers from mergers and acquisitions.

NOTE M—SEGMENT INFORMATION

The Company primarily operates as a global nutrition, personal health and wellness company that develops and manufactures high quality, science-based nutritional, and personal care products. As of December 28, 2024, the Company hadtwo reportable segments: direct selling and Hiya direct-to-consumer. Management identifies segments based upon the Company's organizational and management reporting structure. The direct selling segment develops and manufactures high quality, science-based nutritional, personal care and skincare products with a primary focus on promoting long-term health and wellness in various geographic markets worldwide that are distributed through the direct selling channel. The Hiya direct-to-consumer segment is a new reportable segment in 2024 resulting from the Hiya Acquisition during 2024. Hiya is a leading provider of high-quality children’s health and wellness products in the U.S. that are distributed through the direct-to-consumer channel. Additionally, the Company has operating segments that are not material and included as a component of “Other”.

The operating segments reflect the Company's primary sales channels and represent the way the chief operating decision maker ("CODM") evaluates the Company's business performance and allocates resources. The CODM is the Company's Chief Executive Officer. The CODM evaluates the performance of each segment based on segment earnings from operations in order to determine how to allocate the Company's resources across its operating segments, including allocating capital and personnel. The CODM does not evaluate operating segments using asset information, accordingly, the Company does not report asset information by segment.

Summarized financial information for the Company’s reportable segments is shown in the following tables, including significant segment expenses that are regularly reviewed by the CODM.

(1)The direct selling segment excludes $2,087 of intersegment net sales.

(1)The direct selling segment excludes $1,425 of intersegment net sales.

(1)There wasno intersegment net sales.

No single Associate or customer accounted for 10% or more of net sales for the periods presented. The table below summarizes the approximate percentage of total product revenue for our direct selling and Hiya direct-to-consumer segments that has been contributed by the Company’s nutritionals, foods, and personal care and skincare products for the periods indicated.

(1)Includes the Company’s Active Nutrition line

Financial information on net sales and long-lived assets (excluding intangible assets), presented by geographic region is listed below:

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

NOTE N—COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per share (“EPS”) 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 EPS based on the time they were outstanding in any period. Diluted EPS are based on shares that are outstanding (computed under basic EPS) and on potentially dilutive shares. Shares that are included in the diluted EPS 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 EPS and diluted EPS for the periods indicated:

Equity awards for the following shares were not included in the computation of diluted EPS attributable to USANA due to the fact that their effect would be anti-dilutive:

During the years ended 2024 and 2023, the Company repurchased and retired 194 shares for $9,483 including accrued excise tax of $39, and 180 shares for $11,653 including accrued excise tax of $54, respectively. During the year ended 2022, the Company repurchased and retired 288 shares for an aggregate price of $25,382.

NOTE O—REDEEMABLE NONCONTROLLING INTEREST

December 23, 2024, the Company acquired a 78.85% controlling financial interest in Hiya. Simultaneously, USANA and the remaining noncontrolling interest holders entered into an Amended and Restated Limited Liability Company Agreement ("LLC Agreement"). The agreement granted USANA the right to buy ("Call Right") and the noncontrolling interest holders the right to cause USANA to purchase ("Put Right") half of the remaining noncontrolling interest units beginning on April 30, 2028, and the remaining unpurchased noncontrolling interest units beginning on April 30, 2030 or, if the Put Right and Call Right have not, collectively, been exercised with respect to all noncontrolling interest units prior to the end of 2030, the period beginning on April 30th of each year after 2030. The purchase price for the noncontrolling interest units pursuant to the Call Right and Put Right is based on Hiya’s Adjusted EBITDA (as defined in the LLC Agreement) for the calendar year immediately prior to the year in which such right is exercised, multiplied by the Company Value Reference Amount (as defined in the LLC Agreement). The Call Right and Put Right are not mandatorily redeemable. The redemption of the noncontrolling interest is contingent upon the passage of time and within the control of the interest holders, therefore, the Company has classified the noncontrolling interest as redeemable within the mezzanine section on the consolidated balance sheet.

The noncontrolling interest was recognized and measured at fair value on the acquisition date. The Company records the redeemable noncontrolling interest at the greater of: (i) the carrying value, which is adjusted each period for the noncontrolling interests' share of net earnings or loss and distributions or (ii) the redemption value. The following is a reconciliation of the changes in the redeemable noncontrolling interest for the periods indicated:

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS