According to the World Federation of Direct Selling Associations, the global direct selling market, which includes sales through network marketing and direct mail, reached $86 billion in sales in 2002. The area health and wellness comprised 15.4% of the 2002 total direct selling market according to the Direct Selling Association. According to the Nutrition Business Journal, the U.S. nutritional supplements market grew 5.7% in 2003 to $19.8 billion, of which the weight-loss supplements segment represented $4.2 billion or 21.3%. In addition, the Nutrition Business Journal reported that sales of weight-loss supplements are projected to grow at a 6.8% compound annual growth rate from 2004 through 2010.

The Company’s best-selling Formula 1 meal replacement product has been part of the Company’s basic weight management program for 24 years and generates approximately 25% of the Company’s net sales year-to-date through June 30, 2004. In March 2004, the Company introduced ShapeWorks, a personalized protein-based meal replacement program based on the clinical experience and 15 years of meal replacement research of Dr. David Heber, Director of the UCLA Center for Human Nutrition. The ShapeWorks program incorporates several of the Company’s leading weight management products, including the products listed above. The Company’s distributors help identify body type, analyze lean body mass, and customize a ShapeWorks program that can help increase metabolism and control hunger.

The Company markets numerous dietary and nutritional supplements designed to meet the Company’s customers' specific nutritional needs. Each of these supplements contains quality herbs, vitamins, minerals and other natural ingredients and focuses on specific lifestages and lifestyles of the Company’s customers, including women, men, children, mature adults, and athletes.

The Company’s Outer Nutrition products complement its weight-management and inner nutrition products and improve the appearance of the body, skin and hair. These products include skin cleansers, toners, moisturizers and facial masks, shampoos and conditioners, body-wash items and a selection of fragrances for men and women under the brand names Nature's Mirror, Radiant C and Skin Activator, among others.

The Company also sells literature and promotional materials, including sales aids, informational audiotapes, videotapes, CDs and DVDs designed to support its distributors' marketing efforts, as well as start-up kits called "International Business Packs" for new distributors.

The Company is committed to providing its distributors with unique, innovative products to help them increase sales and recruit additional distributors. The Company accomplishes this through reformulating existing product lines and by introducing new products. The Company has built a world-class product development team including eight Ph.D.'s to formulate, review and evaluate new product ideas.

Net sales in Europe increased $51.0 million or 22.9% for the six months ended June 30, 2004, compared to the same period in 2003.

Net sales in Asia/Pacific Rim increased $16.3 million or 20.7% for the six months ended June 30, 2004, compared to the same period in 2003.

Net sales in Japan decreased $10.3 million, or 16.6% for the six months ended June 30, 2004, compared to the same period in 2003.

Gross profit was $518.3 million for the six months ended June 30, 2004, compared to $453.6 million in the same period in 2003.