UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004

	OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 011-12421

	NU SKIN ENTERPRISES, INC. (Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		87-0565309 (IRS Employer Identification Number)
	75 West Center Street Provo, UT 84601 (Address of principal executive offices and zip code) (801) 345-1000 (Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨

As of July 30, 2004, 69,379,761 shares of the registrant’s Class A common stock, $.001 par value per share and no shares of the registrant’s Class B common stock were outstanding.

NU SKIN ENTERPRISES, INC.

2004 FORM 10-Q QUARTERLY REPORT – SECOND QUARTER

		PAGE
Part I.	Financial Information
	Item 1. Financial Statements:
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Cash Flows	3
	Notes to Consolidated Financial Statements	4
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	9
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	20
	Item 4. Controls and Procedures	20


Part II.	Other Information
	Item 1. Legal Proceedings	21
	Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	21
	Item 3. Defaults upon Senior Securities	21
	Item 4. Submission of Matters to a Vote of Security Holders	21
	Item 5. Other Information	22
	Item 6. Exhibits and Reports on Form 8-K	22
	Signature	24

Nu Skin, Pharmanex and Big Planet are trademarks of Nu Skin Enterprises, Inc. or its subsidiaries.

-i-

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets
(in thousands, except share amounts)

	June 30, 2004		December 31, 2003
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$ 169,774		$ 122,568
Accounts receivable	16,054		15,054
Inventories, net	87,773		83,338
Prepaid expenses and other	46,953		60,163

	320,554		281,123

Property and equipment, net	64,612		60,528
Goodwill	111,331		118,768
Other intangible assets, net	62,847		67,572
Other assets	58,819		63,068

Total assets	$ 618,163		$ 591,059



LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$ 15,567		$ 18,816
Accrued expenses	93,937		95,068
Current portion of long-term debt	17,733		17,915

	127,237		131,799

Long-term debt	146,457		147,488
Other liabilities	20,608		21,524

Total liabilities	294,302		300,811


Stockholders' equity Class A common stock - 500,000,000 shares authorized, $.001 par value, 72,073,135 and 70,700,497 shares issued and outstanding	72		71
Additional paid-in capital	(51,504	)	(68,191	)
Accumulated other comprehensive loss	(68,873	)	(70,849	)
Retained earnings	446,175		431,615
Deferred compensation	(2,009	)	(2,398	)

	323,861		290,248

Total liabilities and stockholders' equity	$ 618,163		$ 591,059

The accompanying notes are an integral part of these consolidated finanical statements.

-1-

NU SKIN ENTERPRISES, INC.
Consolidated Statements of Income (Unaudited)
(in thousands, except per share amounts)

	Three Months Ended June 30,			Six Months Ended June 30,
	2004		2003	2004		2003
Revenue	$ 284,241		$ 240,720	$ 548,229		$ 460,352
Cost of sales	47,506		45,292	91,429		86,901


Gross profit	236,735		195,428	456,800		373,451

Operating expenses:
Selling expenses	121,398		97,492	233,980		185,528
General and administrative expenses	80,382		72,197	164,016		142,470


Total operating expenses	201,780		169,689	397,996		327,998


Operating income	34,955		25,739	58,804		45,453
Other income (expense), net	(2,702	)	965	(3,567	)	1,541


Income before provision for income taxes	32,253		26,704	55,237		46,994
Provision for income taxes	11,934		9,880	20,438		17,387


Net income	$ 20,319		$ 16,824	$ 34,799		$ 29,607


Net income per share (Note 3):
Basic	$ .28		$ .21	$ .49		$ .37
Diluted	$ .28		$ .21	$ .47		$ .36

Weighted average common shares
outstanding:
Basic	71,570		80,403	71,348		80,589
Diluted	73,747		81,561	73,396		81,890

The accompanying notes are an integral part of these consolidated finanical statements.

-2-

NU SKIN ENTERPRISES, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

	Six Months Ended June 30, 2004		Six Months Ended June 30, 2003
Cash flows from operating activities:
Net income	$ 34,799		$ 29,607
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization	13,721		10,954
Amortization of deferred compensation	389		325
Changes in operating assets and liabilities:
Accounts receivable	(1,000	)	2,886
Inventories, net	(4,435	)	(1,080	)
Prepaid expenses and other	10,494		(3,957	)
Other assets	1,176		(4,249	)
Accounts payable	(3,249	)	(2,306	)
Accrued expenses	8,799		(16,666	)
Other liabilities	670		3,706


Net cash provided by operating activities	61,364		19,220


Cash flows from investing activities:
Purchase of property and equipment	(13,859	)	(10,366	)


Net cash used in investing activities	(13,859	)	(10,366	)


Cash flows from financing activities:
Exercise of distributor and employee stock options	9,304		273
Payments of cash dividends	(11,489	)	(11,277	)
Repurchase of shares of common stock	—		(8,231	)


Net cash used in financing activities	(2,185	)	(19,235	)


Effect of exchange rate changes on cash	1,886		3,690


Net increase (decrease) in cash and cash equivalents	47,206		(6,691	)

Cash and cash equivalents, beginning of period	122,568		120,341


Cash and cash equivalents, end of period	$ 169,774		$ 113,650

The accompanying notes are an integral part of these consolidated finanical statements.

-3-

NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements

1. THE COMPANY

Nu Skin Enterprises, Inc. (the “Company”) is a leading, global, direct selling company that develops and distributes premium-quality, innovative personal care products and nutritional supplements that are sold worldwide under the Nu Skin and Pharmanex brands. The Company also markets technology products and services under the Big Planet brand. The Company reports revenue from five geographic regions: North Asia, which consists of Japan and South Korea; Greater China, which consists of Mainland China, Hong Kong and Taiwan; North America, which consists of the United States and Canada; South Asia/Pacific, which consists of Australia, Malaysia, New Zealand, the Philippines, Singapore and Thailand; and Other Markets, which consists of Brazil, Europe, Guatemala and Mexico (the Company’s subsidiaries operating in these countries are collectively referred to as the “Subsidiaries”).

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited consolidated financial statements include the accounts of the Company and the Subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial information as of June 30, 2004, and for the three- and six-month periods ended June 30, 2004 and 2003. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. For further information, refer to the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

2. STOCK–BASED COMPENSATION

The Company measures compensation expense for its stock-based employee compensation plans. Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans based on the fair market value of options granted. The Company has chosen to account for stock-based compensation granted to employees using the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. Accordingly, because the grant price equals the market price on the date of grant for options issued by the Company, no compensation expense is recognized for stock options issued to employees. However, stock-based compensation granted to non-employees, such as the Company’s independent distributors and consultants, is accounted for in accordance with SFAS No. 123. SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, which amended SFAS No. 123 requires more prominent and frequent disclosures about the effects of stock-based compensation, which have been provided herein. Had compensation cost for the Company’s stock options been recognized based upon the estimated fair value on the grant date under the fair value methodology prescribed by SFAS No. 123, as amended by SFAS No. 148, the Company’s net earnings and earnings per share would have been as follows (in thousands, except per share amounts):

-4-

NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements

	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
Net income, as reported	$ 20,319		$ 16,824		$ 34,799		$ 29,607
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for all
awards, net of related tax effects	(1,347	)	(1,332	)	(2,697	)	(2,728	)


Pro forma net income	$ 18,972		$ 15,492		$ 32,102		$ 26,879



Earnings per share:
Basic - as reported	$ 0.28		$ 0.21		$ 0.49		$ 0.37
Basic - pro forma	$ 0.27		$ 0.19		$ 0.45		$ 0.33

Diluted - as reported	$ 0.28		$ 0.21		$ 0.47		$ 0.36
Diluted - pro forma	$ 0.26		$ 0.19		$ 0.44		$ 0.33

3. NET INCOME PER SHARE

Net income per share is computed based on the weighted average number of common shares outstanding during the periods presented. Additionally, diluted earnings per share data gives effect to all potentially dilutive common shares that were outstanding during the periods presented. For the three- and six-month periods ended June 30, 2004, no options were excluded from the calculation of diluted earnings per share because they were anti-dilutive. For the three- and six-month periods ended June 30, 2003, other stock options totaling 3.7 million and 3.6 million, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive. Earnings per share in 2004 were positively impacted by the repurchase of 10.8 million shares of the Company's Class A common stock, which occurred in October 2003.

4. DIVIDENDS PER SHARE

In May 2004, the board of directors declared a quarterly cash dividend of $0.08 per share for all classes of common stock. This quarterly cash dividend of approximately $5.7 million was paid on June 23, 2004, to stockholders of record on June 4, 2004. In July 2004, the board of directors declared a quarterly cash dividend of $0.08 per share for all classes of common stock to be paid in September 2004.

5. DERIVATIVE FINANCIAL INSTRUMENTS

At June 30, 2004 and December 31, 2003, the Company held forward contracts designated as foreign currency cash flow hedges with notional amounts totaling approximately $127.7 million and $64.3 million, respectively, to hedge foreign-currency-denominated intercompany transactions. All such contracts were denominated in Japanese yen. As of June 30, 2004 and December 31, 2003, $1.1 million and $3.9 million of net unrealized losses, net of related taxes, respectively, were recorded in accumulated other comprehensive loss. The contracts held at June 30, 2004 have maturities through May 2005 and accordingly, all unrealized gains and losses on foreign currency cash flow hedges included in accumulated other comprehensive loss will be recognized in current earnings over the next 12 months. The Company recognized pre-tax net losses on foreign currency cash flow hedges of $1.6 million and $4.3 million for the three- and six-month periods ended June 30, 2004, respectively, and recognized losses of $1.5 million and $2.8

-5-

NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements

million for the three- and six-month periods ended June 30, 2003, respectively, which were recorded primarily as an offset to revenue in Japan.

6. REPURCHASE OF COMMON STOCK

During the three- and six-month periods ended June 30, 2004, the Company did not repurchase any shares of its Class A common stock under its open market repurchase plan. During the three- and six-month periods ended June 30, 2003, the Company repurchased approximately 235,000 and 794,000 shares of Class A common stock under the plan for approximately $2.3 million and $8.2 million, respectively.

7. COMPREHENSIVE INCOME

The components of comprehensive income, net of related tax, for the three- and six-month periods ended June 30, 2004 and 2003, were as follows (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2004	2003	2004		2003
Net income	$ 20,319	$ 16,824	$ 34,799		$ 29,607

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	67	2,109	(749	)	1,154
Net unrealized gains on foreign currency
cash flow hedges	1,536	1,377	7		1,577
Net losses reclassified into current
earnings	1,016	854	2,718		1,610

Comprehensive income	$ 22,938	$ 21,164	$ 36,775		$ 33,948

8. SEGMENT INFORMATION

The Company operates in a single reportable operating segment by selling products to a global network of independent distributors that operates in a seamless manner from market to market except for its operations in Mainland China. In Mainland China the Company utilizes an employed sales force to sell its products through fixed retail locations. The Company’s largest expense (selling expenses) is the world-wide commissions and Mainland China sales employee expenses paid on product sales. The Company manages its business primarily by managing its global sales force. The Company does not use profitability reports on a regional or divisional basis for making business decisions. However, the Company does recognize revenue in five geographic regions: North Asia, Greater China, North America, South Asia/Pacific, and Other Markets. Revenue generated in each of these regions is set forth below (in thousands):

	Three Months Ended June 30,		Six Months Ended June 30,
	2004	2003	2004	2003
Region:
North Asia	$ 159,545	$ 150,681	$ 309,600	$ 284,776
Greater China	59,167	30,021	106,742	57,074
North America	36,046	33,058	73,608	65,519
South Asia/Pacific	20,410	18,028	40,087	35,930
Other Markets	9,073	8,932	18,192	17,053

Totals	$ 284,241	$ 240,720	$ 548,229	$ 460,352

-6-

NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements

Certain reclassifications have been made to the prior year amounts to conform to the current year presentation. These reclassifications match the hedging gains and losses associated with the Japanese yen to the North Asia region, which were previously classified under the North America region.

Additional information as to the Company’s operations in its most significant geographical areas is set forth below (in thousands):

Revenue:

	Three Months Ended June 30,		Six Months Ended June 30,
	2004	2003	2004	2003
Japan	$ 143,405	$ 136,111	$ 277,709	$ 256,842
United States	33,458	30,774	68,584	60,799
Mainland China	29,541	5,830	52,337	9,722

Long-lived assets:

		June 30, 2004		December 31, 2003
Japan		$ 16,503		$ 18,553
United States		257,313		286,659

FORM 10-Q

NU SKIN ENTERPRISES, INC.

2004 FORM 10-Q QUARTERLY REPORT – SECOND QUARTER

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

1. THE COMPANY

2. STOCK–BASED COMPENSATION

3. NET INCOME PER SHARE

4. DIVIDENDS PER SHARE

5. DERIVATIVE FINANCIAL INSTRUMENTS

6. REPURCHASE OF COMMON STOCK

7. COMPREHENSIVE INCOME

8. SEGMENT INFORMATION