Usana Health Sciences

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USANA Health Sciences, Inc.
Company typePublic (NYSE: USNA)
IndustryNutrition & Skin Care products
FoundedSalt Lake City, UT (1992)
HeadquartersSalt Lake City, UT
Key people
Myron Wentz, Ph.D., Founder & Chairman

David Wentz, Chief Executive Officer
Fred Cooper Ph.D., President and Chief Operating Officer
Jeff Yates, Vice President and Chief Financial Officer

Tim Wood, Ph.D., Executive Vice President of Research and Development
ProductsNutritional supplements, personal care
Websitewww.usana.com

Usana (Nasdaq: USNA), or USANA Health Sciences, Inc., is a multilevel marketing company that produces various nutritional and skin-care products. Most of these products are manufactured in the United States[1] and sold in thirteen international markets. The company has sponsored and provided products to several Olympic and professional athletes. In 2007, several of its executives were discovered to have made false statements in their resumes.[1].

Background

USANA is based in Salt Lake City, Utah. The company employs approximately 1,000 people worldwide, and has 176,000 associates and so called "preferred customers" in its worldwide distribution network. Approximate sales are $427 million annually.[2] The company sells its products through network marketing and follows a binary plan for compensation.[3] The products are not available through retail channels, but instead can only be obtained by a direct order to the company or through one of its independent associates.

Forbes rated USANAs corporate office as one of the top 200 small companies in 2004-2006, but the company failed to make the Forbes list in 2007.

USANAs Q4 earnings for 2007 fell flat with earnings declining slightly to $11.06 million from $11.1 million. The company attributed this to a 5% decline in the number of US associates.[4] A month later USANA cut its estimated earnings per share for its first quarter of 2008 from 63 cents - 66 cents per share to 44 cents - 46 cents pers share.[5]

The company claims that, as of 2007, their products are marketed in the U.S.A., Canada, Australia, New Zealand, United Kingdom, Netherlands, Japan, Hong Kong, Taiwan, Korea, Singapore, Mexico, and Malaysia.

Products

USANA products encompass four brands: USANA Nutritionals, USANA Macro-Optimizer foods, Sensé skin- and body-care products, and Rev3 Energy drinks.

Nutritionals

The USANA Nutritionals brand composed of the company’s Essentials and Optimizers nutritional supplements.

Macro-Optimizers

The USANA Macro-Optimizers brand is composed of a variety of drink mixes and nutritional bars. USANA also has designed a weight-loss and weight-maintenance program called RESET, which utilizes the Macro-Optimizers and Essentials.

Sensé

The USANA Sensé brand includes the Basics and the Enhancers, which are made up of facial-care products, as well as Sensé Splash, which consists of hair- and body-care products.

Rev3 Energy

Introduced at Usana's 2008 international convention, the drink comes in two forms, a 12-ounce can or a powder mix in a packet.

Athlete sponsorships

USANA sponsors various athletic teams and individual athletes, providing them with free nutritional supplements as well as monetary donations in certain cases, such as the USA Bobsled Team Radcliff.[6]

USANA's partnership with the WTA in 2006 made headlines, as it was the first time the women's professional tennis organization had provided its players with vitamins and health supplements that were backed by an "athlete guarantee" of purity from substances prohibited by the World Anti-Doping Agency.[7][8]

Résumé controversy, and legal allegations

In 2007, Usana faced repeated controversy as a number of their executives were discovered to have made false statements regarding their certification.[1]

Denis Waitley, a member of the board of directors, resigned from his post after it was discovered that he did not have a Master's degree from the Naval Postgraduate School in Monterey, California.[9]. In addition to this USANA informed the Wall Street Journal that they were unable to verify Waitley's Ph.D. from the unaccredited La Jolla University.[10]

Ladd McNamara, a Usana sales associate, quit the company's medical advisory board after it was discovered his license to practice medicine had been revoked by the State Medical Board of Ohio in May 2007.[11] McNamara was required to tell the Ohio Medical Board that he had surrendered his license in Georgia [2] when he renewed his license in Ohio in 2006. Instead, Ohio learned that information elsewhere.[12]

The Vice President of Research and Development, Timothy Wood, was forced to change his résumé to list his doctorate from Yale University as being in forestry, as opposed to the doctorate in biology he claimed.[13]

Usana's now retired Executive Vice President and Chief Financial Officer, Gilbert Fuller, reported biographical information that showed him as a CPA,[14] despite his license having lapsed in 1986; his license expired due to his "failure to pay renewal fees".[15] Mr. Fuller received his CPA license in 1970, and remained active until 1986.[15] While it is not required of a CFO to be a CPA, use of the CPA title while inactive is considered unlawful by the by-laws of the Utah Association of Public Accountants.[13]


In March 2007, Barry Minkow, an executive of the Fraud Discovery Institute, delivered a 500-page report to the United States Securities and Exchange Commission (SEC) accusing Usana of operating a pyramid scheme.[16] These allegations prompted an informal investigation into USANAs business practices by the SEC which concluded on January 11th 2008 with the SEC recommending that no enforcement action be taken against the company.[17]

Subsequently, USANA lodged a lawsuit against Minkow and his San Diego-based Fraud Discovery Institute from U.S. District Court in Salt Lake City for defamation and stock manipulation. Some of those claims were thrown out March 3 2008 by U.S. District Judge Tena Campbell.

On July 29 2008, USANA announced that they had settled the remaining of the lawsuit with Minkow. Minkow agreed to taking all reports related to USANA off of the Fraud Discover Institute web-site, shut down another web-site devoted to USANA's dealings in China, and removed interviews with failed USANA distributors from YouTube. He also agreed to never trade in USANAs stock again. The remaining details of the settlement remain undisclosed. Minkow came out with his first critical report of USANA in February 2007 when he bought "put" options on the stock in a legal bet the price would fall.[18]

References

  1. ^ a b Paul Foy (2007-06-12). "Another Usana official forced to revise resume". Daily Herald. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  2. ^ "USANA Annual Report 2007". United States Securities and Exchange Commission. 2007-12-29. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  3. ^ http://www.nbr.co.nz/docs/US-CEN-Binary%20Comp%20Plan.pdf
  4. ^ USANA Shares Slide on Profit Report: Financial News - Yahoo! Finance
  5. ^ UPSDATE 1-USANA Health Sciences cuts Q1, '08 view; shares tumble: Financial News - Reuters Finance
  6. ^ "USANA Becomes Official Supplement Supplier of USA Bobsled Team Radcliff". REUTERS. 2008-04-23. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  7. ^ Liz Robbins (2006-08-23). "WTA Tour Signs On With Vitamin Supplier". New York Times. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  8. ^ "USANA, women's tennis tour ink deal on 'clean' supplements". Salt Lake Tribune. 2006-08-23. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  9. ^ http://www.sec.gov/Archives/edgar/data/896264/000110465907026138/a07-10015_1defa14a.htm
  10. ^ Don Bauder (2007-09-13). "Pyramid, Phony Bios". "San Diego Reader. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  11. ^ http://www.nbr.co.nz/docs/35081069_ohio.pdf
  12. ^ Helen Malmgren (2007-08-16). "Troubled USANA faces new stock woes". The National Business Review. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  13. ^ a b Roddy Boyd (2007-06-12). "CFO's no CPA - USANA under fire on executive bios". New York Post. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  14. ^ http://www.sec.gov/Archives/edgar/data/896264/000110465907018746/a07-6205_1def14a.htm
  15. ^ a b License 120645-2601 Detail
  16. ^ Dave Anderson. "As stocks plunge, Usana sues Minkow over report". Deseret Morning News. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  17. ^ Pratish Narayanan (2008-01-11). "UPDATE 1-SEC ends Usana probe with no action; shares up". Reuters.
  18. ^ Paul Foy (July 29, 2008). "Supplement-maker USANA settles suit with critic". Associated Press. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)

External links

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