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USANA Health Sciences, Inc.
Company typePublic (NYSE: USNA)
IndustryMulti-Level Marketing of Nutrition & 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 athletic organizations. In 2007, several of its executives were discovered to have made false statements in their resumes.[1]

Background and organization

USANA was founded by an immunologist and microbiologist Myron Wentz.[2] It is based in Salt Lake City, Utah. The company sells its products through multilevel marketing: associates recruit other associates, who recruit still others.[2] 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. [2] The company employs approximately 1,000 people worldwide, and has 176,000 associates and "preferred customers" in its worldwide distribution network. Approximate sales for 2007 was $427 million of which 87% was generated by associates, and 13% by preferred customers.[3] The company states that, as of 2009, their products are marketed in the U.S.A., Canada, Australia, New Zealand, United Kingdom, Netherlands, Japan, Hong Kong, Taiwan, Korea, Singapore, Mexico, Malaysia and The Philippines. From 2004 to 2006, USANA was named on Forbes “200 Best Small Companies” list.[4]

During 2007, USANA faced repeated controversy as several of their executives were discovered to have made false statements regarding their qualifications.[5] These included Denis Waitley, a member of the board of directors[6], Ladd McNamara, who quit the company's medical advisory board after it was discovered his license to practice medicine had been revoked,[7][8][9] the Vice President of Research and Development, Timothy Wood, who was found to have doctorate in forestry, as opposed to biology as he had claimed.[10] and the Executive Vice President and Chief Financial Officer, Gilbert Fuller, who had continued to use the title of CPA,[11] though his license had lapsed.[12][10]

In 2007, USANA was not included on Forbes' 200 Best Small Companies” list, and an article in the magazine quoted industry and government experts who had raised questions about USANA’s business practices and products.[13][14] USANA responded by issuing a press release which denied several of the allegations and claimed that the article contained errors.[15]

Multi-level Marketing

The company uses multilevel marketing: associates sell health and other products, but also seek to recruit other associates, who work under them.[2] USANA uses a binary compensation plan which awards commissionable 'points' for sales volume. When the points reach a pre-determined number, the associate is paid. If the points do not reach the payment threshold, they accumulate towards the next week. USANA requires that associates must generate a certain sales quota every four weeks in order to remain eligible to receive compensation. However, if the quota is not reached, the distributor will lose all the points that have accumulated but not yet been paid on.[16]

USANA's associates are bound by distributor agreements, which include forbidding distributors from making "misleading income claims" to potential associates or from making health claims for the products.[2] However, an investigative report aired by Radio-Canada in February 2009, which included hidden camera filming of recruitment and other sessions, found that one group of associates appeared to violate the company's policies. The program contrasted the information about potential revenues presented at meetings and in written materials with the Canadian legal requirements for multi-level marketing schemes to provide clear, frequent and complete information about the revenue of the typical participant.[2][17] In addition, the same group of associates were filmed making recommendations for using USANA products to treat illnesses including leukemia.[2]

In 2008, two Canadian USANA distributors were awarded c $7 million in compensation for damages related to their wrongful dismissal from the company. USANA had terminated their positions in 2003 because USANA believed the distributor had violated the companies' policies and procedures. [18][19]

Products

USANA products encompass four brands: USANA Nutritionals (Essentials and Optimizers nutritional supplements), USANA Macro-Optimizer foods (drink mixes and nutritional bars), Sensé Basics and Enhancers (face, hair, and skin care products), and Rev3 Energy drinks. Nutritional products are stated to be of high quality, justifying their relatively high cost: the Radio-Canada investigation reported that USANA's products cost two to three times the price of equivalent items in a store, and found no evidence that the products were of better quality than the competitors.[2]

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.[2][20] In 2006, USANA signed a co-sponsorship agreement as the official health supplement supplier to the Sony Ericsson WTA tour.[21][22][23] USANA is also the ofical supplier of the United States, Canadian and Great Britian Speed Skating teams. They are also the official supplier of the Canadian Olympic Ski team.

Law suit

In March 2007, USANA was accused by Barry Minkow, an executive of the Fraud Discovery Institute of operating an illegal pyramid scheme.[24] An informal investigation was undertaken by the U.S. Securities and Exchange Commission concluded in January 2008 with the SEC recommending that no action be taken against the company.[25] USANA lodged suits against Minkow and his company claiming defamation and stock manipulation. USANA dropped the defamation suit and in March 2008 four of the five claims brought by USANA against Minkow were thrown out by a judge.[26][27] The remaining charge of stock manipulation was settled in July 2008 when USANA and Minkow reached an undisclosed settlement, which included the removal of all USANA-related materials from the Fraud Discovery Institute website, a related Chinese website, and from YouTube. Minkow also agreed to never trade in USANA's stock again.[28][29]

See Also

References

  1. ^ 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. ^ a b c d e f g h i "Vente à paliers multiples: légale, à de strictes conditions!". La Facture. February 24 2009. {{cite episode}}: Check date values in: |airdate= (help); Cite has empty unknown parameters: |episodelink= and |serieslink= (help)
  3. ^ "USANA Annual Report 2007". United States Securities and Exchange Commission. 2007-12-29. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  4. ^ "200 Best Small Companies". Forbes. 2006. Retrieved 2008-10-14.
  5. ^ 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)
  6. ^ Don Bauder (2007-09-13). "Pyramid, Phony Bios". "San Diego Reader. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  7. ^ http://web.archive.org/web/20070927213929/http://www.nbr.co.nz/docs/35081069_ohio.pdf
  8. ^ http://web.archive.org/web/20070927213808/http://www.nbr.co.nz/docs/04-036573_georgia.pdf
  9. ^ 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)
  10. ^ 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)
  11. ^ http://www.sec.gov/Archives/edgar/data/896264/000110465907018746/a07-6205_1def14a.htm
  12. ^ License 120645-2601 Detail
  13. ^ Evelyn M. Rusli (August 8, 2007). "Hard to Swallow". Forbes. Retrieved 2008-10-14. {{cite web}}: Cite has empty unknown parameter: |1= (help)
  14. ^ Helen Malmgren (August 11, 2007). "Forbes is Usana's latest critic". The National Business Review. Retrieved 2008-10-14.
  15. ^ Robert MacMillan (August 9, 2007). "Update 1--USANA says Forbes article makes false statements". Reuters. Retrieved 2008-10-14.
  16. ^ "USANA pay plan".
  17. ^ "Competition Bureau - Multi-level Marketing and Pyramid Selling". www.competitionbureau.gc.ca. Retrieved 2009-03-11.
  18. ^ name="USANA Form 8-K">"USANA Form 8-K". United States Securities and Exchange Commission. 2008-12-22. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  19. ^ name="Judgement will cost Usana $7 million">"Judgement will cost Usana $7 million". The Salt Lake Tribune. 2009-02-13. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  20. ^ "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)
  21. ^ 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)
  22. ^ "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)
  23. ^ "Company Press Release: Usana Health Sciences and Sony Ericsson WTA tour announce landmark agreement" (PDF). Usana. 2006-Sept. {{cite news}}: Check date values in: |date= (help)
  24. ^ Dave Anderson. "As stocks plunge, Usana sues Minkow over report". Deseret Morning News. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  25. ^ Pratish Narayanan (2008-01-11). "UPDATE 1-SEC ends Usana probe with no action; shares up". Reuters.
  26. ^ The Associated Press (2008-05-07). "USANA ordered to pay for SLAPP violation". Salt Lake Tribune. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  27. ^ Tom Harvey (2008-03-05). "USANA claims tossed". Salt Lake Tribune. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  28. ^ Tom Harvey (2008-03-05). "USANA claims tossed". Salt Lake Tribune. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  29. ^ 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)
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