<TABLE>
<CAPTION>
As filed with the Securities and Exchange Commission on May 16, 1997. File No. 333-27365
==========================================================================================
<S> <C> <C>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------
FORM S-3A/1
POST-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------------------------
USANA, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0500306
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation)
3838 West Parkway Blvd.
Salt Lake City, Utah 84120
(801) 954-7100
(Address, including zip code, and telephone number, including area
code of registrant's principal executive offices)
---------------------------------------
Gilbert A. Fuller, Vice President Finance
USANA, INC.
3838 West Parkway Blvd.
Salt Lake City, Utah 84120
(801) 954-7100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------------------
Copies of Communications to:
Kevin R. Pinegar, Esq.
Durham, Evans, Jones & Pinegar, P.C.
50 South Main Street, Suite 850
Salt Lake City, Utah 84144
(801) 538-2424
----------------------------------------
Approximate date of commencement of proposed sale to the public: As soon
as possible after the Registration Statement becomes effective.
</TABLE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [X]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
================================================================================
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1993 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a) MAY
DETERMINE.
================================================================================
<PAGE>
PROSPECTUS
[LOGO - USANA]
USANA, INC.
(a Utah corporation)
--------------------------------------------------
100,000 Shares of Common Stock
No Par Value
1997 USANA DISTRIBUTOR STOCK PURCHASE PLAN
--------------------------------------------------
The 1997 USANA, Inc. Distributor Stock Purchase Plan (the "Plan")
described herein offers eligible distributors of USANA, Inc. ("USANA" or the
"Company") an opportunity to acquire an ownership interest in the Company.
Shares of no par value Common Stock (the "Common Stock") of the Company will
be available for purchase by participating distributors ("Participants")
through the Plan on the terms described herein. Such shares may be previously
issued and outstanding shares of Common Stock purchased in the open market or
shares acquired from the Selling Shareholder described below. Shares acquired
by the Participants under the Plan, either in the open market or from the
Selling Shareholder as hereinafter described are collectively referred to
herein as the "Shares."
100,000 Shares are offered and may be sold hereunder by a Selling
Shareholder. See "Selling Security Holder." The Company will not receive any
part of the proceeds from the sale of the Shares. The Shares offered by the
Selling Shareholder may be purchased initially only by the Plan pursuant to
the terms and conditions governing such Plan.
The Common Stock of the Company is included in the National Association
of Securities Dealers Automated Quotation system ("Nasdaq") National Market
System under the symbol "USNA." The Shares will be offered for resale and
purchased by the Plan at prices approximating the market price as reported by
Nasdaq at the time of sale. Open market purchases of the Shares will also be
at prices determined by the market at the time of purchase. See "Description
of Plan" and "Plan of Distribution," below. On July 9, 1997, the closing
price of the Company's Common Stock as quoted by Nasdaq was $14.50 per share.
The estimated expenses of the registration of the Shares, including
registration fees, accounting and legal fees will be paid by the Company.
The Selling Shareholder will pay all commissions on resale of the Shares and
will bear its individual selling expenses. Plan Participants will pay no
commissions or fees on the purchase of the Shares under the Plan. THESE
SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
================================================================================
<S> <C> <C> <C>
Price to Public(1) Commissions(2) Proceeds to Company(3)
- --------------------------------------------------------------------------------
Per Share $ 14.50 $ - $ 0.00
TOTAL $ 1,450,000.00 $ - $ 0.00
================================================================================
</TABLE>
(1) The price at which Shares will be acquired by the Plan will vary based
on the market for such Shares. For purposes of this table, the closing market
price of the Company's common stock on July 9, 1997 has been used.
(2) Commissions or other costs of sale of its Shares to the Plan will be the
sole responsibility of the Selling Shareholder and may vary. The Company will
pay all commissions and fees of the Broker-Dealer, as hereafter defined,
relating to purchase of Shares in the open market for the Plan.
(3) None of the proceeds from the sale of the Shares by the Selling
Shareholder or Shares acquired in the open market will be received by or are
payable to the Company. All proceeds, net of commissions and other expenses
payable by the Selling Shareholder in connection with the sale of Shares by the
Selling Shareholder will be received by the Selling Shareholder.
The date of this Prospectus is July 11, 1997.
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED HEREIN.
ANY INFORMATION OR REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR MADE,
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION WITH RESPECT TO THESE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATIONS THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES.
-------------------------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and has
registered its securities pursuant to Section 12(g) of that Act (Commission
File No. 1-11534). In accordance therewith, the Company files reports, proxy
and information statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and the Commission's Regional Offices in New
York (Jacob Javits Building, 26 Federal Plaza, New York, New York 10278), Los
Angeles (5757 Wilshire Boulevard, Suite 500 East, Los Angeles, California
90036-3648), and Chicago (219 South Dearborn Street, Room 1204, Chicago,
Illinois 60604). Copies of such material can be obtained by written request
to the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, at prescribed rates. The Commission
also maintains a website on the world wide web (Internet) at
"http://www.sec.gov" where the public may access current and other reports
filed electronically with the Commission by the Company.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Plan and the Shares to be
offered and sold by the Selling Shareholder hereby. This Prospectus, which is
a part of the Registration Statement, does not contain all the information set
forth in, or annexed as exhibits to, such Registration Statement, certain
portions of which have been omitted pursuant to rules and regulations of the
Commission. For further information with respect to the Company and the
Shares and the Plan, reference is hereby made to the Registration Statement,
including the exhibits thereto. Copies of the Registration Statement,
including exhibits, may be obtained from the aforementioned public reference
facilities of the Commission upon payment of the prescribed fees, or may be
examined without charge at such facilities. Statements contained herein
concerning any document filed as an exhibit are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such statement is qualified in
its entirety by such reference.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company under the
Exchange Act with the Commission are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 28, 1996;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 27, 1997; and
(iii) the description of the Company's Common Stock contained in
the Company's registration statement, effective April 13, 1993, on Form
10 (Commission File No. 0-21116).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus but prior to
the termination of the offerings shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the date of filing such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request to such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the document that
this Prospectus incorporates by reference). Requests should be directed to
Investor Relations Department, USANA, Inc., 3838 West Parkway Blvd., Salt Lake
City, Utah 84120, telephone number (801) 954-7100.
------------------------------------------
Some of the information presented in or in connection with or
incorporated by reference in the Prospectus constitutes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and Section 27A of the Securities Act. Although the Company believes
that its expectations are based on reasonable assumptions within the bounds of
its knowledge of its business and operations, there can be no assurance that
actual results will not differ materially from its expectations. In addition
to the factors identified in the section of the prospectus entitled "Risk
Factors", factors that could cause actual results to differ from expectations
include: (i) increased competitive activity from companies with greater
resources and broader distribution channels than the Company; (ii)
consolidations and restructurings in the industry causing a decrease in the
number of distributors that purchase and sell the Company's products or an
increase in the ownership concentration within the industry; (iii) social,
political and economic risks to the Company's foreign manufacturing and retail
operations, including changes in foreign investment and trade policies and
regulations of the host countries and of the United States; (iv) foreign
currency fluctuations affecting the relative prices at which the Company and
foreign competitors sell their products in the same market and the Company's
operating and manufacturing costs outside of the United States; and (v)
shipment delays, depletion of inventory and increased production costs resulting
from disruptions of operations at any of the facilities which supply raw
materials to, or which produce or manufacture products marketed and
distributed by, the Company.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the financial statements appearing elsewhere in the Prospectus
and/or incorporated herein by reference.
See "Risk Factors" for reasons an investment in the shares offered hereby
involves significant risks.
THE COMPANY
USANA develops, manufactures, packages and markets its own line of
nutritional, antioxidant, weight management and natural skin and hair care
products.
USANA products are distributed through a growing network marketing
organization. As of December 28, 1996, USANA had approximately 92,000
independent distributors in all 50 states of the U.S. and Canada.
The Company commenced its business operations under the direction of
Myron Wentz, Ph.D., an internationally-recognized pioneer in the development
of human cell-culture technology and disease diagnosis. In 1973, Dr. Wentz
founded Gull Laboratories, Inc. ("Gull," shares traded on the American Stock
Exchange under the symbol GUL) and developed the first commercially-available
test kit for the diagnosis of Epstein-Barr virus infections. Dr. Wentz later
directed his talents to the nutritional requirements of the human body and the
products that would help improve health and the quality of life. Through
analytical testing, Dr. Wentz determined that many nutritional and health
supplements were not only nutritionally unbalanced but had incorrect and
misleading labels and occasionally contained toxic substances. Dr. Wentz's
objective in forming USANA was to develop a line of nutritional products and a
new approach to manufacturing that would ensure the highest quality products.
USANA distributes its products through a network marketing organization.
The marketing of products and services through network marketing and other
direct selling channels has grown significantly in recent years. The
compensation plan developed by the Company for its distributors provides
several opportunities for distributors to earn money. Each distributor is
required to purchase and sell product in order to earn any compensation.
Therefore, a distributor may not simply develop a "downline" sales
organization or receive payment based on the recruiting of new distributors.
The first method of earning compensation is through retail markup on product
sales. Distributors purchase product from the Company and resell the product
at retail prices to consumers. The difference between the price paid by the
distributor to the Company to purchase the product and the price received from
the distributor's customer is profit or compensation to the distributor. The
second method of earning money through the distribution of the Company's
product is to receive commissions on sales volume generated by the
distributor's sales organization or "business center," which can consist of as
few as two additional distributors introduced to the Company by the
distributor, and by meeting certain personal sales volumes. The third method
of earning compensation is by qualifying for the Company's Leadership Bonus
Pool. Commissions and Leadership Bonuses are paid to qualifying distributors
weekly.
RISK FACTORS
Prospective Participants in the Plan should carefully consider the
following matters, as well as other information set forth in or made a part of
this Prospectus.
The Company and its business are subject to a number of significant
risks, among which are the following:
Reliance Upon Independent Distributor Network. The Company's products are
distributed exclusively through an extensive network marketing system of
independent distributors who are not employees of the Company. Distributors
are independent contractors who purchase products directly from the Company
for their own use or for resale at retail prices. Distributors typically work
at distributing the Company's products on a part-time basis and may engage in
other business activities. The Company has a large number of distributors and
a relatively small corporate staff to implement its marketing programs and
provide motivational and other support services for distributors. The
Company's continued growth and success depend to a significant degree on its
ability to retain and motivate its distributors and to attract new
distributors by continuing to offer new products of superior quality and new
marketing programs. Distributor agreements with the Company may be
voluntarily terminated by distributors at any time. There is typically
significant turnover in distributors from year to year. The Company's revenue
is directly dependent upon the efforts of non-employee, independent
distributors and future growth in sales volume will depend in a large part
upon an increase in the number of new distributors and/or improved
productivity of the Company's distributors. Therefore, attrition in the
distributor force, seasonal or other decreases in purchase volume, costs
associated with training new distributors and other expenses associated with
these problems, may combine to reduce the revenues and profitability of the
Company.
Government Regulatory Scrutiny of Network Marketing. Network marketing
systems are frequently subject to laws and regulations directed at ensuring
that product sales are made to consumers of the products and that compensation
and advancement within a marketing organization are based on the sale of
products rather than "investment" in the sponsoring company or from the
recruiting of sales personnel. These laws and regulations include the federal
securities laws, regulations and statutes administered by the Federal Trade
Commission ("FTC") and various state anti-pyramid and business opportunity
laws. Similar laws may govern direct sales activities or network marketing in
foreign countries. Although the Company believes that it is in compliance
with all such laws and regulations, the Company remains subject to the risk
that, in one or more of its present or future markets, its marketing system
could be found not to be in compliance with applicable laws or regulations.
Failure by the Company or its distributors to comply with these laws and
regulations could have an adverse material effect on the Company or a
distributor in a particular market or in general.
Distributors' Actions. The Company's distributors are required to sign
the Company's Distributor Application and Agreement which requires them to
abide by the Company's Policies and Procedures (the "Policies"). Although
these Policies prohibit distributors from making claims regarding the products
or income potential from the Company's distribution compensation plan,
nonetheless, in certain instances distributors may from time to time create
promotional materials which do not accurately describe the Company's marketing
program or may make statements regarding potential earnings, product claims or
other matters not in accordance with the Policies or contrary to applicable
laws and regulations concerning these matters. Although the Company has not
been sued by regulatory authorities, legal actions against distributors or
others affiliated with the Company can lead to increased regulatory scrutiny.
In order to assure itself that its Policies and the practices of its
independent distributors conform to law and fairly protect the interests of
consumers, the Company attempts to carefully monitor against
misrepresentations by distributors. There can be no assurance that the
Company will be able to completely accomplish this objective. In addition,
distributors could make predictive statements about the Company's operations
or other unauthorized remarks regarding the Company which the Company may be
unable to control. Publicity resulting from such activities of distributors
can also make it more difficult for the Company to sponsor and retain
distributors or may adversely affect the Company's ability to expand into new
markets.
Competition. The business of distributing and marketing nutritional
supplements, vitamins and minerals, personal care items, weight management
items, and other nutritional products offered by the Company is highly
competitive. Numerous manufacturers, distributors and retailers compete
actively for consumers and for distributors. The Company competes directly
with other entities that manufacture, market and distribute nutritional and
personal care products in each of its product lines. The Company competes
with these entities by emphasizing the value and high quality of its products
as well as the convenience afforded by its network marketing system. However,
many of the Company's competitors are substantially larger than the Company
and have greater financial resources and broader name recognition. The market
is highly sensitive to the introduction of new products that may rapidly
capture a significant share of the market. As a result, the Company's ability
to remain competitive depends in part upon the successful introduction of new
products. The Company is also subject to significant competition from other
marketing organizations for the recruitment of distributors. The Company's
ability to remain competitive depends, in significant part, on the Company's
success in recruiting and retaining distributors. There can be no assurance
that the Company's programs for recruitment and retention of distributors will
be successful. The Company competes for the time, attention and commitment
of its independent distributor force. The pool of individuals interested in
the business opportunities presented by direct selling tends to be limited in
each market, and it is reduced to the extent other network marketing companies
successfully recruit these individuals into their businesses. Although
management believes the Company offers an attractive opportunity for
distributors, there can be no assurance that other marketing companies will
not be able to recruit the Company's existing distributors or deplete the pool
of potential distributors in a given market.
Government Regulation of Products and Manufacturing. The manufacturing,
processing, formulation, packaging, labeling and advertising of the Company's
products are subject to regulation by federal agencies, including the Food and
Drug Administration (the "FDA"), the FTC, the Consumer Product Safety
Commission, the United States Department of Agriculture, the United States
Postal Service and the United States Environmental Protection Agency. These
activities are also subject to regulation by various agencies of the
countries, provinces, states and localities in which the Company's products
are sold. The Dietary Supplement Health and Education Act of 1994 ("DSHEA")
defines dietary supplements (which include vitamins, minerals, nutritional
supplements and herbs) and provides a regulatory framework to ensure safe,
quality dietary supplements, and the dissemination of accurate information
about such products. Dietary supplements are currently regulated as foods
under the DSHEA and the FDA is generally prohibited from regulating the active
ingredients in dietary supplements as food additives or as drugs unless
product claims trigger drug status. The DSHEA provides for specific
nutritional labeling requirements for dietary supplements. The DSHEA permits
substantiated, truthful and non-misleading statements of nutritional support
to be made in labeling, such as statements describing general well-being from
consumption of a dietary ingredient or the role of a nutrient or dietary
ingredient in affecting or maintaining structure or function of the body. In
addition, the DSHEA authorizes the FDA to promulgate current Good
Manufacturing Practices ("cGMP's") specific to the manufacture of dietary
supplements to be modeled after food cGMP's. The Company currently
manufactures its dietary supplement products pursuant to food cGMP's. The
Company cannot determine what effect currently proposed FDA regulations or
changed or amended regulations, when and if promulgated, will have on its
business in the future. Such regulations could, among other things, require
expanded or different labeling, the recall or discontinuance of certain
products, additional record keeping and expanded documentation of the
properties of certain products and scientific substantiation of product
claims. In addition, the Company cannot predict whether new legislation
regulating its activities will be enacted, which new legislation could have a
material adverse effect on the Company.
Product Liability. As a manufacturer and distributor, the Company could
be exposed to product liability claims. The Company has not had any such
claims to date. Although the Company maintains product liability insurance
which it believes to be adequate for its needs, there can be no assurance that
the Company will not be subject to claims in the future or that its insurance
coverage will be adequate.
Expansion Into Foreign Markets. The Company has announced its intentions
to expand into markets outside North America. However, there can be no
assurance that the Company can open markets on a timely basis or that such new
markets will prove to be profitable. Significant regulatory and legal
barriers must be overcome before marketing can begin in any foreign market.
Also, before marketing has commenced, it is difficult to assess the extent to
which the Company's products and marketing techniques will be successful in
any given country. In addition to significant regulatory barriers, the
Company may also expect problems related to entering new markets with
different cultural, social and legal systems from those encountered
elsewhere. Moreover, expansion of the Company's operations into new markets
may require substantial working capital and capital requirements associated
with regulatory compliance. There can be no assurance that the Company will
be able to obtain necessary permits and approvals or that it will have
sufficient capital to finance its expansion efforts in a timely manner.
Risks Associated With Rapid Growth. Since commencing operations after
the spin-off from Gull in 1992, the Company has experienced rapid growth. The
management challenges imposed by this growth, include significant growth in
the number of employees and distributors, the need for expansion of facilities
to accommodate growth, additions and modifications to the Company's product
lines, and expansion into new markets. To effectively manage these changes,
the Company has hired and may be required to hire additional management and
operations personnel and to improve its operational, financial, information
and management systems. If the Company is unable to manage growth effectively
or to hire and retain qualified personnel, its business and results of
operations may be adversely affected. Moreover, the capital expenditures and
personnel expenses associated with such growth may adversely affect the
Company's results of operations.
Risks Associated with Material Suppliers. The Company has only
short-term contracts with suppliers of raw materials used in its products.
Normally, materials used in manufacturing the Company's products are purchased
on account or purchase order. The Company has very few long-term agreements
for the supply of such materials. There is a risk that any of the Company's
suppliers or manufacturers could discontinue selling their products to the
Company. Although the Company believes that it could establish alternate
sources for most of its supplies, any delay in locating and establishing
relationships with other sources could result in product shortages and back
orders for products, with a resulting loss of revenues to the Company. For
example, in the fourth quarter of 1996, the Company experienced difficulty in
obtaining sufficient quantities of Vitamin E Succinate Powder, an ingredient
required for the manufacture of several of its products. It is expected that
the supplier's shortage will continue during 1997. As a consequence, the
Company has been required to alter its product or to substitute a different
product from another source. This and similar future product or ingredient
shortages may adversely affect the Company's results of operations.
Control by Principal Shareholder. The Selling Shareholder is the
beneficial owner of 3,957,116 shares or approximately 62 percent of the
Company's Common Stock. If all of the Shares offered by the Selling
Shareholder to the Plan were sold, it would continue to beneficially own
approximately 61 percent of the issued and outstanding shares of Common Stock
of the Company. There are no cumulative voting rights under the Company's
Articles of Incorporation and, therefore, this shareholder possesses the
ability to elect all of the directors of the Company, to increase its
authorized capital, to dissolve or merge the Company or to sell its assets and
generally to exert substantial control over the business and operations of the
Company. See, "Selling Security Holder."
Reliance on Personnel. The Company's success depends to a significant
extent upon certain members of senior management, including Dr. Wentz, Dallin
Larsen, Jeb McCandless, Gilbert Fuller, David Wentz and Mark Petersen. The
Company does not maintain key man life insurance policies on any of these
persons and there can be no assurance that such policies will be obtained in
the future or that if obtained they can adequately compensate the Company for
the loss of such individuals. The Company has no employment contracts with
any of these persons. The loss of any senior manager or other key employee
could have an adverse effect upon the Company's business, financial condition
and operating results.
Effect of Exchange Rate Fluctuations. The Company has a Canadian
subsidiary and has commenced efforts to expand its marketing organization into
other foreign countries. As a result, exchange rate fluctuations may have a
significant effect on its sales and the Company's gross margins. Further, if
exchange rates fluctuate dramatically, it may become uneconomical for the
Company to establish or continue activities in certain countries.
Anti-Takeover Protection. The Utah Control Shares Act (the "Control
Shares Act") provides that any person or entity that acquires 20 percent or
more of the outstanding voting shares of a publicly-held Utah corporation is
denied voting rights with respect to the acquired shares, unless a majority of
the disinterested shareholders of the corporation elects to restore such
voting rights. The provisions of the Control Shares Act may discourage
companies or persons interested in acquiring a significant interest in or
control of the Company, regardless of whether such acquisition may be in the
interest of the Company's shareholders.
Investment Risks Generally; Volatility of Stock Prices. There is no
assurance that an investment in the Company's Common Stock will result in any
profit. Investors in the Company's Common Stock risk losing all or
substantially all of the value of their investment for a number of reasons,
including, but not limited to the risks listed above. In recent years, the
stock markets have been volatile and characterized by widely fluctuating
prices for equity securities. The Company's securities are not widely held
and historically have traded in limited volumes. The price of the Company's
shares can fluctuate up or down, even with relatively small numbers of shares
being traded.
DESCRIPTION OF THE 1997 USANA, INC. DISTRIBUTOR STOCK PURCHASE PLAN
The following is a description of the Plan offered to selected
distributors of USANA. The description of the Plan is subject to, and is
qualified in its entirety by, the full text of the Plan which has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part. The Plan was approved by the Company's Board of Directors on May 28,
1997.
Purpose and Advantages of the Plan.
The Plan provides participating distributors of USANA (each, a
"Participant") an opportunity to acquire a proprietary interest in the Company
through the purchase of Common Stock. The purpose of the Plan is to provide
an additional incentive to Participants by enabling them to acquire stock
ownership in the Company, to attract and retain persons of ability as
independent distributors of USANA, and to entice such persons to exert their
best efforts on behalf of the Company. The Plan offers Participants an
affordable way to invest, through regularly placing small amounts into the
Plan and saving on commissions and fees normally associated with such
purchases.
In addition to the savings on commissions, regularly contributing to the
Plan, even in small increments, permits a Participant to benefit from dollar
cost averaging, minimizing the adverse effects of volatile changes in the
price of the Company's Common Stock. As a fixed amount of money is regularly
invested over a long period of time, purchases are made at varying prices as
the market price for the Common Stock fluctuates. Over time, the average cost
paid per share is usually less than if a uniform number of shares of stock
were purchased each period.
There can be no assurance against the loss of a Participant's investment
in whole or in part, due to declining market conditions or otherwise. There
is no assurance that a Participant's investment in the Plan will result in any
profit.
Participation
Participation in the Plan is entirely voluntary. The Company does not
make any recommendation concerning participation in the Plan. Participation
is not required as a requisite for becoming or continuing as a distributor of
the Company's products. Any distributor of USANA in good standing may
participate in the Plan, provided the distributor is regularly purchasing
products, completes and submits the official enrollment materials and
satisfies certain performance criteria established by the Company as provided
in the enrollment materials.
Enrollment in the Plan
A distributor who is eligible to participate in the Plan may enroll in
the Plan by completing and delivering enrollment forms to the Company.
Enrollment forms may be obtained at any time upon written request to the
Company. Participation in the Plan by an eligible distributor will be
effective as of the first day of the calendar month which immediately follows
the Company's receipt of such eligible distributor's properly prepared and
executed enrollment forms and shall continue until terminated in accordance
with the provisions of the Plan.
Upon enrollment in the Plan, a separate brokerage account ("Account") is
established in the name of the Participant with Merrill Lynch, Pierce, Fenner
& Smith ("Merrill Lynch" or the "Broker-Dealer"). The relationship between
the Participant and Merrill Lynch is governed by a written agreement ("Account
Agreement") which contains the terms and conditions governing transactions
made in or for the Participant's Account under the Plan or otherwise. Except
as provided by the Plan, the relationship between the Participants and Merrill
Lynch will be substantially identical to the typical broker/dealer-client
relationship. The Company's activities in connection with the Plan will be
strictly limited as described herein.
Contributions to the Plan; Accounts
Contributions to the Plan will be made solely by Participants. The
Company will not make any contributions to the Plan. Each Participant whose
gross weekly commission (the "Commission Amount") is $200\1 or more may
voluntarily elect to have contributions to the Plan deducted automatically
from his or her Commission check. Participant's may also make contributions
to their Accounts directly. All contributions to the Plan will be subject to
the following:
(A) Each Participant may, in its sole discretion, make direct
contributions to the Participant's Account for the purchase of Shares, subject
to the terms of the Plan and the Account Agreement. Purchases of Shares for
the Account of the Participant will be made by the Broker-Dealer as instructed
by the Participant, but consistent with the terms and limitations of the Plan.
(B) A Participant whose weekly gross Commission Amount is $200 or
more may elect to have an amount not less than $20 (U.S. twenty dollars) and
not in excess of ten percent (10%) of the Commission Amount, up to a maximum
of $500 (U.S. five hundred dollars), withheld by the Company by deduction from
the Commission check and contributed to the Participants' Account, in lieu of
receiving such amounts of compensation. This election is made by delivering
to the Company properly completed and executed forms at the time of
enrollment. A Participant may increase or decrease the amount deducted from
the Commission check from time to time (within the limitations indicated above)
by giving written notice to the Company.
Purchase of Shares
Purchases of Shares will be made by Merrill Lynch on behalf of each
Participant's Account within thirty (30) days of receipt of the funds, or on
the next succeeding business day if such day is not a business day (each, a
"Stock Purchase Date"). On each Stock Purchase Date, Merrill Lynch shall apply
- --------------------
/1 Note, all dollar amounts are in U.S. dollars.
<PAGE>
the funds then accumulated in a Participant's Account, together with all other
funds of Participants to the purchase on behalf of each Participant's Account
of the maximum number of Shares that can be purchased with the accumulated
funds. The Shares purchased pursuant to the Plan may be purchased on the open
market or from the Selling Shareholder. Any funds remaining in a Participant's
Account after the purchase of such maximum number of Shares on any Stock
Purchase Date will be retained in the Participant's Account and treated as a
part of the accumulation for the next succeeding calendar month.
The timing of all purchases and the price to be paid for Shares purchased
pursuant to the Plan in the open market, will be determined solely by Merrill
Lynch. Neither the Company nor the Participants nor the Selling Shareholder
will have any control or influence on such purchases. In the case of Shares
purchased from the Selling Shareholder, the purchase price will be determined
by agreement between the Company and Merrill Lynch, based primarily on market
prices as reported by the Nasdaq National Stock Market.
Costs and Expenses
Participants in the Plan will not be obligated to pay any brokerage
commissions or service charges with respect to the purchase of Shares under
the Plan. The Company will pay such expenses, although the Selling
Shareholder will pay such expenses in connection with sales of its Shares
under the Plan. Participants are solely responsible for payment of any
commissions, fees, administrative costs, taxes or other expenses with respect
to the sale, transfer or other disposition of Shares from the Participants'
Accounts.
Voting of Shares; Dividends
Each Participant is entitled to direct the exercise of any voting rights
attributable to Shares held in the Participant's Account under the Plan. Each
Participant will be sent proxy materials with respect to each meeting of the
Company's shareholders. If a Participant does not direct the exercise of such
voting rights with respect to any particular occasion for the exercise
thereof, such voting rights will not be exercised with respect to such
occasion.
Each Participant is entitled to receive dividends, if declared, and to
all other rights as a shareholder of the Company with respect to Shares held
in the Participant's Account under the Plan.
Administration
The Plan will be administered by the Executive Committee of the Board of
Directors ("Committee") of the Company, comprising Dr. Wentz, David Wentz and
Ronald Poelman. The Committee has appointed Merrill Lynch as the
Broker-Dealer to service the Plan. Merrill Lynch's duties will include
establishing and maintaining separate Accounts for Participants, purchasing
Shares on behalf of Participants' Accounts, maintaining records of each
Participant's Account and furnishing to Participants reports under the Plan.
The Committee will direct Merrill Lynch with regard to its duties under the
Plan by means of a written Servicing Agreement. Participants will receive
quarterly statements of the activity and market value of their Accounts from
Merrill Lynch.
Delivery of Shares; Sales by Participants
Shares are held in each Account in the name of Merrill Lynch or its
nominee, unless a Participant otherwise directs. A Participant may at any
time have a stock certificate delivered to the Participant by notifying
Merrill Lynch in writing and upon payment of any certificate fee or other
nominal charges associated with the issuance of such certificate. Merrill
Lynch will also hold USANA stock certificates in safe keeping for
Participants, without charging a fee for such service.
A Participant may direct Merrill Lynch to sell Shares in the
Participant's Account at any time. Participants are solely responsible for
the payment of any taxes, commissions, administrative expense, transaction or
other fees incurred in connection with or relating to such sales.
Recapitalizations
If at any time while the Plan is in effect, there shall be any increase
or decrease in the number of issued and outstanding shares of Common Stock of
the Company through the declaration of a stock dividend or through any
recapitalization resulting in a stock split, combination or exchange of shares
of Common Stock, then and in such event appropriate adjustments will be made
in the maximum number of shares of Common Stock that may be purchased under
the Plan, so that the same percentage of the Company's issued and outstanding
shares of Common Stock will continue to be available for purchase under the
Plan.
Withdrawals and Termination
A Participant may withdraw from the Plan at any time by delivering to the
Company properly prepared and executed Termination Forms. Termination Forms
may be obtained at any time upon written request to the Company. A
Participant's participation in the Plan will immediately terminate if and when
(i) the Participant ceases to be eligible to participate in the Plan or (ii)
the Participant has made no contributions to the Plan for a continuous period
of twelve months.
Upon withdrawal or termination of participation (other than by reason of
the Participant's death), any funds contributed by the Participant that remain
in the Participant's Account will be paid to the Participant in accordance
with such administrative rules and procedures as are established by the
Committee, without payment of interest thereon, and any Shares held in the
Participant's Account will be delivered to the Participant. Upon the death of
a Participant, any funds that remain in the Participant's Account and any
Shares held in the Participant's Account will be distributed to the
Participant's designated beneficiary. A Participant who withdraws or whose
participation is terminated, may elect to convert the Account to an ordinary
brokerage account with Merrill Lynch following termination or withdrawal.
Conversion is subject to approval by Merrill Lynch and compliance with its
policies and procedures governing such accounts.
A Participant whose participation in the Plan is terminated may, any time
after six (6) months following such termination, elect to again participate in
the Plan as long as the Participant continues to be eligible.
Non-Transferability
No Participant may transfer, sell, assign or otherwise dispose of any
rights to participate in the Plan or any rights under the Plan, including such
Participant's interest in any Account, to any other person. Any attempt by a
Participant to assign, alienate, create a security interest in or otherwise
encumber any of such Participant's interest under the Plan will be void.
Term, Modification and Termination of Plan
The Plan became effective on June 4, 1997 and will continue in
effect until May 31, 2007, unless earlier terminated by the Company. The
Committee may at any time and from time to time amend, modify, suspend or
terminate the Plan. No Shares may be purchased pursuant to the Plan
subsequent to its termination.
SELLING SECURITY HOLDER
Certain Shares offered to the Plan pursuant to this Prospectus are held
by Gull Holdings, Ltd., an Isle of Man company (the "Selling Shareholder") and
will be held for resale to the Plan by the Selling Shareholder. As of the
date of this Prospectus, there are 6,353,119 shares of Common Stock of the
Company issued and outstanding. A total of 100,000 Shares have been
registered and may be offered to the Plan by the Selling Shareholder on a
delayed or continuous basis. Prior to the sale of any of the Shares, the
Selling Shareholder owns 3,957,116 shares of Common Stock, or approximately 62
percent of the issued and outstanding Common Stock of the Company. Sales of
Shares to the Plan by the Selling Shareholder will result in a corresponding
decrease in the Selling Shareholder's percentage ownership of the Company's
Common Stock. If all of the Selling Shareholder's Shares offered to the Plan
hereunder are purchased, the Selling Shareholder will then own 3,857,116
shares of Common Stock, or approximately 61 percent of the total issued and
outstanding shares of Common Stock of the Company. The Shares were originally
issued to the sole shareholder of the Selling Shareholder at the time the
Company was spun off from Gull. The sole shareholder of the Selling
Shareholder, Dr. Wentz, is the Chairman and Chief Executive Officer of the
Company.
PLAN OF DISTRIBUTION
The Shares may be sold by and for the account of the Selling Shareholder
as discussed below. At such time as the Registration Statement of which this
Prospectus forms a part has been declared effective by the Securities and
Exchange Commission and thereafter so long as the Registration Statement shall
continue effective, the Selling Shareholder may offer and sell the Shares to
the Plan. Merrill Lynch will determine the time and all other terms for the
purchase of the Shares through the Plan.
Under the Exchange Act and the regulations thereunder, persons engaged in
a distribution of the Shares offered hereby may not simultaneously engage in
market making activities with respect to the common stock of the Company
during the applicable "cooling off" periods prior to the commencement of such
distribution. In addition, and without limiting the foregoing, the Selling
Shareholder will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation,
Regulation M, which provisions may limit the timing of purchases and sales of
Common Stock of the Company by the Selling Shareholder. The Selling
Shareholder and any broker-dealer who may act in connection with the sale of
the Shares hereunder may be deemed to be "underwriters" as that term is
defined in Section 2(11) of the Securities Act, as amended.
MATERIAL CHANGES IN THE COMPANY'S AFFAIRS
Since the end of the Company's last fiscal year (December 28, 1996),
there have been no material changes in the business and affairs of the Company
for which financial statements were included in the latest annual report to
security holders and which have not previously been included in a report on
Form 10-Q filed under the Exchange Act.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Part 9 of the Utah Revised Business Corporation Act (Utah Code Ann.
Section 16-10a-901, et seq.) authorizes the Company to indemnify its directors
and officers under specified circumstances. The bylaws of the Company provide
that the Company shall indemnify, to the extent permitted by Utah law, its
directors and officers against liabilities (including expenses, judgments and
settlements) incurred by them in connection with any actual or threatened
action, suit or proceeding to which they are or may become parties and which
arises out of their activities as directors or officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
EXPERTS
The financial statements of the Company incorporated in this Prospectus
by reference to the Company's Annual Report on Form 10-KSB for the year ended
December 28, 1996, have been audited by Grant Thornton, L.L.P., independent
auditors, as stated in their report, which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
[The remainder of this page is intentionally left blank.]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by the Registrant in connection with
the issuance and distribution of the shares of Common Stock of the Registrant
being offered hereby. All expenses are estimated.
Registration and filing fee $ 500.00
Accounting fees and expenses 5,000.00
Legal fees and expenses 10,000.00
Printing and miscellaneous 2,500.00
-----------
TOTAL $ 18,000.00
===========
Item 15. Indemnification of Directors and Officers.
Section 16-10a-901 of the Utah Revised Business Corporation Act and the
Registrant's Bylaws under certain circumstances provide for the limitation of
liability and indemnification of the Registrant's directors against
liabilities which they may incur in the course of acting in such capacity.
In general, under these provisions, any officer or director may be
indemnified against expenses, fines, settlements or judgments arising in
connection with a legal proceeding to which such person is a party, as a
result of such relationship, except in relation to matters in which such
person is adjudged to be liable for his own negligence or intentional
misconduct in the performance of his duty.
Indemnification may also be granted pursuant to the terms of agreements
which may be entered into in the future or pursuant to a vote of shareholders
or directors. This indemnification is in addition to any other right of the
indemnified person under any such contract or any law, bylaw, agreement, vote
of shareholders or otherwise.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
Item 16. Exhibits
Number Description
4 1997 USANA, Inc. Distributor's Stock Purchase Plan*
5 Opinion re: legality*
23.1 Consent of Independent Auditors*
23.2 Consent of counsel (included in Exhibit 5)*
24 Powers of Attorney (included on Signature Page)*
_________________
* Filed previously.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes that it will:
(1) File, during any period in which offers or sales are being made
hereunder, a post-effective amendment to include any additional or changed
material information on the plan of distribution.
(2) For purposes of determining liability under the Securities Act of
1933, treat each such post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Salt Lake City, Utah on July 11, 1997.
USANA, INC.
By: /s/ Gilbert A. Fuller
-------------------------------------
Title: Vice President Finance, Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement Amendment has been signed by the following persons
in the capacities and on the dates indicated.
Signature Title Date
- ----------------------------- -------------------------- ------------
/s/ Dr. Myron Wentz* President/CEO and Director July 11, 1997
- -----------------------------
Myron Wentz, Ph.D.
/s/ David Wentz* Director July 11, 1997
- -----------------------------
David Wentz
/s/ Dr. Suzanne Winters* Director July 11, 1997
- -----------------------------
Suzanne Winters, Ph.D.
/s/ Robert Anciaux* Director July 11, 1997
- -----------------------------
Robert Anciaux
/s/ Gilbert A. Fuller Vice President Finance July 11, 1997
- ----------------------------- (Chief Accounting Officer)
Gilbert A. Fuller
___________________
* /s/ Gilbert A. Fuller
_____________________________
Gilbert A. Fuller, Attorney in Fact
