We are pleased to give investors a preview of our strong financial results in advance of tomorrow's earnings announcement," said Gilbert A. Fuller, the Company's executive vice president and chief financial officer. "We believe these sales and earnings results demonstrate the fundamental strength of our business and are the direct result of the hard work and commitment of our Associates to our high quality products.
USANA said it expects to post a quarterly profit of 66 cents per share on $109.4 million in revenue. The company previously predicted a profit of 63 cents to 65 cents per share on $103 million to $105 million in revenue.
Analysts polled by Thomson Financial expected a profit of 63 cents per share on $104.2 million in revenue.
Oh—the Company announced, too, the departure of Grant Thornton LLP as the Company's independent registered public accounting firm.
Even though GT resigned on July 10, 2007, management did not file a Form 8-K with the SEC until after the close of trading on July 16. As if to minimize any material implications hereof, USANA noted that there “were no disagreements between the Company and Grant Thornton on any accounting principles or practices.”
“Fraud and falsehood only dread examination. Truth invites it.” Samuel Johnson (English writer, 1709 -1784)
The last audited report of Grant Thornton for the Company was for the fiscal year ended December 30, 2006. No certifying accountant means that investors need to “rely on management’s representations” for the financial statements of the first quarter and second quarter ended March 31 and June 30, 2007, respectively.
In its filing, management was quick to note that
GT has not advised the Company that information has come to its attention that it has concluded materially impacts the fairness or reliability of either: (i) a previously issued audit report or the underlying financial statements, or (ii) the financial statements issued or to be issued covering the fiscal periods subsequent to the last audited financial statements.
Given recent controversies circling the Company--including a just filed lawsuit by independent distributors accusing the Company of fraud and deception, credibility issues about its network marketing business model, and a series of flaps involving the credentials of top executives and sales associates—maybe Grant Thornton had the prescience to quietly slip away.
“Better slip with foot than tongue.” Benjamin Franklin (American Statesman, 1706 – 1790)
The price of USANA climbed $1.22 per share, or 2.44% in after hours trading, partly driven by short interest of 106.50% relative to its public float.
Author David J. Phillips is long put options in USANA Health Sciences, Inc. The 10Q Detective has a Full Disclosure Policy.
USNA 1-yr chart: