Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 11-K

 

(Mark One)

x                              ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2017

 

or

 

o                                 TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                                 to                               

 

Commission file number: 001-35024

 


 

A.  Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

USANA HEALTH SCIENCES 401(k) PLAN

 

B.  Name of issuer of the securities held pursuant to the plan and the address of its principal executive office.

 

USANA HEALTH SCIENCES, INC.

3838 West Parkway Blvd., Salt Lake City, Utah 84120

(Address of principal executive offices, Zip Code)

 

 

 



Table of Contents

 

USANA HEALTH SCIENCES 401(k) PLAN

 

FORM 11-K

 

For the Year Ended December 31, 2017

 

INDEX

 

 

Page

 

 

Report of Independent Registered Public Accounting Firm

3

Financial Statements:

 

Statements of Assets Available for Benefits

4

Statement of Changes in Assets Available for Benefits

5

Notes to Financial Statements

6 – 9

Schedule of Assets (Held at End of Year)*

10

Exhibit

11

Signature

12

 


* Other supplementary schedules required by section 2520-103.10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Plan Administrators

USANA Health Sciences 401(k) Plan

 

Opinion on the Financial Statements

 

We have audited the accompanying statements of assets available for benefits of the USANA Health Sciences 401(k) Plan (the Plan) as of December 31, 2017 and 2016, the related statement of changes in assets available for benefits for the year ended December 31, 2017 and the related notes to financial statements (collectively referred to as the financial statements).  In our opinion, the financial statements present fairly, in all material respects, the assets available for benefits of the Plan as of December 31, 2017 and 2016, and the changes in assets available for benefits for the year ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Supplemental Information

 

The Schedule of Assets (Held at End of Year) (the supplemental schedule) has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental schedule reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule.  In forming our opinion on the supplemental schedule, we evaluated whether the supplemental schedule, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, as amended.  In our opinion, the supplemental schedule is fairly stated, in all material respects, in relation to the financial statements as a whole.

 

/s/ Tanner LLC

 

We have served as the Plan’s auditor since 2004

Salt Lake City, Utah

June 26, 2018

 

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USANA HEALTH SCIENCES 401(k) PLAN

 

Statements of Assets Available for Benefits

 

 

 

December 31,

 

 

 

2016

 

2017

 

 

 

 

 

 

 

Investments, at fair value:

 

 

 

 

 

Mutual funds

 

$

44,643,206

 

$

56,904,310

 

USANA Health Sciences, Inc. Stock Fund

 

6,366,296

 

5,939,880

 

Collective investment fund

 

1,722,459

 

1,377,436

 

 

 

 

 

 

 

Total investments

 

52,731,961

 

64,221,626

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

Employer contributions

 

39,157

 

 

Notes receivable from participants

 

1,506,220

 

1,594,856

 

 

 

 

 

 

 

Total receivables

 

1,545,377

 

1,594,856

 

 

 

 

 

 

 

Assets available for benefits

 

$

54,277,338

 

$

65,816,482

 

 

The accompanying notes are an integral part of these statements.

 

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USANA HEALTH SCIENCES 401(k) PLAN

 

Statement of Changes in Assets Available for Benefits

 

Year Ended December 31, 2017

 

Additions to (deductions from) assets attributable to:

 

 

 

 

 

 

 

Investment income:

 

 

 

Net appreciation in fair value of investments

 

$

8,498,509

 

Interest and dividends

 

2,341,495

 

 

 

 

 

Total investment income

 

10,840,004

 

 

 

 

 

Interest on notes receivable from participants

 

65,920

 

 

 

 

 

Contributions:

 

 

 

Participants

 

4,078,459

 

Employer

 

1,799,200

 

Rollovers

 

347,605

 

 

 

 

 

Total contributions

 

6,225,264

 

 

 

 

 

Benefits paid to participants

 

(5,478,900

)

 

 

 

 

Administrative expenses

 

(113,144

)

 

 

 

 

Net increase in assets available for benefits

 

11,539,144

 

 

 

 

 

Assets available for benefits:

 

 

 

Beginning of the year

 

54,277,338

 

 

 

 

 

End of the year

 

$

65,816,482

 

 

The accompanying notes are an integral part of this statement.

 

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USANA HEALTH SCIENCES 401(k) PLAN

NOTES TO FINANCIAL STATEMENTS

 

NOTE A — DESCRIPTION OF THE PLAN

 

The following description of the USANA Health Sciences 401(k) Plan (the “Plan”) provides only general information.  Participants and other financial statement users should refer to the Plan agreement for a more complete description of the Plan’s provisions.

 

1.        General

 

The Plan is a defined contribution plan covering substantially all United States non-union employees of USANA Health Sciences, Inc. (the “Company” or the “Employer”) who have completed one month of service and are age 18 or older.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and permits traditional 401(k) deferrals (pre-tax) as well as Roth 401(k) deferrals (after-tax).

 

2.        Contributions

 

Each year participants may elect to contribute up to 75 percent of their annual compensation subject to certain limits as defined in the Plan.  Participant contributions are limited by the Internal Revenue Code, which established a maximum contribution of $18,000 ($24,000 for participants age 50 or older) for the year ended December 31, 2017.  Participants may elect to make pre-tax contributions and/or after-tax Roth elective contributions into their accounts.  Participants may also contribute amounts representing distributions from certain other defined benefit or defined contribution plans.  Under the safe harbor and certain other provisions of the Plan, eligible employees who have not made an affirmative election to defer or not defer will have deferrals withheld in the amount of six percent of their compensation, to be invested in the appropriate target date retirement fund.  Participants may direct their investments into one or more of the investment options offered by the Plan, with no more than 25 percent of their investment allocations directed into shares of the Company’s stock fund.

 

The Company provides a matching contribution equal to 100 percent of the first one percent of a participant’s compensation that is contributed as an elective deferral by the participant, and 50 percent of elective deferrals between one and six percent of the participant’s compensation.  The Company’s board of directors may also authorize additional contributions to the Plan.

 

3.        Participant accounts

 

Individual accounts are maintained for each Plan participant.  Each participant’s account is adjusted for the participant’s contributions and allocations of (a) the Company’s contributions and (b) investment gains or losses.  The allocation of the Company’s discretionary contributions and forfeitures is based on each participant’s contribution, as defined by the Plan.  The allocation of investment gains or losses is based on a participant’s weighted-average account balance, as defined by the Plan.

 

4.        Vesting

 

Participants are fully vested in their voluntary contributions, including any net investment income on those contributions.  The Company’s matching contributions fully vest at the end of two years of service.

 

5.        Notes receivable from participants

 

A participant may borrow a minimum of $1,000 up to a maximum of three loans that in the aggregate are equal to the lesser of $50,000 or 50 percent of his or her vested account balance.  Loans are secured by the balances in the participants’ accounts and bear interest at rates ranging from 4.25 percent to 5.25 percent, which rates were commensurate with prevailing rates at the time of loan origination.  Principal and interest are paid ratably through payroll deductions.  Loans are re-paid over a five-year period, unless the loans were used to purchase a principal residence, in which case the payback period may not exceed 30 years.  As of December 31, 2017, the Plan had outstanding loans to participants with maturities ranging from 2018 through 2047.

 

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USANA HEALTH SCIENCES 401(k) PLAN

NOTES TO FINANCIAL STATEMENTS - CONTINUED

 

NOTE A — DESCRIPTION OF THE PLAN — CONTINUED

 

6.        Benefits paid to participants

 

On termination of service due to death, permanent disability, or retirement, a participant or beneficiary may receive a lump-sum amount equal to the value of the participant’s vested interest in his or her account.  For termination of service due to other reasons, the Plan will automatically make a lump-sum distribution of the value of the participant’s vested interest in his or her account where the account balance is less than $5,000.

 

7.                        Forfeited accounts

 

Forfeited accounts related to the Company’s matching contributions may first be used to pay any administrative expenses and are then used to reduce any future Employer matching contributions.  The table below provides a reconciliation of the balance of forfeited accounts from December 31, 2016 to December 31, 2017.

 

Balance as of December 31, 2016

 

$

7,293

 

Forfeitures

 

28,812

 

Application of forfeitures

 

(13,366

)

Earnings on forfeited account balance

 

127

 

 

 

 

 

Balance as of December 31, 2017

 

$

22,866

 

 

8.                        Expenses

 

The Company, as the Plan Sponsor, paid all administrative expenses during the year ended December 31, 2017, except for $113,144.

 

NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

1.                          Basis of accounting

 

The financial statements of the Plan are presented using the accrual method of accounting in accordance with U.S. generally accepted accounting principles (“US GAAP”).

 

2.                          Use of estimates

 

The preparation of financial statements in conformity with US GAAP requires Plan management to make estimates and assumptions that affect certain reported amounts of assets available for benefits at the date of the financial statements, the changes in assets available for benefits during the reporting period and, when applicable, the disclosure of contingent assets and liabilities at the date of the financial statements.  Those key estimates include determination of the fair value of investments.  Actual results may differ from estimates and assumptions made.

 

3.                          Investment valuation and income recognition

 

The Plan’s investments are stated at fair value.  Quoted market prices are used to value investments in shares of mutual funds.  Units of the USANA Health Sciences, Inc. Stock Fund (“Stock fund”) and the collective investment fund are valued at net asset value, which approximates fair value, using daily market information.  Net appreciation (depreciation) caused by fluctuations in the value of investments is reflected in the statement of changes in assets available for benefits.  Amounts invested may earn interest and dividends, which in turn are reinvested.

 

Purchases and sales of securities are recorded on a trade-date basis.  Income from interest is recorded on the accrual basis.  Dividends are recorded on the ex-dividend date.  Earnings and losses within each fund are allocated to participants based on their proportionate shares in the fund.

 

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USANA HEALTH SCIENCES 401(k) PLAN

NOTES TO FINANCIAL STATEMENTS - CONTINUED

 

NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

In general, the Plan’s securities are exposed to various risks, such as interest rate, credit, and overall market volatility.  Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the accompanying statements of assets available for benefits.

 

4.                          Notes receivable from participants

 

Notes receivable from participants represent participant loans and are valued at their unpaid principal balance plus any accrued but unpaid interest, which approximates fair value.  As of December 31, 2017 and December 31, 2016, no allowances for credit losses had been recorded.  If a participant ceases to make loan repayments and the Plan Administrators deem the note receivable from a participant to be a distribution, the note receivable balance is reduced and a benefit payment is recorded.

 

5.                          Benefits paid to participants

 

Benefits are recorded when paid.  As of December 31, 2017, there were no distributions that had been requested but not paid.

 

NOTE C — FAIR VALUE MEASUREMENTS

 

The Plan reports investments in accordance with established authoritative guidance, which requires a three-level valuation hierarchy for disclosure of fair value measurements.  The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

 

The three levels are defined as follows:

 

·                  Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

·                  Level 2 inputs are from other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

·                  Level 3 inputs are unobservable and are used to measure fair value in situations where there is little, if any, market activity for the asset or liability at the measurement date.

 

Investments in mutual funds are valued using Level 1 inputs.  In accordance with Subtopic 820-10, the Stock fund and the collective investment fund are measured using the net asset value per unit as a practical expedient and are therefore not classified in the fair value hierarchy.

 

The Stock fund primarily includes Company common stock, the value of which is measured using net asset value per unit as a practical expedient.  Redemption frequency for this fund is immediate, this fund contains no unfunded commitments, and has no redemption restrictions.

 

Shares of the collective investment fund are measured at net asset value, which approximates fair value.  Redemption frequency for this fund is immediate, this fund contains no unfunded commitments, and has no redemption restrictions.

 

NOTE D — RELATED-PARTY TRANSACTIONS

 

Plan assets include common stock of the Company.  Transactions with respect to shares of the Company’s common stock qualify as party-in-interest transactions.  As of December 31, 2016, 99,100 shares of the Company’s common stock were held in a unitized stock fund, the balance of which was $6,366,296, including $301,376 in cash.  During the second half of 2017, the Plan transitioned the common stock of the Company to a Stock fund.  As of December 31, 2017, the Plan held 80,214 shares of the Company’s common stock, the balance of which was $5,939,880.  The closing price of the Company’s common stock on December 31 2016 and December 31, 2017 was $61.20 and $74.05, respectively.

 

Notes receivable from participants on December 31, 2016 and December 31, 2017 were $1,506,220 and $1,594,856, respectively.   Notes receivable are considered party-in-interest transactions.  Interest income pertaining to notes receivable from participants totaled $65,920 for 2017.

 

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USANA HEALTH SCIENCES 401(k) PLAN

NOTES TO FINANCIAL STATEMENTS - CONTINUED

 

NOTE E — PLAN TERMINATION

 

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue the Company’s contributions at any time and to terminate the Plan subject to the provisions of ERISA.  In the event of Plan termination, participants would become 100 percent vested in their accounts.

 

NOTE F — TAX STATUS

 

The Plan has adopted a non-standardized prototype plan for which the Internal Revenue Service has issued a favorable opinion letter covering the qualification of the Plan.  The Plan Administrators and the Plan’s tax counsel do not anticipate that changes in the Plan after the date of the Internal Revenue Service opinion letter will affect the qualified and tax-exempt status of the Plan.  Accordingly, the financial statements of the Plan do not include provisions, assets or liabilities related to income taxes.

 

US GAAP requires management to evaluate income tax positions taken by the Plan and to recognize an income tax liability if the Plan has taken an uncertain tax position that more likely than not would not be sustained upon examination by taxing authorities.  The Plan Administrators analyzed the tax positions taken by the Plan and have concluded that as of December 31, 2016 and December, 31 2017, there are no uncertain tax positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements.  The Plan is subject to routine audits by tax jurisdictions for tax years for which the applicable statutes of limitations have not expired; however, there are currently no audits for any tax periods in progress.

 

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USANA HEALTH SCIENCES 401(k) PLAN

SUPPLEMENTAL INFORMATION

Employer Identification Number:  87-0500306

Plan Number:  001

SCHEDULE H, PART IV, Line 4(i)

SCHEDULE OF ASSETS (HELD AT END OF YEAR)

As of December 31, 2017

 

( a )

 

( b )

 

( c )

 

 

 

( e )

 

 

 

IDENTITY OF ISSUE, BORROWER, LESSOR, OR
SIMILAR PARTY

 

DESCRIPTION OF INVESTMENT

 

SHARES,
UNITS, OR
LOANS

 

CURRENT
VALUE

 

 

 

 

 

 

 

 

 

 

 

*

 

USANA Health Science, Inc. Stock Fund

 

Stock fund

 

80,214

 

$

5,939,880

 

 

 

 

 

 

 

 

 

 

 

 

 

The Hartford Growth Opportunities Fund Class Y

 

Mutual funds

 

156,403

 

7,438,506

 

 

 

American Funds Washington Mutual Investors Fund Class R-6

 

Mutual funds

 

146,403

 

6,686,215

 

*

 

Fidelity® 500 Index Fund - Premium Class

 

Mutual funds

 

62,956

 

5,883,197

 

 

 

Janus Henderson International Opportunities Fund Class I

 

Mutual funds

 

120,440

 

3,616,807

 

 

 

American Funds American Balanced Fund® Class R-6

 

Mutual funds

 

132,226

 

3,591,262

 

 

 

American Funds SMALLCAP World Fund® Class R-6

 

Mutual funds

 

62,896

 

3,565,551

 

 

 

American Funds 2050 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

210,940

 

3,197,856

 

 

 

Prudential Total Return Bond Fund Class Q

 

Mutual funds

 

205,290

 

2,993,127

 

 

 

American Funds 2040 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

141,770

 

2,161,998

 

 

 

American Funds 2045 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

123,688

 

1,915,922

 

 

 

American Funds New World Fund® Class R-6

 

Mutual funds

 

28,409

 

1,900,018

 

 

 

American Funds 2025 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

129,876

 

1,752,030

 

 

 

American Funds 2035 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

114,694

 

1,706,650

 

 

 

American Funds 2030 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

113,763

 

1,643,878

 

 

 

American Funds 2055 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

75,322

 

1,426,597

 

 

 

Carillon Eagle Mid Cap Growth Fund Class R6

 

Mutual funds

 

21,279

 

1,272,895

 

 

 

Nuveen Real Estate Securities Fund Class R6

 

Mutual funds

 

45,073

 

935,270

 

 

 

Janus Henderson Triton Fund Class I

 

Mutual funds

 

31,262

 

902,843

 

*

 

Fidelity® Mid Cap Index Fund - Premium Class

 

Mutual funds

 

30,987

 

650,097

 

*

 

Fidelity® Small Cap Index Fund - Premium Class

 

Mutual funds

 

30,913

 

628,160

 

 

 

Victory Sycamore Established Value Fund Class R6

 

Mutual funds

 

14,066

 

571,219

 

 

 

Principal Diversified Real Asset Fund Class R-6

 

Mutual funds

 

48,646

 

566,239

 

 

 

American Funds 2020 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

40,445

 

509,604

 

 

 

Undiscovered Managers Behavioral Value Fund Class L

 

Mutual funds

 

6,057

 

423,534

 

*

 

Fidelity® Total International Index Fund - Premium Class

 

Mutual funds

 

28,963

 

362,903

 

 

 

Templeton Global Bond Fund Class R6

 

Mutual funds

 

18,086

 

214,317

 

 

 

American Funds 2015 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

13,238

 

153,697

 

 

 

Invesco Diversified Dividend Fund Class R6

 

Mutual funds

 

6,043

 

123,031

 

 

 

American Funds 2010 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

6,412

 

70,086

 

 

 

American Funds 2060 Target Date Retirement Fund® Class R-6

 

Mutual funds

 

3,110

 

38,628

 

*

 

Fidelity® Government Money Market Fund

 

Mutual funds

 

2,173

 

2,173

 

 

 

 

 

 

 

 

 

56,904,310

 

*

 

Notes receivable from participants

 

Loans with interest rates ranging from 4.25% to 5.25%

 

282

 

1,594,856

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo Stable Value Fund Class C

 

Collective investment fund

 

26,142

 

1,377,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

65,816,482

 

 


* Party-in-interest

Note - Column ( d ), cost, is not required because all investments are participant directed.

 

See accompanying Report of Independent Registered Public Accounting Firm.

 

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EXHIBIT

 

Exhibit
Number

 

Description

 

 

 

23.1

 

Consent of Independent Registered Public Accounting Firm (filed herewith)

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

USANA Health Sciences 401(k) Plan

 

 

Date:

June 26, 2018

 

/s/ G. Douglas Hekking

 

G. Douglas Hekking

 

Chief Financial Officer
(Principal Financial and Accounting Officer)
Plan Sponsor

 

12