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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, 2018
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)
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USANA HEALTH SCIENCES 401(k) PLAN
FORM 11-K
For the Year Ended December 31, 2018
INDEX
* 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, 2018 and 2017, the related statement of changes in assets available for benefits for the year ended December 31, 2018, 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, 2018 and 2017, and the changes in assets available for benefits for the year ended December 31, 2018, 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 audits 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 24, 2019
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USANA HEALTH SCIENCES 401(k) PLAN
Statements of Assets Available for Benefits
| | December 31, | |
| | 2017 | | 2018 | |
| | | | | |
Investments, at fair value: | | | | | |
Mutual funds | | $ | 56,904,310 | | $ | 56,292,603 | |
USANA Health Sciences, Inc. Stock Fund | | 5,939,880 | | 9,532,961 | |
Collective investment fund | | 1,377,436 | | 2,455,781 | |
| | | | | |
Total investments | | 64,221,626 | | 68,281,345 | |
| | | | | |
Receivables: | | | | | |
Notes receivable from participants | | 1,594,856 | | 1,718,519 | |
| | | | | |
Total receivables | | 1,594,856 | | 1,718,519 | |
| | | | | |
Assets available for benefits | | $ | 65,816,482 | | $ | 69,999,864 | |
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, 2018
Additions to (deductions from) assets attributable to: | | | |
| | | |
Investment income: | | | |
Net depreciation in fair value of investments | | $ | (3,957,904 | ) |
Interest and dividends | | 4,423,450 | |
| | | |
Investment income, net | | 465,546 | |
| | | |
Interest on notes receivable from participants | | 76,436 | |
| | | |
Contributions: | | | |
Participants | | 4,638,621 | |
Employer | | 1,947,524 | |
Rollovers | | 804,355 | |
| | | |
Total contributions | | 7,390,500 | |
| | | |
Benefits paid to participants | | (3,571,287 | ) |
| | | |
Administrative expenses | | (177,813 | ) |
| | | |
Net increase in assets available for benefits | | 4,183,382 | |
| | | |
Assets available for benefits: | | | |
Beginning of the year | | 65,816,482 | |
| | | |
End of the year | | $ | 69,999,864 | |
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. (collectively, 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).
The trustee for the 2017 and 2018 Plan year is Fidelity Management Trust Company (“Fidelity” or “Trustee”).
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 $18,500 ($24,500 for participants age 50 or older) for the year ended December 31, 2018. 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 USANA Health Sciences, Inc. Stock Fund (“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. No additional contributions were authorized during the year ended December 31, 2018.
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 6.25 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, 2018, the Plan had outstanding loans to participants with maturities ranging from 2019 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 be used to pay any administrative expenses or used to reduce any future Employer matching contributions. The table below provides a reconciliation of the balance of forfeited accounts from December 31, 2017 to December 31, 2018.
Balance as of December 31, 2017 | | $ | 22,866 | |
Forfeitures | | 221,870 | |
Application of forfeitures | | (129,572 | ) |
Earnings on forfeited account balance | | 3,270 | |
| | | |
Balance as of December 31, 2018 | | $ | 118,434 | |
8. Expenses
The Company, as the Plan Sponsor, paid all administrative expenses during the year ended December 31, 2018, except for $177,813.
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. 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 and the Stock Fund. Units of 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, 2018, 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, 2018, 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 and the Stock Fund are valued using Level 1 inputs. In accordance with Subtopic 820-10, the collective investment fund is measured using the net asset value per unit as a practical expedient and is therefore not classified in the fair value hierarchy.
Redemption frequency for the collective investment fund is immediate, this fund contains no unfunded commitments, and has no redemption restrictions.
NOTE D — EXEMPT PARTY-IN-INTEREST 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. 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 in the Stock Fund, the balance of which was $5,939,880. As of December 31, 2018, the Plan held 80,973 shares of the Company’s common stock in the Stock Fund, the balance of which was $9,532,961. The closing price of the Company’s common stock on December 31, 2017 and December 31, 2018 was $74.05 and $117.73, respectively.
Notes receivable from participants on December 31, 2017 and December 31, 2018 were $1,594,856 and $1,718,519, respectively. Notes receivable are considered party-in-interest transactions. Interest income pertaining to notes receivable from participants totaled $76,436 for 2018.
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USANA HEALTH SCIENCES 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE D — EXEMPT PARTY-IN-INTEREST TRANSACTIONS — CONTINUED
Certain Plan investments are shares in registered investment company funds managed by Fidelity Investments, an affiliate of the Trustee as defined by the Plan, and therefore, these transactions qualified as party-in-interest transactions.
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 (“IRS”) 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 IRS 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, 2017 and December 31, 2018, 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, 2018
( a ) | | ( b ) | | ( c ) | | ( d ) | | ( e ) | |
| | | | | | | | | |
| | IDENTITY OF ISSUE, BORROWER, LESSOR, OR
SIMILAR PARTY | | DESCRIPTION OF INVESTMENT | | COST | | CURRENT
VALUE | |
| | | | | | | | | |
* | | USANA Health Science, Inc. Stock Fund | | Stock fund | | ** | | $ | 9,532,961 | |
| | | | | | | | | |
| | The Hartford Growth Opportunities Fund Class Y | | Mutual fund | | ** | | 7,486,190 | |
| | American Funds Washington Mutual Investors Fund Class R-6 | | Mutual fund | | ** | | 5,883,002 | |
* | | Fidelity® 500 Index Fund | | Mutual fund | | ** | | 5,606,178 | |
| | American Funds 2050 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 3,454,650 | |
| | American Funds American Balanced Fund® Class R-6 | | Mutual fund | | ** | | 3,259,658 | |
| | PGIM Total Return Bond Fund Class R-6 | | Mutual fund | | ** | | 3,246,387 | |
| | American Funds SMALLCAP World Fund® Class R-6 | | Mutual fund | | ** | | 3,083,508 | |
| | Janus Henderson International Opportunities Fund Class I | | Mutual fund | | ** | | 2,649,563 | |
| | American Funds 2040 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 2,180,697 | |
| | American Funds 2030 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 2,127,534 | |
| | American Funds 2045 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 2,046,295 | |
| | American Funds 2025 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 1,912,096 | |
| | American Funds 2035 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 1,784,665 | |
| | Carillon Eagle Mid Cap Growth Fund Class R-6 | | Mutual fund | | ** | | 1,586,175 | |
| | American Funds New World Fund® Class R-6 | | Mutual fund | | ** | | 1,583,952 | |
| | American Funds 2055 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 1,577,901 | |
| | Janus Henderson Triton Fund Class I | | Mutual fund | | ** | | 1,155,055 | |
* | | Fidelity® Small Cap Index Fund | | Mutual fund | | ** | | 894,002 | |
| | Nuveen Real Estate Securities Fund Class R-6 | | Mutual fund | | ** | | 814,331 | |
| | American Funds 2020 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 720,323 | |
* | | Fidelity® Mid Cap Index Fund | | Mutual fund | | ** | | 705,106 | |
| | Templeton Global Bond Fund Class R-6 | | Mutual fund | | ** | | 529,650 | |
| | Principal Diversified Real Asset Fund Class R-6 | | Mutual fund | | ** | | 516,328 | |
| | Victory Sycamore Established Value Fund Class R-6 | | Mutual fund | | ** | | 488,111 | |
| | Undiscovered Managers Behavioral Value Fund Class L | | Mutual fund | | ** | | 380,820 | |
* | | Fidelity® Total International Index Fund | | Mutual fund | | ** | | 291,535 | |
| | American Funds 2015 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 135,879 | |
| | Invesco Diversified Dividend Fund Class R6 | | Mutual fund | | ** | | 77,674 | |
| | American Funds 2060 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 57,112 | |
| | American Funds 2010 Target Date Retirement Fund® Class R-6 | | Mutual fund | | ** | | 53,530 | |
* | | Fidelity® Government Money Market Fund | | Mutual fund | | ** | | 4,696 | |
| | | | | | | | 56,292,603 | |
* | | Notes receivable from participants | | Loans with interest rates ranging from 4.25% to 6.25%, with maturities through 2047 | | N/A | | 1,718,519 | |
| | | | | | | | | |
| | Wells Fargo Stable Value Fund Class C | | Collective investment fund | | ** | | 2,455,781 | |
| | | | | | | | | |
| | | | | | | | $ | 69,999,864 | |
* Party-in-interest
** Column (d) cost information is not presented as these 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 24, 2019 | | /s/ G. Douglas Hekking |
| G. Douglas Hekking |
| Chief Financial Officer
(Principal Financial and Accounting Officer)
Plan Sponsor |
| | | |
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