Herbalife (NYSE: HLF) today announced that KPMG LLP notified Herbalife
on April 8, 2013 that KPMG was resigning, effective immediately, as
Herbalife's independent accountant. KPMG stated it had concluded it was
not independent because of alleged insider trading in Herbalife's
securities by one of KPMG’s former partners who, until April 5, 2013,
was the KPMG engagement partner on Herbalife's audit. KPMG advised the
Company it resigned as Herbalife's independent accountant solely due to
the impairment of KPMG's independence resulting from its now former
partner’s alleged unlawful activities and not for any reason related to
Herbalife's financial statements, its accounting practices, the
integrity of Herbalife's management or for any other reason.
None of KPMG’s audit reports on Herbalife’s financial statements for the
fiscal years ended December 31, 2010, 2011 and 2012 or KPMG’s audit
reports on the effectiveness of internal control over financial
reporting as of December 31, 2010, 2011 and 2012 contained an adverse
opinion or a disclaimer of opinion, nor was any such report qualified or
modified as to uncertainty, audit scope or accounting principles. In
addition, at no point during the three fiscal years ended December 31,
2012 and the subsequent interim period through April 8, 2013 were there
any (1) disagreements with KPMG on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or
procedures, which disagreement(s), if not resolved to the satisfaction
of KPMG, would have caused it to make reference to the subject matter of
the disagreement(s) in connection with its reports, or (2) “reportable
events” as such term is defined in Item 304(a)(1)(v) of Regulation S-K.
As a result of the alleged insider trading activity by its now former
partner and KPMG’s resulting resignation on April 8, 2013, KPMG notified
Herbalife that KPMG’s independence had been impaired and it had no
option but to withdraw its audit reports on Herbalife’s financial
statements for the fiscal years ended December 31, 2010, 2011 and 2012
and the effectiveness of internal control over financial reporting as of
December 31, 2010, 2011 and 2012 and that such reports should no longer
be relied upon as a result of KPMG's lack of independence created by the
circumstances described above. Herbalife’s Audit Committee and
management continue to believe that the Company's financial statements
covering the referenced periods fairly present, in all material
respects, the financial condition and results of operations of the
Company as of the end of and for the referenced periods and may continue
to be relied upon and that the Company's internal control over financial
reporting was effective during these periods.
As a result of the matters described above, Herbalife will be
withdrawing the proposal to ratify the appointment of KPMG as
Herbalife’s independent registered public accountants for fiscal 2013
originally planned to be submitted to Herbalife’s shareholders at
Herbalife’s Annual General Meeting of Shareholders to be held on April
25, 2013.
About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF) is a global nutrition company that sells
weight-management, nutrition and personal care products intended to
support a healthy lifestyle. Herbalife products are sold in more than 80
countries to and through a network of independent distributors. The
company supports the Herbalife Family Foundation and its Casa Herbalife
program to help bring good nutrition to children. Herbalife's website
contains information about Herbalife, including financial and other
information for investors at http://ir.Herbalife.com.
The company encourages investors to visit its website from time to time,
as information is updated and new information is posted.
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements” within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical fact are “forward-looking
statements” for purposes of federal and state securities laws, including
any projections of earnings, revenue or other financial items; any
statements of the plans, strategies and objectives of management for
future operations; any statements concerning proposed new services or
developments; any statements regarding future economic conditions or
performance; any statements of belief; and any statements of assumptions
underlying any of the foregoing. Forward-looking statements may include
the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,”
“expect” or “anticipate” and any other similar words.
Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed in any of our forward-looking
statements. Our future financial condition and results of operations, as
well as any forward-looking statements, are subject to change and to
inherent risks and uncertainties, such as those disclosed or
incorporated by reference in our filings with the Securities and
Exchange Commission. Important factors that could cause our actual
results, performance and achievements, or industry results to differ
materially from estimates or projections contained in our
forward-looking statements include, among others, the following:
-
any collateral impact resulting from the ongoing worldwide financial
“crisis,” including the availability of liquidity to us, our customers
and our suppliers or the willingness of our customers to purchase
products in a recessionary economic environment;
-
our relationship with, and our ability to influence the actions of,
our distributors;
-
improper action by our employees or distributors in violation of
applicable law;
-
adverse publicity associated with our products or network marketing
organization;
-
changing consumer preferences and demands;
-
our reliance upon, or the loss or departure of any member of, our
senior management team which could negatively impact our distributor
relations and operating results;
-
the competitive nature of our business;
-
regulatory matters governing our products, including potential
governmental or regulatory actions concerning the safety or efficacy
of our products and network marketing program, including the direct
selling market in which we operate;
-
legal challenges to our network marketing program;
-
risks associated with operating internationally and the effect of
economic factors, including foreign exchange, inflation, disruptions
or conflicts with our third party importers, pricing and currency
devaluation risks, especially in countries such as Venezuela;
-
uncertainties relating to the application of transfer pricing, duties,
value added taxes, and other tax regulations, and changes thereto;
-
uncertainties relating to interpretation and enforcement of
legislation in China governing direct selling;
-
our inability to obtain the necessary licenses to expand our direct
selling business in China;
-
adverse changes in the Chinese economy, Chinese legal system or
Chinese governmental policies;
-
our dependence on increased penetration of existing markets;
-
contractual limitations on our ability to expand our business;
-
our reliance on our information technology infrastructure and outside
manufacturers;
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the sufficiency of trademarks and other intellectual property rights;
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product concentration;
-
changes in tax laws, treaties or regulations, or their interpretation;
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taxation relating to our distributors;
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product liability claims; and
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whether we will purchase any of our shares in the open markets or
otherwise.
Forward-looking statements speak only as of the date hereof. We do not
undertake any obligation to update or release any revisions to any
forward-looking statements or to report any events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events, except as required by law.
