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CNBC Transcript: Herbalife CEO Michael Johnson Responds To Ackman's Short Position on Firm's Stock on CNBC's "Street Signs"

WHEN: TODAY, WEDNESDAY, DECEMBER 19TH

WHERE: CNBC'S "STREET SIGNS"

Following is the unofficial transcript of Herbalife CEO Michael Johnson on CNBC's "Street Signs" today. Following is the link to the interview on CNBC.com: http://video.cnbc.com/gallery/?play=1&video=3000136542. All references must be sourced to CNBC.

BRIAN SULLIVAN: THERE'S HERBALIFE STOCK DOWN 14.6% THE NEWS BILL ACKMAN NOTED INVESTOR SHORTING THIS STOCK ACCORDING TO CNBC'S OWN KATE KELLY AND RIGHT NOW WE ARE JOINED BY THE CEO OF HERBALIFE MICHAEL JOHNSON. HE HAS CALLED IN. MICHAEL WE DO APPRECIATE IT WE KNOW THAT IT IS A TOUGH DAY. YOU DON'T WANT THIS KIND OF NEWS TO COME OUT BUT YOU HEARD WHAT KATE REPORTED AND YOU HEARD WHAT ACKMAN IS CLAIMING. REFUTE HIS CLAIMS OR ADDRESS THEM PLEASE SIR.

MICHAEL JOHNSON: HI BRIAN, HI KATE. FIRST OF ALL GUYS THIS IS NOT ABOUT HERBALIFE'S BUSINESS MODEL THIS IS ABOUT BILL ACKMAN'S BUSINESS MODEL. THIS IS WRONG. THIS IS TOTALLY WRONG WHAT IS TAKING PLACE. WHERE IS THE SEC PROTECTING THE INDIVIDUAL SHAREHOLDER RIGHT NOW. THIS IS BLATANT MARKET MANIPULATION. THIS APPEARS TO BE ANOTHER ATTEMPT TO ILLEGALLY MANIPULATE THE MARKET BY A GROUP OF SHORT SELLERS. HERE'S WHAT WE KNOW AND LET ME JUST GIVE YOU THIS QUICKLY. AN EXTRAORDINARY NUMBERS PUTS ON OUR STOCK WE DUE TO EXPIRE THIS FRIDAY. WE PREVIOUSLY LEARNED THIS ACTIVITY WAS PEGGED AT SOME KIND OF "SIGNIFICANT EVENT." MR ACKMAN SUDDENLY ANNOUNCES HE WILL MAKE A PRESENTATION ON HERBALIFE ON THURSDAY. THE DAY BEFORE THE PUTS EXPIRE. OUR CFO CALLED MR ACKMAN THIS MORNING AND ASKED HIM TO PARTICIPATE. MR ACKMAN SAID NO AND HE REFUSED. NOW WE KNOW WHAT THIS HAS BEEN GOING ON FOR IN THE SHADOWS AS WE SAY FOR THE LAST EIGHT MONTHS. THIS HAS BEEN RIDICULOUS WHAT IS HAPPENING HERE. WE'RE NOT A PYRAMID SCHEME THAT'S A BOGUS ACCUSATION. WE HAVE MILLIONS OF CUSTOMERS AROUND THE WORLD. WE DON'T PAY FOR RECRUITING. WE'VE BEEN IN BUSINESS 32 YEARS. WE JUST ANNOUNCED A HUNDRED MILLION DOLLAR FACILITY IN NORTH CAROLINA EMPLOYING OVER 500 PEOPLE WITH THE GOVERNOR OF NORTH CAROLINA THIS MORNING. THIS IS A LEGITIMATE COMPANY. MR ACKMAN'S PROPOSITION THAT…UNITED STATES WOULD BE BETTER WHEN HERBALIFE IS GONE. THE UNITED STATES WILL BE BETTER WHEN BILL ACKMAN GONE.

KATE KELLY: MR JOHNSON WHAT ARE THE CONCERNS AIRED BY FOLKS THAT CONSIDER YOUR COMPANY TO BE A PYRAMID SCHEME. AND THIS IS SOMETHING THAT HAS COME TO YOU THROUGH THE COUNTRY OF BELGIUM IN A LAWSUIT MORE RECENTLY TODAY THROUGH BILL ACKMAN. QUESTIONS HAVE BEEN RAISED BY OTHER MAJOR INVESTORS INCLUDING DAVID EINHORN. ARE THE SALES THAT GO ON ABOUT YOUR PRODUCTS CONFINED TO YOUR OWN DISTRIBUTION NETWORK. IS THAT THE CASE OR IS IT BROADER THAN THAT?

JOHNSON: WE HAVE MILLIONS OF CUSTOMERS. MILLIONS UPON MILLIONS OF CUSTOMERS. LIEBERMAN RESEARCH WAS HIRED BY US TO GO OUT AND VERIFY AND VALIDATE THAT. WE'VE BEEN VALIDATING THAT FOR THE PAST TWO QUARTERS. WE WILL CONTINUE TO DO THAT. THAT'S NEVER BEEN A PROBLEM. NONE WITH FTC NONE WITH ANYONE. OUR CUSTOMERS ARE SOMETIMES CALLED DISTRIBUTORS THAT'S THE ONLY CONFUSION THAT WE HAVE. AND THEY ARE DISTRIBUTORS BECAUSE THEY GET A DISCOUNT ON OUR PRODUCTS.

KELLY: CAN YOU GIVE US A PERCENTAGE FIGURE THOUGH MR JOHNSON AS TO WHAT PERCENTAGE OF YOUR SALES ARE OUTSIDE THAT DISTRIBUTION NETWORK.

JOHNSON: 90%

KELLY: SO THE VAST MAJORITY

JOHNSON: ABSOLUTELY

SULLIVAN: SO MICHAEL WE HEARD YOUR STRONG COMMENTS ON ACKMAN OK I'M NOT GOING TO AGREE OR DISAGREE I DON'T KNOW BILL THAT WELL BUT HE IS A SMART GUY. CAN'T REFUTE THAT. DAVID EINHORN SMART GUY WE DON'T KNOW HIS POSITION BUT HE RAISED QUESTIONS AS WELL. WHAT ARE THEY MISSING? WHAT ARE THEY NOT SEEING OR NOT UNDERSTAND SPECIFICALLY ABOUT YOUR COMPANY?

JOHNSON: THEY NEED TO COME OUT AND SPEND TIME WITH US. JUST LIKE HERB GREENBERG DID TWO WEEKS AGO. THEY NEED TO COME OUT AND SEE OUR CUSTOMERS. SEE OUR OPPORTUNITY. SEE THE WAY OUR PRODUCTS ARE MADE. SEE THE WAY THAT OUR BUSINESS IS PUT INTO THE MARKETPLACE. THESE GUYS ARE LISTENING TO A REPORT THAT WAS GENERATED BY A RESEARCH FIRM IN NEW YORK AND WE'VE ASKED FOR THAT AND WE'VE SENT HER A LEGAL LETTER AS OF THIS WEEK TO SAY SEND US THIS REPORT. WE'LL TALK TO YOU ABOUT ANYTHING. WE HAVE BEEN BOXING IN THE SHADOWS OF THIS FOR TEN MONTHS. THIS IS A RIDICULOUS ASSERTATIONS BY PEOPLE WHO ARE TRYING TO MANIPULATE OUR STOCK.

KELLY: WE'LL GET MORE DETAILS ON THIS TOMORROW MORNING AT A MIDTOWN MANHATTAN PRESENTATION WHERE ACKMAN'S GOING T O BE GETTING INTO MORE DETAILS ABOUT HIS THESIS. BUT FROM WHAT I'M TOLD AND I'M ONE OF OUR HEDGE FUND REPORTERS HE CONSIDERS THIS TO BE ONE OF THE BEST FUNDAMENTAL RESEARCH CASES HE HAS EVER SEEN. A SHORT THESIS ON YOUR COMPANY. WHAT OTHER ISSUES ARE BEING MISSED IN THE TRANSLATION? YOU DON'T SPEND A YEAR BASED ON ONE RESEARCH REPORT CORRECT? I MEAN BILL ACKMAN IS KNOWN FOR DOING DEEP FUNDAMENTAL RESEARCH ON HIS IDEAS GOOD OR BAD BUT HE PUTS A LOT OF WORK INTO IT.

JOHNSON: I'M SURE HE DOES AND WHY DIDN'T HE COME TALK TO US.

KELLY: WELL I'M SURE TOMORROW IF YOU WOULD LIKE TO REJOIN US WE'D LOVE TO TALK TO YOU ABOUT A RESPONSE TO WHAT HE SAYS TO INVESTORS.

JOHNSON: I AM SURE WE WILL HAVE ONE READY.

SULLIVAN: SO TAKE US MORE INTO THE CALL. YOU SAID THAT YOUR CFO SPOKE TO ACKMAN THIS MORNING AND THEN YOU SAID YOU HAD ASKED HIM TO PARTICIPATE. WHAT DID YOU MEAN BY THAT?

JOHNSON: OUR CFO ASKED TO PARTICIPATE IN MR ACKMAN'S PRESENTATION TOMORROW AND HE WAS REFUSED.

SULLIVAN: OK SO YOU GUYS SAID HEY YOU ARE GOING TO SLAM US LET US BE A PART OF IT AND ACKMAN SAID NO

JOHNSON: THAT'S CORRECT

SULLIVAN: DID HE GIVE YOU A REASON WHY HE SAID NO?

JOHNSON: NO

SULLIVAN: WOULD YOU DO IT IF HE CHANGED HIS MIND

JOHNSON: ABSOLUTELY

SULLIVAN: DO YOU EXPECT HIM TO CHANGE HIS MIND

JOHNSON: DON'T KNOW

SULLIVAN: AND YOU ALSO MENTIONED SORRY ABOUT THESE RAPID FIRE QUESTIONS MICHAEL. YOU MENTIONED MARKET MANIPULATION. YOU CAME OUT SWINGING PRETTY HARD AT THE BEGINNING OF THE INTERVIEW YOU MENTIONED SOME OPTIONS EXPIRING ON FRIDAY. YOU ARE OBVIOUSLY VERY PASSIONATE ABOUT THIS. WHAT ARE YOU PREPARED TO DO? ARE YOU PLANNING TO TAKE FURTHER ACTION IF YOU REALLY BELIEVE SOMETHING WAS GOING ON?

JOHNSON: WE WANT THE SEC TO TAKE ACTION.

KELLY: SO MICHAEL ARE WE CORRECT IN SURMISING THAT YOU CONSIDER THIS TO BE ESSENTIALLY A MARKET MANIPULATION. A BUNCH OF SHORTS GANGING UP ON YOUR COMPANY BECAUSE CLEARLY THE MARKET REACTION TO HERBALIFE THIS YEAR HAS NOT BEEN POSITIVE. YOU ARE GETTING THESE ACCUSATIONS FROM BELGIUM YOU ARE GETTING THEM FROM ACKMAN YOU ARE GETTING THEM FROM OTHER SMALL INVESTORS VOTING WITH THEIR WALLETS ESSENTIALLY. IS IT JUST A BROAD MISUNDERSTANDING?

JOHNSON: YES

KELLY: AND TO WHAT DO YOU ATTRIBUTE THAT? YOU JUST THINK IT IS RUMOR MONGERING IN THE MARKET?

JOHNSON: YES AND YOU KNOW SOMETHING GUYS I DON'T WANT TO GET TOO MUCH DEEPER INTO THIS THE LAWYERS ARE GOING TO GO CRAZY IF I DO. I AM SURE THAT THEY ARE ALREADY. SO I AM GOING TO HAVE TO SAY THANK YOU VERY MUCH FOR THE TIME THIS IS NOT THE LAST THAT YOU HAVE HEARD FROM US.

SULLIVAN: MICHAEL BEFORE YOU GO WE ARE NOT GOING TO GET YOU IN MORE TROUBLE WITH YOUR COUNSEL I CERTAINLY UNDERSTAND THAT. THEY ARE PROBABLY SITTING THERE WITH A LEGAL PAD AND PEN BUT I DO WANT TO ASK YOU BEFORE YOU GO MAKE THE CASE FOR HERBALIFE. YOU HAVE BEEN DEFENDING THE COMPANY YOU'VE ADDRESSED WHAT ACKMAN IS GOING TO SAY. MAKE THE CASE FOR YOUR COMPANY TO THE INVESTORS THAT ARE WATCHING CNBC RIGHT NOW.

JOHNSON: HERBALIFE HAS BEEN IN BUSINESS FOR 32 YEARS. WE GIVE PEOPLE A PERSONAL BUSINESS OPPORTUNITY TO MAKE A LITTLE MONEY IF THEY WANT TO WORK THEIR BUTTS OFF WORK THEIR TAILS OFF THEY CAN MAKE MORE THAN A LITTLE MONEY. THEY MIGHT BE ABLE TO MAKE A LOT OF MONEY. WE HAVE ONE OF THE GREATEST HEALTH NUTRITION PRODUCTS ON THE FACE OF THE EARTH FROM SEED TO FEED WE ARE GROWING OUR OWN CROPS WE ARE PUTTING IT THROUGH OUR OWN FACILITY. WE ARE TESTING OUR PRODUCT NIGHT AND DAY. WE HAVE GOT SOME OF THE BEST PEOPLE ON THE FACE OF THE EARTH AROUND OUR PRODUCT AROUND OUR BUSINESS OPPORTUNITY. WE'RE BUILDING A BRAND AS YOU CAN SEE ON A GLOBAL BASIS. WE ARE INCREDIBLY PROUD OF THIS COMPANY WHERE IT IS GOING TODAY TOMORROW AND INTO THE DEEP FUTURE.



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