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Herbalife Expands R&D Disclosure: Greenberg

Last week, I knocked Herbalife for claiming it does a bunch of R&D, but not disclosing the amount it spends on it.

Herbalife
Source: Herbalife
Herbalife

Then, later in the week, without fanfare, the nutritional supplement company updated the R&D section of its website to show the amount it spends on R&D and other stuff.

Here's the way the site used to look, with a comment that since 2003 they have increased their R&D spending dramatically.

"Herbalife is committed to setting the standard by which all nutrition companies are measured. We are advancing the science of nutrition through scientific research conducted around the world. Since 2003, we’ve increased our research and development expenditures dramatically to advance the product-development process."

Here's how it looks now, with a disclosure that they spent about $25 million on the combined scientific areas of R&D, technical operations, scientific affairs, quality control, product safety and....compliance.

"Herbalife is committed to setting the standard by which all nutrition companies are measured. We are advancing the science of nutrition through scientific research conducted around the world. Since 2003, we've increased our research and development expenditures dramatically to advance the product-development process.

In 2011, the company spent approximately $25 million on the combined scientific areas of R&D, technical operations, scientific affairs, quality assurance/quality control, product safety and compliance. The company spent an additional $11 million on nutrition affairs, product licensing and strategic sourcing.

At Herbalife, there are 180 scientists on staff, of which 19 have PhDs. The company’s internal staff is supplemented with 30 consulting scientists, all with PhDs. From January 2011 to date (March 2012), the company has initiated 12 clinical studies, of which five relate specifically to the Formula 1 product.

Note: Formula 1 is an existing product, which excludes it from R&D expenses reported under current FASB rules, which only allow expenses to be classified as R&D if they relate to new products or "significant" changes to existing products."

I asked the company how much was spent just on R&D. They responded that they already had told me how they account for R&D, but added: “If you honestly want to learn more about our science come see us…We’ll show you our labs, manufacturing facility, etc.”

I just may take them up on that.

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