SEC may suspend Nature's Sunshine's stock trading
Friday, July 13, 2007
http://www.heraldex
GRACE LEONG - Daily Herald
Nature's Sunshine Products Inc., which lost its stock listing on Nasdaq in April 2006 and is now trading on over-the-counter "pink sheets," is facing the possibility of having its stock registration revoked for up to a year, according to SEC documents released late Thursday.
On Thursday, the SEC's Division of Enforcement began administrative proceedings against the Provo nutritional supplements maker after an investigation found the company failed to file its Form 10-K annual earnings reports since March 16, 2005 and its audited quarterly reports since June 30, 2005.
The company, in a statement Thursday, said it is evaluating the SEC's action and plans to defend against a possible suspension of the trading of its stock.
A hearing on the matter will be held before an administrative law judge, who will issue a decision in about four months.
Nature's Sunshine, in preliminary, unaudited financial statements for fiscal 2006 and the 2007 first fiscal quarter released Thursday, also revealed for the first time it is being audited by the Internal Revenue Service.
The IRS, in early 2006, began an audit of the company's income tax returns for the years 2002 through 2005.
Nature's Sunshine also disclosed in Thursday's statement, that the SEC has subpoenaed, and the U.S. Department of Justice has requested, certain documents related to an internal investigation of its foreign operations by the company's audit committee.
"Why are people learning about the IRS audit now?" asked Phillip Kim, lead counsel for several Nature's Sunshine shareholders in an ongoing class action lawsuit against the company over alleged insider trading and securities law violations.
The suit alleged Nature's Sunshine and three executives filed misleading Sarbanes-Oxley Act certifications between March 16, 2005 and Nov. 22, 2005, and false Form 10-Q earnings with the SEC to illicit "clean" audit reports from its former auditor, KPMG LLP. The case is now in discovery.
"The IRS audit is significant especially since it covers such a long period of time -- four years," Kim said. "The company also didn't say when the SEC subpoenaed the information, or when the DOJ requested the information from them."
The company, in Thursday's statement, said it is unable to file audited financial statements for 2004 through 2006 until its new public accountant, Deloitte & Touche LLP, completes the audit in a few months.
But Nature's Sunshine said it will continue to periodically provide to its shareholders preliminary unaudited financial information, which the company said could be restated after the audit is completed.
For the first quarter ended March 31, the company said its sales revenues rose 4 percent to $94.4 million from $90.8 million a year ago. The company also said its first quarter operating income returned to the black at $3.7 million, compared with an operating loss of $1.3 million a year ago.
For the fiscal year ended Dec. 31, the company's revenues gained 2.9 percent to $363. 8 million, from $353.6 million a year ago, while its operating income fell to $12.5 million from $15.5 million a year ago.
The company said its working capital totaled $52.8 million and its cash holdings totaled $49.6 million for its first fiscal quarter.
This story appeared in The Daily Herald on page A1.
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