Herbalife Issues Response to NY Times Article

In response to today's New York Times story about incidents in early 2011, it's important to note that the source for the story is a disgruntled former Herbalife (NYSE: HLF) employee whose efforts, as the Times notes, are being funded by Bill Ackman. We believe this story is yet another example of Mr. Ackman's desperation. According to the Times, at this point, all Mr. Ackman has to show for his $1 billion bet against Herbalife is an approximately $400 million loss for his investors. Herbalife's Lake Forest, CA. manufacturing facility operates at the highest quality and sanitary standards and its operating procedures are designed to comply with or exceed the appropriate current good manufacturing practices (cGMP) for foods and dietary supplements. During the start-up of this facility in late 2010, our quality control systems worked as designed in detecting problems with new equipment, which is not unusual in a new manufacturing facility. Herbalife's quality control systems functioned as intended by ensuring that the extremely few affected products were detected and destroyed, but out of an abundance of caution, Herbalife chose to re-verify the quality and safety of the products in which issues were not detected, going back to the opening of the production line. Thus, in keeping with its paramount commitment to safety and quality, and, acting in accordance with FDA guidance, Herbalife's quality control processes ensured that only safe products were shipped to consumers. In fact, in the three years since these events, the California state food and drug authorities have visited the plant, conducted a regular audit, and provided a report to the FDA stating no serious violations.The Times' article shows that Herbalife always ensured that its customers received products worthy of Herbalife's commitment to safety and quality:• The Times reports that the ex-employee informed the FDA of these incidents last year, and the FDA told the Times that a company would not need to contact the agency if the company was confident it had quarantined its contaminated products.• Only safe products were ever shipped to consumers.• There have been no consumer complaints relating to these incidents.• The handful of quotes included in the article were taken out of context to appear sensational, when in fact only safe products were ever shipped to consumers. For the past eight months, Pershing Square has executed a relentless attack on Herbalife's business model, and our products or production facilities have never been a focus of Mr. Ackman's campaign. If not for the publicity surrounding Mr. Ackman, we do not believe that this incident – which occurred nearly three years ago in early 2011 with no product in question ever released for sale – would be considered at all newsworthy by any media outlet, much less The New York Times.