Questioning Herbalife's research & development

Normally this part of a public company's operations are spelled out in SEC filings. And the L.A.-based marketer of weight-control supplements is not shy about touting its R&D efforts. But in its 10-K filing the company says that research and development costs are "not material" and therefore not disclosed. Huh? Despite Herbalife's impressive performance, CNBC contributor Herb Greenberg is suspicious:

So why not break it out? Maybe because despite the R&D hype, and per the fine print in its 10-K, Herbalife doesn't really spend much money on it. After all, last year 29 percent of the company's revenue last year came from a product it has been selling since for 32 years. Which gets us to the question: What is Herbalife? To Wall Street, the company is anything but just a multi-level marketing company. Yet according to its 10-K, Herbalife describes itself "a global network marketing company that sells weight management, nutritional supplement, energy, sports & fitness products and personal care products." Those products are sold through 2.7 million "distributors" -- most of them individuals, and many of them selling to family and friends.

Other food and personal care companies spend hundreds of millions of dollars on R&D - and they disclose their numbers. As Greenberg notes, "I don't like it when companies try to position themselves as something more than what they are -- and say one thing to Wall Street and something else in their SEC filings. It just makes you wonder what else isn't quite as it appears."