Direct Selling Association 0912 Boardbook

7/26/2019 Direct Selling Association 0912 Boardbook

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AGENDA

DSA BOARD OF DIRECTORSGaylord National Hotel and Convention Center, National Harbor, Md.

September 11, 2012 9:00 a.m. Noon

Item Discussant Page

1. Call to Order/Welcome

Introduction of Board Members Brett R. Chapman

2. Chairmans Goals & Vision Brett R. Chapman

3. Approval of Minutes* Brett R. Chapman 6

4. Announcement and Appointment of Brett R. Chapman 9

Executive Committee*

5. Treasurers Report* William R. Dangl 13

6. Communications ReportERA/Image Amy Robinson/ 33

Enhancement Update Scott Monroe

7. Code Administrators Report Jared O. Blum

8. Management Report Joseph Mariano/Adolfo Franco

9. Direct Selling Education Foundation John Parker/ 53

Charles Orr

10. Committee and Council Reports Committee Chairs

a. Annual Meeting Committee Orville Thompson 30

b. Awards Committee Lori Bush 32

c. Education Committee Pam Dean 34d. Ethics & Self-Regulation Comm. Laura Beitler 35

e. Government Relations Committee Bryan Harrison 36

f. Industry Research Committee JJ LeBlanc 39

g. International Council John Venardos 41h. Lawyers Council Renee Cogdell Lewis 44

i. Member Services Committee Michelle Jones 46

j. Nominating Committee Jerry Kelly


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k. Strategic Planning Committee Marjorie L. Fine 48

l. Supplier Advisory Committee Edward A. Dion, Jr. 50

m. Diversity Task Force Leo Williams 51

11. Executive SessionMembership Adolfo Franco 14

Development*

a. Review of Procedures

b. Presentation of Direct Selling company applicants

c. Presentation of Supplier company applicants

12. New Business Brett R. Chapman

13. Adjournment Brett R. Chapman

*May Require Board Action


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MINUTESEXECUTIVE COMMITTEE

DIRECT SELLING ASSOCIATION

---oOo---

A meeting of the Direct Selling Association Executive Committee was held on Saturday, June 2,2012, at The Gaylord Texan in Grapevine, Texas.

Attending:

Mr. Jerry Kelly (Silpada Designs) ChairmanMs. Anne Butler (PartyLite Gifts, Inc.)Mr. Brett R. Chapman (Herbalife)Mr. Matt Dorny (Nu Skin Enterprises)Ms. Marjorie Fine (Shaklee Corporation)

Mr. Thomas F. Kelly (Silpada Designs)Mr. Michael L. Lunceford (Mary Kay Inc.)Mr. Daniel L. Murphy (Selkirk & Sutherland Group, LLC)Mr. Orville Thompson (Scentsy, Inc.)

Staff and Counsel:

Mr. Joseph N. Mariano President (Direct Selling Association)Mr. Adolfo A. Franco Executive Vice President (Direct Selling Association)Ms. Deborah T. Ashford General Counsel (Hogan Lovells US LLP)

Chairman Kelly called the meeting to order at 11 a.m. and welcomed members of theCommittee.

Approval of Minutes

Upon a motion properly made and seconded, the minutes of the March 16, 2012, Executive

Committee meeting were approved as presented.

Treasurers Report

Mr. Murphy gave the Treasurers Report as follows. The 2012 revenues are over budget and theexpenses are under budget to date. The investment advisor has been successfully changed toUBS from the two previous managers. This change has resulted in cost savings because fees arenow 55 basis points. UBS will be adding investments in Equity Traded Funds. Mr. Murphy thenreviewed the Investment Policy, including the 60/40 allocation between equities and fixedincome investments. The new policy sets ranges that better utilize funds because advisors are notbound by set amounts that might disadvantage returns because of the necessity of selling in a badmarket to meet set percentage allocations.


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Upon a motion properly made and seconded, the revised Investment Policy was approved.

Upon a motion properly made and seconded, the Treasurers report was approved as

presented.

Nominating Committee Report

Chairman Marjorie Fine reported on behalf of the Nominating Committee. Tom Kelly has joinedSilpada and will no longer serve on the Board. Avons Rich Makover will replace Mr. Kelly.President Joseph Mariano then reviewed the slate of officers and nominees to the Board ofDirectors.

Upon a motion properly made and seconded, the following slate was approved as

presented.

Officers:

Chairman: Brett R. Chapman (Herbalife)Vice Chairman: Orville Thompson (Scentsy, Inc.)Vice Chairman: Truman Hunt (Nu Skin Enterprises)Treasurer: William R. Dangl (Amway)Immediate Past Chairman: Jerry Kelly (Silpada Designs)Past Chairman: Marjorie L. Fine (Shaklee Corporation)

Directors:

Traci Lynn Burton (Traci Lynn Fashion Jewelry)Joan Hartel Cabral (Vantel Pearls in the Oyster)Cari Christopher (Signature HomeStyles)Richard Jutkins (Stampin Up!)Friedrich Kroos (JAFRA Cosmetics International, Inc.)Richard Makover (Avon Products, Inc.)Cindy Monroe (Thirty-One Gifts)Peter Schneider (Primerica, Inc.)

Management Report

Executive Vice President Adolfo Franco reported a dues uptick, and indicated that there is goodreason to meet or exceed the $4.3 million 2012 dues budget goal. President Joseph Marianoreported that he and Mr. Franco continue to meet regularly with possible new membercompanies. A discussion followed on how to attract new member companies. Mr. Marianoreported that staff are focusing on programs that appeal to senior management, such as theAnnual Meeting CEO track and the General Counsel Retreat that was held in February 2012. Healso noted that competition in the meeting space is increasing.


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Mr. Mariano encouraged members of the Committee to attend the Investors Forum at the AnnualMeeting, at which new industry data will be presented.

Mr. Mariano then reported that DSA and DSEF have been discussing working together to co-brand the Hartford Insurance affinity program.

Upon a motion properly made and seconded, the Committee approved the Hartford

Insurance co-branding program and authorized Mr. Mariano and Mr. Franco to pursue an

agreement with Hartford and with DSEF, in consultation with legal counsel.

Having no further business, the Committee meeting was adjourned.

Respectfully submitted,

________________Adolfo FrancoSecretary


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MINUTESBOARD OF DIRECTORS

DIRECT SELLING ASSOCIATION

---oOo---

A meeting of the Direct Selling Association Board of Directors was held on Saturday, June 2,2012, at the Gaylord Texan in Grapevine, Texas.

Attending:

Officers:

Mr. Jerry Kelly Chairman (Silpada Designs)Ms. Anne Butler Vice Chairman (PartyLite Gifts, Inc.)Mr. Brett R. Chapman Vice Chairman (Herbalife)

Ms. Marjorie L. Fine Immediate Past Chairman (Shaklee Corporation)Mr. Thomas Kelly Past Chairman (Silpada Designs)Mr. Daniel L. Murphy Treasurer (Selkirk & Sutherland Group, LLC)Mr. Joseph Mariano President (Direct Selling Association)Mr. Adolfo Franco Secretary (Direct Selling Association)

Directors:

Ms. Laura M. Beitler (Mary Kay Inc.)Mr. Richard B. Brooke (Oxyfresh.com/21Ten Inc.)Ms. Lori Bush (Rodan + Fields Dermatologists)Ms. Heather Chastain (Celebrating Home)Ms. Angela Loehr Chrysler (Team National)Ms. Renee Cogdell Lewis (lia sophia)Ms. Pam Dean (Avalla)Mr. Matt Dorny (Nu Skin Enterprises)Mr. Timothy A. Horner (Premier Designs, Inc.)Mr. Michael J. Iacono (Iacono Production Services, Inc.)Ms. Judith N. Jones (Amway)Ms. Catherine R. Landman (The Pampered Chef)Mr. Michael L. Lunceford (Mary Kay Inc.)Mr. Scott Monroe (Thirty-One Gifts)Ms. Kay Napier (Arbonne International, LLC)Mr. Ryan Nelson (Melaleuca, Inc.)Mr. Mike Nichols (The Kirby Company)Ms. Joani M. Nielson (Tastefully Simple, Inc.)Mr. Jeffrey Reigle (Regal Ware, Inc.)Mr. Rudy Revak (Symmetry Corporation)Mr. Jeff Stroud (Private Quarters)Ms. Connie Tang (Princess House, Inc.)


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Mr. Orville Thompson (Scentsy, Inc.)Mr. Joseph P. Urso (Aerus LLC-Vollara, LLC)Mr. David A. Wentz (USANA Health Sciences, Inc.)Gen. Leo V. Williams (Take Shape for Life, Inc.-Medifast)

Guests:

Ms. Anne Aldrich (Artemis Strategy Group)Ms. Traci Lynn Burton (Traci Lynn Fashion Jewelry)Ms. Cari Christopher (Signature HomeStyles)Ms. Stacey Clark (Soul Purpose Lifestyle, Inc.)Mr. Mike Costache (Genius Giver, Inc.)Ms. Brenda Cude (University of Georgia)Ms. Susan Eerdmans (Avon Products, Inc.)Mr. John T. Fleming (Direct Selling News)Mr. J. Stanley Fredrick (Mannatech, Inc.)

Ms. Katherine Gardner (VideoPlus, L.P.)Ms. Joan A. Hartel Cabral (Vantel Pearls in the Oyster)Mr. Harry W. Hersey, III (Garden State Nutritionals, Inc.)Mr. Stuart Johnson (VideoPlus, L.P.)Mr. Richard Jutkins (Stampin Up!)Mr. Alan D. Kennedy (Mannatech, Inc.)Mr. Friedrich Kroos (JAFRA Cosmetics International, Inc.)Ms. Michelle Larter (IMN)Ms. JJ LeBlanc (Mary Kay Inc.)Mr. Richard Makover (Avon Products, Inc.)Mr. Solomon McCluster (IDSTC)Ms. Josephine Mills (Avon Products, Inc.)Ms. Cindy Monroe (Thirty-One Gifts)Mr. Nathan Moore (Mary Kay Inc.)Mr. James A. Northrop (Winfield Consulting)Ms. Julie Paashe (Artemis Strategy Group)Mr. John Parks (John A. Parks Co., Inc.)Mr. Andre Peterson (Morinda Bioactives)Mr. Brad Reichard (FOCUS Communications LLC)Mr. Robert David Roach, Jr. (The Hartford)Mr. James Stitt (CUTCO/Vector Marketing Corporation)Mr. S. Kerry Tassopoulos (Mary Kay Inc.)Ms. Michelle Wilson (XANGO LLC)

Staff and Counsel:

Ms. Deborah T. Ashford (DSA General Counsel, Hogan Lovells US LLP)Ms. Melissa K. Brunton (Senior Vice President, Education & Meeting Services)Ms. Nancy M. Burke (Director, Membership)Ms. Robin B. Diamond (DSEF Program Director)


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Ms. Jennifer Dunleavey (Director, Finance & Operations)Ms. Tamuna Gabilaia (WFDSA Executive Director)Ms. Karen E. T. Garrett (Director, Marketing & Publication Services)Mr. Jeff Hanscom (Attorney & Government Relations Manager)Ms. Valerie Hayes (Senior Director, Global Regulatory Affairs)

Ms. Nancy Laichas (DSEF Director, Marketing & Communications)Mr. Charlie Orr (DSEF Executive Director)Ms. Marcia Davis Rhinehart (Director, Executive Office & Board Activities)Ms. Amy M. Robinson (Chief Marketing Officer & Senior Vice President)Ms. Jenifer Van Nortwick (Global Regulatory Affairs Assistant)Mr. John W. Webb (Associate Legal Counsel & Senior Director, Government Relations)Ms. Alyssa Wolice (Marketing & Communications Specialist)

Chairman Kelly called the meeting to order at 1:10 p.m.

Approval of Minutes

Upon a motion made by Chairman Kelly and properly seconded, the minutes of the March

16, 2012, Board meeting were approved as presented.

Treasurers Report and Description of Audit

Mr. Daniel Murphy presented the Treasurers Report and reported that after approval by theBoard of Directors at the March 16, 2012, Board meeting, the Associations investments weretransferred from several investment firms to UBS Financial Services. As a result, the Associationhas generated savings in fees.

Mr. Murphy noted the Associations operating expenses are running below budget and revenuehas increased. However, Mr. Murphy noted that Annual Meeting and seminar revenue has yet tobe factored in.

Mr. Murphy recommended minor changes to the Associations investment policies to providebetter flexibility.

Upon a motion properly made and seconded, the changes to the Associations investment

policy were adopted.

Management Report

The Chairman asked Messrs. Joseph Mariano and Adolfo Franco to present the managementreport. Mr. Franco stated the Association is in a better financial position than it was in 2011 andas of May 2012, is projected to meet its $4.3 million dues revenue goal.

Mr. Franco stated the Executive Committee approved a shared DSA/DSEF affinity program withThe Hartford Insurance Company, offering member company salesforce members home and


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automobile insurance. The Association will continue to explore affinity programs in an effort toraise revenue.

Mr. Franco discussed the Associations California Direct Selling Day, which took place inSacramento, Calif., on May 2, 2012. Mr. Franco reported the event as a success and thanked

Government Relations Committee Chairman Suzanne Loomis for leading the delegation of DSAmember executives. A successful fundraiser was also held for Assemblywoman Toni Atkins (D-San Diego) in Sacramento and a total of $7,500 was raised for her re-election campaign.Assemblywoman Atkins is among the Democratic members of the California legislature whomDSA is cultivating as a champion for the industry.

Nominating Committee

Chairman Marjorie Fine presented the Nominating Committee report. Ms. Fine recommendedthe Board approve the DSA slate of nominees to the Direct Selling Education Foundation(DSEF) Board of Directors for terms expiring in 2015, and the slate of nominees for DSA

Officers for One-Year Terms and Directors for Terms Expiring in 2015.

Upon a motion properly made and seconded, the Nominating Committee proposals were

approved as follows:

DSA Nominees to the DSEF Board of Directors for terms expiring in 2015:Sarah Baker Andrus (CUTCO/Vector Marketing Corporation)Daniel Moore (Southwestern Advantage)Connie Tang (Princess House, Inc.)Orville Thompson (Scentsy, Inc.)John Wadsworth (Morinda Bioactives)

Officers for One-Year Terms:Brett Chapman (Herbalife) ChairmanOrville Thompson (Scentsy, Inc.) Vice ChairmanTruman Hunt (Nu Skin Enterprises) Vice ChairmanWilliam R. Dangl (Amway) TreasurerJerry Kelly (Silpada Designs) Immediate Past ChairmanMarjorie Fine (Shaklee Corporation) Past Chairman

Directors for Terms Expiring in 2015:Traci Lynn Burton Traci Lynn Fashion JewelryJoan Hartel Cabral Vantel Pearls in the OysterCari Christopher Signature HomeStylesRichard Jutkins Stampin Up!Friedrich Kroos JAFRA Cosmetics International, Inc.Richard Makover Avon Products, Inc.Cindy Monroe Thirty-One GiftsPeter Schneider Primerica, Inc.


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Direct Selling Education Foundation

DSEF Chairman Tom Kelly and DSEF Executive Director Charles Orr presented the DSEFreport. Mr. Orr stated that fundraising efforts have improved compared to 2011.

Mr. Orr urged members to participate in the DSEF walkathon taking place during the DSAAnnual Meeting to raise money for DSEF and the Network for Teaching Entrepreneurship(NFTE). Mr. Orr also thanked Chairman Tom Kelly for his service and reported that John Parker(Amway) would be assuming the chairmanship of DSEF for the term 2012-2013.

Annual Meeting Committee

Chairman Anne Butler presented the Annual Meeting Committee report. Ms. Butler announcedthat the DSA Annual Meeting had a record number of attendees at nearly 1,200 registrants andurged Board members to support Supplier members by attending Supplier events during theAnnual Meeting. Ms. Butler thanked the companies that contributed to the Annual Meeting

through the Associations sponsorship program, as well as participating as speakers inworkshops and general sessions. Ms. Butler also thanked the Nominating Committee, DSEF,DSA Senior Vice President of Education and Meeting Services Melissa Brunton, Michael Iaconoof Iacono Production Services, Inc. and DSA President Joseph Mariano for their hard work andefforts.

Ms. Butler also announced the 2013 Annual Meeting will be held June 9-11, in Phoenix, Ariz., atthe JW Marriott Desert Ridge & Spa, and the 2014 Annual Meeting will be held at the PeabodyOrlando in Orlando, Fla., June 1-3, 2014.

Awards Committee

Chairman Lori Bush reported on the Awards Committee undertook a major overhaul of the DSAawards program. Participation in awards activities was beyond what was anticipated. TheAwards Committee had a goal of 50 submissions but exceeded this objective by receiving 125submissions. Ms. Bush also thanked DSA Chief Marketing Officer and Senior Vice PresidentAmy Robinson for her efforts.

Communications Committee

Chairman Scott Monroe asked DSA Chief Marketing Officer and Senior Vice President AmyRobinson to present an update on the New ERA Pilot Marketing Campaign. Ms. Robinson statedthe New ERA campaign was extended two weeks longer than originally intended to adjust themessaging and campaign website. As a result, company outcomes were still being accumulatedand a full report and recommendations for future activity will be made at the September 2012board meeting.


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Ethics and Self-Regulation Committee

Chairman Laura Beitler reported that participation in the Code of Ethics CommunicationInitiative continues to increase and she is pleased to see more DSA member companies applyingfor recognition.

Education Committee

Chairman Pam Dean reported the Womens Leadership Retreat will take place Sept. 11-12,2012, at the Gaylord National in National Harbor, Md. The Leadership Retreat is scheduled tocoincide with the Sept. 10-11, 2012, DSA/DSEF Board of Directors dinner and meeting, as wellas Direct Selling Day on Capitol Hill.

Government Relations Committee

Chairman Suzanne Loomis and Mr. Franco reported DSAs Direct Selling Day on Capitol Hill

will take place on Sept. 12, 2012, following the DSA/DSEF Board meetings. Mr. Franco alsoencouraged Board members to fill out the DSA Political Action Committee Solicitation Releaseforms and urged members to donate to the DSAPAC.

Industry Research Committee

Chairman Judy Jones reported that the Industry Research Committee saw a vast increase incompany submissions for the Growth and Outlook Survey since the March 2012 Board meetingwith 94 submissions and praised member companies for their participation. Ms. Jones alsothanked DSA President Joseph Mariano and Chief Marketing Officer and Senior Vice PresidentAmy Robinson for following up with DSA member companies after the March Board meeting.These DSA figures have been submitted to the WFDSA for the annual global statistical survey.

Ms. Jones also reported that DSA has retained the services of Artemis Strategy Group to provideassistance and support in assembling research data about the direct selling industry.

International Council

Chairman Ryan Nelson reported that India has presented substantial regulatory challenges andthat representatives from various DSA member companies have visited India recently in an effortto represent the industry and promote direct selling as a legitimate business model. Mr. Nelsonalso reported that a full update would be given at the upcoming International Council meeting onthe European Union and how a new directive could change how direct selling is regulated abroadover the next few years.

Lawyers Council

Chairman Renee Cogdell Lewis provided an update on pending patent infringement litigationand reported that Reshare filed a lawsuit against Amway, the latest of numerous suits againstdirect selling companies. Ms. Cogdell Lewis also reported BurnLounge received a $17 million


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judgment against them. BurnLounge was deemed to have engaged in deceptive advertising and areference was made in the decision that questions the legitimacy of internal consumption. TheLawyers Council will monitor BurnLounges appeals and consider options for the Association.

Member Services Committee

In Chairman Aaron Garritys absence, Chairman Kelly referred members to the MemberServices Committee Board report.

Strategic Planning Committee

Mr. Stroud introduced members of the Artemis Strategy Group who have been retained by DSAto assist in research activities on direct selling. The Artemis executives led an interactivediscussion on changes in direct selling industry and better ways to define direct sellers. Theobservations and recommendations of the Board members made during the interactive sessionwill be considered by the Strategic Planning Committee as it continues its review of better

communicating the essence and definition of direct selling to prospects, media, policymakers andthe general public.

Supplier Advisory Committee

Chairman Michael Iacono reported 17 new Supplier members had been added to theAssociations Supplier member roster and thanked DSA Speaker & Supplier MembershipCoordinator Sonya Cooper-Turner for her dedication and hard work on behalf of the Suppliercommunity.

Diversity & Empowerment Task Force

Chairman Leo Williams announced he would be retiring from Take Shape for Life, Inc.-Medifastand consequently will be unable to continue to serve on the Associations Board of Directors, asoutlined in the DSA Board bylaws. At the request of Chairman Kelly and DSA PresidentMariano, Mr. Williams agreed to continue to serve as Chairman of the Diversity &Empowerment Task Force.

Chairman Kelly adjourned the meeting at 2:45 p.m.

Respectfully submitted,

________________

Adolfo A. FrancoSecretary


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I. Finance Committee

Report to the Board of Directors, September 11, 2012

(As of August 6, 2012)

II. Action Items for the Board

None.

III. Committee Actions

None.

IV. Accomplishments/Future Activities Planned/FYI since June 2012

The income statement through July 31, 2012, is attached.

The 2012 Annual Meeting exceeded budgeted income. Final expenses are to be

determined. Management anticipates the meeting will generate net positive revenue.

As of July 31, 2012, the Association has received active dues income of more than$4.2 million. Management currently anticipates active dues income will meet budget.

Total year-to-date expenses are lower than they were in 2011 for this period asmanagement continues to closely monitor and reduce expenses as much as possible.

In August, DSA staff met with executives of the Credit Union National Association(CUNA) to discuss non-dues revenue opportunities.

Approved By:

William R. DanglTreasurer & Chairman, Finance Committee


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2012 2011

ASSETS

Current Assets

Cash $321,132 $335,283

Investments 5,507,864 4,755,939

Accounts Receivable-General 170,921 709,385

Accounts Receivable-DSEF 10,175 71,213

Accounts Receivable-WFDSA 7,164 281

Interest Receivable 1,584 3,355

Prepaid Expense 66,508 86,256

------------------------------------ ------------------------------------

Total Current Assets 6,085,348 5,961,712

Fixed Assets

Furniture and Equipment 979,951 901,015

Less Accumulated Depreciation (860,451) (792,451)

------------------------------------ ------------------------------------Total Fixed Assets 119,500 108,564

Travel Advances 3,000

Security Deposit 44,436 44,436

------------------------------------ ------------------------------------

TOTAL ASSETS $6,252,284 $6,114,712========================= =========================

LIABILITIES AND NET ASSETS

Liabilities

Accounts Payable $4,234 $7,839Accrued Expenses 4,443

Metrocheck Payable (14,080) (10,741)

Deferred Income 64,997 99,283

Accrued Annual Leave 83,477 109,583

Accrued Pension Cost 214,105 143,953

Deferred Rent 297,857 367,196

Deferred Compensation Liability 57,153

Security Deposit Held 8,141 8,141

------------------------------------ ------------------------------------

Total Liabilities 658,731 786,850--------------------------------------------------------------------------------------------

Net Assets

Unrestricted Net Assets 5,209,403 5,327,862

Temporarily Restricted Net Assets 384,150

------------------------------------ ------------------------------------

Total Net Assets 5,593,553 5,327,862

------------------------------------ ------------------------------------

TOTAL LIABILITIES AND NET ASSETS $6,252,284 $6,114,712========================= =========================

See Accountant's Compilation Report

Direct Selling Association

Statement of Financial Position

as of July 31, 2012


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Budget 7/31/12 vs. 7/31/12 vs

Total 7/31/12 7/31/11 7/31/11 Budget

UNRESTRICTED

Revenue

Dues Active 4,300,000$ 4,220,002$ 4,275,096$ ( 55,094 )$ ( 79,998 )$

Dues Suppliers 360,000 369,033 361,432 7,601 9,033

Annual Meeting 1,300,000 1,387,309 1,260,046 127,263 87,309

Interest 30,000 55,120 15,772 39,348 25,120

Member Sales 80,000 13,610 58,154 (44,544) (66,390)

Seminars 300,000 69,215 67,018 2,197 (230,785)

Miscellaneous Income 10,000 23,723 20,892 2,831 13,723

Salesforce Support 60,000 41,468 33,945 7,523 (18,532)-------------------------- -------------------------- -------------------------- -------------------------- --------------------------

Total Revenue 6,440,000 6,179,480 6,092,355 87,125 (260,520)

Expense

Personnel 2,254,000 1,150,961 1,473,493 (322,532) (1,103,039)

Retirement 142,000 77,049 83,226 (6,177) (64,951)

Employee Insurance 341,000 182,536 227,125 (44,589) (158,464)

Employee Taxes 130,000 86,918 94,193 (7,275) (43,082)

Meetings 70,000 22,774 29,113 (6,339) (47,226)

Travel/Entertainment 170,000 127,598 10,253 117,345 (42,402)

Postage/Shipping 75,000 43,032 40,421 2,611 (31,968)

Telephone/Fax 60,000 28,201 33,817 (5,616) (31,799)

Printing 97,000 66,901 66,743 158 (30,099)

Government Relations 210,000 136,183 87,520 48,663 (73,817)

Dues, Subscriptions, Training 60,000 35,144 32,833 2,311 (24,856)

Office Expenses 130,000 168,627 106,398 62,229 38,627

Credit Card Processing/Bank Fees 129,876 92,741 37,135 100,668

Legal 155,000 71,165 31,290 39,875 (83,835)

Other Professional 287,000 190,603 158,291 32,312 (96,397)

Research 280,000 92,226 48,648 43,578 (187,774)

Public Relations 150,000 67,566 125,735 (58,169) (82,434)

Rent 566,000 289,983 303,983 (14,000) (276,017)

Leasing/Maintenance 100,000 54,161 42,833 11,328 (45,839)

Taxes/Insurance 45,000 12,980 12,939 41 (32,020)

Depreciation/Amortization 62,000 39,969 61,400 (21,431) (22,031)

Annual Meeting 865,000 714,322 657,904 56,418 (150,678)

Seminars 201,000 33,351 17,231 16,120 (167,649)

Offset by Affiliaties (40,000) (39,500) (39,500) 500

---------------------- ---------------------- ---------------------- ---------------------- ----------------------

Total Expense 6,410,000 3,652,750 3,745,389 (92,639) (2,757,250)

Change in Net Assets from Operations 30,000 2,526,730 2,346,966 179,764 2,496,730

Realized gain/(loss) on Investments 222,568 124,447 98,121 222,568

Unrealized gain/(loss) on Investments (96,529) (65,356) (31,173) (96,529)-------------------------- -------------------------- -------------------------- -------------------------- --------------------------

Change in Unrestricted Net Assets 30,000 2,652,769 2,406,057 246,712 2,622,769

TEMPORARILY RESTRICTED

New Era Funds Beginning Balance 585,686 585,686 585,686

New Era Funds Revenue 2,600 555,000 (552,400) 2,600

New Era Funds Expenses (204,137) (204,137) (204,137)

---------------------- ---------------------- ---------------------- ---------------------- ----------------------

Change in Temporarily Restricted Net Assets 0 (201,537) 555,000 (756,537) (201,537)

New Era Funds Ending Balance 384,149 555,000 (170,851) 384,149

-------------------------- -------------------------- -------------------------- -------------------------- --------------------------

Change in Net Assets 30,000$ 2,451,232$ 2,961,057$ ( 509,825 )$ 2,421,232$=============== =============== =============== =============== ===============

See Accountant's Compilation Report

Direct Selling Association

Statement of Activities

For the Seven Periods Ended July 31, 2012


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PRESENTATION SCHEDULE OF

PENDING ACTIVE MEMBER COMPANIES TO THE

DIRECT SELLING ASSOCIATION BOARD OF DIRECTORS

These pending active member companies will be presented to the Board of Directors upon

investigation with Attorneys General offices and pertinent Better Business Bureaus, as well asreview by DSA legal staff of all requested documents, contracts and marketing plan materials.

September2012Greenfoot Global Dropped, unpaid dues

Jusuru International, Inc.

K&K DesignsStream Energy

December 2012

anyArt, Inc.Ava Anderson Non-Toxic

Biltmore Inspirations

Celebrating Grace LLCCieAura, LLC

Compelling Creations, Inc.

FM Group USAGeorgi Gemma Direct Dropped, unpaid dues

HealthNation Dropped, unpaid dues

Krysalis FitLindt Chocolate RSVP

Racco Cosmetics Dropped, decided not to renew at this time

Syntek Global, Inc.Union Springs Wellness

March 2013

Amega Worldwide Inc.Ampegy

Bamboopink Out of business

Jillian ChaseMonaVie LLC

NYR Organic

Organo Gold International Inc.Vemma Nutrition Company

WowWe, Inc.

June 2013

Delivery.com

LegalShield


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September 2013

Boresha International, Inc.

Vault DenimZija International

2012/2013Alive Worldwide, Inc.

Allasta

Americraft Cookware

AmyKate Miniature GardensArtNest, Inc.

Bandals International, Inc.

BellaromaBeyond Organic

BonLook

Chick Boss, LLC

Country Gourmet HomeDardis Clothiers Dropped, decided not to renew

Eclipse Candle Company

Global Vision Network, LLCIndependence Energy Alliance LLC

iScentU

Jamberry NailsJewel Kade

Kilambe Coffee

LIVV! AccentsMy Lazy Daisy, LLC

Noonday Collection

NRG Worldwide, LLCOmnilife USA, Inc.

Origami Owl

Perfectly Posh

Pink Zebra @ Home, LLCRocky & Bella, LLC (Formerly Natural Wellbeing)

Rosemary Grove, Naturally You

Ruby Ribbon, Inc.Scent-Lit

SnackHealthy

TemptuTobe Entertainment Dropped, out of businessUtoria, LLC

WakeUpNow, Inc.

Subscriber Status

Ainsworth Pet Nutrition

Alue Optics


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ARIIX Dropped, unpaid dues

Aromatic Planet Dropped, unpaid dues

Ava GrayBeget, Inc.

Connection Benefit Group

Counter BrandsDevine Beauty Dropped, unpaid dues

E3 Corporation Dropped, unpaid duesFamily Vacation NetworkFor Days USA

GeniusGiver, Inc.

Giffarine Sales USAHapacus, LLC Dropped, not pursuing direct selling

Harmony Green America, Inc.

(Aloe Laboratories, Inc.)

IATImplicit Bioscience Inc. Dropped, unpaid dues

Insight Venture Partners Dropped, not pursing membership at

this timeInterush Inc.

Living Fresh Collection, LLC

Manda MuddMaple Lilly LLC Dropped, unpaid dues

Office Candy

Queen Street America LLC

TXU EnergySecret Blessings Dropped, unpaid dues

Syndero Dropped, unpaid dues

Time Savor Solutions Dropped, unpaid dues

Veto Naturals Dropped, unpaid duesVirtual Celebration

VitaChefVivri, LLC

Yves Rocher

Global Associate Members

Clientele Limited

ENERGETIX Wellness GmbH

Oriflame CosmeticsEpicure Selections


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Direct Selling AssociationPENDING MEMBER PROFILE FORM

For Presentation to the DSA Board of Directors

COMPANY Jusuru International, Inc.

1668 South Lewis StreetAnaheim, CA 92805Phone: (888) 862-3968 Fax: (714) 678-1998Website:www.jusuru.com

PRODUCTS/SERVICES

Primary products/services Nutritional SupplementsRetail price range $49.95 - $69.95Sellers initial cost $39.95 startup kit, $140.00 suggested supply of product

SALES

Number of salespeople 4,266Primary sales approach Person-to-PersonCompensation structure Multilevel

OPERATIONS

Year company founded 2009Year direct selling began 2009

Publicly or privately held Private

Name of individual owner(s) Asma Ishaq

or parent corporation

Number of employees 8

PERSONNEL

Chief Executive Officer Asma Ishaq, PresidentDSA Executive Contact/title Asma Ishaq, President

Top three executives in firm/titles 1. Asma Ishaq, President2. David Grijalva, VP, Operations

3.

David Ciemny, VP, Business Development
http://www.jusuru.com/http://www.jusuru.com/


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COMPANY DESCRIPTION

Jusuru International is a values-driven company, committed to delivering the most advancednutritional supplements, made with the highest quality ingredients and meticulous care.

Value #1: Safe and Effective ProductsThe first of our values is that every product we make must be not only safe, but also effective.Our flagship product, Jusuru Life Blend, meets the most stringent criteria of Current GoodManufacturing Practices (cGMP) and embodies this value by helping our customers andrepresentatives to live healthy, active lives with a product backed by scientific research andsafety studies.

Value #2: The Strength of LeadershipThe second of our values is embodied in the leadership team we have assembled. Our seniorcorporate managers were carefully selected for their personal integrity and their mastery of theskills needed to create a dynamic organization. The executive team members support ourexpanding network of independent representatives with decades of experience in health, scienceand business management. Each of our corporate executives is committed to delivering guidanceand practical help with an exhilarating passion for sharing their Jusuru journey. Our passion iscontagious; it rubs off on our entire network of independent representatives.

Value # 3: The Spirit of Free EnterpriseIf we start with a product so effective that it practically sells itself and we develop a managementteam with integrity, experience and impeccable credentials, then it should be possible to supporta growing network of independent representativeseach working diligently to promote his orher own business. This is precisely what is happening with Jusuru. Many of our customers, aftertrying the product themselves, are motivated to share its benefits with their friends, neighborsand others. There is nothing as contagious in the marketplace as a product that really worksbecause nothing succeeds like success.

Whether their motive is helping others, promoting health and wellness, or financial freedom,people are discovering that Jusuru can offer a world of possibilities.

(Description taken from company website.)


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COMPANY K&K Designs

3903 Deep Rock RoadRichmond, VA 23233Phone: (804) 346-1961 Fax: (804) 968-4734Website: www.k-kdesigns.com

PRODUCTS/SERVICES

Primary products/services Art/Framing, Hope Accessories/DcorRetail price range $10.00 - $100.00Sellers initial cost $99.00, $170.00 or $250.00

SALES

Number of salespeople 38Primary sales approach Party PlanCompensation structure Multilevel

OPERATIONS



Name of individual owner(s)Kristin Melton and Katy Cohen

or parent corporation

Number of employees

PERSONNEL

Chief Executive Officer Katy CohenDSA Executive Contact/title Katy Cohen, Co-Owner

Top two executives in firm/titles 1. Katy Cohen, Co-Owner2. Kristin Melton, Co-Owner


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COMPANY DESCRIPTION

K&K Designs, founded in 2010 by two life-long friends, is a unique party plan companyfeaturing vinyl wall art specializing in personalization of gifts, home and childrens dcor.

Katy Cohen, Founder and Co-Owner of K&K Designs, had a vinyl Merry Christmastransferred on one of her walls in her kitchen over the holidays a few years back. At her yearlyNew Years Eve party she got such rave reviews it hit her like a lightning bolt. Boy if I couldpersonalize the vinyl with names and initials, and make this sort of thing for everyone, what funthat would be.

Kristin Melton, Co-Owner of K&K Designs and mother of four, agreed. Personal designs invarious colors at great prices appeal to those who have Rodeo Drive tastes on a Target budget.The companys vinyl wall art paired with great dcor items makes lasting impressionsthere issomething for everyone and the affordability is just the icing on the cake.

At K&K Designs, the executives take their mission seriously: to create unique and quality homepersonalization at reasonable prices, while providing their Konsultants un-matchedopportunities for financial independence and an unsurpassed work-life balance. They live andbreathe by it.

Most of us want to make money for our families but want time to share the fruits of our labor.Its just that simple. Make money. Be with family. Having a good balance of both equates to ahappy life. Thats it: HAPPY LIFE! Providing the most unique vinyl designs at great prices isthe first step the company created to help others achieve that Happy Life success.

(Description taken from company website.)


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COMPANY Stream Gas & Electric, Ltd. DBA Stream Energy

(formerly Ignite, Inc.)1950 Stemmons Freeway, Suite 3061Dallas, TX 75207Phone: (214) 800-4409Website: www.igniteinc.com

PRODUCTS/SERVICES

Primary products/services Electricity and Natural GasRetail price range VariesSellers initial cost $329.00

SALES

Number of salespeople 235,000+Primary sales approach Person-to-PersonCompensation structure Multilevel

OPERATIONS



Name of individual owner(s) Stream Gas & Electric, Ltd.or parent corporation

Number of employees 300+

PERSONNEL

Chief Executive Officer Robert SnyderDSA Executive Contact/title Vanessa Rush, General Counsel

Top two executives in firm/titles 1. Robert Snyder, President and Chairman

2.

Mark Schiro, Vice President


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Pending Suppliers Being Presented to the

Board of Directors in September 2012

1. Exigo Office

2.

Indianapolis Convention & Visitors Association

3. Jet Creations Inc.

4. Leader Promotions

5. Mondo Direct

6. Porter Wright Morris & Arthur LLP

7. Robinson Pharma, Inc.

8. Staging Solutions, Inc.

9. The Connection

10.UBS Institutional Consulting

11. Ultimate Coach University

12. Vouchfor! Inc.


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Exigo Office

8130 John W. Carpenter Freeway

Dallas, TX 75247Phone: (949) 300-9933

Website: www.exigo.com

Executive Contact: Ed Jarrin

KEY FACTS

Number of Employees: 18Year Founded: 2001

PRODUCTS/SERVICES

Computers/Computer Systems, Database

Management, Genealogy/Compensation

Management Systems, Internet Services,

Software

COMPANY PROFILE (PROVIDED

BY THE APPLICANT)

Exigo Office is an enterprise-level

software platform that powers our clients

operating internationally in more than 60countries. Exigos technology is one of a

kind, offering its clients open

architecture and open source code.Integration and interoperability with all

third party systems are welcome.

Indianapolis Convention & Visitors

Association

200 South Capitol AvenueSuite 300

Indianapolis, IN 46225

Phone: (317) 262-8226Fax: (317) 262-8250

Website: www.visitindy.com

Executive Contact:Nicole Perry

KEY FACTS


PRODUCTS/SERVICES

Convention/Visitors Bureaus


BY THE APPLICANT)

As the Indianapolis Convention &

Visitors Association (ICVA to our

friends), its our job to promote the cityof Indianapolis, and that job has never

been easier, more energizing or more

rewarding than it is right now. As anunprecedented level of cooperation

between business and government boosts

Indianapolis to a completely new level,were reveling in the opportunity to

show our city off.


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Jet Creations Inc.

6060 Farrington Avenue

Alexandria, VA 22304Phone: (703) 823-6225

Fax: (703) 823-6730

Website: www.jetcreations.com

Executive Contact: Jason Tseng

KEY FACTS

Number of Employees: 7

Year Founded: 1997

PRODUCTS/SERVICES

Manufacturing, Product Development,

Cosmetics/Skincare/Personal Care

Products, Household Items


BY THE APPLICANT)

We have become one of the top

manufacturers of inflatable products in

the world. We expanded our product linerecently and introduced negative ion

items to our selection. We have done

work for thousands of clients worldwideand take pride in our reputation for

quality and customer satisfaction. Were

constantly improving our productsthrough diligent and extensive research,

and always use the latest technology to

ensure the highest quality.

Leader Promotions

790 East Johnstown Road

Gahanna, OH 43230Phone: (614) 416-6536

Fax: (614) 416-6566

Website:www.leaderpromos.com

Executive Contact: Susan Barger

KEY FACTS


Year Founded: 1995

PRODUCTS/SERVICES

Ad Specialties, Awards/Plaques/

Trophies, Jewelry/Gifts, Logowear,

Premiums/Incentives


BY THE APPLICANT)

Leader Promotions specializes in

promotional marketing exclusively for

direct selling companies. We are a one-stop-shop for awards, trip incentives and

amenities, tradeshow giveaways,

consultant and customer gifts and onlinesupply store management. From

traditional promotional products to

custom designed items, we have it all.


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Mondo Direct

6A Glen Street, Suite 607

Milsons PointSydney, Australia 2061

Phone: (61) 9460-0033

Fax: (61) 8622-7700Website: www.mondodirect.com.au

Executive Contact: Heather Rickard

KEY FACTS

Year Founded: 1998


PRODUCTS/SERVICES

Executive Recruitment, International

Market Consultants, ManagementConsultants, Training Consultants,

Speakers


BY THE APPLICANT)

Mondo Direct is one of Australiasleading specialized executive

recruitment firms for the direct selling,

direct marketing and franchise industriesin Australia. We specialize in providing

executive search and recruitment

services, consultants and contractors,coaches and mentoring, training and

developmentplus professional

speakersto these dynamic sectors. We

support these sectors in achievingsuccess through their peoplebuilding

robust teams of talent. We operate

consultancies in Sydney, Melbourne andAdelaide, as well as national and

international affiliates in the U.S., U.K.,

Europe, New Zealand and Asia.

Porter Wright Morris & Arthur LLP

41 South High Street

Suite 2800Columbus, OH 43215-6194

Phone: (614) 227-2192

Fax: (614) 227-2100Website: www.porterwright.com

Executive Contact: Donna Ruscitti

KEY FACTS

Year Founded: 1846

PRODUCTS/SERVICES

Incorporation Service, Legal

Representation, Patents and Trademarks


BY THE APPLICANT)

Porter Wright Morris & Arthur LLP is anationally recognized law firm that

traces its origins back to 1846. With

offices in Cincinnati, Cleveland,Columbus and Dayton, Ohio; Naples,

Florida; and Washington, D.C., Porter

Wright provides counsel to a worldwidebase of clients.


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Robinson Pharma, Inc.

3330 South Harbor Blvd.

Santa Ana, CA 92704Phone: (714) 241-0235

Fax: (714) 751-6066

Website: www.robinsonpharma.com

Executive Contact: Tuong Nguyen

KEY FACTS

Year Founded: 1989

PRODUCTS/SERVICES

Nutritional Products


BY THE APPLICANT)We manufacture products that support

wellness and health. We are the most

extensively certified manufacturer ofnutraceutical and pharmaceutical

products in America and the largest

capacity manufacturer of softgels inAmerica.

Staging Solutions, Inc.

1520 Rutland

Houston, TX 77008Phone: (713) 545-9079

Fax: (615) 807-3048

Website: www.stagingsolutions.com

Executive Contact: Sallynda Montz

KEY FACTS


Year Founded: 1993

PRODUCTS/SERVICES

Production Services, Audio Services,

Video Services


BY THE APPLICANT)

Staging Solutions is an event design,production management and

video/media production company. We

specialize in producing corporatemeetings of all sizes around the world.

Our headquarters are based in Houston

and we have offices in Las Vegas andHawaii. We have been in business for 15

years and work with Fortune 500

companies.


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The Connection

11351 Rupp Drive

Burnsville, MN 55337Phone: (952) 948-5335

Fax:(952) 948-5498

Website:www.the-connection.com

Executive Contact: Erin Brooks

KEY FACTS


Year Founded: 1981

PRODUCTS/SERVICES

Call Center, Interactive Voice Response,

Teleservices, Web Chat Services


BY THE APPLICANT)

The Connection is an award-winning,U.S.-based outsourced contact center

service provider. The Connection

provides extensive customer service,technical support and sales specializing

in inbound and outbound teleservices,

email response, live web chat andinteractive voice response (IVR)

services. With multiple contact centers

located throughout the nation, TheConnection provides uninterrupted 24-7

support 365 days each year. The

Connection has provided contact center

support since 1981.

UBS Institutional Consulting

1501 K Street, NW, Suite 1100

Washington, DC 20005Phone: (202) 585-5348

Fax: (855) 235-4793

Website:www.ubs.com

Executive Contact: Sandra

Cunningham, CFP, CIMA

KEY FACTS

Number of Employees: 63,500

Year Founded: 1854

PRODUCTS/SERVICES

Insurance


BY THE APPLICANT)

UBS draws on its 150-year heritage toserve private, institutional and corporate

clients worldwide, as well as retail

clients in Switzerland. We combine ourwealth management, investment banking

and asset management businesses with

our Swiss operations to deliver superiorfinancial solutions. Headquartered in

Zurich and Basel, UBS is a global firm

providing financial services to private,corporate and institutional clients.


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Ultimate Coach University

1325 River Oaks Drive

Flower Mound, TX 75028Phone: (972) 874-8070

Website:

www.ultimatecoachuniversity.com

Executive Contact: Dr. Neil Phillips

KEY FACTS


Year Founded: 2011

PRODUCTS/SERVICES

Business Consultants, Management

Consultants, Training Consultants,

Speakers, Training Materials


BY THE APPLICANT)

Ultimate Coach University is not just

another training company. As a full-

service coach training university, one ofour majors is in direct sales coaching.

Graduates learn best practices in

coaching, prospecting, recruiting, sellingand leadership development, as well as

the core competencies of coaching:

listening, powerful questions, designingactions and gaining commitment. Past

students include company founders,

regional sales managers, department

directors, field development managersand independent distributors. We also

offer a full range of customized

communication, leadership and coachingworkshops for companies that want to

create a coaching culture. Faculty

members are credentialed coaches andhave more than 100 years of direct

selling experience.

Vouchfor! Inc.

100 Highland Road

Roseneath, Canada K0K2X0Phone: (416) 919-3199

Website: www.vouchfor.com

Executive Contact: John Stewart

KEY FACTS


PRODUCTS/SERVICES

Incentive/Recognition Consultants,

Internet Marketing/Social Media

Services, Distribution Services/Shipping,

Database Management, InternetServices, Software

COMPANY PROFILE (TAKEN

FROM APPLICANT WEBSITE)

Vouchfor! is an exciting social referral

platform, delivered as Software-as-a-Service (SaaS), that utilizes a patent-

pending, structured, online referrals

engine that tracks, monitors and issuesunique vouchers to users who adopt and

use our platform. We draw from past

experiences building some of the largestreferral reward websites.


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I. Annual Meeting Committee




None.


The following members will serve on the 2012-2013 committee:

o Mr. Orville Thompson, CEO, Scentsy, Inc.

o Mr. Brett R. Chapman, General Counsel, Herbalifeo Ms. Cari Christopher, President, Signature HomeStyles

o Ms. Pam Dean, CEO, Avalla

o Mr. Edward A. Dion Jr., President, E.A. Dion, Inc.o Ms. Joan Hartel Cabral, President & Owner, Vantel Pearls in the Oystero Mr. Truman Hunt, President & CEO, Nu Skin Enterprises

o Mr. Jerry Kelly, Chairman, Silpada Designso

Mr. Scott Monroe, Chief Brand Officer, Thirty-One Giftso Ms. Heidi Thompson, President, Scentsy, Inc.

o

Mr. David Wentz, CEO, USANA Health Sciences, Inc.

The Committee requests assistance from the Board of Directors and members to

ensure the 2013 Annual Meeting is a success. The Committee asks that membersconsider offering support in the following ways:

o Personal and corporate team attendanceo Suggestion on subjects/issues about which you would like to learn

o Participation as speakers and facilitators at workshops

The sponsorship program is in full swing. The Committee asks members to select

from the list provided at the Board of Directors meeting. The Committee notes thatmember participation is greatly appreciated and helps keep the registration rates from

increasing.

The Committee requests that Committee chairs schedule their respective Committee

meetings that will be held in conjunction with the 2013 Annual Meeting as soon aspossible so they can be included on the schedule of events for Sunday, June 9, 2013,

and that they begin after the DSEF charitable event concludes at Noon. The


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Committee also asks that special requests please be submitted before the December

2012 Board of Directors meeting.


Plans are underway for DSAs 2013 Annual Meeting, which will be held June 9-11,2013, at the JW Marriott Desert Ridge in Phoenix, Ariz.

The Committee held its first planning meeting on Aug. 28, 2013, at the JW Marriott

Desert Ridge in Phoenix, Ariz. Subsequent meetings will be held in conjunction withthe December 2012 and March 2013 DSA/DSEF Board of Directors meetings.

Approved By:

Orville Thompson

Chairman, Annual Meeting Committee


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I. Awards Committee




None.


Invitations have been extended and accepted for the 2012/2013 Committee.

The next Committee conference call has been scheduled for Sept. 6, 2012.


Highlights of 2012 ETHOS Awards program are attached.

The Committee Charter has been revised (see attached).

Opportunities for adjustment and enhancements are to be reviewed during the Sept. 6,

2012, Committee meeting.

Approved By:

Lori Bush

Chairman, Awards Committee


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DSA Awards Committee Charter(ETHOS Awards)

Revised August 2012

Purpose

The DSA Awards Committee exists to create and oversee programs to recognize member

companies that exemplify the values of the Direct Selling Association and the direct sellingindustry and enhance the industrys public perception in the United States.

Key values embodied in the awards program:

Direct selling provides an equal-opportunity career path

Direct selling supports personal development and a sense of connectedness

Direct selling brings product advancement/innovation to the marketplace

DSA member companies keep the customers best interests at the heart of their

businesses and demonstrate commitment to the DSA Code of Ethics.

The Awards Committee is governed by the DSA Board of Directors and provides guidance and

oversight to DSA staff members. The committee is comprised of 6-8 executive-level managers in

the areas of salesforce development, marketing, public relations, technology, or

general/executive management from DSA member companies and one executive-level managerfrom a DSA Supplier member company. The committee chairman is appointed on an annual

basis by the DSA Chairman of the Board. The committee meets telephonically at least four times

per year and may, on occasion, hold in-person meetings.

Committee Members Roles and Responsibilities:

Recommend and approve DSA Member and Supplier slate of ETHOS Awards

Recommend and approve Vision for Tomorrow program and other relevant recognitionprograms

Select and approve slate of judges

Provide guidance for awards rules and processes, including judging criteria

Provide guidance and input for awards program-related communications

ETHOS Awards Judging:

Judges may be selected from DSA membership companies or from relevant adjacencyspecialties

No more that 50 percent of the judging panel may be Awards Committee members

Judges may not judge any award for which their company is entered

Number of judges may vary based on slate of awards and anticipated number of

submissions


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2012 ETHOS AWARDS

Recap prepared by Amy Robinson

Received a record number of entries: 125

Record number of companies that submitted an entry: 54

Successfully created the ETHOS Awards brandthe top seven Google search results (as wellas 12 of the top 17 results) for ETHOS Awards link to DSA or a winning company.

Achieved significant online reachthere are more than 53,000 mentions of the DSA ETHOSAwards online made through websites, blog posts, Facebook pages, press releases or other

electronic means.

Provided companies with multiple opportunities for recognition and coverage through workshop

presentations (internal) and press release distribution (external).

Extended the ETHOS brand to multiple websites by offering use of the ETHOS logo to winningcompanies:

o Here is an example of how Mary Kay used the logo:http://beta.marykay.com/erinlynch/en-

US/TipsAndTrends/MakeoverAndBeautyTools/Pages/The-Look-Makeover-App.aspxo It even had global reach:http://www.xango.com.tw/misc/ethos-tw

o It was used in a company newsletter:

http://www.imakenews.com/paperly/index000596479_13.cfm?x=blfjGRK,brcHTMTH

Quotes gathered in the course of writing the follow-up articles on the 2012 award winners:

We were honored to receive the 2012 ETHOS Award and believe it provides an opportunity to

raise awareness about the reality of hunger in this country and how people can help through ourRound-Up from the Heart program. We are celebrating the award with our customers, consultants

and co-workers in the home office. We hope the recognition for this years campaign will help

create excitement for the launch of our next Round-Up from the Heart campaign in September. Rochelle Mangold, Dir., Corporate Communications, The Pampered Chef (Vision for

Tomorrow category winner; sub-category winner for Vision for Tomorrow: Philanthropy)

We have been honored and humbled by every award we have received from the DSA, and weconsistently mention those awards in our news releases, on our websites and in our marketing

materials. We do this because an award from the DSA is an indicator of quality work and the ethical

standards to which we hold ourselves. Exposure from the 2012 ETHOS Award for Excellence in

Salesforce Development has helped us reinforce the quality of the Scentsy opportunity, as well asour commitment to delivering the best possible Consultant experience. JohnCurtis, VP, Brand

& Communications, Scentsy (Excellence in Salesforce Development category winner and sub-

category winner for Salesforce Development: Business Training)

[The Association] has done a fantastic job of promoting DSAs new ETHOS Awards, fromcommunications to participate prior to the Annual Meeting to press thats gone out following the

award announcements. Now its 4Lifes job as an award recipient to properly couch the significance

of this distinction for our distributors in the field. We do this, and will continue to do so, byengaging our distributors with the news. Lesley Dunn, VP, Events & Recognition, 4Life

Research (sub-category winner of Excellence in Salesforce Development: Recognition)
http://beta.marykay.com/erinlynch/en-US/TipsAndTrends/MakeoverAndBeautyTools/Pages/The-Look-Makeover-App.aspxhttp://beta.marykay.com/erinlynch/en-US/TipsAndTrends/MakeoverAndBeautyTools/Pages/The-Look-Makeover-App.aspxhttp://beta.marykay.com/erinlynch/en-US/TipsAndTrends/MakeoverAndBeautyTools/Pages/The-Look-Makeover-App.aspxhttp://beta.marykay.com/erinlynch/en-US/TipsAndTrends/MakeoverAndBeautyTools/Pages/The-Look-Makeover-App.aspxhttp://www.xango.com.tw/misc/ethos-twhttp://www.xango.com.tw/misc/ethos-twhttp://www.xango.com.tw/misc/ethos-twhttp://www.imakenews.com/paperly/index000596479_13.cfm?x=blfjGRK,brcHTMTHhttp://www.imakenews.com/paperly/index000596479_13.cfm?x=blfjGRK,brcHTMTHhttp://www.imakenews.com/paperly/index000596479_13.cfm?x=blfjGRK,brcHTMTHhttp://www.xango.com.tw/misc/ethos-twhttp://beta.marykay.com/erinlynch/en-US/TipsAndTrends/MakeoverAndBeautyTools/Pages/The-Look-Makeover-App.aspxhttp://beta.marykay.com/erinlynch/en-US/TipsAndTrends/MakeoverAndBeautyTools/Pages/The-Look-Makeover-App.aspx


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I. Communications Committee




None.


In response to attacks on the direct selling business model by mainstream and

financial media the Communications Committee, in concert with the Industry

Research Committee, created a response plan. As of August 29 this plan is still under

review and execution of the plan is expected to commence prior to the board meeting.

The plan includes a variety of tactics to counter negative information with a higher

volume of positive information. Additionally there are specific tactics designed to

reach the financial community to include investors, analysts and media.


A full report on the 12-week pilot national marketing campaign will be presented to

the Board of Directors at the September meeting. Top-level findings include a high

level of response to the messaging, but a very low level of interaction/conversionafter initial engagement with the messaging. The report given during the Board

meeting will include detailed information about the results of the program as well as

suggestions for using the insights gained from the test.

Approved By:

Scott Monroe

Chairman, Communications Committee


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I. Education Committee




None.


The following members will serve on the 2012-2013 Committee:

o Paula Antonini, Antonini & Associates

o

Dr. Traci Lynn Burton, Founder & CEO, Traci Lynn Fashion Jewelryo Gabrielle DeSantis, CEO & Co-Founder, GiGi Hill, LLCo

Stuart Johnson, President, VideoPlus, L.P.o Calvin Jolley, VP, Communications, 4Life Research, LLC

o Cindy Monroe, Founder & CEO, Thirty-One Gifts

o Joe Urso, Chairman & CEO, Aerus/Vollara, LLC


DSAs Global Regulatory Summit combines legal, international and tax topics, as did

last years Looking Forward Conference. Attendance will be upwards of 160 direct

selling executives and vendors. The business exposition will feature five vendor

companies. The Committee encourages Board members to participate on Mondayevening, Oct. 8, 2012, in our Road Warriors Reception at the Mayflower in

Washington, D.C., where DSA will honor a group of global regulatory professionals

who have spent the majority of their time on the road fighting for direct selling instate capitals across the country. A pre-summit webinar has also been held in

conjunction with this summit on Sept. 5, 2012, discussing current regulatory

challenges facing the sales channel and recent growth statistics.

The program for the Communications and Marketing Conference, taking place Dec.

5-7, 2012, is being planned to provide direct selling executives with the skills andstrategies to make their communications and public relations efforts work together to

advance their companies success. Those new to direct selling can take advantage of

DSAs Smart Start pre-conference workshop. This Conference is convenientlyscheduled in conjunction with the Dec. 4-5, 2012, DSA/DSEF Board meetings, so

Board members can take full advantage of this programming for you and your

management team.

Approved By:

Pam Dean

Chairperson, Education Committee


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I. Ethics and Self-Regulation Committee




None.


On July 26, 2012, the Ethics Committee held a teleconference to discuss the issue of

initial start-up fees charged by member companies. These are fees that are not part ofa start-up kit. The reimbursement of fees is not specifically covered by the DSA Codeof Ethics 90 percent buyback rule as it was intended to prevent inventory loading.Accordingly, the buyback rule only covers inventory and sales kits and othermaterials if their purchase is required or commissionable. However, several statesspecifically require the repayment of fees under their buyback provisions.

Due to the fact that some DSA member companies require substantial start-up feesup to $300the Committee decided to review this matter. The DSA CodeAdministrator, Jared Blum, opined that language in the Code gives some level offlexibility to the Code Administrator with regard to the reimbursement of fees. The

Committee requested that amendatory Code language on this matter be drafted forfurther consideration by the Committee.


On future teleconferences, the Committee will evaluate the status of the Code

Communications Initiative and determine if any changes to the program arewarranted. As soon as the program details are finalized for the 2013 initiative,information and applications will be publicized to the DSA membership.

A Code Responsibility Officers teleconference is being planned and will be scheduledin either late October or November.

The Committee anticipates having its next teleconference in September 2012.

Approved By:

Laura BeitlerChairman, Ethics and Self-Regulation Committee


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I. Government Relations Committee




None.


None.


Washington, D.C., Direct Selling Day:DSA will host a Direct Selling Day inWashington, D.C., on Sept. 12, 2012. At the time of this writing, 37 executivemembers were registered to participate in the event.

Champion of Free Enterprise Award: In conjunction with the ice cream socialhosted on Direct Selling Day, DSA will recognize Congressman Pete Sessions (R-TX) and present him with the Champion of Free Enterprise Award. The purpose ofthe award is to recognize Members of Congress who support direct sellers, attract theattention of Congress and the media, garner support for future DSA governmentrelations initiatives and promote a positive message about direct selling.

Congressman Sessions has supported legislation favorable to the industry, signed aletter to the Federal Trade Commission in support of the business opportunitycomments filed by DSA, serves as Vice Chairman of the House Rules Committee andis slated to be the next Chairman of the Rules Committee.

Candidate Advertising Expenditures: A new initiative undertaken this year by

DSA is to support candidates by placing ads in their jurisdiction. The goals inproviding this kind of support are to gain the attention of the candidate in order to

cultivate a champion for the direct selling industry, to promote the direct sellingindustry and impact the outcome of the race.

The two candidates DSA will support in this manner are Congressman Fred Upton(R-MI) and Senator Robert Menendez (D-NJ). The ads in support of CongressmanUpton ran during the month of July leading up to the Aug. 7, 2012, Michiganprimary. Newspaper ads were published in the Grand Rapids Business Journal andthe Kalamazoo Gazette. DSA also had two billboards and a radio ad during multiple


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time slots. In addition, DSA created a website in support of Congressman Uptonwww.dsa.org/upton. Congressman Upton won the Republican primary and will faceDemocratic candidate Mike OBrien in the November election. Congressman Uptontook note of the ads and very appreciative of the industrys support.

The ads in support of Senator Menendez will run in October leading up to theNovember election.

DSA Champions of Direct Selling Website: DSA has a legislative recognition siteentitled Champions of Direct Selling, which lists federal and state legislators whohave been supportive of the industryhttp://legislativerecognition.dsa.org. The site islinked on the DSA website and available for the public to view.

Federal Issues: Fair Playing Field Act of 2012TheFair Playing Field Act of2012, introduced on March 1, 2012, as companion House and Senate bills (S.2145/H. 4123) by Senator John Kerry (D-MA) and Representative Jim McDermott

(D-WA), would amend the Internal Revenue Code by striking section 530 andpermitting the Treasury Department to issue guidance clarifying the employmentstatus of individuals for purposes of employment taxes, but would prevent retroactiveassessments with respect to such clarifications. In short, the Fair Playing Field Actof 2012 would eliminate the continued use of the Section 530 safe harbor to classifyworkers as independent contractors. While this does not affect the direct sellerindependent contractor protections of Section 3508, it is still of great concern to thebroader independent contractor community. The Act will also require businesses whouse independent contractors on a regular and ongoing basis to provide theindependent contractors with a written statement informing them of their federal taxobligations, notifying them of the employment law protections that do not apply tothem and informing them how to seek a determination of their status from the IRS.Senator Tom Harkin (D-IA) also introduced the Rebuild America Act (S. 2252).Included within the bill is the Fair Playing Field Act of 2012.

While none of the bills has received consideration or been scheduled for a hearing,DSA continues to see this type of legislation being introduced. DSA brought the billsto the attention of DSAs Independent Contractor Task Force, and the Task Forceapproved a strategy suggested by DSA of monitor-plus, which includes closelymonitoring the bills, while at the same time actively reaching out to Members ofCongress and highlighting the damaging impact eliminating Section 530 would haveon jobs.

State Issues: DSA is currently tracking 113 bills in 31 states. None of the legislation

DSA is tracking has passed since the June Board meeting as most states are not in

session during the summer months.


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DSA Political Action Committee Report: As of Aug. 20, 2012, the DSAPAC

balance was $30,687.36. Since the last Board report, the DSAPAC has made $1,000

contributions to Dave Camp for Congress (R-MI) and Lee Terry for Congress (R-

NE). DSA anticipates drawing down a substantial amount of the PAC fund in the next

60 days.

Approved by:

Bryan HarrisonChairman, Government Relations Committee


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I. Industry Research Committee




None.


None.


U.S. Direct Selling in 2011 Growth & Outlook Survey:U.S. direct sales were up in2011 by 4.6 percent from USD $28.56 billion to $29.87 billion at estimated retail.Salesforce size decreased slightly (1.3 percent) to 15.6 million sellers from 15.8million in 2010.

o The final report will be published in September with a new, more visual andcontext-rich report. Members can easily see the comparisons to the economic,retail, demographic and past industry trends with narratives and graphics.

o Survey participation was up 28 percent with 93 companies participating,providing a more complete view of industry performance.

o The survey due date for submission was advanced to align with the WFDSAglobal research efforts and provide a complete update to the DSA Board intime for the 2012 Annual Meeting.

DataTracker: Results for the second quarter of 2012 were published on Aug. 13,2012, showing sales up 4 percent vs. the same period last year and year-to-date, andnew recruits down 1.2 percent in Q2, but up 3.6 percent year-to-date.

U.S. DSA Annual Meeting:

o The Committee provided a follow-up conference session titled Using

Todays Trends to Attract Entrepreneursto the well-received 2011 TheFuture of Direct Sellingsession. Leading global research firm GfK Ropergave a detailed update and implications on the consumers most important tothe future of our industry.

A New Generational Landscape:MillennialsLeveraging trend,will examine key non-life stage differences by Gen Y, Gen X andBoomers


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Differences within a Generation:Women vs. MenExamined keydifferences of Gen Y men and women today (and how their genderroles are different today than previous generations)

A New Multi-Cultural LandscapeExaminedkey differences ofrising minority groupsspecifically Hispanics, Asians and African

Americanso More than 60 attendees then broke into groups to further discuss, share current

and future plans to address the opportunities of these potential direct sellersand end-customers.

o

To determine the Industry Research Committees (IRC) future researchefforts, a two-hour session was held with selected leaders from across ourmembership. Their recommendations and feedback on current industry trends,challenges and research needs were gathered and prioritized. These findingswere incorporated into the IRCs new research plan (see below).

DSA cross-committee (IRC & Communications) discussions were held and continue

on the industry issue of internal consumption and productivity based on the type ofdirect seller. At this time, research needs to support this topic are still beingconsidered.

Collaboration with World Federation of DSAs:Outgoing Committee Chair JudyJones (Amway) continued chairmanship of the WFDSA team responsible fororganizing and vetting theAnnual Global Statistical Survey. The goals for 2012 thatwere achieved include continued improvement of standardization, providing resultsearlier and improving data quality. WFDSA has also created a sub-committee ofresearch industry leaders to work on draft definitions for direct sellers by type inrelations to the survey. Both Judy Jones and JJ LeBlanc, current Committee Chair, aremembers of the committee. Recommended definitions are targeted for delivery to theWFDSA Operating Group this fall.

The Committees new research partner, Artemis Strategy Group, developed an IRCResearch Plan for 2012 and beyond. The summary of this outlay will be provided tothe DSA Board prior to the December 2012 meeting.

The Committee will be seeking new members for 2012-2013 to replace outgoingmembers.

The search for a new DSA Research Manager continues.

Approved By:

JJ LeBlancChairman, Industry Research Committee


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I. International Council

Report to the Board of Directors, June 2, 2012

(As of April 30, 2012)


None.

III. Council Actions

Continue to monitor international regulatory matters of interest to direct sellers.

IV. Accomplishments/Future Activities Planned/FYI since March 2012

India:Chairman John Venardos (Herbalife) reported DSA has been working with the

India Direct Selling Agency (IDSA) and the World Federation of Direct Selling

Associations (WFDSA) to create a better understanding within India on multi-level

marketing and direct selling to distinguish these forms of commerce from the PrizeChits Act of 1978. Chairman Venardos asked the WFDSA to provide input as

appropriate to the IDSA concerning a draft white paper being written by a leading

Indian economist in collaboration with the Federation of Indian Chambers ofCommerce and Industry (FICCI) that will be presented to key government officials.

As of August 31,we understand the Indian Inter-Ministerial Committee (IMC)

chaired by Secretary Consumer Affairs may be ready with recommended"Guidelines" (it rejected the option of a "Direct Selling Act"). The Department of

Financial Services is to be responsible for formulating the guidelines. The guidelines

are to be drafted in consultation with other departments that may include the LawMinistry and Securities Exchange Board of India (SEBI). We expect the guidelines

will be more comprehensive than the State of Kerala guidelines (IMC felt that Keralaguidelines could be misused by pyramid schemes). International regulations including

those of US, Canada, EU, Thailand and Malaysia are being reviewed to identify bestpractices in MLM/direct selling regulation. The guidelines will provide for a central

agency, possibly the Central Economic Intelligence Bureau (CEIB), to monitor

violations and suggest legal action to state authorities. The IMC felt that the stateagencies may not have the necessary expertise to check sophisticated pyramid

schemes and a central agency may be better equipped to do so. While registering

themselves as companies with Registrar of Companies, Direct selling/MLM

companies will additionally be required to provide information on their businessmodel and marketing plan. The matter of web based pyramid schemes was also


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discussed by IMC and the Ministry of Information Technology is likely to be asked to

suggest how such websites could be screened and blocked. With a new Secretary

Consumer Affairs having taken over today, the report will be finalized after heapproves of it.

Richard Holwill (Amway) reported there appears to be confusion with the Hindi

translation of MLM as officials interpret the term level to mean a money makingscheme and the term may need to be abandoned altogether. Mr. Holwill reported

companies need to demonstrate that their business model provides personal flexibility

for independent contractors and offers genuine economic benefits. The best course ofaction would be a substantial educational effort for both federal and state officials.

Chairman Venardos requested that DSA work in conjunction with the WFDSA

working group on India so that key companies operating in India can reach aconsensus on the best way to address legislative issues as an industry.

Bangladesh: Chairman Venardos expressed concern over the pending Direct Selling

Act of 2011 about which WFDSA expressed concerns and submitted formal

comments. The Act restricts direct selling and prohibits certain products such as

nutritionals from being sold through the direct selling channel. Adolfo Franco (DSA)stated DSA would follow up with Bangladeshi officials in Washington, DC.

Europe: Maurits Bruggink (SELDIA) reported the XANGO antitrust matter in Italy

has been resolved and that the company has adjusted its compensation model to be inline with what is required by the Italian government. XANGO had used the same

compensation plan the company uses elsewhere in Europe. Mr. Bruggink noted the

law is not harmonized in Europe and European Union law is left up to each nationalgovernments discretion as to how it is interpreted and enforced.

As a result of the Euro crisis, Ukraine, Hungary and Romania are consideringdeeming direct sellers employees in an effort to increase tax revenue. SELDIA will

work with European Union officials to draft a formal text that will explain why direct

sellers are independent entrepreneurs.

Russia is set to become a member of the World Trade Organization in August 2012and subsequently will need to modify its nutritional supplements laws that are now

only sold through pharmacies.

French Polynesia: Chairman Venardos reported employees from Herbalife had met

with government officials to gain a better understanding of multi-level marketing inlight of a proposed direct selling law that might be detrimental to direct selling.

Chairman Venardos noted that while French Polynesia is governed by French laws,

they have the ability to implement laws specific to the islands.

Russian Federation: Russia officially joined the WTO August 22nd

. Russias WTO

GATS commitments trump its national laws, and this is specified in the WTO


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agreement. Therefore, Russia should be committed to provide for direct selling of

supplements as of August 22nd

.

WFDSA Ethics Update: Joe Mariano (DSA) reported Code Administrators from

Latin America met in Lima, Peru recently to discuss key ethics issues and the role of

Code Administrators. The seminar highlighted the success the Peruvian Chamber ofDirect Selling (CAPEVEDI) had with its Code recognition program. Mr. Mariano

praised the Latin American sector for its advancement and elevation of ethical

standards.

Trans-Pacific Partnership Agreement Proposed Direct Sales/MLM Language:

Attached is model language Chairman Venardos has proposed as regards direct

sales/MLM that could be included in the pending Trans-Pacific PartnershipAgreement and other Services Negotiations such as the Plurilateral WTO Services

Negotiations. By way of background, US Trade Representative officials highlighted

the Express Delivery annexes of the Korea and Colombia Free Trade Agreements

(FTAs) as an possible model for the direct selling industry in future bilateral,plurilateral and multilateral services agreements. USTR notes that the annex provides

definition and clarity to the express delivery sector, making explicit the market access

and national treatment commitments that are generally applicable to all non-limitedsectors. The express delivery sector has its own unique circumstances with the

prevalence of state-owned postal monopolies, which bring competition-related issues

into the mix, but USTR felt that the direct selling/MLS industry might have similarissues that are not otherwise accounted for in the traditional market access

definitions. For example, the right to provide compensation/bonuses to independent

distributors would be something that could be clarified in a services annex. We seekendorsement of this or modified language by the DSA board so that the DSAs

collective position can be shared with the USTR. Note: with regard to the WTO

services plurilateral, the next major event should be a hearing of the House Ways andMeans Committee on the topic, which has been rescheduled for September 20

th.

WFDSA Update

WFDSA Executive Director Tamuna Gabilaia reported the Global Regulatory Affairs

Committee agreed to issue a Global Industry Threat Report that will be distributed to

member DSAs and will also be posted on the website.

Mr. Mariano noted as a part of the industry image enhancement program, the US

DSAs Board of Directors and Strategic Planning Committee are trying to synthesizewhat direct selling should be defined as and asked for input from Council members

and WFDSA.

Approved By:

John Venardos

Chairman, International Council


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ANNEX [ ] DIRECT SALES

1. For purposes of this agreement, Direct Sales means the sale of a consumer product orservice, person-to-person, away from a fixed retail location, through independent sales

representatives who are also referred to as independent distributors. Direct selling company

distributors are independent contractors rather than employees whose compensation is based onthe distributors individual product sales. The direct selling company sells products or services at

wholesale price to its distributors, who in turn sell the products or services to end consumers.

2. The Parties confirm their desire to maintain at least the level of market openness fordirect sales that is in existence on the date this Agreement is signed. If a Party considers that the

other Party is not maintaining such level of access, it may request consultations. The other Party

shall afford adequate opportunity for consultations and, to the extent possible, shall provideinformation in response to inquiries regarding the level of access and any related matter.

3. Each Party ensures there will be no limitations on market access or national treatment on

direct sales, specifically wholesale or retail trade services away from a fixed location. Each Partywill develop regulations, consistent with their Schedule of Specific Commitments and its

obligations under this Agreement, on sales away from a fixed location.

4. Each Party confirms its intention to permit direct selling be made by properly trained and

certified individual commission agents away from a fixed location for which remuneration is

received both for sales efforts and for sales support services that result in additional sales byother contracted distributors. Compensation can be based on the amount of product sales

generated directly and indirectly by contractors and not on a fixed hourly rate.

5. For transparency purposes, services commitments on direct sales include sales of

registered food/nutritional supplements, including those in tablet, powder or capsule form.


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I. Lawyers Council




None.


None.


The Lawyers Council held an in-person meeting on June 3, 2012, and discussed the

following issues:

FTC v.BurnLounge: DSA staff provided a detailed analysis of the recent UnitedStates District Court for t

Documents

Direct Selling Association 0912 Boardbook