- Record full year 2016 worldwide
volume points of 5.6 billion, representing year over year growth of
approximately 5%
- Full year 2016 net sales of $4.5
billion, consistent with prior year and an increase of 6% on a
constant currency basis compared to the prior year period.
- Fourth quarter 2016 reported net
sales of $1.0 billion
- Fourth quarter 2016 reported diluted
EPS of $1.16 and adjusted1 diluted EPS of $1.00,
which both include an $0.11 negative impact due to currency
fluctuations
- Approximately 300,000 have converted
to or signed-up as Preferred Members in the U.S.
- Record worldwide sales leader
retention of 60.9%, record U.S. sales leader retention of
75.3%
- Company announces board approval of
a new 3 year $1.5 billion share buyback program
Herbalife Ltd. (NYSE: HLF) reports results for the fourth
quarter and full year ended December 31, 2016.
Michael O. Johnson, chairman and CEO of Herbalife, stated, “2016
was a dynamic and record-breaking year. Our members continue to
successfully build customer-focused businesses, which is evident in
our record volume and retention metrics. In addition, our new share
buyback authorization is a further testament of our commitment to
enhance shareholder value.”
The company reported record full year 2016 worldwide volume
points of 5.6 billion, which represents an increase of
approximately 5% compared to 2015. Reported full year 2016 net
sales of $4.5 billion was flat, while constant currency net sales
increased 6%, both compared to 2015.
On a reported basis, full year 2016 net income was $260.0
million, or $3.02 per diluted share, compared to net income of
$339.1 million or $3.97 per diluted share for 2015.
Adjusted1 earnings for 2016 was $4.85 per diluted share compared
to $4.952 per diluted share for 2015. Due to the negative impact of
currency, full year 2016 reported and adjusted1 net income were
each negatively impacted by $82.2 million, and reported diluted EPS
and adjusted1 diluted EPS were each negatively impacted by
$0.95.
For the fourth quarter 2016, the company reported net sales of
$1.0 billion and a volume point decline of 1% compared to the prior
year period.
On a reported basis, fourth quarter 2016 net income was $99.4
million, or $1.16 per diluted share, compared to net income of
$84.5 million or $0.98 per diluted share for the fourth quarter in
2015.
Adjusted1 earnings for the fourth quarter was $1.00 per diluted
share compared to $1.172 per diluted share for the comparable
quarter in 2015. Due to the negative impact of currency, fourth
quarter 2016 reported and adjusted1 net income were each negatively
impacted by $9.5 million, and reported diluted EPS and adjusted1
diluted EPS were each negatively impacted by $0.11.
In a separate press release this afternoon, the Company
announced that it has reached an agreement in principle to form a
joint venture with China’s Tasly Holding Group. The press release
can be found here http://ir.Herbalife.com.
Fourth Quarter and Fiscal 2016 Key
Metrics3
Regional Volume Point Metrics
Volume Points (Mil)
Volume Points (Mil) Region 4Q '16 Yr/Yr % Chg
FY 2016 Yr/Yr % Chg North America 270.5 1 %
1,248.6 8 % Asia Pacific 273.2 1 % 1,076.4 1 % EMEA 260.0 5
% 1,049.6 14 % Mexico 226.7 7 % 919.8 9 % South & Central
America 163.9 -16 % 663.0 -14 % China 136.5 -11 %
624.7 7 % Worldwide Total 1,330.8 -1 %
5,582.1 5 %
Regional Net Sales and Foreign Exchange (“FX”) Impact
Reported
Net Sales Growth/Decline Growth/Decline Region
4Q '16 (mil) including FX excluding FX North America
$ 202.2 -1 % -1 % Asia Pacific $ 225.9 -3 % -3 % EMEA $ 196.6 2 % 5
% Mexico $ 104.8 -8 % 9 % South & Central America $ 120.8 -11 %
-9 % China $ 194.7 -12 % -6 % Worldwide Total
$ 1,045.0 -5 % -1 %
Reported Net Sales
Growth/Decline Growth/Decline Region FY 2016 (mil)
including FX excluding FX North America $ 955.7 9 % 9
% Asia Pacific $ 913.0 -3 % -1 % EMEA $ 815.6 8 % 14 % Mexico $
446.6 -7 % 10 % South & Central America $ 488.7 -14 % -3 %
China $ 868.8 3 % 9 % Worldwide Total $
4,488.4 0 % 6 %
Outlook
John DeSimone, CFO of Herbalife, stated “the company’s new $1.45
billion debt deal and $1.5 billion share repurchase authorization
combined with the strength of our balance sheet, allows us to
capitalize on our global market potential, and gives us the
financial flexibility to further create long-term shareholder value
through investments that includes share repurchase."
With respect to guidance, the company cannot accurately predict
the impact to its share base from any repurchases that may be made
under the new authorization during 2017 and therefore the guidance
table below excludes any impact thereof to EPS. However, the cost
of the new debt deal is predictable and has been included.
Three Months Ending Twelve Months Ending March 31, 2017
December 31, 2017
Low High
Low High Volume Point Growth vs
2016 (5 .0%) (1 .0%) 2 .0% 5 .0% Net Sales Growth vs 2016 (9 .0%)
(5 .0%) 0 .3% 3 .3% Diluted EPS (a) $ 0 .50 $ 0 .70 $ 2 .95 $ 3 .35
Adjusted(b) Diluted EPS $ 0 .75 $ 0 .95 $ 3 .65 $ 4 .05 Cap Ex ($
millions) $ 15 .0 $ 25 .0 $ 125 .0 $ 155 .0 Effective Tax Rate (a)
26 .8% 28 .8% 26 .8% 28 .8% Currency Adjusted Net Sales Growth vs
2016 (7 .2%) (3 .2%) 3 .6% 6 .6% Currency Adjusted Diluted EPS $ 0
.85 $ 1 .05 $ 4 .20 $ 4 .60 (a) Excludes any ongoing tax
effects from the exercise of equity awards that could impact our
tax rate beginning fiscal year 2017 due to a recently issued stock
compensation accounting standard.
(b) Adjusted diluted EPS, for the purposes
of 2017 guidance, excludes the impact of expenses relating to
challenges to the company’s business model, the impact of non-cash
interest costs associated with the company’s convertible notes, FTC
settlement implementation and expenses related to regulatory
inquiries. See Schedule A – “Reconciliation of Non-GAAP Financial
Measures” for a detailed reconciliation of adjusted net income to
net income calculated in accordance with GAAP and a reconciliation
of adjusted diluted EPS to diluted EPS calculated in accordance
with GAAP and a discussion of why we believe these non-GAAP
measures are useful.
Forward guidance is based on the average daily exchange rates of
the first three weeks of January.
Adjusted1 diluted EPS guidance for the first quarter 2017
includes a projected currency headwind of approximately $0.10 per
diluted share versus the first quarter of 2016.
Full year 2017 adjusted1 diluted EPS guidance includes a
projected currency headwind of approximately $0.50 per diluted
share, compared to 2016, which is higher than the $0.15 headwind
included in the guidance the company provided on its third quarter
earnings call.
The Herbalife Investor Relations website contains a significant
amount of financial and other information about the company at
http://ir.herbalife.com. The company encourages investors to visit
its website from time to time, as information is updated and new
information is posted.
Fourth Quarter and Full Year 2016 Earnings Conference
Call
Herbalife senior management will host an investor conference
call to discuss its recent financial results and provide an update
on current business trends on Thursday, February 23, 2017, at 2:30
p.m. PT (5:30 p.m. ET).
The dial-in number for this conference call for domestic callers
is (877) 317-1296, and (262) 320-2006 for international callers
(conference ID 50583540). Live audio of the conference call will be
simultaneously webcast in the investor relations section of the
company's website at http://ir.herbalife.com.
An audio replay will be available following the completion of
the conference call in MP3 format or by dialing (855) 859-2056 for
domestic callers or (404) 537-3406 for international callers
(conference ID 50583540). The webcast of the teleconference will be
archived and available on Herbalife's website.
About Herbalife Ltd.
Herbalife is a global nutrition company that has been changing
people's lives with great products since 1980. Our nutrition,
weight-management, energy and fitness and personal care products
are available exclusively to and through dedicated Herbalife
Independent Members in more than 90 countries. We are committed to
fighting the worldwide problems of poor nutrition and obesity by
offering high-quality products, one-on-one coaching with an
Herbalife Member and a community that inspires customers to live a
healthy, active life.
We support the Herbalife Family Foundation (HFF) and
its Casa Herbalife programs to help bring good nutrition
to children in need. We also sponsor more than 190 world-class
athletes, teams and events around the globe,
including Cristiano Ronaldo, the LA Galaxy and
champions in many other sports.
The company has over 8,000 employees worldwide, and its shares
are traded on the New York Stock Exchange (NYSE: HLF)
with net sales of approximately $4.5 billion in 2016. To
learn more, visit Herbalife.com or IAmHerbalife.com.
The company also encourages investors to visit its investor
relations website at http://ir.herbalife.com as financial and other
information is updated and new information is posted.
FORWARD-LOOKING STATEMENTS
This earnings release contains “forward-looking statements”
within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Although we believe that
the expectations reflected in any of our forward-looking statements
are reasonable, actual results could differ materially from those
projected or assumed in any of our forward-looking statements. Our
future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and to
inherent risks and uncertainties, such as those disclosed or
incorporated by reference in our filings with the Securities and
Exchange Commission. Important factors that could cause our actual
results, performance and achievements, or industry results to
differ materially from estimates or projections contained in our
forward-looking statements include, among others, the
following:
- our relationship with, and our ability
to influence the actions of, our Members;
- improper action by our employees or
Members in violation of applicable law;
- adverse publicity associated with our
products or network marketing organization, including our ability
to comfort the marketplace and regulators regarding our compliance
with applicable laws;
- changing consumer preferences and
demands;
- the competitive nature of our
business;
- regulatory matters governing our
products, including potential governmental or regulatory actions
concerning the safety or efficacy of our products and network
marketing program, including the direct selling market in which we
operate;
- legal challenges to our network
marketing program;
- the consent order entered into with the
FTC, the effects thereof and any failure to comply therewith;
- risks associated with operating
internationally and the effect of economic factors, including
foreign exchange, inflation, disruptions or conflicts with our
third party importers, pricing and currency devaluation risks,
especially in countries such as Venezuela;
- uncertainties relating to
interpretation and enforcement of legislation in China governing
direct selling;
- our inability to obtain the necessary
licenses to expand our direct selling business in China;
- adverse changes in the Chinese
economy;
- our dependence on increased penetration
of existing markets;
- contractual limitations on our ability
to expand our business;
- our reliance on our information
technology infrastructure and outside manufacturers;
- the sufficiency of trademarks and other
intellectual property rights;
- product concentration;
- our reliance upon, or the loss or
departure of any member of, our senior management team which could
negatively impact our Member relations and operating results;
- U.S. and foreign laws and regulations
applicable to our international operations;
- uncertainties relating to the United
Kingdom’s vote to exit from the European Union;
- restrictions imposed by covenants in
our credit facility;
- uncertainties relating to the
application of transfer pricing, duties, value added taxes, and
other tax regulations, and changes thereto;
- changes in tax laws, treaties or
regulations, or their interpretation;
- taxation relating to our Members;
- product liability claims;
- our incorporation under the laws of the
Cayman Islands;
- whether we will purchase any of our
shares in the open markets or otherwise; and
- share price volatility related to,
among other things, speculative trading and certain traders
shorting our common shares.
We do not undertake any obligation to update or release any
revisions to any forward-looking statement or to report any events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events, except as required by law.
RESULTS OF OPERATIONS:
Herbalife Ltd. and Subsidiaries Condensed Consolidated
Statements of Income (In millions, except per share amounts)
(Unaudited) Three Months Ended Twelve Months
Ended
12/31/2016
12/31/2015
12/31/2016
12/31/2015
North America $ 202.2 $ 203.4 $ 955.7 $ 879.5 Mexico 104.8
113.7 446.6 479.9 South and Central America 120.8 136.4 488.7 569.7
EMEA 196.6 192.4 815.6 755.1 Asia Pacific 225.9 232.1 913.0 938.6
China
194.7
220.4 868.8 846.2
Worldwide Net Sales 1,045.0 1,098.4 4,488.4 4,469.0 Cost of Sales
(1) 196.1 204.4 854.6
856.0 Gross Profit 848.9 894.0 3,633.8 3,613.0
Royalty Overrides 303.7 305.0 1,272.6 1,251.4 Selling, General and
Administrative Expenses (2) 421.7 449.5 1,966.9 1,784.5 Other
Operating Income (3) (34.7 ) (3.1 ) (63.8 )
(6.5 ) Operating Income 158.2 142.6 458.1 583.6 Interest
Expense, net 23.3 25.6 93.4 94.9 Other Expense, net (4) -
- - 2.3 Income
Before Income Taxes 134.9 117.0 364.7 486.4 Income Taxes
35.5 32.5 104.7 147.3
Net Income $ 99.4 $ 84.5 $ 260.0 $
339.1 Weighted Average Shares Outstanding: Basic 83.2
82.7 83.0 82.6 Diluted 86.0 85.8 86.1 85.3 Earnings Per
Share: Basic $ 1.19 $ 1.02 $ 3.13 $ 4.11
Diluted $ 1.16 $ 0.98 $ 3.02 $ 3.97
(1) Cost of Sales includes $0.1 million
and $2.0 million of inventory write downs related to Venezuela for
the three and twelve months ended December 31, 2015,
respectively.
(2) Selling, General and Administrative
Expenses includes $203 million related to regulatory settlements
for the twelve months ended December 31, 2016 and $32.9 million
pre-tax unfavorable impact related to the remeasurement of
Venezuela Bolivar-denominated assets and liabilities at the SIMADI
rate for the twelve months ended December 31, 2015.
(3) Other Operating Income relates to
certain China grant income and the KPMG arbitration award.
(4) Other Expense, net relates to the
impairment of investments in Bolivar-denominated bonds for the
twelve months ended December 31, 2015.
Herbalife Ltd. and Subsidiaries Condensed
Consolidated Balance Sheets (In millions) (Unaudited)
Dec 31, Dec 31,
2016 2015
ASSETS Current Assets: Cash and cash equivalents $ 844.0 $ 889.8
Receivables, net 70.3 69.9 Inventories 371.3 332.0 Prepaid expenses
and other current assets 176.9 161.1 Deferred income tax assets
- 113.5 Total Current Assets 1,462.5
1,566.3 Property, plant and equipment, net 378.0 339.2
Deferred compensation plan assets 30.6 29.3 Other assets 294.3
141.1 Marketing related intangibles and other intangible assets,
net 310.1 310.2 Goodwill 89.9 91.8
Total Assets
$
2,565,4
$
2,477.9
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities: Accounts payable $ 66.0 $ 71.1 Royalty
overrides 261.2 249.9 Accrued compensation 125.8 128.8 Accrued
expenses 236.9 228.7 Current portion of long-term debt 9.5 229.5
Advance sales deposits 50.1 63.8 Income taxes payable 42.0
52.6 Total Current Liabilities 791.5 1,024.4
Non-current liabilities Long-term debt, net of current
portion 1,438.4 1,392.5 Deferred compensation plan liability 50.0
43.6 Deferred income tax liabilities 15.3 0.4 Other non-current
liabilities 73.9 70.5 Total Liabilities
2,369.1 2,531.4 Commitments and Contingencies
Shareholders' equity (deficit): Common shares 0.1 0.1 Paid-in
capital in excess of par value 467.6 438.2 Accumulated other
comprehensive loss (205.1 ) (165.5 ) Accumulated deficit
(66.3 ) (326.3 ) Total Shareholders' Equity (Deficit)
196.3 (53.5 ) Total Liabilities and
Shareholders' Equity (Deficit)
$
2,565.4
$
2,477.9
Herbalife Ltd. and Subsidiaries Condensed
Consolidated Statements of Cash Flows (In millions)
(Unaudited)
Twelve Months Ended
12/31/2016
12/31/2015 CASH FLOWS FROM OPERATING ACTIVITIES Net
income $ 260.0 $ 339.1 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 98.3 98.0 Excess tax benefits from share-based payment
arrangements (0.4 ) (4.1 ) Share-based compensation expenses 40.2
44.9 Non-cash interest expense 55.7 56.2 Deferred income taxes
(36.4 ) (38.2 ) Inventory write-downs 15.8 25.3 Foreign exchange
transaction gain (0.7 ) (6.3 ) Foreign exchange loss and other
charges relating to Venezuela 4.5 37.2 Other (11.8 ) 6.5 Changes in
operating assets and liabilities: Receivables - (6.2 ) Inventories
(71.6 ) (30.5 ) Prepaid expenses and other current assets 21.1 4.4
Other assets (26.3 ) (21.3 ) Accounts payable (1.3 ) 6.0 Royalty
overrides 20.9 21.6 Accrued expenses and accrued compensation 22.9
71.1 Advance sales deposits (11.1 ) 2.3 Income taxes (15.5 ) 21.8
Deferred compensation plan liability 3.0 0.9
NET CASH PROVIDED BY OPERATING ACTIVITIES 367.3
628.7 CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (143.4 ) (79.0 ) Other
2.1 5.6 NET CASH USED IN INVESTING
ACTIVITIES (141.3 ) (73.4 ) CASH FLOWS FROM FINANCING
ACTIVITIES Borrowings from senior secured credit facility and other
debt 200.0 - Principal payments on senior secured credit facility
and other debt (438.8 ) (227.6 ) Issuance costs relating to
long-term debt - (6.2 ) Share repurchases (13.2 ) (16.6 ) Excess
tax benefits from share-based payment arrangements 0.4 4.1 Other
(0.7 ) (3.7 ) NET CASH USED IN FINANCING ACTIVITIES
(252.3 ) (250.0 ) EFFECT OF EXCHANGE RATE CHANGES ON
CASH (19.5 ) (60.9 ) NET CHANGE IN CASH AND CASH
EQUIVALENTS (45.8 ) 244.4 CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR 889.8 645.4 CASH AND CASH
EQUIVALENTS, END OF YEAR $ 844.0 $ 889.8 CASH
PAID DURING THE YEAR Interest paid $ 45.4 $ 50.5
Income taxes paid $ 162.9 $ 168.4
SUPPLEMENTAL INFORMATION
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited and unreviewed), (All tables provide Dollars in
millions, except per Share Data)
In addition to its reported results and guidance calculated in
accordance with GAAP, the company has included in this release
adjusted net income and adjusted diluted EPS, performance measures
that the Securities and Exchange Commission defines as “non-GAAP
financial measures.” Management believes that such non-GAAP
financial measures, when read in conjunction with the company’s
reported or forecasted results, in each case calculated in
accordance with GAAP, can provide useful supplemental information
for investors because they facilitate a period to period
comparative assessment of the company’s operating performance
relative to its performance based on reported or forecasted results
under GAAP, while isolating the effects of some items that vary
from period to period without any correlation to core operating
performance and eliminate certain charges that management believes
do not reflect the company’s operations and underlying operational
performance. The company’s definition of adjusted net income and
adjusted diluted earnings per share may not be comparable to
similarly titled measures of other companies because other
companies may not calculate them in the same manner as the company
does and should not be viewed in isolation from nor as alternatives
to net income or diluted EPS calculated in accordance with
GAAP.
The following is a reconciliation of net
income, presented and reported in accordance with U.S. generally
accepted accounting principles, to net income adjusted for certain
items:
Three Months Ended Twelve Months
Ended 12/31/2016 12/31/2015 12/31/2016 12/31/2015 (in millions)
Net (loss) income, as reported $ 99.4 $ 84.5 $ 260.0 $ 339.1
Remeasurement, impairment losses and other charges relating to
Venezuela (1)(2) - 4.3 - 42.5 Expenses incurred responding to
attacks on the company's business model (1) (2) 1.4 3.7 12.1 18.7
Expenses related to Regulatory inquiries (1) (2) 2.4 4.7 16.3 21.5
Expenses incurred for the recovery of re-audit expenses (1) (2) 0.1
0.8 3.6 2.0 Foreign exchange loss (gain) from Euro/USD exposure on
intercompany balances (1) (2) - - - (7.4 ) Non-cash interest
expense and amortization of non-cash issuance costs (1) (2) (3)
11.5 10.3 45.1 42.2 Regulatory settlements (1) (2) - - 203.0 -
China grant income (1) (2) (4) (5.1 ) (3.1 ) (34.2 ) (6.5 ) FTC
Consent Order implementation (1) (2) (5) 5.4 - 10.7 - Recovery of
defective manufacturing equipment previously impaired (1) (2) - - -
(3.1 ) Arbitration award related to the re-audit (1) (2) (29.7 ) -
(29.7 ) - Legal reserve for the Bostick case (1) (2) - (1.9 ) -
(1.9 ) Income tax adjustments for above items (1) (2) 0.5
(3.0 ) (69.4 ) (24.9 ) Net income, as
adjusted (4)(6) $ 85.9 $ 100.2 $ 417.4 $ 422.3
The following is a reconciliation of
diluted earnings per share, presented and reported in accordance
with U.S. generally accepted accounting principles, to diluted
earnings per share adjusted for certain items.
Three Months Ended Twelve Months
Ended 12/31/2016 12/31/2015 12/31/2016 12/31/2015 Diluted
(loss) earnings per share, as reported $ 1.16 $ 0.98 $ 3.02 $ 3.97
Remeasurement, impairment losses and other charges relating to
Venezuela (1)(2) - 0.05 - 0.50 Expenses incurred responding to
attacks on the company's business model (1) (2) 0.02 0.04 0.14 0.22
Expenses related to Regulatory inquiries (1) (2) 0.03 0.05 0.19
0.25 Expenses incurred for the recovery of re-audit expenses (1)
(2) - 0.01 0.04 0.02 Foreign exchange loss (gain) from Euro/USD
exposure on intercompany balances (1) (2) - - - (0.09 ) Non-cash
interest expense and amortization of non-cash issuance costs (1)
(2) (3) 0.13 0.12 0.52 0.49 Regulatory settlements (1) (2) - - 2.36
- China grant income (1) (2) (4) (0.06 ) (0.04 ) (0.40 ) (0.08 )
FTC Consent Order implementation (1) (2) (5) 0.06 - 0.12 - Recovery
of defective manufacturing equipment previously impaired (1) (2) -
- - (0.04 ) Arbitration award related to the re-audit (1) (2) (0.35
) - (0.34 ) - Legal reserve for the Bostick case (1) (2) - (0.02 )
- (0.02 ) Income tax adjustments for above items (1) (2)
0.01 (0.04 ) (0.80 ) (0.29 ) Diluted
earnings per share, as adjusted (4)(6) $ 1.00 $ 1.17
$ 4.85 $ 4.95
(1) Based on interim income tax reporting
rules, these expenses are not considered discrete items. As a
result, the company's full year effective tax rate is impacted by
these items. When applying the full year effective tax rate to
year-to-date income, the company's year-to-date tax provision
recorded with respect to these non-GAAP adjustments is different
from the forecasted full-year tax provision impact of these items.
As a consequence, adjustments to the year-to-date and quarterly tax
impacts will be recorded as the adjusted full year effective tax
rate is applied to income in subsequent periods.
(2) Excludes tax (benefit)/expense as follows: Three Months
Ended Twelve Months Ended 12/31/2016 12/31/2015 12/31/2016
12/31/2015 (in millions) Remeasurement, impairment losses
and other charges relating to Venezuela - (1.8 ) - (14.9 ) Expenses
incurred responding to attacks on the company's business model (0.1
) (0.4 ) (3.0 ) (4.9 ) Expenses related to Regulatory inquiries
(0.2 ) (0.8 ) (5.5 ) (7.3 ) Expenses incurred for the recovery of
re-audit expenses - (0.2 ) (1.0 ) (0.7 ) Foreign exchange loss
(gain) from Euro/USD exposure on intercompany balances - (0.5 ) -
(0.8 ) Non-cash interest expense and amortization of non-cash
issuance costs (1.8 ) (0.9 ) - - Regulatory settlements (1.3 ) -
(70.0 ) - China grant income 1.4 0.9 9.8 1.9 FTC Consent Order
Implementation (1.4 ) - (3.6 ) - Recovery of defective
manufacturing equipment previously impaired - - - 1.1 Arbitration
award related to the re-audit 3.9 - 3.9 - Legal reserve for the
Bostick case - 0.7 -
0.7 Total income tax adjustments $ 0.5 $ (3.0
) $ (69.4 ) $ (24.9 ) (3) Relates to non-cash expense on our
convertible notes and prepaid forward share repurchase contract.
(4) Prior year amounts have been updated for comparative purposes
to adjust for China grant income recognized in 2015. (5) Includes
$1.7 million of product discounts related to preferred member
conversions. (6) Amounts may not total due to rounding.
The following is a reconciliation of
diluted earnings per share guidance, presented in accordance with
U.S. generally accepted accounting principles, to adjusted diluted
earnings per share guidance for certain items.
Three Months Ending Twelve Months Ending March
31, 2017 December 31, 2017 Diluted EPS Guidance (1)
$0.50 - $0.70 $2.95 - $3.35 Expenses incurred responding to attacks
on the company's business model (2) 0.02 0.06 Non-cash interest
expense and amortization of non-cash issuance costs (3) 0.13 0.50
FTC Consent Order Implementation (4) (5) 0.08 0.12 Expenses related
to Regulatory inquiries (6) 0.03 0.06 Income tax adjustments for
above items (7) (0.02) (0.06) Adjusted Diluted EPS Guidance (8)
$0.75 - $0.95 $3.65 - $4.05 (1) Excludes the
potential ongoing tax effects from the exercise of equity awards
that will impact our tax rate beginning fiscal year 2017 due to a
recently issued Stock Compensation accounting standard. (2)
Excludes tax impact of $0.4 million and $1.5 million for the three
months ending March 31, 2017 and the twelve months ending December
31, 2017, respectively. (3) Relates to non-cash expense on our
convertible notes and prepaid forward share repurchase contract.
(4) Excludes tax impact of $2.0 million and $3.0 million for the
three months ending March 31, 2017 and the twelve months ending
December 31, 2017, respectively. (5) Includes $3.0 million of
product discounts related to preferred member conversions. (6)
Excludes tax impact of $0.8 million and $1.5 million for the three
months ending March 31, 2017 and the twelve months ending December
31, 2017, respectively.
(7) Aggregates the individual tax impacts
of each item as described in greater detail in footnotes 2, 4 and 6
above.
(8) Amounts may not total due to rounding.
-----------------------------
1 Adjusted net income and adjusted diluted EPS are both non-GAAP
measures and, for the purposes of reported results, exclude the
impact of charges relating to Venezuela, expenses relating to
challenges to the company’s business model, regulatory inquiries,
expenses related to the recovery of re-audit expenses, foreign
exchange impact from EUR/USD exposure, the impact of non-cash
interest costs associated with the company’s convertible notes,
regulatory settlements, China grant income, FTC settlement
implementation, recovery of defective manufacturing equipment,
arbitration award related to the re-audit and reserves related to
the Bostick case. Adjusted diluted EPS, for the purposes of 2017
guidance, excludes the impact of expenses relating to challenges to
the company’s business model, the impact of non-cash interest costs
associated with the company’s convertible notes, FTC settlement
implementation and expenses related to regulatory inquiries. See
Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a
detailed reconciliation of adjusted net income to net income
calculated in accordance with GAAP and a reconciliation of adjusted
diluted EPS to diluted EPS calculated in accordance with GAAP and a
discussion of why we believe these non-GAAP measures are
useful.
2 Prior year amounts have been updated for comparative purposes
to adjust for China grant income recognized in 2015. See Schedule A
– “Reconciliation of Non-GAAP Financial Measures” for a detailed
reconciliation of adjusted net income to net income calculated in
accordance with GAAP and a reconciliation of adjusted diluted EPS
to diluted EPS calculated in accordance with GAAP and a discussion
of why we believe these non-GAAP measures are useful.
3 Supplemental tables that include Average Active Sales Leader
and additional business metrics can be found at
http://www.ir.herbalife.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20170223006641/en/
Herbalife Ltd.Media Contact:Jennifer Butler, 213.745.0420VP,
Media RelationsorInvestor Contact:Alan Quan, 213.745.0541VP,
Investor Relations
Herbalife (NYSE:HLF)
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