UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
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November 3, 2015
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Herbalife
Ltd.
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(Exact
name of registrant as specified in its charter)
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Cayman Islands
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1-32381
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98-0377871
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(State or other jurisdiction
of incorporation)
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(Commission File
Number)
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(I.R.S. Employer
Identification No.)
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P.O. Box 309GT, Ugland House, South Church Street, Grand
Cayman, Cayman Islands
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KY1-1106
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
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c/o (213) 745-0500
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Not Applicable
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Former name or former address, if changed since last report
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Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
The following information is furnished pursuant to Item 2.02, Results of
Operations and Financial Condition.
On November 3, 2015, Herbalife Ltd. issued a press release announcing
its financial results for its fiscal quarter ended September 30, 2015. A
copy of the press release is attached hereto as Exhibit 99.1 and
incorporated by reference herein.
The information contained in this Item 2.02 shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act,
except as shall be expressly set forth by specific reference in such a
filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press Release issued by Herbalife Ltd. on November 3, 2015.
SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Herbalife Ltd.
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November 3, 2015
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By:
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/s/ Mark J. Friedman
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Name:
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Mark J. Friedman
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Title:
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General Counsel
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EXHIBIT INDEX
Exhibit
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Description of Exhibit
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99.1
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Press Release issued by Herbalife Ltd. on November 3, 2015.
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4
Exhibit 99.1
Herbalife
Ltd. Announces Third Quarter 2015 Results, Raises Adjusted Full Year
Guidance, and Provides Initial 2016 Adjusted Guidance
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Third
quarter adjusted1
EPS of $1.28 per diluted share exceeded guidance of $1.00 - $1.10;
reported EPS of $1.09 per diluted share
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Raises
FY’15 adjusted diluted EPS guidance to a range of $4.65 to $4.75; up
from the previous range of $4.50 to $4.70
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Reported
worldwide net sales of $1.1 billion, grew 5% in constant currency and
on a reported basis declined 12% due to the unfavorable impact of
currency exchange rates compared to the prior year period
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Cash
flow from operations of $134.5 million increased 32% compared to prior
year period
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Initial
2016 volume point guidance range of 2.5% - 5.5% growth
LOS ANGELES--(BUSINESS WIRE)--November 3, 2015--Herbalife Ltd. (NYSE:
HLF) reported third quarter net sales of $1.1 billion. Local currency
net sales grew by 5%, while reported net sales declined 12% primarily
due to the continuing unfavorable impact of currency exchange rates.
Adjusted1 earnings for the quarter were $1.28 per diluted
share compared to $1.45 per diluted share for the same period in 2014.
On a reported basis, third quarter net income was $93.6 million, or
$1.09 per diluted share, compared to $11.2 million, or $0.13 per diluted
share for the same period in 2014. Third quarter 2015 diluted EPS was
negatively impacted by a $0.422 currency fluctuation.
For the quarter ended September 30, 2015, the company generated $134.5
million in net operating cash flow, and invested $17.1 million in
capital expenditures.
For the full year 2015, the company is raising adjusted diluted EPS
guidance to a range of $4.65 to $4.75, from the previous range of $4.50
to $4.70. Currency movement since the company’s previous guidance had a
negative $0.14 impact to the current full year 2015 adjusted diluted EPS
guidance.
For the full year 2016, the company is providing adjusted EPS guidance
of $4.35 - $4.75 per share, which includes a $0.50 headwind due to an
expected unfavorable impact of currency fluctuations.
Michael Johnson, chairman and CEO stated, “The improving trends we
continue to see in both performance and member metrics reinforce our
belief that we are building an Herbalife focused on creating the very
best customer and member experience while delivering long term value for
our shareholders."
Johnson continued, “We remain focused on building a brand that is
synonymous with good nutrition. Our members have embraced this concept
and their activity and engagement remains high."
Third Quarter and 2015 Key Metrics3,4
Regional Volume Point and Average Active Sales Leader Metrics
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Volume Points (Mil)
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Average Active Sales Leaders
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Region
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3Q'15
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Yr/Yr % Chg
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3Q'15
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Yr/Yr % Chg
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North America
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285.0
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-6%
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77,066
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0%
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Asia Pacific
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258.0
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-15%
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77,130
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1%
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EMEA
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219.0
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10%
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74,741
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25%
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Mexico
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207.2
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-5%
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64,640
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-3%
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South & Central America
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188.7
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-8%
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60,726
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-6%
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China
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149.8
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24%
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25,696
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31%
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Worldwide Total
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1,307.7
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-3%
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367,557
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4%
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Regional Net Sales and Foreign Exchange (“FX”) Impact
Region
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Reported Net Sales
3Q '15 (mil)
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Growth/Decline
including FX
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Growth/Decline
excluding FX
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North America
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$
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219.4
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-2
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%
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-1
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%
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Asia Pacific (ex. China)
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$
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224.6
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-25
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%
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-16
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%
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EMEA
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$
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182.5
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-11
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%
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13
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%
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Mexico
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$
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113.4
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-21
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%
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-1
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%
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South & Central America
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$
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138.1
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-33
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%
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19
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%
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China
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$
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224.9
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24
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%
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27
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%
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Worldwide Total
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$
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1,102.9
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-12
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%
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5
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%
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_______________________________
1 See Schedule A – “Reconciliation of Non-GAAP
Financial Measures” for more detail.
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2 Excludes the impact of Venezuela price increases tied
to foreign exchange rate movements.
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3 Supplemental tables that include additional business
metrics can be found at http://www.ir.herbalife.com.
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4 Worldwide Average Active Sales Leaders may not equal
the sum of the Average Active Sales Leaders in each region due to
the calculation being an average of Sales Leaders active in a
period, not a summation, and the fact that some sales leaders are
active in more than one region but are counted only once in the
worldwide amount.
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Outlook
Guidance for the fourth quarter includes an unfavorable impact from
currency exchange rates of approximately $0.27 per diluted share versus
the fourth quarter of 2014.
Full year 2015 guidance includes a currency headwind of approximately
$1.54 per diluted share, including approximately $0.45 from Venezuela
compared to last year. Full year 2015 guidance also includes a $0.14
negative impact from currency compared to guidance provided a quarter
ago.
Guidance for full year 2016 includes an expected currency headwind of
approximately $0.50 per diluted share.
Based on current business trends the company’s fourth quarter 2015 and
full year 2016 guidance is as follows:
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Three Months Ending
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Twelve Months Ending
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December 31, 2015
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December 31, 2015
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Low
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High
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Low
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High
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Volume Point Growth vs 2014
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(1.5%)
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1.5%
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(3.5%)
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(2.8%)
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Net Sales Growth vs 2014
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(8.5%)
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(5.5%)
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(11.1%)
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(10.4%)
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Adjusted Diluted EPS
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$0.85
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$0.95
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$4.65
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$4.75
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Cap Ex ($ millions)
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$30.0
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$40.0
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$80.0
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$90.0
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Effective Tax Rate
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27.5%
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29.5%
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29.0%
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30.0%
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Currency Adjusted(a) Net Sales Growth vs 2014
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1.6%
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4.6%
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1.0%
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1.7%
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Currency Adjusted EPS (a)
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$1.12
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$1.22
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$6.19
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$6.29
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Free Cash Flow ($ millions) (b)
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$490.0
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$510.0
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(a) Excludes the impact of Venezuela price increases tied
to FX rate movements.
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(b) Free Cash Flow equals Cash Flow from operations less
Capital Expenditures.
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Twelve Months Ending
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December 31, 2016
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Low
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High
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Volume Point Growth vs 2015
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2.5%
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5.5%
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Net Sales Growth vs 2015
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4.5%
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7.5%
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Adjusted Diluted EPS
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$4.35
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$4.75
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Cap Ex ($ millions)
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$115.0
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$145.0
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Effective Tax Rate
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28.0%
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30.0%
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Currency Adjusted(a) Net Sales Growth vs 2015
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7.0%
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10.0%
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Currency Adjusted EPS (a)
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$4.85
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$5.25
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Free Cash Flow ($ millions) (b)
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(a) Excludes the impact of Venezuela price increases tied
to FX rate movements.
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(b) Free Cash Flow equals Cash Flow from operations less
Capital Expenditures.
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Guidance excludes the impact of legal and advisory services and expenses
relating to challenges to the company’s business model, including
expenses related to regulatory inquiries, the impact of non-cash
interest costs associated with the company’s convertible notes and the
expenses incurred related to the effort to recover costs related to the
re-audits that occurred in 2013. Forward guidance is based on the
average daily exchange rates of the first two weeks of October. With
respect to Venezuela, the guidance assumes a SIMADI rate of 198 to 1 for
the remainder of 2015, for full-year 2016 and excludes the potential
impact of the recent and any future devaluation of the Venezuelan
Bolivar and future repatriation, if any, of existing cash balances in
Venezuela.
Third Quarter 2015 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 Tuesday, November 3, 2015 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 (706) 634-5671 for international callers (conference
ID 51095552). 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
51095552). The webcast of the teleconference will be archived and
available on Herbalife's website.
About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF) is a 35-year-old global nutrition company that
sells weight-management, nutrition and personal care products intended
to support a healthy lifestyle. Herbalife products are sold in more than
90 countries to and through a network of independent members. The
company supports the Herbalife Family Foundation and its Casa Herbalife
program to help bring good nutrition to children. Herbalife's 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.
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:
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our relationship with, and our ability to influence the actions of,
our Members;
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improper action by our employees or Members in violation of applicable
law;
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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;
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changing consumer preferences and demands;
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the competitive nature of our business;
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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;
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legal challenges to our network marketing program;
-
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;
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our inability to obtain the necessary licenses to expand our direct
selling business in China;
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adverse changes in the Chinese economy;
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our dependence on increased penetration of existing markets;
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contractual limitations on our ability to expand our business;
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our reliance on our information technology infrastructure and outside
manufacturers;
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the sufficiency of trademarks and other intellectual property rights;
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product concentration;
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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;
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restrictions imposed by covenants in our credit facility;
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uncertainties relating to the application of transfer pricing, duties,
value added taxes, and other tax regulations, and changes thereto;
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changes in tax laws, treaties or regulations, or their interpretation;
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taxation relating to our Members;
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product liability claims;
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our incorporation under the laws of the Cayman Islands;
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whether we will purchase any of our shares in the open markets or
otherwise; and
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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:
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Herbalife Ltd. and Subsidiaries
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Condensed Consolidated Statements of Income
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(In millions, except per share amounts)
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(Unaudited)
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|
|
|
|
|
|
|
|
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Three Months Ended
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Nine Months Ended
|
|
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9/30/2015
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|
9/30/2014
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|
9/30/2015
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9/30/2014
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North America
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|
$
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219.4
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$
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223.6
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$
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676.1
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$
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722.0
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Mexico
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113.4
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143.9
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366.2
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435.2
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South and Central America
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138.1
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205.2
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433.3
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653.2
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EMEA
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182.5
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204.4
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562.7
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642.9
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Asia Pacific
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224.6
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297.8
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706.5
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884.5
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China
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224.9
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181.3
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625.8
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487.2
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Worldwide net sales
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1,102.9
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1,256.2
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3,370.6
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3,825.0
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Cost of Sales (5)
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206.9
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255.0
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651.6
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763.3
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Gross Profit
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896.0
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1,001.2
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2,719.0
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3,061.7
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Royalty Overrides
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304.7
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363.9
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946.4
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1,136.5
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Selling, General and Administrative Expenses (6)
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429.7
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609.7
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1,331.6
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1,573.7
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Operating Income
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161.6
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27.6
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441.0
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351.5
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Interest Expense, net
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24.1
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19.9
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69.3
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56.2
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Other Expense, net (7)
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|
-
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9.8
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2.3
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13.0
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Income (loss) before income taxes
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|
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137.5
|
|
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(2.1
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)
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|
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369.4
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|
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282.3
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Income Taxes
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|
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43.9
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|
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(13.3
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)
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|
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114.8
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|
|
76.9
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Net Income
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$
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93.6
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|
$
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11.2
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|
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$
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254.6
|
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$
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205.4
|
|
|
|
|
|
|
|
|
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Basic Shares
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|
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82.6
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|
|
81.9
|
|
|
|
82.5
|
|
|
87.8
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Diluted Shares
|
|
|
85.7
|
|
|
86.2
|
|
|
|
85.1
|
|
|
92.6
|
|
|
|
|
|
|
|
|
|
Basic EPS
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$
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1.13
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$
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0.14
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|
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$
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3.09
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$
|
2.34
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Diluted EPS
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$
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1.09
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|
$
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0.13
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|
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$
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2.99
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$
|
2.22
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
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|
$
|
-
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) As discussed in Note 2 of the quarterly report on
Form 10-Q for the quarter ended Sept. 30, 2015, Cost of Sales
includes $0.2 million and $1.9 million of inventory write downs
related to Venezuela for the three and nine months ended Sept 30,
2015, respectively; and $7.6 million of inventory write-downs
related to Venezuela for the three and nine months ended Sept. 30,
2014.
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(6) As discussed in Note 2 of the quarterly report on
Form 10-Q for the quarter ended Sept. 30, 2015, Selling, General
and Administrative Expenses includes $32.9 million pre-tax
unfavorable impact related to the remeasurement of Venezuela
Bolivar-denominated assets and liabilities at the SIMADI rate for
the nine months ended Sept. 30, 2015; and $115.1 million and
$201.4 million pre-tax unfavorable impact related to the
remeasurement of Venezuela Bolivar-denominated assets and
liabilities at the SICAD I and SICAD II rate for the three and
nine months ended Sept. 30, 2014, respectively; and $7.0 million
loss on Venezuela asset impairment for both the three and nine
months ended Sept. 30, 2014.
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(7) As discussed in Note 2 of the quarterly report on
Form 10-Q for the quarter ended Sept. 30, 2015, Other Expense, net
relates to the impairment of investments in Bolivar-denominated
bonds.
|
|
|
|
|
|
|
Herbalife Ltd. and Subsidiaries
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Condensed Consolidated Balance Sheets
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(In millions)
|
(Unaudited)
|
|
|
Sept 30,
|
|
Dec 31,
|
|
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2015
|
|
2014
|
|
|
|
|
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ASSETS
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash & cash equivalents
|
|
$
|
813.2
|
|
|
$
|
645.4
|
|
Receivables, net
|
|
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89.9
|
|
|
|
83.6
|
|
Inventories
|
|
|
315.6
|
|
|
|
377.7
|
|
Prepaid expenses and other current assets
|
|
|
180.0
|
|
|
|
186.1
|
|
Deferred income tax assets
|
|
|
93.4
|
|
|
|
100.6
|
|
Total Current Assets
|
|
|
1,492.1
|
|
|
|
1,393.4
|
|
|
|
|
|
|
Property, net
|
|
|
335.8
|
|
|
|
366.7
|
|
Deferred compensation plan assets
|
|
|
27.3
|
|
|
|
27.4
|
|
Other assets
|
|
|
142.6
|
|
|
|
152.8
|
|
Deferred financing cost, net
|
|
|
21.5
|
|
|
|
22.0
|
|
Marketing related intangibles and other intangible assets, net
|
|
|
310.2
|
|
|
|
310.4
|
|
Goodwill
|
|
|
92.0
|
|
|
|
102.2
|
|
Total Assets
|
|
$
|
2,421.5
|
|
|
$
|
2,374.9
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
81.4
|
|
|
$
|
72.4
|
|
Royalty overrides
|
|
|
237.5
|
|
|
|
251.0
|
|
Accrued compensation
|
|
|
113.6
|
|
|
|
69.6
|
|
Accrued expenses
|
|
|
229.1
|
|
|
|
252.1
|
|
Current portion of long-term debt
|
|
|
254.7
|
|
|
|
100.0
|
|
Advance sales deposits
|
|
|
86.2
|
|
|
|
70.0
|
|
Income taxes payable
|
|
|
28.0
|
|
|
|
59.7
|
|
Total Current Liabilities
|
|
|
1,030.5
|
|
|
|
874.8
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
1,398.7
|
|
|
|
1,711.7
|
|
Deferred compensation plan liability
|
|
|
42.5
|
|
|
|
42.9
|
|
Deferred income tax liabilities
|
|
|
7.4
|
|
|
|
15.3
|
|
Other non-current liabilities
|
|
|
73.1
|
|
|
|
64.6
|
|
Total Liabilities
|
|
|
2,552.2
|
|
|
|
2,709.3
|
|
|
|
|
|
|
Contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders' deficit:
|
|
|
|
|
Common shares
|
|
|
0.1
|
|
|
|
0.1
|
|
Paid-in capital in excess of par value
|
|
|
436.3
|
|
|
|
409.1
|
|
Accumulated other comprehensive loss
|
|
|
(156.3
|
)
|
|
|
(78.2
|
)
|
Accumulated deficit
|
|
|
(410.8
|
)
|
|
|
(665.4
|
)
|
Total Shareholders' Deficit
|
|
|
(130.7
|
)
|
|
|
(334.4
|
)
|
|
|
|
|
|
Total Liabilities and Shareholders' Deficit
|
|
$
|
2,421.5
|
|
|
$
|
2,374.9
|
|
|
|
|
|
|
Herbalife Ltd. and Subsidiaries
|
Condensed Consolidated Statements of Cash Flows
|
(In millions)
|
(Unaudited)
|
|
|
Nine Months Ended
|
|
|
9/30/2015
|
|
9/30/2014
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
|
$
|
254.6
|
|
|
$
|
205.4
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
72.6
|
|
|
|
69.2
|
|
Excess tax benefits from share-based payment arrangements
|
|
|
(1.5
|
)
|
|
|
(4.2
|
)
|
Share-based compensation expenses
|
|
|
34.2
|
|
|
|
34.4
|
|
Non-cash interest expense
|
|
|
39.8
|
|
|
|
31.2
|
|
Deferred income taxes
|
|
|
(1.5
|
)
|
|
|
(59.0
|
)
|
Inventory write-downs
|
|
|
22.3
|
|
|
|
17.7
|
|
Foreign exchange transaction (gain) loss
|
|
|
(11.9
|
)
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss from Venezuela currency devaluation
|
|
|
32.9
|
|
|
|
200.3
|
|
Impairments and write-downs relating to Venezuela currency
devaluation
|
|
|
4.3
|
|
|
|
27.5
|
|
Other
|
|
|
8.9
|
|
|
|
3.1
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Receivables
|
|
|
(25.1
|
)
|
|
|
(5.4
|
)
|
Inventories
|
|
|
(3.2
|
)
|
|
|
(58.7
|
)
|
Prepaid expenses and other current assets
|
|
|
0.4
|
|
|
|
(59.2
|
)
|
Other assets
|
|
|
(16.8
|
)
|
|
|
(8.8
|
)
|
Accounts payable
|
|
|
18.3
|
|
|
|
15.4
|
|
Royalty overrides
|
|
|
5.6
|
|
|
|
4.4
|
|
Accrued expenses and accrued compensation
|
|
|
61.7
|
|
|
|
11.8
|
|
Advance sales deposits
|
|
|
23.3
|
|
|
|
27.5
|
|
Income taxes
|
|
|
(26.6
|
)
|
|
|
(11.7
|
)
|
Deferred compensation plan liability
|
|
|
0.9
|
|
|
|
4.6
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
|
493.2
|
|
|
|
449.5
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(57.5
|
)
|
|
|
(140.0
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
0.3
|
|
|
|
-
|
|
Investments in Venezuelan bonds
|
|
|
(0.1
|
)
|
|
|
(11.8
|
)
|
Other
|
|
|
6.0
|
|
|
|
-
|
|
NET CASH (USED IN) INVESTING ACTIVITIES
|
|
|
(51.3
|
)
|
|
|
(151.8
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
Dividends paid
|
|
|
-
|
|
|
|
(30.4
|
)
|
Dividends received
|
|
|
-
|
|
|
|
3.4
|
|
Payments for Capped Call Transactions
|
|
|
-
|
|
|
|
(123.8
|
)
|
|
|
|
|
|
|
|
|
|
Proceeds from senior convertible notes
|
|
|
-
|
|
|
|
1,150.0
|
|
|
|
|
|
|
|
|
|
|
Principal payments on senior secured credit facility and other debt
|
|
|
(202.6
|
)
|
|
|
(56.3
|
)
|
Issuance costs relating to long-term debt and senior convertible
notes
|
|
|
(6.2
|
)
|
|
|
(28.9
|
)
|
Share repurchases
|
|
|
(10.7
|
)
|
|
|
(1,278.4
|
)
|
Excess tax benefits from share-based payment arrangements
|
|
|
1.5
|
|
|
|
4.2
|
|
Proceeds from exercise of stock options and sale of stock under
employee stock purchase plan
|
|
|
1.4
|
|
|
|
2.4
|
|
Other
|
|
|
(1.3
|
)
|
|
|
-
|
|
NET CASH (USED IN) FINANCING ACTIVITIES
|
|
|
(217.9
|
)
|
|
|
(357.8
|
)
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
|
(56.2
|
)
|
|
|
(234.7
|
)
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
167.8
|
|
|
|
(294.8
|
)
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
645.4
|
|
|
|
973.0
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
813.2
|
|
|
$
|
678.2
|
|
|
|
|
|
|
|
|
|
|
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, the company has included in the
tables below adjusted results 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 results, can provide useful supplemental information
for investors in analyzing period to period comparisons of the company’s
results.
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
|
|
|
Nine Months Ended
|
|
|
9/30/2015
|
|
9/30/2014
|
|
|
9/30/2015
|
|
9/30/2014
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
Net income, as reported
|
|
$
|
93.6
|
|
|
$
|
11.2
|
|
|
$
|
254.6
|
|
|
$
|
205.4
|
Remeasurement, impairment losses and other charges relating to
Venezuela (8) (9)
|
|
|
0.3
|
|
|
|
83.7
|
|
|
|
25.1
|
|
|
|
152.9
|
Expenses incurred responding to attacks on the company's business
model (8) (10)
|
|
|
2.8
|
|
|
|
4.5
|
|
|
|
10.5
|
|
|
|
13.5
|
Expenses related to Regulatory inquiries (8) (11)
|
|
|
4.7
|
|
|
|
2.8
|
|
|
|
10.4
|
|
|
|
6.5
|
Expenses incurred for the recovery of re-audit fees (8) (12)
|
|
|
0.4
|
|
|
|
-
|
|
|
|
0.8
|
|
|
|
0.4
|
Foreign exchange gain from Euro/USD exposure on intercompany
balances (8) (13)
|
|
|
(0.8
|
)
|
|
|
-
|
|
|
|
(7.7
|
)
|
|
|
-
|
Non-cash interest expense and amortization of non-cash issuance costs
(8) (14)
|
|
|
11.2
|
|
|
|
9.9
|
|
|
|
32.8
|
|
|
|
25.9
|
Legal reserve for the Bostick case (15)
|
|
|
-
|
|
|
|
11.3
|
|
|
|
-
|
|
|
|
11.3
|
Impairment of newly acquired defective manufacturing equipment
(16)
|
|
|
-
|
|
|
|
1.7
|
|
|
|
-
|
|
|
|
1.7
|
Recovery of defective manufacturing equipment previously impaired (17)
|
|
|
(2.0
|
)
|
|
|
-
|
|
|
|
(2.0
|
)
|
|
|
-
|
Net income, as adjusted (18)
|
|
$
|
110.1
|
|
|
$
|
125.1
|
|
|
$
|
324.5
|
|
|
$
|
417.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
Nine Months Ended
|
|
|
9/30/2015
|
|
9/30/2014
|
|
|
9/30/2015
|
|
9/30/2014
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share, as reported
|
|
$
|
1.09
|
|
|
$
|
0.13
|
|
|
$
|
2.99
|
|
|
$
|
2.22
|
Remeasurement, impairment losses and other charges relating to
Venezuela (8) (9)
|
|
|
-
|
|
|
|
0.97
|
|
|
|
0.30
|
|
|
|
1.65
|
Expenses incurred responding to attacks on the company's business
model (8) (10)
|
|
|
0.03
|
|
|
|
0.05
|
|
|
|
0.12
|
|
|
|
0.15
|
Expenses related to Regulatory inquiries (8) (11)
|
|
|
0.05
|
|
|
|
0.03
|
|
|
|
0.12
|
|
|
|
0.07
|
Expenses incurred for the recovery of re-audit fees (8) (12)
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
-
|
Foreign exchange gain from Euro/USD exposure on intercompany
balances (8) (13)
|
|
|
(0.01
|
)
|
|
|
-
|
|
|
|
(0.09
|
)
|
|
|
-
|
Non-cash interest expense and amortization of non-cash issuance costs
(8) (14)
|
|
|
0.13
|
|
|
|
0.12
|
|
|
|
0.38
|
|
|
|
0.28
|
Legal reserve for the Bostick case (15)
|
|
|
-
|
|
|
|
0.13
|
|
|
|
-
|
|
|
|
0.12
|
Impairment of newly acquired defective manufacturing equipment
(16)
|
|
|
-
|
|
|
|
0.02
|
|
|
|
-
|
|
|
|
0.02
|
Recovery of defective manufacturing equipment previously impaired (17)
|
|
|
(0.02
|
)
|
|
|
-
|
|
|
|
(0.02
|
)
|
|
|
-
|
Diluted earnings per share, as adjusted (18)
|
|
$
|
1.28
|
|
|
$
|
1.45
|
|
|
$
|
3.81
|
|
|
$
|
4.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) 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. Additionally,
adjustments to items unrelated to these non-GAAP adjustments may
have an effect on the income tax impact of these non-GAAP
adjustments in subsequent periods. The company plans to update the
income tax impact of these items in subsequent interim reporting
periods.
|
(9) Net of $0.9 million and $55.8 million tax benefit
for the three months ended Sept. 30, 2015 and 2014, respectively;
and net of $13.1 million and $76.1 million tax benefit for the
nine months ended Sept. 30, 2015 and 2014, respectively.
|
(10) Net of $0.8 million and $1.5 million tax benefit
for the three months ended Sept. 30, 2015 and 2014, respectively;
and net of $4.5 million and $4.8 million tax benefit for the nine
months ended Sept. 30, 2015 and 2014, respectively.
|
(11) Net of $3.0 million and $1.8 million tax benefit
for the three months ended Sept. 30, 2015 and 2014, respectively;
and net of $6.4 million and $4.1 million tax benefit for the nine
months ended Sept. 30, 2015 and 2014, respectively.
|
(12) Net of $0.3 million and $0.1 million tax benefit
for the three months ended Sept. 30, 2015 and 2014, respectively;
and net of $0.4 million and $0.1 million tax benefit for the nine
months ended Sept. 30, 2015 and 2014, respectively.
|
(13) Net of $0.8 million and $0.2 million tax benefit for
the three and nine months ended Sept. 30, 2015, respectively.
|
(14) Relates to non-cash expense on our convertible notes
and prepaid forward share repurchase contract.
|
(15) Net of $6.2 million tax benefit for the three and
nine months ended Sept. 30, 2014.
|
(16) Net of $0.9 million tax benefit for the three and
nine months ended Sept. 30, 2014.
|
(17) Net of $1.1 million tax expense for the three and
nine months ended Sept. 30, 2015.
|
(18) Amounts may not total due to rounding.
|
The following is a reconciliation of total long-term debt to net debt:
|
|
9/30/2015
|
|
12/31/2014
|
|
|
(in millions)
|
|
|
|
|
|
Total long-term debt (current and long-term portion)
|
|
$
|
1,653.4
|
|
$
|
1,811.7
|
Less: Cash and cash equivalents
|
|
|
813.2
|
|
|
645.4
|
Net debt
|
|
$
|
840.2
|
|
$
|
1,166.3
|
CONTACT:
Herbalife Ltd.
Media Contact:
Julian Cacchioli
VP,
Corporate Communications
213.745.0519
or
Investor Contact:
Alan
Quan
VP, Investor Relations
213.745.0541
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