- Fourth quarter 2017 reported net
sales of $1.1 billion increased 5% and 3% on an as reported and
constant currency basis, respectively, compared to fourth quarter
2016.
- Fourth quarter 2017 reported EPS of
($0.87) per diluted share compared to $1.16 per diluted share for
the comparable prior year quarter, which includes a provisional
one-time non-cash charge of $153 million, or ($2.01) per
adjusted1 diluted share, as a result of the Tax Cuts
and Jobs Act (the “Tax Act”) that was signed into law on December
22, 2017.
- Adjusted2 earnings per
adjusted1 diluted share of $1.29 increased 29%
compared to $1.00 per diluted share for the comparable prior year
quarter.
- Reiterates FY 2018 volume point
guidance range of 2% to 6% growth as well as reported and
adjusted2 diluted EPS guidance of $3.82 to $4.22 and
$4.60 to $5.00.
- Announces new executive organization
structure.
Herbalife Ltd. (NYSE: HLF) reports results for the fourth
quarter and full year ended December 31, 2017.
“After a year of transition, we returned to net sales growth in
the fourth quarter as expected, and we anticipate stronger net
sales growth for the full year in 2018,” said Rich Goudis, CEO of
Herbalife. “This growth is due to the determination and hard work
of our talented independent distributors and employees around the
globe who are continuously looking for ways to fulfill our purpose
to make the world healthier and happier.”
The Company reported fourth quarter 2017 volume points of 1.3
billion, which represents a decline of 1.8%, compared to the prior
year period, in line with the pre-announcement issued on January 8,
2018. Reported fourth quarter 2017 net sales of $1.1
billion increased 4.6%, while constant currency net sales
increased 3.4%, both compared to the same period in 2016.
On a reported basis, fourth quarter 2017 net loss was $63.4
million, or ($0.87) per diluted share, which includes a provisional
charge of $153.3 million, or ($2.01) per adjusted1 diluted share,
related to the Tax Act, compared to fourth quarter 2016 net income
of $99.4 million, or $1.16 per diluted share. The provisional
charge related to the Tax Act is subject to continued evaluation
and adjustment in future periods as additional information becomes
available and further analysis is completed.
Adjusted2 earnings for the fourth quarter 2017 were $1.29 per
adjusted1 diluted share compared to $1.00 per diluted share for the
fourth quarter of 2016.
Full year 2017 worldwide volume points of 5.4 billion declined
3.6% compared to full year 2016. Reported full year 2017 net sales
of $4.4 billion decreased 1.4%, while constant currency
net sales decreased 1.1%, both compared to full year 2016.
On a reported basis, full year 2017 net income was $213.9
million, or $2.58 per diluted share, compared to net
income of $260.0 million, or $3.02 per diluted
share for 2016.
Adjusted2 earnings for 2017 were $4.86 per
diluted share compared to $4.85 per diluted share for
2016. Due to the negative impact of currency, full year 2017
reported diluted EPS and adjusted2 diluted EPS were each
negatively impacted by $0.23.
Since the approval by the Company’s Board of Directors in
February 2017 of the share repurchase program, a total of
approximately 11.7 million shares were repurchased, including
approximately 400,000 shares repurchased from November 2, 2017
through February 21, 2018.
For the full year 2018, the Company is reiterating its volume
point guidance range of 2% to 6% growth as well as its 2018
reported and adjusted2 diluted EPS guidance of $3.82 to $4.22 and
$4.60 to $5.00.
Furthermore, Herbalife announces, consistent with the Company’s
succession strategy, a new executive organization structure
effective May 1, 2018.
The Company’s president, Des Walsh, will transition to the new
role of executive vice-chairman where his 14 years of experience at
the Company will primarily be used in growing the business and
developing and maintaining strong relationships with the Company’s
distributor leaders around the world.
Concurrently with Mr. Walsh’s transition to his new role, two
Company veterans will each be promoted to serve as co-president of
the Company, each with separate but complementary responsibilities
for leading the Company forward.
John DeSimone, currently chief financial officer, will assume
the role of co-president and chief strategic officer where he will
manage the Company’s regional leadership, who have responsibility
for growing the Company’s nutrition business and driving
performance in more than 90 countries around the globe. These will
be new duties for Mr. DeSimone who will continue to manage the
Company’s financial planning and investor relations operations.
Chief health and nutrition officer, Dr. John Agwunobi, will
continue in his role leading the Company’s nutrition and fitness
training and medical and consumer affairs. As co-president and
chief health and nutrition officer, Dr. Agwunobi will expand his
responsibilities to concentrate on enhancing the distributor and
customer experience. This new position will work intimately with
our distributors and customers, ensuring that the Company is
continuously innovating in the areas of corporate sales,
technology, marketing and product development.
As part of this new organization structure, current senior vice
president and principal accounting officer, Bosco Chiu, having
served close to 25 years at the Company, will be promoted to
executive vice president and chief financial officer. In addition,
current acting general counsel Richard Werber will assume the new
role of chief legal officer while current senior vice president,
deputy general counsel and chief compliance officer Henry Wang will
be promoted to executive vice president and general counsel.
Fourth Quarter and Fiscal 2017 Key
Metrics3
Regional Volume Point Metrics
Volume Points (Mil) Volume Points (Mil) Region
4Q '17 Yr/Yr % Chg FY '17 Yr/Yr % Chg North
America 250.8 -7.3% 1,099.0 -12.0% Asia Pacific 273.8
0.2% 1,089.2 1.2% EMEA 271.8 4.5% 1,088.5 3.7% Mexico 207.7 -8.4%
875.4 -4.8% South & Central America 153.0 -6.6% 593.9 -10.4%
China 149.7 9.6% 633.4 1.4% Worldwide
Total 1,306.8 -1.8% 5,379.4 -3.6%
Regional Net Sales and Foreign Exchange
(“FX”) Impact
Reported Net Sales Growth/Decline
Growth/Decline Region 4Q '17 (mil) including FX
excluding FX North America $ 192.2 -4.9% -5.0% Asia Pacific
$ 229.7 1.7% -0.2% EMEA $ 220.3 12.0% 5.4% Mexico $ 108.0 3.1%
-1.3% South & Central America $ 125.2 3.5% 17.0% China $
217.9 11.9% 8.4% Worldwide Total $ 1,093.3
4.6% 3.4% Reported Net Sales
Growth/Decline Growth/Decline Region FY '17 (mil)
including FX excluding FX North America $ 840.2
-12.1% -12.1% Asia Pacific $ 915.9 0.3% -0.9% EMEA $ 868.7 6.5%
4.2% Mexico $ 442.7 -0.9% 0.5% South & Central America $ 474.3
-2.9% 0.4% China $ 885.9 2.0% 4.0% Worldwide
Total $ 4,427.7 -1.4% -1.1%
Outlook
Based on current business trends the Company’s first quarter
2018 and full year 2018 guidance are as follows:
Three Months Ending Twelve Months Ending March 31,
2018 December 31, 2018
Low
High
Low
High
Volume Point Growth vs 2017 (7.0%) (3.0%) 2.0% 6.0% Net Sales
Growth vs 2017 (1.0%) 3.0% 5.5% 9.5% Diluted EPS (a) $0.70 $0.90
$3.82 $4.22 Adjusted Diluted EPS (a) (b) $0.90 $1.10 $4.60 $5.00
Cap Ex ($ millions) $30.0 $40.0 $115.0 $155.0 Effective Tax Rate
(a) 30.0% 35.0% 30.0% 35.0% Adjusted Effective Tax Rate (a) (b)
27.0% 32.0% 27.0% 32.0% (a) Excludes any future potential
ongoing tax effects from the exercise of equity awards that could
impact the Company's tax rate due to the updated stock compensation
accounting standard, any future contingent value rights
revaluation, any impact of potential Venezuela currency
devaluations, benefits from future potential China grants, as well
as any impact of the China Growth and Impact Investment Fund.
(b) Adjusted diluted EPS and adjusted
effective tax rate, for the purposes of guidance, excludes the
impact of non-cash interest costs associated with the company’s
convertible notes, expenses related to regulatory inquiries, and
contingent value rights revaluation, as applicable and detailed in
Schedule A. See Schedule A – “Reconciliation of Non-GAAP Financial
Measures” for a detailed reconciliation of adjusted diluted EPS to
diluted EPS calculated in accordance with GAAP and a discussion of
why the company believes these non-GAAP measures are useful.
With respect to guidance, the Company has included a $200
million impact to its share base from repurchases under its share
repurchase program in 2018.
Any incremental repurchases beyond $200 million that may be made
in 2018 cannot be accurately predicted and are therefore excluded
from the guidance table above.
Guidance is based on the average daily exchange rates during the
first three weeks of January.
Adjusted2 diluted EPS guidance for the first quarter 2018
includes a projected currency benefit of approximately $0.10 per
diluted share versus the first quarter of 2017.
Full year 2018 adjusted2 diluted EPS guidance includes a
projected currency benefit of approximately $0.13 per diluted
share, compared to 2017, which is $0.03 favorable compared to the
$0.10 tailwind included in the initial full year 2018 guidance the
Company provided on November 2, 2017.
_______________
1 See Schedule A - “Reconciliation of Non-GAAP Financial Measures”
for a reconciliation of adjusted diluted share count to reported
diluted share count and a discussion of why the share count has
been adjusted for purposes of calculating adjusted diluted EPS for
the fourth quarter of 2017. 2 Adjusted diluted EPS is a non-GAAP
measure and, for the purpose of guidance, excludes the impact of:
non-cash interest costs associated with the Company’s convertible
notes, expenses related to regulatory inquiries, China grant
income, and contingent value rights revaluation. Adjusted diluted
EPS, for the purpose of reported results, also excludes expenses
relating to challenges to the Company’s business model, expenses
relating to FTC settlement implementation, arbitration award
related to the re-audit, and the impact of the Tax Act as
applicable and detailed in Schedule A. 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.
Fourth Quarter 2017 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 22, 2018, 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 34074913). 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 34074913). 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
weight-management, targeted nutrition, energy and sports and
fitness and outer nutrition 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 $4.4 billion in 2017. To
learn more, visit Herbalife.com or IAmHerbalife.com.
The Herbalife Investor Relations website at
http://ir.herbalife.com contains a significant amount of financial
and other information about the Company. 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 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 markets 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 and anti-pyramiding;
- 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;
- any material disruption to our business
caused by natural disasters, other catastrophic events, acts of war
or terrorism, or cyber-security incidents;
- contractual limitations on our ability
to expand our business;
- our reliance on our information
technology infrastructure and outside manufacturers;
- the sufficiency of our 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;
- risks related to the convertible
notes;
- 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)
Three Months Ended Twelve Months Ended
12/31/2017
12/31/2016
12/31/2017
12/31/2016
(Unaudited)
North America $ 192.2 $ 202.2 $ 840.2 $ 955.7 Mexico 108.0
104.8 442.7 446.6 South and Central America 125.2 120.8 474.3 488.7
EMEA 220.3 196.6 868.7 815.6 Asia Pacific 229.7 225.9 915.9 913.0
China 217.9 194.7 885.9
868.8 Worldwide Net Sales 1,093.3 1,045.0 4,427.7
4,488.4 Cost of Sales 209.8 196.1
848.6 854.6 Gross Profit 883.5 848.9
3,579.1 3,633.8 Royalty Overrides 310.1 303.7 1,254.2 1,272.6
Selling, General and Administrative Expenses (1) 431.6 421.7
1,758.6 1,966.9
Other Operating Income (2)
(7.3 ) (34.7 ) (50.8 ) (63.8 )
Operating Income 149.1 158.2 617.1 458.1 Interest Expense, net 39.8
23.3 146.3 93.4
Other (Income) Expense, net (3)
(0.4 ) - (0.4 ) - Income
Before Income Taxes 109.7 134.9 471.2 364.7 Income Taxes (4)
173.1 35.5 257.3 104.7
Net (Loss) Income $ (63.4 ) $ 99.4 $ 213.9 $
260.0 Weighted Average Shares Outstanding: Basic 72.9
83.2 79.2 83.0 Diluted 72.9 86.0 82.9 86.1 (Loss) Earnings
Per Share: Basic $ (0.87 ) $ 1.19 $ 2.70 $ 3.13
Diluted $ (0.87 ) $ 1.16 $ 2.58 $ 3.02
(1) Selling, General and Administrative
Expenses includes $203 million related to regulatory settlements
for the twelve months ended December 31, 2016.
(2) Other Operating Income for FY 2017
relates to certain China grant income and for FY16 relates to
certain China grant income and KPMG arbitration award
(3) Other (Income) Expense relates to the
revaluation of the Contingent Value Rights
(4) Includes the impact of excess tax
benefit recognized under ASU 2016-09 of $4.7 million and $31.1
million for the three months and twelve months ended December 31,
2017, respectively.
Herbalife Ltd. and Subsidiaries Condensed Consolidated
Balance Sheets (In millions) Dec 31, Dec 31,
2017
2016
ASSETS Current Assets: Cash and cash equivalents $ 1,278.8 $
844.0 Receivables, net 93.3 70.3 Inventories 341.2 371.3 Prepaid
expenses and other current assets 147.0 176.9
Total Current Assets 1,860.3 1,462.5 Property, plant
and equipment, net 377.5 378.0 Marketing related intangibles and
other intangible assets, net 310.1 310.1 Goodwill 96.9 89.9 Other
assets 250.3 324.9 Total Assets $
2,895.1 $ 2,565.4 LIABILITIES AND
SHAREHOLDERS' (DEFICIT) EQUITY Current Liabilities: Accounts
payable $ 67.8 $ 66.0 Royalty overrides 277.7 261.2 Current portion
of long-term debt 102.4 9.5 Other current liabilities 458.9
454.8 Total Current Liabilities 906.8 791.5
Non-current liabilities Long-term debt, net of current
portion 2,165.7 1,438.4 Other non-current liabilities 157.3
139.2 Total Liabilities 3,229.8 2,369.1
Contingencies Shareholders' equity: Common shares 0.1 0.1
Paid-in capital in excess of par value 407.3 467.6 Accumulated
other comprehensive loss (165.4 ) (205.1 ) Accumulated deficit
(248.1 ) (66.3 ) Treasury stock (328.6 ) -
Total Shareholders' (Deficit) Equity (334.7 ) 196.3
Total Liabilities and Shareholders' (Deficit)
Equity $ 2,895.1 $ 2,565.4 Herbalife
Ltd. and Subsidiaries Condensed Consolidated Statements of Cash
Flows (In millions) Twelve Months Ended
12/31/2017
12/31/2016
CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 213.9 $ 260.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 99.8 98.3 Share-based compensation
expenses 42.1 40.2 Non-cash interest expense 60.2 55.7 Deferred
income taxes 97.8 (36.4 ) Inventory write-downs 20.7 15.8 Foreign
exchange transaction loss 2.4 3.7 Other 1.9 (11.7 ) Changes in
operating assets and liabilities: Receivables (22.2 ) - Inventories
37.9 (71.6 ) Prepaid expenses and other current assets 38.3 0.8
Accounts payable (5.0 ) (1.3 ) Royalty overrides 6.0 20.9 Other
current liabilities (17.1 ) 12.4 Other 14.1
(19.5 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 590.8
367.3 CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (95.5 ) (143.4 ) Other
(2.3 ) 2.1 NET CASH USED IN INVESTING
ACTIVITIES (97.8 ) (141.3 ) CASH FLOWS FROM FINANCING
ACTIVITIES Borrowings from senior secured credit facility, net of
discount 1,274.0 200.0 Principal payments on senior secured credit
facility and other debt (494.5 ) (438.8 ) Debt issuance costs (22.6
) - Share repurchases (844.2 ) (13.2 ) Other 2.1
(0.3 ) NET CASH USED IN FINANCING ACTIVITIES (85.2 )
(252.3 ) EFFECT OF EXCHANGE RATE CHANGES ON CASH 27.0
(19.5 ) NET CHANGE IN CASH AND CASH EQUIVALENTS 434.8
(45.8 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 844.0
889.8 CASH AND CASH EQUIVALENTS, END OF PERIOD
$ 1,278.8 $ 844.0 CASH PAID DURING THE YEAR
Interest paid $ 100.7 $ 45.4 Income taxes paid $
158.8 $ 162.9
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 used by 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
12/31/2017 12/31/2016 12/31/2017
12/31/2016 (in millions) Net
(loss) income, as reported $ (63.4 ) $ 99.4 $ 213.9 $ 260.0
Expenses incurred responding to attacks on the company's business
model (1) (2) 0.8 1.4 5.0 12.1 Expenses related to regulatory
inquiries (1) (2) 3.7 2.4 13.7 16.3 Expenses incurred for the
recovery of re-audit expenses (1) (2) - 0.1 - 3.6 Non-cash interest
expense and amortization of non-cash issuance costs (1) (2) (3)
12.2 11.5 47.7 45.1 China grant income (1) (2) (7.3 ) (5.1 ) (50.8
) (34.2 ) FTC Consent Order implementation (1) (2) (4) 1.0 5.4 17.7
10.7 Regulatory settlements (1) (2) - - - 203.0
Arbitration award related to the re-audit
(1) (2)
- (29.7 ) - (29.7 )
Contingent value rights revaluation (1)
(2)
(0.4 ) - (0.4 ) -
Income tax adjustments for above items (1)
(2)
(1.2 ) 0.5 2.6 (69.4 ) Provisional Tax Act impact (5) 153.3
- 153.3 -
Net income, as adjusted (6)
$ 98.6 $ 85.9 $ 402.6 $ 417.4
The following table is a reconciliation of
diluted shares outstanding, presented and reported in accordance
with GAAP, to diluted shares outstanding, adjusted for the impact
of outstanding equity awards. Outstanding equity awards were
excluded from the number of reported diluted outstanding shares for
the fourth quarter of 2017 because the Company reported a net loss
for the fourth quarter of 2017 and their inclusion would be
anti-dilutive. However, because the company’s adjusted net income
for the fourth quarter of 2017, as calculated in the table above,
was positive, inclusion of outstanding equity awards would not be
anti-dilutive. Therefore, the company has adjusted the diluted
shares outstanding for the fourth quarter of 2017 to include equity
awards as set forth below so the calculation of adjusted diluted
EPS is not overstated for the fourth quarter of 2017 and such
number is comparable to adjusted diluted EPS for the prior year
period.
Three Months Ended 12/31/2017 12/31/2016 (in
millions) Diluted shares outstanding, as reported 72.9 86.0
Potential dilutive effect of outstanding equity grants 3.4 -
Diluted shares outstanding, as adjusted 76.3 86.0
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
12/31/2017 12/31/2016 12/31/2017
12/31/2016 (per share) Diluted
(loss) earnings per share, as reported $ (0.87 ) $ 1.16 $ 2.58 $
3.02 Impact of adjusted shares outstanding 0.04
- - - Diluted (loss)
earnings per share using adjusted diluted shares outstanding $
(0.83 ) $ 1.16 $ 2.58 $ 3.02 Expenses incurred responding to
attacks on the company's business model (1) (2) 0.01 0.02 0.06 0.14
Expenses related to regulatory inquiries (1) (2) 0.05 0.03 0.17
0.19 Expenses incurred for the recovery of re-audit expenses (1)
(2) - - - 0.04 Non-cash interest expense and amortization of
non-cash issuance costs (1) (2) (3) 0.16 0.13 0.58 0.52 China grant
income (1) (2) (0.10 ) (0.06 ) (0.61 ) (0.40 ) FTC Consent Order
implementation (1) (2) (4) 0.01 0.06 0.21 0.12 Regulatory
settlements (1) (2) - - - 2.36
Arbitration award related to the re-audit
(1) (2)
- (0.35 ) - (0.34 )
Contingent value rights revaluation (1)
(2)
(0.01 ) - - -
Income tax adjustments for above items (1)
(2)
(0.02 ) 0.01 0.03 (0.80 ) Provisional Tax Act Impact (5)
2.01 - 1.85 -
Diluted earnings per share, as adjusted (6) $ 1.29 $ 1.00
$ 4.86 $ 4.85
(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. 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.
(2) Excludes tax (benefit)/expense as follows: Three
Months Ended Twelve Months Ended 12/31/2017
12/31/2016 12/31/2017
12/31/2016 (in millions) Expenses incurred
responding to attacks on the company's business model (0.3 ) $ (0.1
) $ (1.2 ) $ (3.0 ) Expenses related to regulatory inquiries (1.3 )
(0.2 ) (4.7 ) (5.5 ) Expenses incurred for the recovery of re-audit
expenses - - (1.0 ) Non-cash interest expense and amortization of
non-cash issuance costs (1.1 ) (1.8 ) - - China grant income 2.0
1.4 14.6 9.8 FTC Consent Order Implementation (0.4 ) (1.4 ) (6.0 )
(3.6 ) Regulatory settlements - (1.3 ) - (70.0 ) Arbitration award
related to the re-audit - 3.9 - 3.9 Contingent Value Rights
revaluation - - -
Total income tax adjustments (6) $ (1.2 ) $ 0.5 $ 2.6
$ (69.4 ) Three Months Ended Twelve Months Ended
12/31/2017 12/31/2016 12/31/2017
12/31/2016 (per share) Expenses
incurred responding to attacks on the company's business model $ -
$ - $ (0.01 ) $ (0.03 ) Expenses related to regulatory inquiries
(0.02 ) - (0.06 ) (0.06 ) Expenses incurred for the recovery of
re-audit expenses - - - (0.01 ) Non-cash interest expense and
amortization of non-cash issuance costs (0.01 ) (0.02 ) - - China
grant income 0.03 0.02 0.18 0.11 FTC Consent Order Implementation
(0.01 ) (0.02 ) (0.07 ) (0.04 ) Regulatory settlements - (0.02 ) -
(0.81 ) Arbitration award related to the re-audit -
0.05 - 0.05 Total income
tax adjustments (6) $ (0.02 ) $ 0.01 $ 0.03 $ (0.80 )
(3) Relates to non-cash expense on our convertible
notes and prepaid forward share repurchase contract. (4) Includes
$3.0 million of product discounts related to preferred member
conversions for the twelve months ended December 31, 2017.
(5) Relates to the estimated income tax
effect of the Tax Cuts and Jobs Act on the Company’s Consolidated
Financial Statements as of December 31, 2017 as discussed in Note
12, Income Taxes, to the Consolidated Financial Statements included
in the annual report on form 10-K for the year ended December 31,
2017.
(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,
2018 December 31, 2018 Diluted EPS Guidance (1) $0.70
- $0.90 $3.82 - $4.22 Non-cash interest expense and amortization of
non-cash issuance costs (2) 0.17 0.66 Expenses related to
regulatory inquiries (3) 0.04 0.16 Income tax adjustments for above
items (4) (0.01) (0.04) Adjusted diluted EPS guidance (5) $0.90 -
$1.10 $4.60 - $5.00
(1) Excludes any future potential ongoing
tax effects from the exercise of equity awards that could impact
the Company's tax rate due to the updated stock compensation
accounting standard, any future contingent value rights
revaluation, any impact of potential Venezuela currency
devaluations, benefits from future potential China grants, as well
as any impact of the China Growth and Impact Investment Fund.
(2) Relates to non-cash expense on our
convertible notes and prepaid forward share repurchase
contract.
(3) Excludes tax impact of $0.9 million
and $3.4 million for the three months ending March 31, 2018 and the
twelve months ending December 31, 2018, respectively.
(4) The individual tax impact of footnote 3. (5) Amounts may not
total due to rounding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180222006383/en/
Herbalife Ltd.Media Contact:Jennifer ButlerVP, Media
Relations213.745.0420orInvestor Contact:Eric MonroeDirector,
Investor Relations213.745.0449
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