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Herbalife Ltd. Announces Record Fourth Quarter 2012 And Record Full Year Results, And Raises 2013 Earnings Guidance

• 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.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
             
Three Months Ended Twelve Months Ended
  12/31/2012     12/31/2011     12/31/2012     12/31/2011
 
North America $ 197,052 $ 165,737 $ 841,243 $ 698,631
Mexico 132,070 106,192 496,101 436,930
South and Central America 203,252 155,373 688,799 554,439
EMEA 164,684 151,556 627,801 615,180
Asia Pacific 295,166 247,015 1,139,867 938,590
China   67,096   58,696     278,519   210,767
Worldwide net sales 1,059,320 884,569 4,072,330 3,454,537
Cost of Sales   211,105   170,960     812,583   680,084
Gross Profit 848,215 713,609 3,259,747 2,774,453
Royalty Overrides 355,658 293,109 1,338,633 1,137,560
SGA   332,764   286,151     1,259,667   1,074,623
Operating Income 159,793 134,349 661,447 562,270
Interest Expense - net   2,453   (1,357 )   10,541   2,491
Income before income taxes 157,340 135,706 650,906 559,779
Income Taxes   39,459   30,349     173,716   147,201
Net Income   117,881   105,357     477,190   412,578
 
Basic Shares 107,444 115,989 112,359 117,540
Diluted Shares 112,230 122,640 117,856 124,846
 
Basic EPS $ 1.10 $ 0.91   $ 4.25 $ 3.51
Diluted EPS $ 1.05 $ 0.86   $ 4.05 $ 3.30
 
Dividends declared per share $ 0.30 $ 0.20   $ 1.20 $ 0.73
 

Herbalife Ltd.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Dec 31,   Dec 31,
  2012     2011  
 
ASSETS
Current Assets:
Cash & cash equivalents $ 333,534 $ 258,775
Receivables, net 116,139 89,660
Inventories 339,411 247,696
Prepaid expenses and other current assets 125,425 117,073
Deferred income taxes   49,339     55,615  
Total Current Assets 963,848 768,819
 
Property, plant and equipment, net 242,886 193,703
Deferred compensation plan assets 24,267 20,511
Other assets 48,805 41,125
Deferred financing cost, net 7,462 4,797
Marketing related intangibles and other intangible assets, net 311,186 311,764
Goodwill   105,490     105,490  
Total Assets $ 1,703,944   $ 1,446,209  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 75,209 $ 57,095
Royalty overrides 243,351 197,756
Accrued compensation 95,220 76,435
Accrued expenses 181,523 152,744
Current portion of long term debt 56,302 1,542
Advance sales deposits 49,432 31,702
Income taxes payable   15,854     31,415  
Total Current Liabilities 716,891 548,689
 
Non-current liabilities
Long-term debt, net of current portion 431,305 202,079
Deferred compensation plan liability 29,454 23,702
Deferred income taxes 62,982 72,348
Other non-current liabilities   42,557     39,203  
Total Liabilities 1,283,189 886,021
 
Commitments and Contingencies
 
Shareholders' equity:
Common shares 107 116
Paid-in capital in excess of par value 303,975 291,950
Accumulated other comprehensive loss (31,695 ) (37,809 )
Retained earnings   148,368     305,931  
Total Shareholders' Equity   420,755     560,188  
   
Total Liabilities and Shareholders' Equity $ 1,703,944   $ 1,446,209  
 

Herbalife Ltd.
Condensed Consolidated Statements of Cash Flows
(In thousands)

(Unaudited)

 

       
Twelve Months Ended
12/31/2012   12/31/2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 477,190 $ 412,578
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 74,384 71,853
Excess tax benefits from share-based payment arrangements (29,684 ) (27,450 )
Share based compensation expenses 27,906 24,133
Amortization of discount and deferred financing costs 1,797 1,007
Deferred income taxes (9,050 ) (12,984 )
Unrealized foreign exchange transaction loss (gain) 2,121 9,403
Write-off of deferred financing costs - 914
Other 532 2,206
Changes in operating assets and liabilities:
Receivables (28,186 ) (9,687 )
Inventories (82,177 ) (84,880 )
Prepaid expenses and other current assets 249 3,229
Other assets (5,288 ) (13,864 )
Accounts payable 17,034 15,427
Royalty overrides 41,868 44,041
Accrued expenses and accrued compensation 39,440 28,749
Advance sales deposits 17,790 (1,538 )
Income taxes 16,106 42,659
Deferred compensation plan liability   5,752     3,535  
NET CASH PROVIDED BY OPERATING ACTIVITIES   567,784     509,331  
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (121,524 ) (90,408 )
Proceeds from sale of property, plant and equipment 280 297
Deferred compensation plan assets   (3,756 )   (1,975 )
NET CASH USED IN INVESTING ACTIVITIES   (125,000 )   (92,086 )
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (135,091 ) (85,489 )
Borrowings from long-term debt 1,430,560 914,200
Principal payments on long-term debt (1,146,580 ) (888,865 )
Deferred financing costs (4,460 ) (5,718 )
Share repurchases (556,727 ) (321,639 )
Excess tax benefits from share-based payment arrangements 29,684 27,450
Proceeds from exercise of stock options and sale of stock under
employee stock purchase plan   11,373     22,262  
NET CASH USED IN FINANCING ACTIVITIES   (371,241 )   (337,799 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH   3,216     (11,221 )
NET CHANGE IN CASH AND CASH EQUIVALENTS 74,759 68,225
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR   258,775     190,550  
CASH AND CASH EQUIVALENTS, END OF YEAR   333,534     258,775  
CASH PAID DURING THE YEAR
Interest paid $ 14,268   $ 8,800  
Income taxes paid $ 169,725   $ 118,906  




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