LOS ANGELES--(BUSINESS WIRE)-- Herbalife Ltd. (NYSE: HLF) today reported third quarter 2009 net sales of $600.2 million, a decrease of 0.3 percent compared to the same period of 2008, primarily reflecting the 780 basis point unfavorable impact from currency fluctuations. Excluding the impact from currency fluctuations, local currency year-over-year net sales were 7.5 percent higher than third quarter 2008 results. For the quarter ended September 30, 2009, the company reported net income of $57.9 million, or $0.91 per diluted share, compared to $58.1 million, or $0.89 per diluted share in the third quarter of 2008, reflecting lower net sales and gross profit margins attributable to unfavorable currency fluctuations, offset by a lower effective tax rate and accretion from the company's share repurchase program. Excluding the impact from adjusting items in the third quarter 2009 (1), adjusted net income was $54.1 million, or $0.85 in adjusted diluted earnings per share, reflecting a decrease of 6.9 percent and 4.5 percent, respectively, compared to the same period in 2008.
For the nine months ended September 30, 2009, the company produced cash flow from operations of $227.3 million, paid dividends of $36.7 million, invested $42.1 million in capital expenditures, repurchased $32.5 million in common stock and paid approximately $10.0 million for certain acquired manufacturing assets. The company's net debt balance (1) at the end of the third quarter was $94.4 million, reflecting an improvement of $106.3 million from December 2008.
"We were very pleased with our local currency sales growth of 7.5 percent that was driven by volume point growth of five percent this quarter and was well ahead of our expectations. We believe that the increase in volume continues to validate that our distributors are gaining traction and momentum through the use of the daily consumption sales model around the globe. The ongoing transformation of our business is enabling distributors to offer Herbalife products to a broader customer base which is allowing for deeper market penetration than in the past", said Chairman and Chief Executive Officer Michael O. Johnson. "As we head into 2010, many of our key markets, led by engaged distributors, are demonstrating the successful transition to a business model more focused on daily consumption including the U.S., Taiwan, Korea, Brazil and India."
During the third quarter 2009 the company added 48,040 new Sales Leaders (2), which is 8.7 percent lower than the same period in 2008. Additionally, total Sales Leaders (2) decreased 5.4 percent to 437,125 in the third quarter of 2009 compared to the same period in 2008. During the third quarter 2009, the company's President's Team membership increased 8.4 percent to 1,262 members versus the third quarter of 2008 and the company's prestigious Chairman's Club and China Brand Ambassador membership increased 8.3 percent to 39 members, versus the third quarter of 2008.
1 See Schedule D - "Reconciliation of Non-GAAP Financial
Measures" for more detail
2 See Schedule titled "New
Sales Leaders by Region" and "Total Sales Leaders by Region" for more
detail
Business Highlights
During the third quarter the company hosted three Extravaganzas in Europe: in Prague, Turin, and St. Petersburg along with an Extravaganza in Mexico, which collectively were attended by over 32,400 distributors. Additionally, Taiwan hosted an Herbalife University event, attended by over 11,000, which focused on providing detailed training to qualifying supervisors. Product launches during the quarter included Mango Herbal Aloe Concentrate in the U.S., Formula 1 Meal Replacement Bar in 11 countries within EMEA, all three flavors of the Protein Bars in Russia and Herbal Aloe Powder in China.
In early July 2009, China's Ministry of Commerce granted five additional licenses for the company to conduct direct-selling business in the provinces of Fujian, Shan'Xi, Sichuan, Hubei, and Shanghai. Licenses for these new provinces became effective immediately, except Shanghai which will be activated upon government review of our service outlets for which the timing remains uncertain. Additionally, the company's license for Beijing, which was granted in July 2008 with the same exception as noted above for Shanghai, is now active. The company now has direct-selling licenses in 11 provinces representing an addressable population of approximately 599 million. Additionally, the company applied for five new provincial licenses in August 2009.
Third Quarter 2009 Regional Key Metrics
Volume Increase/ New Increase/ Total Increase/
Points (Decrease) Sales (Decrease) Sales (Decrease)
Region (Mil) (Y/Y) Leaders (Y/Y) Leaders (Y/Y)
North America 207.6 2.4 % 10,569 (9.8 %) 87,348 (4.5 %)
Asia Pacific 148.2 36.1 % 13,262 25.9 % 89,750 11.2 %
(excluding China)
EMEA 109.4 (5.8 %) 5,222 (13.7 %) 66,454 (11.5 %)
Mexico 126.4 (4.3 %) 6,132 (1.8 %) 64,438 (16.0 %)
South & Central 102.2 0.7 % 6,376 (40.7 %) 84,936 (11.8 %)
America
China 32.3 6.8 % 6,479 (11.0 %) 44,199 6.3 %
The North America region reported volume points of 207.6 million in the third quarter of 2009, reflecting an increase of 2.4 percent versus the same period of 2008. Volume point growth in the U.S., the largest country in the region, increased 2.8 percent compared to 2008, reflecting an increase in the Latin market of 7.0 percent and a decrease in the General market of 5.3 percent compared to the third quarter of 2008. New Sales Leaders in the region were 10,569 during the quarter ended September 30, 2009, a decrease of 9.8 percent versus the same period last year. Total Sales Leaders in the region decreased 4.5 percent to 87,348 as of September 30, 2009 versus September 30, 2008.
The Asia Pacific region reported volume points of 148.2 million in the third quarter of 2009, reflecting an increase of 36.1 percent over the same period of 2008. Top markets in this region were Taiwan, with volume point growth of 37.2 percent; Korea, with volume point growth of 83.3 percent; Malaysia with volume point growth of 16.8 percent and India with volume point growth of 111.4 percent, all compared to the same period in 2008. New Sales Leaders in the region were 13,262 during the quarter ended September 30, 2009, an increase of 25.9 percent versus the same period last year. Total Sales Leaders increased 11.2 percent to 89,750 as of September 30, 2009 versus September 30, 2008.
The Europe, Middle East and Africa (EMEA) region reported volume points of 109.4 million in the third quarter of 2009, reflecting a decrease of 5.8 percent versus the same period of 2008. The top market in this region was Italy, with volume point growth of 6.7 percent compared to the same period in 2008. New Sales Leaders in the region were 5,222 during the quarter ended September 30, 2009, a decrease of 13.7 percent versus the same period last year. Total Sales Leaders in the region decreased 11.5 percent to 66,454 as of September 30, 2009 versus September 30, 2008.
The Mexico region reported volume points of 126.4 million in the third quarter of 2009, reflecting a decrease of 4.3 percent versus the same period of 2008. During the third quarter of 2008, the company began collecting a Value Added Tax (VAT) from our Mexican distributors that has had a negative impact on our financial results. Distributors in Mexico previously paid zero percent VAT on their purchases for most of our nutrition products. This effective price increase, which impacted approximately 60 percent of our volume points in the Mexican market, adversely affected sales in Nutrition Clubs, which are retail price-sensitive, and as a result has caused volume to decline from pre-VAT levels. We are continuing to challenge this assessment on several fronts. New Sales Leaders in the Mexico region were 6,132 during the quarter ended September 30, 2009, or 1.8 percent lower than the same period last year. Total Sales Leaders in the region decreased 16.0 percent to 64,438 as of September 30, 2009 versus September 30, 2008.
The South and Central American region reported volume points of 102.2 million in the third quarter of 2009, reflecting an increase of 0.7 percent versus the same period of 2008. The top markets in this region were Brazil, with volume point growth of 7.7 percent and Venezuela, with a volume point increase of 36.8 percent, both compared to the same period in 2008. New Sales Leaders in the region were 6,376 during the quarter ended September 30, 2009, or 40.7 percent lower than the same period last year. Total Sales Leaders in the region decreased 11.8 percent to 84,936 as of September 30, 2009 versus September 30, 2008.
The China region reported volume points of 32.3 million in the third quarter of 2009, reflecting an increase of 6.8 percent over the same period of 2008. The company is currently licensed for direct sales in 11 provinces. New Sales Employees in China were 6,479 during the quarter ended September 30, 2009, a decrease of 11.0 percent versus the same period last year. Total Sales Employees increased 6.3 percent to 44,199 as of September 30, 2009 versus September, 2008.
2009 Guidance
Based on current business trends and late September spot FX rates, the company's fourth quarter 2009 and fiscal 2009 guidance is provided below. We expect to exchange most of our excess cash in Venezuela, approximately 100 million Venezuelan Bolivars, for U.S. dollars during the fourth quarter at a parallel exchange rate that is unfavorable to the official exchange rate. In October 2009, we began, and will continue, to repatriate exchanged U.S. dollars which would result in a reduction of cash of approximately $30 million. The P&L impact of this expected repatriation will be recognized in the fourth quarter of 2009 as well as in 2010, and is excluded from both periods' guidance below.
Fourth Quarter - The company's fourth quarter 2009 diluted earnings per share guidance range is $0.88 to $0.91 (3) (4) (5) (6) on a volume point growth of 8.5 percent to 9.5 percent and a net sales growth of 15.5 percent to 16.5 percent compared to the same period in 2008, respectively, and an effective tax rate range of 30.0 percent to 31.0 percent. Assuming constant currency levels from the fourth quarter of 2008, the company's net sales growth range would be 11.0 percent to 12.0 percent and its diluted earnings per share range would be $0.79 to $0.82. The company's fourth quarter 2009 capital expenditures are expected to be in the range of $18 to $23 million.
Fiscal 2009 - The company's new full year diluted earnings per share guidance is $3.19 to $3.22 (3) (4) (5) (6) on volume point growth of 1.0 percent to 1.5 percent and a net sales decline of 2.5 percent to 3.0 percent compared to 2008, respectively, along with an effective tax rate range of 30.5 to 31.0 percent. Assuming constant currency levels from 2008, the company's net sales growth range would be 3.0 percent to 4.0 percent and its diluted earnings per share range would be $3.99 to $4.02. Full year 2009 capital expenditures are expected in the range of $60 million to $65 million.
2010 Guidance
Based on current business trends and late September spot FX rates, the company is initiating guidance for 2010 with a diluted earnings per share guidance range of $3.50 to $3.65 (7) on a volume point growth of 5.0 to 6.0 percent and a net sales growth of 11.0 percent to 13.0 percent compared to the same period in 2009, respectively, and an effective tax rate range of 30.0 percent to 31.0 percent. The company's guidance for capital spending in 2010 is in the range of $65 to $75 million.
While 2010 guidance excludes the impact of repatriating approximately 100 million Venezuelan Bolivars of our existing excess cash in Venezuela described above, 2010 guidance does include the ongoing repatriation of excess cash generated in Venezuela during 2010 at rates which are unfavorable to the official exchange rate. (8)
3 Excludes the potential impact of expenses relating to the
company's December 2008 restructuring.
4 Excludes the
accretion/dilution impact should the company elect to repurchase shares
under its share repurchase program.
5 Excludes the
impact of repatriating dollars from Venezuela at an exchange rate which
is less favorable than the official exchange rate.
6
Excludes the impact of the expense resulting from an international
income tax audit settlement, expiration of statute of limitation on a
reserved issue, and the expected Q4 reversal of a prior adjustment to
income tax accrual.
7 Includes utilization of $50
million of the company's share repurchase program.
8 Assumes
a Parallel rate of no more than 6.5 Bolivars to 1 Dollar.
Third Quarter Earnings Conference Call
Herbalife's senior management team will host an investor conference call to discuss its third quarter 2009 financial results and provide an update on current business trends on Tuesday, November 3 at 8 a.m. PST (11 a.m. EST).
The dial-in number for this conference call for domestic callers is (866) 219-5268 and (703) 639-1120 for international callers. Live audio of the conference call will be simultaneously webcast in the Investor Relations section of the company's Web site at http://ir.Herbalife.com.
An audio replay will be available following the completion of the conference call in MP3 format or by dialing (866) 837-8032 (domestic callers) and (703) 925-2474 (international callers) and entering access code 336024. The webcast of the teleconference will be archived and available on Herbalife's Web site.
2009 Analyst and Investor Day
Herbalife's senior management team will host its annual analyst and investor day on December 17, 2009 in New York at the Four Seasons. Chairman and CEO Michael O. Johnson and Chief Financial Officer Richard Goudis will be joined by other members of Herbalife's management team to discuss the company's initiatives and operations.
The presentation will be webcast in the investor relations section of Herbalife's Web site at https://ir.Herbalife.com
To register for the event, email investorrelations@herbalife.com or call Amy Greene at 213.745.0504.
About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF) is a global network marketing company that sells weight-management, nutrition, and personal care products intended to support a healthy lifestyle. Herbalife products are sold in 70 countries through a network of approximately 1.9 million independent distributors. The company supports the Herbalife Family Foundation and its Casa Herbalife program to help bring good nutrition to children. Herbalife's Web site contains a significant amount of information about Herbalife, including financial and other information for investors at http://ir.Herbalife.com. The company encourages investors to visit its Web site from time to time, as information is updated and new information is posted.
Disclosure Regarding Forward-Looking Statements
This document contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect" or "anticipate" and any other similar words.
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 distributors;
-- adverse publicity associated with our products or network marketing organization;
-- uncertainties relating to interpretation and enforcement of recently enacted 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, Chinese legal system or Chinese governmental policies;
-- improper action by our employees or international distributors in violation of applicable law;
-- changing consumer preferences and demands;
-- loss or departure of any member of our senior management team which could negatively impact our distributor relations and operating results;
-- 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;
-- third party legal challenges to our network marketing program;
-- risks associated with operating internationally, including foreign exchange and devaluation risks;
-- 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 on our management team;
-- 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 distributors;
-- product liability claims;
-- any collateral impact resulting from the ongoing worldwide financial "crisis," including the availability of liquidity to us, our customers and our suppliers or the willingness of our customers to purchase products in a recessionary economic environment; and
-- whether we will purchase any of our shares in the open markets or otherwise.
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.
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
9/30/2009 9/30/2008 9/30/2009 9/30/2008
North America $ 140,829 $ 135,840 $ 402,294 $ 387,665
Mexico 68,290 91,632 193,881 287,962
South and Central America 93,035 94,364 253,702 299,066
EMEA 123,334 135,434 373,222 453,303
Asia Pacific 129,240 103,736 357,723 313,830
China 45,490 41,193 112,884 104,510
Worldwide net sales 600,218 602,199 1,693,706 1,846,336
Cost of Sales 131,777 116,620 356,619 362,335
Gross Profit 468,441 485,579 1,337,087 1,484,001
Royalty Overrides 194,639 200,323 556,921 628,343
SGA 195,968 196,761 568,220 584,274
Operating Income 77,834 88,495 211,946 271,384
Interest Expense - net 1,037 3,407 4,087 10,364
Income before income taxes 76,797 85,088 207,859 261,020
Income Taxes 18,902 27,004 60,169 73,489
Net Income 57,895 58,084 147,690 187,531
Basic Shares 61,234 63,594 61,467 64,062
Diluted Shares 63,397 65,439 63,049 66,269
Basic EPS $ 0.95 $ 0.91 $ 2.40 $ 2.93
Diluted EPS $ 0.91 $ 0.89 $ 2.34 $ 2.83
Dividends declared per share $ 0.20 $ 0.20 $ 0.60 $ 0.60
Herbalife Ltd.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
Sept 30, Dec 31,
2009 2008
ASSETS
Current Assets:
Cash & cash equivalents $ 215,401 $ 150,847
Receivables, net 84,747 70,002
Inventory, net 133,376 134,392
Prepaid expenses and other current assets 97,510 89,214
Deferred income taxes 43,490 40,313
Total Current Assets 574,524 484,768
Property and equipment, net 176,774 175,492
Deferred compensation plan assets 17,076 15,754
Deferred financing cost, net 1,622 1,989
Marketing related intangibles 310,060 310,060
Goodwill 115,351 110,677
Other assets 23,079 22,578
Total Assets $ 1,218,486 $ 1,121,318
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 41,324 $ 41,084
Royalty Overrides 144,170 130,369
Accrued compensation 57,105 60,629
Accrued expenses 127,271 104,795
Current portion of long term debt 12,361 15,117
Advance sales deposits 35,034 12,603
Income taxes payable 24,093 37,302
Total Current Liabilities 441,358 401,899
Non-current liabilities
Long-term debt, net of current portion 297,482 336,514
Deferred compensation 15,970 13,979
Deferred income taxes 102,648 103,675
Other non-current liabilities 23,695 23,520
Total Liabilities 881,153 879,587
Contingencies
Shareholders' equity:
Common shares 122 123
Additional paid in capital 210,748 197,715
Accumulated other comprehensive loss (26,956 ) (28,614 )
Retained earnings 153,419 72,507
Total Shareholders' Equity 337,333 241,731
Total Liabilities and Shareholders' Equity $ 1,218,486 $ 1,121,318
Herbalife Ltd.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
9/30/2009 9/30/2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 147,690 $ 187,531
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 45,646 34,789
Deficiency (Excess) tax benefits from share-based 759 (12,659 )
payment arrangements
Share based compensation expenses 15,100 13,877
Amortization of discount and deferred financing 367 359
costs
Deferred income taxes (3,098 ) 1,348
Unrealized foreign exchange transaction loss (gain) 6,763 (4,580 )
Other 233 891
Changes in operating assets and liabilities:
Receivables (9,265 ) (16,483 )
Inventories 10,451 (11,232 )
Prepaid expenses and other current assets (5,724 ) (37,392 )
Other assets 354 (1,613 )
Accounts payable (4,851 ) 8,155
Royalty overrides 9,525 14,201
Accrued expenses and accrued compensation 5,870 18,851
Advance sales deposits 21,011 6,877
Income taxes payable (15,529 ) 359
Deferred compensation plan liability 1,992 (1,682 )
NET CASH PROVIDED BY OPERATING ACTIVITIES 227,294 201,597
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property (41,776 ) (68,325 )
Proceeds from sale of property 93 67
Acquisition of business (10,000 ) 0
Deferred compensation plan assets (1,321 ) 1,488
NET CASH USED IN INVESTING ACTIVITIES (53,004 ) (66,770 )
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (36,727 ) (38,338 )
Borrowings from long-term debt 138,974 50,000
Principal payments on long-term debt (180,540 ) (117,652 )
Increase in deferred financing costs 0 (75 )
Share repurchases (33,630 ) (94,193 )
(Deficiency) Excess tax benefits from share-based (759 ) 12,659
payment arrangements
Proceeds from exercise of stock options and sale of 2,209 18,275
stock under employee stock purchase plan
NET CASH USED IN FINANCING ACTIVITIES (110,473 ) (169,324 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH 737 (3,516 )
NET CHANGE IN CASH AND CASH EQUIVALENTS 64,554 (38,013 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 150,847 187,407
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 215,401 $ 149,394
CASH PAID DURING THE PERIOD
Interest paid $ 8,443 $ 10,365
Income taxes paid $ 77,397 $ 68,597
NON CASH ACTIVITIES
Assets acquired under capital leases and other $ 339 $ 28,785
long-term debt
Herbalife Ltd
New Sales Leaders by Region
(Unaudited)
For Three Months Ended For the Nine Months Ended September
September 30, 2009 30, 2009
2009 2008 % 2009 2008 % Change
Change
North 10,569 11,723 (9.8 %) 29,095 33,862 (14.1 %)
America
Mexico 6,132 6,243 (1.8 %) 16,799 21,810 (23.0 %)
South &
Central 6,376 10,758 (40.7 %) 22,212 36,666 (39.4 %)
America
EMEA 5,222 6,052 (13.7 %) 17,162 21,107 (18.7 %)
Asia
Pacific 13,262 10,532 25.9 % 37,182 30,676 21.2 %
(excluding
China)
Total New 41,561 45,308 (8.3 %) 122,450 144,121 (15.0 %)
Supervisors
New China
Sales 6,479 7,283 (11.0 %) 17,577 19,500 (9.9 %)
Employees
Worldwide
Total New 48,040 52,591 (8.7 %) 140,027 163,621 (14.4 %)
Sales
Leaders (1)
Herbalife Ltd
Total Sales Leaders by Region
(Unaudited)
As of September 30
2009 2008 % Change
North America 87,348 91,496 (4.5 %)
Mexico 64,438 76,700 (16.0 %)
South & Central America 84,936 96,285 (11.8 %)
EMEA 66,454 75,071 (11.5 %)
Asia Pacific (excluding China) 89,750 80,706 11.2 %
Total Supervisors 392,926 420,258 (6.5 %)
China Sales Employees 44,199 41,580 6.3 %
Worldwide Total Sales Leaders(1) 437,125 461,838 (5.4 %)
Note: (1) - We refer to supervisors who qualified in 69 countries under our traditional marketing plan plus China sales employees collectively as 'Sales Leaders'.
Herbalife Ltd
Volume Points by Region
(Unaudited, In thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 % Change 2009 2008 % Change
North 207,612 202,772 2.4 % 594,567 586,190 1.4 %
America
Mexico 126,375 132,083 (4.3 %) 371,035 433,023 (14.3 %)
South &
Central 102,166 101,475 0.7 % 302,708 331,476 (8.7 %)
America
EMEA 109,429 116,218 (5.8 %) 350,871 382,282 (8.2 %)
Asia
Pacific 148,184 108,840 36.1 % 418,591 325,567 28.6 %
(excluding
China)
China 32,270 30,224 6.8 % 85,904 84,317 1.9 %
Worldwide 726,036 691,612 5.0 % 2,123,676 2,142,855 (0.9 %)
SUPPLEMENTAL INFORMATION
SCHEDULE A: FINANCIAL GUIDANCE
2009 Guidance
For the Three Months and Twelve Months Ending December 31, 2009
Three Months Ending Twelve Months Ending
December 31, 2009 December 31, 2009
Low High Low High
Volume point growth vs 2008 8.5 % 9.5 % 1.0 % 1.5 %
Net sales growth vs 2008 15.5 % 16.5 % (3.0 %) (2.5 %)
EPS (1) (2) (3) (4) $ 0.88 $ 0.91 $ 3.19 $ 3.22
Cap Ex ($ millions) $ 18.0 $ 23.0 $ 60.0 $ 65.0
Effective Tax Rate (4) 30.0 % 31.0 % 30.5 % 31.0 %
(1) Excludes the potential impact of expenses
relating to the company's December 2008 restructuring.
(2)
Excludes any accretion/dilution impact should the company elect to
repurchase shares under its share repurchase program.
(3)
Excludes the impact of repatriating dollars from Venezuela at an
exchange rate that is less favorable than the official exchange rate.
(4)
Excludes the impact of the expense resulting from an international
income tax audit settlement, expiration of statute of limitation of a
reserved issue, and the expected Q4 reversal of a prior adjustment to
income tax accrual.
2010 Guidance
For the Twelve Months Ending December 31, 2010
Twelve Months Ending
December 31, 2010
Low High
Volume point growth vs 2009 5.0 % 6.0 %
Net sales growth vs 2009 11.0 % 13.0 %
EPS (1) (2) $ 3.50 $ 3.65
Cap Ex ($ millions) $ 65.0 $ 75.0
Effective Tax Rate 30.0 % 31.0 %
(1) Includes utilization of $50 million of the company's share
repurchase program.
(2) While 2010 guidance excludes the
impact of repatriating approximately 100 million Venezuelan Bolivars of
our existing excess cash in Venezuela, 2010 guidance does include the
ongoing repatriation of excess cash generated in Venezuela during 2010.
SCHEDULE B: NET SALES OF TOP 10 COUNTRIES
(In Millions)
Q3 2009 Q3 2008
Currency FX Benefit Currency FX
Benefit
Reported Adjusted (Loss) Reported Adjusted (Loss)
1 USA $ 136.7 $ 136.7 $ 0.0 1 USA $ 130.9 $ 130.9 $ 0.0
2 Mexico $ 68.3 $ 87.8 ($19.5 ) 2 Mexico $ 91.6 $ 86.1 $ 5.5
3 China $ 45.5 $ 45.4 $ 0.1 3 Brazil $ 43.6 $ 37.8 $ 5.8
4 Brazil $ 45.1 $ 50.7 ($5.6 ) 4 China $ 41.2 $ 37.3 $ 3.9
5 Taiwan $ 41.3 $ 43.3 ($2.0 ) 5 Taiwan $ 32.4 $ 30.7 $ 1.7
6 South $ 33.4 $ 38.9 ($5.5 ) 6 Italy $ 27.7 $ 25.3 $ 2.4
Korea
7 Italy $ 29.2 $ 30.8 ($1.6 ) 7 Korea $ 20.8 $ 23.9 ($3.1 )
8 Venezuela $ 21.9 $ 21.9 $ 0.0 8 Venezuela $ 15.9 $ 15.9 $ 0.0
9 Malaysia $ 12.3 $ 13.0 ($0.7 ) 9 France $ 13.2 $ 12.1 $ 1.1
10 Japan $ 11.8 $ 12.5 ($0.7 ) 10 Japan $ 13.0 $ 11.9 $ 1.1
Total of Top $ 445.5 $ 481.0 ($35.5 ) Total of Top $ 430.3 $ 411.9 $ 18.4
10 10
TOTAL NET $ 600.2 $ 647.4 ($47.2 ) TOTAL NET $ 602.2 $ 576.4 $ 25.8
SALES SALES
Note: Currency adjusted net sales use the prior year foreign currency rates to adjust
current year reported net sales figures.
SCHEDULE C: VOLUME POINTS FOR TOP 10 COUNTRIES
(In Millions)
Q3 2009 Q3 2008
1 USA 201.8 1 USA 196.3
2 Mexico 126.4 2 Mexico 132.1
3 Taiwan 51.3 3 Brazil 42.7
4 Brazil 45.9 4 Taiwan 37.4
5 Korea 41.6 5 China 30.2
6 China 32.3 6 Korea 22.7
7 Italy 22.9 7 Italy 21.5
8 Venezuela 16.1 8 Venezuela 11.8
9 Malaysia 12.5 9 Malaysia 10.7
10 India 9.5 10 Peru 10.6
Total of Top 10 560.3 Total of Top 10 516.0
TOTAL VOLUME POINTS 726.0 TOTAL VOLUME POINTS 691.6
SCHEDULE D: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars
in Thousands, 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 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
9/30/2009 9/30/2008 9/30/2009 9/30/2008
Net income, as reported $ 57,895 $ 58,084 $ 147,690 $ 187,531
Restructuring Expenses
associated with 494 - 899 1,071
realignment for growth
initiative (1)
Expiration of statutes (4,852 ) - (4,852 ) -
of limitations
Tax expense resulting
from an international 537 - 1,628 -
income tax audit
settlement
Net income, as adjusted $ 54,074 $ 58,084 $ 145,365 $ 188,602
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
9/30/2009 9/30/2008 9/30/2009 9/30/2008
Diluted earnings per share, as $ 0.91 $ 0.89 $ 2.34 $ 2.83
reported
Restructuring Expenses associated
with realignment for growth 0.01 0.01 0.02
initiative (1)
Expiration of statutes of (0.08 ) - (0.08 ) -
limitations
Tax expense resulting from an
international income tax audit 0.01 - 0.03 -
settlement
Diluted earnings per share, as $ 0.85 $ 0.89 $ 2.31 $ 2.85
adjusted (2)
The following is a reconciliation of total long-term debt to net debt:
9/30/2009 12/31/2008
Total long-term debt (current and long-term portion) $ 309,843 $ 351,631
Less: Cash and cash equivalents 215,401 150,847
Net debt $ 94,442 $ 200,784
The restructuring charge adjustments reflect items that although they, or
(1) similar items, might recur are of a nature and magnitude that identifying
them separately provides investors with a greater ability to project the
Company's future performance.
(2) Amounts may not total due to rounding
Source: Herbalife Ltd.
Released Nov 2, 2009 • 4:10pm EST