LOS ANGELES--(BUSINESS WIRE)--November 3, 2014--Herbalife Ltd. (NYSE: HLF) today reported third quarter net sales of $1.3 billion, reflecting an increase of 4 percent compared to the same period in 2013. Adjusted¹ net income for the quarter was $125.1 million, or $1.45 per diluted share, compared to $152.1 million, or $1.41 per diluted share for the same period in 2013. On a reported basis, the company announced third quarter net income of $11.2 million, or $0.13 per diluted share, compared to $142.0 million, or $1.32 per diluted share for the same period in 2013.

Third quarter 2014 reported net income was negatively impacted by $139.5 million in pre-tax charges, or $0.97 per diluted share after tax, related to the remeasurement of Venezuelan Bolivar denominated assets and liabilities at the SICAD I and SICAD II rates, and $17.5 million in pre-tax charges, or $0.13 per diluted share after tax related to a legal reserve.

For the quarter that ended September 30, 2014, the company generated $101.9 million net operating cash flow, and purchases of property, plant and equipment in the period were $34.5 million.

Michael Johnson, chairman and CEO stated, “In the quarter we saw volume increases in two-thirds of our 91 countries, especially Russia and China. Excluding the impact of currency translation in Venezuela, the company had solid increases in both volume and net sales. We continue to implement initiatives that we believe will further strengthen our foundation and drive long-term improvements in activity, productivity and retention of our Sales Leaders. We are proud of our members’ ability to grow the business in the short term while embracing changes that we believe will enhance the long-term opportunity.”

¹ See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for more detail.

Mr. Johnson continued, “The changes we are applying globally, such as first order limits, have been tested in key markets and proven to drive positive results in terms of long term sustainable growth. China, Russia and parts of Europe are all great examples of markets that are stronger now than they were before we implemented such changes.

“While these initiatives may continue to moderate near-term volumes and sales growth, we know from our experience in those markets that have already adopted them, that they enhance the experience of our members and their customers, and position us for even greater future success. Our industry-leading Gold Standard consumer protections, changes designed to encourage our newest members to grow their businesses prudently, and a focus on growing a customer base of life-long customers all help our members become more productive and successful leaders. We know that these initiatives work, and coupled with the strength of our business model, the efficacy of our products and the power of our brand, will lead the company into its next phase of growth.”

² Supplemental tables that include additional business metrics can be found at http://www.ir.herbalife.com.

³ 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.

Guidance for fourth quarter FY’14 includes an unfavorable impact from currency rates of approximately $0.31 compared to the prior year, inclusive of approximately $0.22 from Venezuela. Guidance for FY’15 includes a currency headwind of approximately $0.66, including approximately $0.45 from Venezuela.

Based on current business trends the company’s fourth quarter fiscal 2014 and full year fiscal 2015 guidance is as follows.

Guidance excludes the impact of expenses primarily related to legal and advisory services relating to the company’s ongoing business matters, expenses related to an FTC inquiry, and 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 reaudits that occurred last year. Forward guidance is based on the average daily exchange rates of the first two weeks of October. Included in the guidance is the use of the GAAP rate for Venezuela of 50 to 1 for the balance of the year and all of 2015 and excludes the potential impact of future devaluation of the Venezuelan Bolivar and future repatriation, if any, of existing cash balances in Venezuela.

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 4, 2014 at 8 a.m. PST (11 a.m. EST).

The dial-in number for this conference call for domestic callers is (877) 317-1296 and (706) 634-5671 for international callers (conference ID 7788487). 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 7788487). The webcast of the teleconference will be archived and available on Herbalife's website.

Herbalife Ltd. (NYSE:HLF) is a 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 through and to 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 information about Herbalife, including financial and other information for investors 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.

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:

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.

Herbalife Ltd. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended					Nine Months Ended
		9/30/2014		9/30/2013		9/30/2014		9/30/2013

North America	$	223,474		$	228,660	$	721,935	$	697,697
Mexico		143,927			141,243		435,248		419,770
South and Central America		205,211			241,235		653,186		683,112
EMEA		204,428			181,738		642,933		537,609
Asia Pacific		297,896			284,017		884,583		895,003
China		181,228			136,650		487,128		323,238
Worldwide net sales		1,256,164			1,213,543		3,825,013		3,556,429
Cost of Sales ⁽¹⁾		254,941			238,415		763,327		711,616
Gross Profit		1,001,223			975,128		3,061,686		2,844,813
Royalty Overrides		363,859			373,241		1,136,452		1,116,821
Selling, General and Administrative Expenses ⁽²⁾		609,722			409,747		1,573,701		1,174,574
Operating Income		27,642			192,140		351,533		553,418
Interest Expense, net		19,864			4,726		56,231		15,658
Other Expense, net ⁽³⁾		9,831			-		12,992		-
(Loss) Income before income taxes		(2,053	)		187,414		282,310		537,760
Income Taxes		(13,301	)		45,464		76,902		133,775
Net Income		11,248			141,950		205,408		403,985

Basic Shares		81,927			102,200		87,754		103,096
Diluted Shares		86,201			107,777		92,619		107,759

Basic EPS	$	0.14		$	1.39	$	2.34	$	3.92
Diluted EPS	$	0.13		$	1.32	$	2.22	$	3.75

Dividends declared per share	$	-		$	0.30	$	0.30	$	0.90


⁽¹⁾ As discussed in Note 2 of the quarterly report on Form 10-Q for the quarter ended September 30, 2014, Cost of Sales includes $7.6 million of inventory write downs related to Venezuela.
⁽²⁾ As discussed in Note 2 of the quarterly report on Form 10-Q for the quarter ended September 30, 2014, Selling, General and Administrative Expenses includes $17.1 million and $98.0 million pre-tax unfavorable impact related to the remeasurement of Venezuela Bolivar-denominated assets and liabilities at the SICAD I and SICAD II rate, respectively, and $7.0 million loss on Venezuela asset impairment for the three months ended September 30, 2014; and includes $103.4 million and $98.0 million pre-tax unfavorable impact related to the remeasurement of Venezuela Bolivar-denominated assets and liabilities at the SICAD I and SICAD II rate, respectively, and $7.0 million loss on Venezuela asset impairment for the nine months ended September 30, 2014.
⁽³⁾ As discussed in Note 2 of the quarterly report on Form 10-Q for the quarter ended September 30, 2014, Other Expense, net relates to the impairment of investments in Bolivar-denominated bonds.


Herbalife Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

	Sep 30,			Dec 31,
		2014			2013

ASSETS
Current Assets:
Cash & cash equivalents	$	678,134		$	972,974
Receivables, net		100,560			100,326
Inventories		367,827			351,201
Prepaid expenses and other current assets		208,589			148,774
Deferred income taxes		81,722			69,845
Total Current Assets		1,436,832			1,643,120

Property, net		358,983			318,860
Deferred compensation plan assets		27,102			26,821
Deferred financing cost, net		23,837			4,896
Other assets		101,730			63,713
Marketing related intangibles and other intangible assets, net		310,524			310,801
Goodwill		105,490			105,490
Total Assets	$	2,364,498		$	2,473,701


LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	93,561		$	82,665
Royalty overrides		257,775			266,952
Accrued compensation		85,451			111,905
Accrued expenses		273,074			267,501
Current portion of long-term debt		100,000			81,250
Advance sales deposits		89,499			68,079
Income taxes payable		28,674			43,826
Total Current Liabilities		928,034			922,178

Non-current liabilities
Long-term debt, net of current portion		1,727,919			850,019
Deferred compensation plan liability		41,805			37,226
Deferred income taxes		25,719			66,026
Other non-current liabilities		61,582			46,806
Total Liabilities		2,785,059			1,922,255

Contingencies

Shareholders' (deficit) equity:
Common shares		92			101
Paid-in capital in excess of par value		406,822			323,860
Accumulated other comprehensive loss		(58,785	)		(19,794	)
(Accumulated deficit) retained earnings		(768,690	)		247,279
Total Shareholders' (Deficit) Equity		(420,561	)		551,446

Total Liabilities and Shareholders' (Deficit) Equity	$	2,364,498		$	2,473,701


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


	Nine Months Ended
		9/30/2014			9/30/2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	205,408		$	403,985
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		69,191			63,207
(Excess) deficiency in tax benefits from share-based payment arrangements		(4,176	)		2,586
Share-based compensation expenses		34,431			21,882
Non-cash interest expense		31,179			1,937
Deferred income taxes		(59,022	)		(7,532	)
Inventory write-downs		17,729			17,536
Unrealized foreign exchange transaction loss (gain)		4,032			585
Foreign exchange loss relating to Venezuela		200,294			15,116
Impairments and write-downs relating to Venezuela		27,514			-
Other		3,060			1,661
Changes in operating assets and liabilities:
Receivables		(5,388	)		1,624
Inventories		(58,724	)		(37,311	)
Prepaid expenses and other current assets		(59,211	)		(15,330	)
Other assets		(8,794	)		(678	)
Accounts payable		15,407			8,569
Royalty overrides		4,385			13,959
Accrued expenses and accrued compensation		11,822			65,868
Advance sales deposits		27,446			27,038
Income taxes		(11,665	)		(13,313	)
Deferred compensation plan liability		4,579			5,595
NET CASH PROVIDED BY OPERATING ACTIVITIES		449,497			576,984
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(139,970	)		(91,782	)
Proceeds from sale of property, plant and equipment		23			121
Investments in Venezuelan bonds		(11,818	)		-
NET CASH USED IN INVESTING ACTIVITIES		(151,765	)		(91,661	)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid		(30,400	)		(92,651	)
Dividends received		3,416			-
Payments for Capped Call Transactions		(123,825	)		-
Borrowings from senior secured credit facility and other debt		-			763,232
Proceeds from senior convertible notes		1,150,000			-
Principal payments on senior secured credit facility and other debt		(56,250	)		(300,733	)
Issuance costs relating to long-term debt and senior convertible notes		(28,927	)		-
Share repurchases		(1,278,420	)		(275,821	)
Excess (deficiency in) tax benefits from share-based payment arrangements		4,176			(2,586	)
Proceeds from exercise of stock options and sale of stock under employee stock purchase plan		2,401			975
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(357,829	)		92,416
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(234,743	)		(18,725	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(294,840	)		559,014
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		972,974			333,534
CASH AND CASH EQUIVALENTS, END OF PERIOD		678,134			892,548
CASH PAID DURING THE PERIOD
Interest paid	$	31,512		$	18,005
Income taxes paid	$	152,698		$	163,843
NON CASH ACTIVITIES
Accrued capital expenditures	$	10,939		$	7,705

SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited and unreviewed), (Dollars in Thousand, 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
		9/30/14		9/30/13		9/30/14		9/30/13
	(in thousands)

Net income, as reported	$	11,248		$	141,950	$	205,408	$	403,985
Remeasurement and impairment losses relating to Venezuela ⁽¹⁾⁽²⁾		83,717			12		152,878		8,319
Expenses incurred responding to attacks on the Company's business model ⁽¹⁾⁽³⁾		4,543			5,485		13,459		20,589
Expenses incurred for the re-audit of 2010 to 2012 financial statements ⁽¹⁾⁽⁴⁾		-			4,640		-		7,301
Expenses related to the FTC inquiry ⁽¹⁾⁽⁵⁾		2,776			-		6,541		-
Expenses incurred for the recovery of re-audit fees ⁽¹⁾⁽⁶⁾		(33	)		-		378		-
Non-cash interest expense and amortization of non-cash issuance costs ⁽⁷⁾		9,927			-		25,936		-
Legal reserve for the Bostick case ⁽¹⁾⁽⁸⁾		11,279			-		11,279		-
Impairment of newly acquired defective manufacturing equipment ⁽¹⁾⁽⁹⁾		1,651			-		1,651		-
Net income, as adjusted	$	125,108		$	152,087	$	417,530	$	440,194



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
		9/30/14		9/30/13		9/30/14		9/30/13

Diluted earnings per share, as reported	$	0.13		$	1.32	$	2.22	$	3.75
Remeasurement loss relating to Venezuela ⁽¹⁾⁽²⁾		0.97			-		1.65		0.08
Expenses incurred responding to attacks on the Company's business model ⁽¹⁾⁽³⁾		0.05			0.05		0.15		0.19
Expenses incurred for the re-audit of 2010 to 2012 financial statements ⁽¹⁾⁽⁴⁾		-			0.04		-		0.07
Expenses related to the FTC inquiry ⁽¹⁾⁽⁵⁾		0.03			-		0.07		-
Expenses incurred for the recovery of re-audit fees ⁽¹⁾⁽⁶⁾		-			-		-		-
Non-cash interest expense and amortization of non-cash issuance costs ⁽⁷⁾		0.12			-		0.28		-
Legal reserve for the Bostick case ⁽¹⁾⁽⁸⁾		0.13			-		0.12		-
Impairment of newly acquired defective manufacturing equipment ⁽¹⁾⁽⁹⁾		0.02			-		0.02		-
Diluted earnings per share, as adjusted ⁽¹⁰⁾	$	1.45		$	1.41	$	4.51	$	4.08



⁽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. The Company plans to update the income tax impact of these items in subsequent interim reporting periods.
⁽²⁾ Net of $55,801 and $(12) tax benefit for the three months ended Sept. 30, 2014 and 2013, respectively; and net of $76,118 and $6,796 tax benefit for the nine months ended Sept. 30, 2014 and 2013, respectively.
⁽³⁾ Net of $1,461 and $773 tax benefit for the three months ended Sept. 30, 2014 and 2013, respectively; and net of $4,827 and $3,241 tax benefit for the nine months ended Sept. 30, 2014 and 2013, respectively.
⁽⁴⁾ Net of $1,533 and $2,329 tax benefit for the three and nine months ended Sept. 30, 2013, respectively.
⁽⁵⁾ Net of $1,817 and $4,095 tax benefit for the three and nine months ended Sept. 30, 2014, respectively.
⁽⁶⁾ Net of $93 and $96 tax benefit for the three and nine months ended Sept. 30, 2014, respectively.
⁽⁷⁾ Relates to non-cash expense on our convertible notes and prepaid forward share repurchase contract.
⁽⁸⁾ Net of $6,221 tax benefit for the three and nine months ended Sept. 30, 2014.
⁽⁹⁾ Net of $913 tax benefit for the three and nine months ended Sept. 30, 2014.
⁽¹⁰⁾ Amounts may not total due to rounding.

CONTACT:
Herbalife Ltd.
Media Contact:
Julian Cacchioli
VP, Worldwide Corp. Comm.
213-745-0519
or
Investor Contact:
Amy Greene
SVP, Investor Relations
213-745-0474

Regional Volume Point and Average Active Sales Leader Metrics

	Volume Points (Mil)		Average Active Sales Leaders
Region	3Q'14	Yr/Yr % Chg	3Q'14	Yr/Yr % Chg
North America	303.0	(4%)	77,218	4%
Asia Pacific (ex. China)	304.5	3%	76,649	5%
EMEA	199.0	15%	59,668	18%
Mexico	218.7	(0%)	66,977	4%
South & Central America	204.4	(17%)	64,279	7%
China	120.7	24%	19,550	23%
Worldwide Total	1,350.3	0%	352,248	8%


Regional Net Sales and FX Impact

	Reported Net
	Sales (in		Growth/Decline	Growth/Decline
Region	thousands)		including FX	excluding FX
North America	$	223,474	(2.3%)	(2.2%)
Asia Pacific (ex. China)	$	297,896	4.9%	2.0%
EMEA	$	204,428	12.5%	15.2%
Mexico	$	143,927	1.9%	3.5%
South & Central America	$	205,211	(14.9%)	(1.1%)
China	$	181,228	32.6%	33.5%
Worldwide Total	$	1,256,164	3.5%	6.3%

	Three Months Ending		Twelve Months Ending
	December 31, 2014		December 31, 2014
	Low	High	Low	High
Volume Point Growth vs 2013, ex. VZ	0.0%	3.0%	5.0%	6.0%
Volume Point Growth vs 2013	(3.0%)	0.0%	2.7%	3.5%
Net Sales Growth vs 2013	(8.0%)	(5.0%)	3.5%	4.3%
Currency Adjusted Net Sales Growth vs 2013	1.0%	4.0%	NA	NA
Diluted EPS, excluding items	$1.30	$1.40	$5.80	$5.90
Currency Adjusted EPS	$1.61	$1.71	NA	NA
Cap Ex ($ millions)	$52.0	$62.0	$170.0	$180.0
Effective Tax Rate	27.0%	29.0%	27.5%	29.5%

	Twelve Months Ending
	December 31, 2015
	Low	High
Volume Point Growth vs 2014	0.0%	3.0%
Net Sales Growth vs 2014	(1.0%)	2.0%
Currency Adjusted Net Sales Growth vs 2014	3.0%	6.0%
Diluted EPS	$5.45	$5.75
Currency Adjusted EPS	$6.10	$6.40
Cap Ex ($ millions)	$145.0	$165.0
Effective Tax Rate	27.0%	29.0%
Free Cash Flow ($ millions)	$470.0	$500.0


	9/30/14			12/31/13

Total long-term debt (current and long-term portion)	$	1,827,919	$	931,269
Less: Cash and cash equivalents		678,134		972,974
Net debt	$	1,149,785	$	(41,705	)