Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v2.4.0.8
Segment Information
 3 Months Ended
Mar. 31, 2014
Segment Reporting [Abstract]  
Segment Information

6. Segment Information

The Company is a nutrition company that sells a wide range of weight management products, nutritional supplements and personal care products. The Company’s products are manufactured by third party providers and by the Company in its Changsha, Hunan, China extraction facility, Suzhou, China facility and in its Lake Forest, California facility, and then are sold to Members who consume and sell Herbalife products to retail consumers or other Members. Revenues reflect sales of products by the Company to its Members and are categorized based on geographic location.

As of March 31, 2014, the Company sold products in 91 countries throughout the world and was organized and managed by geographic regions. The Company aggregates its operating segments, excluding China, into one reporting segment, or the Primary Reporting Segment, as management believes that the Company’s operating segments have similar operating characteristics and similar long term operating performance. In making this determination, management believes that the operating segments are similar in the nature of the products sold, the product acquisition process, the types of customers to whom products are sold, the methods used to distribute the products, and the nature of the regulatory environment. China has been identified as a separate reporting segment as it does not meet the criteria for aggregation. The operating information for the Primary Reporting Segment and China, and sales by product line are as follows:

 

     Three Months Ended  
     March 31,
2014		      March 31,
2013		  
     (In millions)  

Net Sales:

      

Primary Reporting Segment

      

United States

    $ 234.0       $ 216.2   

Mexico

      142.7         132.9   

South Korea

      99.0         110.0   

Others

      651.1         596.0   
  

 

 

     

 

 

  

Total Primary Reporting Segment

      1,126.8         1,055.1   

China

      135.8         68.5   
  

 

 

     

 

 

  

Total Net Sales

    $ 1,262.6       $ 1,123.6   
  

 

 

     

 

 

  

Contribution Margin(1)(2):

      

Primary Reporting Segment

      

United States

    $ 100.6       $ 94.7   

Mexico

      61.4         58.6   

South Korea

      55.4         55.2   

Others

      287.9         264.7   
  

 

 

     

 

 

  

Total Primary Reporting Segment

      505.3         473.2   

China

      124.4         60.5   
  

 

 

     

 

 

  

Total Contribution Margin

    $ 629.7       $ 533.7   
  

 

 

     

 

 

  

Selling, general and administrative expenses(2)

      502.0         364.7   

Interest expense, net

      15.0         5.4   

Other expense, net

      3.2         —     
  

 

 

     

 

 

  

Income before income taxes

      109.5         163.6   

Income taxes

      34.9         44.7   
  

 

 

     

 

 

  

Net Income

    $ 74.6       $ 118.9   
  

 

 

     

 

 

  

Net sales by product line:

      

Weight Management

    $ 807.6       $ 711.6   

Targeted Nutrition

      284.0         256.9   

Energy, Sports and Fitness

      66.7         58.3   

Outer Nutrition

      39.7         38.2   

Literature, promotional and other(3)

      64.6         58.6   
  

 

 

     

 

 

  

Total Net Sales

    $ 1,262.6       $ 1,123.6   
  

 

 

     

 

 

  

Net sales by geographic region:

      

North America

    $ 247.8       $ 221.5   

Mexico

      142.7         132.9   

South and Central America

      244.7         219.4   

EMEA

      211.2         169.5   

Asia Pacific

      280.4         311.8   

China

      135.8         68.5   
  

 

 

     

 

 

  

Total Net Sales

    $ 1,262.6       $ 1,123.6   
  

 

 

     

 

 

  

 

(1) Contribution margin consists of net sales less cost of sales and royalty overrides.
(2) Service fees to China independent service providers totaling $61.6 million and $31.4 million for the three months ended March 31, 2014 and 2013, respectively, are included in selling, general and administrative expenses while Member compensation for all other countries is included in contribution margin.
(3) Product buybacks and returns in all product categories are included in the literature, promotional and other category.