Quarterly report pursuant to Section 13 or 15(d)

Shareholders' Deficit

v3.24.3
Shareholders' Deficit
 9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Shareholders' Deficit

10. Shareholders’ Deficit

Changes in shareholders’ deficit for the three months ended September 30, 2024 and 2023 were as follows:

 

 

 

Three Months Ended September 30, 2024

 

 

 

Common Shares

 

 

Paid-in Capital in Excess of Par Value

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated Deficit

 

 

Total Shareholders’ Deficit

 

 

 

(in millions)

 

Balance as of June 30, 2024

 

$

0.1

 

 

$

253.4

 

 

$

(257.4

)

 

$

(1,033.3

)

 

$

(1,037.2

)

Issuance of less than 0.1 common shares from exercise of SARs, restricted stock units, employee stock purchase plan, and other

 

 

—

 

 

 

0.6

 

 

 

 

 

 

 

 

 

0.6

 

Additional capital from share-based compensation

 

 

 

 

 

13.0

 

 

 

 

 

 

 

 

 

13.0

 

Repurchases of — common shares

 

 

—

 

 

 

—

 

 

 

 

 

 

—

 

 

 

—

 

Net income

 

 

 

 

 

 

 

 

 

 

 

47.4

 

 

 

47.4

 

Foreign currency translation adjustment, net of income taxes of $(0.1)

 

 

 

 

 

 

 

 

13.0

 

 

 

 

 

 

13.0

 

Unrealized gain on derivatives, net of income taxes of $—

 

 

 

 

 

 

 

 

9.0

 

 

 

 

 

 

9.0

 

Balance as of September 30, 2024

 

$

0.1

 

 

$

267.0

 

 

$

(235.4

)

 

$

(985.9

)

 

$

(954.2

)

 

 

 

Three Months Ended September 30, 2023

 

 

 

Common Shares

 

 

Paid-in Capital in Excess of Par Value

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated Deficit

 

 

Total Shareholders’ Deficit

 

 

 

(in millions)

 

Balance as of June 30, 2023

 

$

0.1

 

 

$

202.8

 

 

$

(238.0

)

 

$

(1,115.3

)

 

$

(1,150.4

)

Issuance of 0.1 common shares from exercise of SARs, restricted stock units, employee stock purchase plan, and other

 

 

—

 

 

 

0.8

 

 

 

 

 

 

 

 

 

0.8

 

Additional capital from share-based compensation

 

 

 

 

 

13.7

 

 

 

 

 

 

 

 

 

13.7

 

Repurchases of — common shares

 

 

—

 

 

 

(0.3

)

 

 

 

 

 

—

 

 

 

(0.3

)

Net income

 

 

 

 

 

 

 

 

 

 

 

42.8

 

 

 

42.8

 

Foreign currency translation adjustment, net of income taxes of $(0.3)

 

 

 

 

 

 

 

 

(15.5

)

 

 

 

 

 

(15.5

)

Unrealized gain on derivatives, net of income taxes of $—

 

 

 

 

 

 

 

 

0.4

 

 

 

 

 

 

0.4

 

Other

 

 

 

 

 

5.0

 

 

 

 

 

 

 

 

 

5.0

 

Balance as of September 30, 2023

 

$

0.1

 

 

$

222.0

 

 

$

(253.1

)

 

$

(1,072.5

)

 

$

(1,103.5

)

 

Changes in shareholders’ deficit for the nine months ended September 30, 2024 and 2023 were as follows:

 

 

 

Nine Months Ended September 30, 2024

 

 

 

Common Shares

 

 

Paid-in Capital in Excess of Par Value

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated Deficit

 

 

Total Shareholders’ Deficit

 

 

 

(in millions)

 

Balance as of December 31, 2023

 

$

0.1

 

 

$

233.9

 

 

$

(232.0

)

 

$

(1,062.3

)

 

$

(1,060.3

)

Issuance of 2.1 common shares from exercise of SARs, restricted stock units, employee stock purchase plan, and other

 

 

—

 

 

 

2.1

 

 

 

 

 

 

 

 

 

2.1

 

Additional capital from share-based compensation

 

 

 

 

 

36.7

 

 

 

 

 

 

 

 

 

36.7

 

Repurchases of 0.6 common shares

 

 

—

 

 

 

(5.7

)

 

 

 

 

 

—

 

 

 

(5.7

)

Net income

 

 

 

 

 

 

 

 

 

 

 

76.4

 

 

 

76.4

 

Foreign currency translation adjustment, net of income taxes of $(0.1)

 

 

 

 

 

 

 

 

(18.5

)

 

 

 

 

 

(18.5

)

Unrealized gain on derivatives, net of income taxes of $—

 

 

 

 

 

 

 

 

15.1

 

 

 

 

 

 

15.1

 

Balance as of September 30, 2024

 

$

0.1

 

 

$

267.0

 

 

$

(235.4

)

 

$

(985.9

)

 

$

(954.2

)

 

 

 

Nine Months Ended September 30, 2023

 

 

 

Common Shares

 

 

Paid-in Capital in Excess of Par Value

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated Deficit

 

 

Total Shareholders’ Deficit

 

 

 

(in millions)

 

Balance as of December 31, 2022

 

$

0.1

 

 

$

188.7

 

 

$

(250.2

)

 

$

(1,204.5

)

 

$

(1,265.9

)

Issuance of 1.6 common shares from exercise of SARs, restricted stock units, employee stock purchase plan, and other

 

 

—

 

 

 

2.3

 

 

 

 

 

 

 

 

 

2.3

 

Additional capital from share-based compensation

 

 

 

 

 

35.7

 

 

 

 

 

 

 

 

 

35.7

 

Repurchases of 0.5 common shares

 

 

—

 

 

 

(9.7

)

 

 

 

 

 

—

 

 

 

(9.7

)

Net income

 

 

 

 

 

 

 

 

 

 

 

132.0

 

 

 

132.0

 

Foreign currency translation adjustment, net of income taxes of $(0.5)

 

 

 

 

 

 

 

 

(0.7

)

 

 

 

 

 

(0.7

)

Unrealized loss on derivatives, net of income taxes of $(0.1)

 

 

 

 

 

 

 

 

(2.2

)

 

 

 

 

 

(2.2

)

Other

 

 

 

 

 

5.0

 

 

 

 

 

 

 

 

 

5.0

 

Balance as of September 30, 2023

 

$

0.1

 

 

$

222.0

 

 

$

(253.1

)

 

$

(1,072.5

)

 

$

(1,103.5

)

 

Dividends

The Company has not declared or paid cash dividends since 2014. The declaration of future dividends is subject to the discretion of the Company’s board of directors and will depend upon various factors, including its earnings, financial condition, Herbalife Ltd.’s available distributable reserves under Cayman Islands law, restrictions imposed by the 2024 Credit Facility and the terms of any other indebtedness that may be outstanding, cash requirements, future prospects and other factors deemed relevant by its board of directors.

Share Repurchases

On February 9, 2021, the Company’s board of directors authorized a three-year $1.5 billion share repurchase program which had approximately $985.5 million of remaining authorized capacity prior to the share repurchase program expiring on February 9, 2024. This share repurchase program allowed the Company, which included an indirect wholly-owned subsidiary of Herbalife Ltd., to repurchase the Company’s common shares at such times and prices as determined by management, as market conditions warranted, and to the extent Herbalife Ltd.’s distributable reserves were available under Cayman Islands law. The 2024 Credit Facility permits the Company to repurchase its common shares as long as no default or event of default exists and other conditions, such as specified consolidated leverage ratios, are met.

During the nine months ended September 30, 2024 and 2023, the Company did not repurchase any of its common shares through open-market purchases.

The number of shares issued upon vesting or exercise for certain restricted stock units and SARs granted pursuant to the Company’s share-based compensation plans is net of the statutory withholding requirements that the Company pays on behalf of its employees. Although shares withheld are not issued, they are treated as common share repurchases in the Company’s condensed consolidated financial statements, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the Company’s share repurchase program described above. During the three and nine months ended September 30, 2024 and 2023, the Company withheld shares on its vested restricted stock units and exercised SARs relating to its share-based compensation plans.

The Company reflects the aggregate purchase price of its common shares repurchased as an increase to shareholders’ deficit. The Company generally allocates the purchase price of the repurchased shares to accumulated deficit, common shares and additional paid-in capital.

For both the nine months ended September 30, 2024 and 2023, the Company’s share repurchases, inclusive of transaction costs, were zero, under the Company’s share repurchase programs, and $5.7 million and $9.7 million, respectively, due to shares withheld for tax purposes related to the Company’s share-based compensation plans and have been recorded as an increase to shareholders’ deficit within the Company’s condensed consolidated balance sheets.

Accumulated Other Comprehensive Loss

The following table summarizes changes in accumulated other comprehensive loss by component during the three months ended September 30, 2024 and 2023:

 

 

 

Changes in Accumulated Other Comprehensive Loss by Component

 

 

 

Three Months Ended

 

 

 

September 30,
2024

 

 

September 30,
2023

 

 

 

Foreign Currency Translation Adjustments

 

 

Unrealized Gain (Loss) on Derivatives

 

 

Total

 

 

Foreign Currency Translation Adjustments

 

 

Unrealized (Loss) Gain on Derivatives

 

 

Total

 

 

 

(in millions)

 

Beginning balance

 

$

(262.1

)

 

$

4.7

 

 

$

(257.4

)

 

$

(233.4

)

 

$

(4.6

)

 

$

(238.0

)

Other comprehensive income (loss) before reclassifications, net of tax

 

 

13.0

 

 

 

8.2

 

 

 

21.2

 

 

 

(15.5

)

 

 

(1.0

)

 

 

(16.5

)

Amounts reclassified from accumulated other comprehensive loss to income, net of tax(1)

 

 

—

 

 

 

0.8

 

 

 

0.8

 

 

 

—

 

 

 

1.4

 

 

 

1.4

 

Total other comprehensive income (loss), net of reclassifications

 

 

13.0

 

 

 

9.0

 

 

 

22.0

 

 

 

(15.5

)

 

 

0.4

 

 

 

(15.1

)

Ending balance

 

$

(249.1

)

 

$

13.7

 

 

$

(235.4

)

 

$

(248.9

)

 

$

(4.2

)

 

$

(253.1

)

 

(1)
See Note 9, Derivative Instruments and Hedging Activities, for information regarding the location within the condensed consolidated statements of income of gains (losses) reclassified from accumulated other comprehensive loss to income during the three months ended September 30, 2024 and 2023.

Other comprehensive income (loss) before reclassifications was net of tax benefit of $0.1 million for foreign currency translation adjustments for the three months ended September 30, 2024.

Other comprehensive income (loss) before reclassifications was net of tax benefit of $0.3 million for foreign currency translation adjustments for the three months ended September 30, 2023.

The following table summarizes changes in accumulated other comprehensive loss by component during the nine months ended September 30, 2024 and 2023:

 

 

Changes in Accumulated Other Comprehensive Loss by Component

 

 

 

Nine Months Ended

 

 

 

September 30,
2024

 

 

September 30,
2023

 

 

 

Foreign Currency Translation Adjustments

 

 

Unrealized (Loss) Gain on Derivatives

 

 

Total

 

 

Foreign Currency Translation Adjustments

 

 

Unrealized Loss on Derivatives

 

 

Total

 

 

 

(in millions)

 

Beginning balance

 

$

(230.6

)

 

$

(1.4

)

 

$

(232.0

)

 

$

(248.2

)

 

$

(2.0

)

 

$

(250.2

)

Other comprehensive (loss) income before reclassifications, net of tax

 

 

(18.5

)

 

 

13.0

 

 

 

(5.5

)

 

 

(0.7

)

 

 

(8.0

)

 

 

(8.7

)

Amounts reclassified from accumulated other comprehensive loss to income, net of tax(1)

 

 

—

 

 

 

2.1

 

 

 

2.1

 

 

 

—

 

 

 

5.8

 

 

 

5.8

 

Total other comprehensive (loss) income, net of reclassifications

 

 

(18.5

)

 

 

15.1

 

 

 

(3.4

)

 

 

(0.7

)

 

 

(2.2

)

 

 

(2.9

)

Ending balance

 

$

(249.1

)

 

$

13.7

 

 

$

(235.4

)

 

$

(248.9

)

 

$

(4.2

)

 

$

(253.1

)
(1)
See Note 9, Derivative Instruments and Hedging Activities, for information regarding the location within the condensed consolidated statements of income of gains (losses) reclassified from accumulated other comprehensive loss to income during the nine months ended September 30, 2024 and 2023.

Other comprehensive income (loss) before reclassifications was net of tax benefit of $0.1 million for foreign currency translation adjustments for the nine months ended September 30, 2024.

Other comprehensive income (loss) before reclassifications was net of tax benefit of $0.5 million for foreign currency translation adjustments for the nine months ended September 30, 2023. Amounts reclassified from accumulated other comprehensive loss to income was net of tax benefit of $0.1 million for unrealized gain (loss) on derivatives for the nine months ended September 30, 2023.