Herbalife Ltd. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2025

Components of Income before Income Taxes

The components of income before income taxes were as follows:


	Year Ended December 31,
	2025			2024			2023
	(in millions)
Domestic	$	(155.7	)	$	(167.7	)	$	(94.1	)
Foreign		430.8			337.1			297.1
Total	$	275.1		$	169.4		$	203.0

Components of Income Tax Expense

Income taxes were as follows:


	Year Ended December 31,
	2025			2024			2023
	(in millions)
Current:
Foreign	$	93.3		$	90.3		$	80.8
Federal		18.2			49.4			21.3
State		—			5.0			(0.2	)
		111.5			144.7			101.9
Deferred:
Foreign		(38.3	)		(165.9	)		(1.7	)
Federal		(23.0	)		(57.0	)		(34.6	)
State		(2.9	)		(6.7	)		(4.8	)
		(64.2	)		(229.6	)		(41.1	)
	$	47.3		$	(84.9	)	$	60.8

Schedule of Reconciliation of U.S. Federal Statutory Income Tax Rate to Effective Income Tax Rate

The following table presents the required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to the Company’s actual global effective amount and rate for the year ended December 31, 2025:


	Year Ended December 31,
	2025
	Amount			Percent
	(in millions)
U.S. federal statutory tax rate	$	57.8			21.0	%
State taxes, net of federal benefit (1)		(0.8	)		(0.3	)%
Effect of cross-border tax laws
Net foreign tested income, net of credits		6.1			2.2	%
Foreign-derived intangible income		8.0			2.9	%
Foreign tax credits		(3.0	)		(1.1	)%
Other		(1.7	)		(0.6	)%
Tax credits
Research and development tax credits		(4.2	)		(1.5	)%
Changes in valuation allowances		(15.1	)		(5.5	)%
Nontaxable or nondeductible items
Nondeductible stock compensation		15.5			5.6	%
Other		3.7			1.3	%
Changes in unrecognized tax benefits		(5.8	)		(2.1	)%
Foreign tax effects
India
Statutory tax rate difference between India and United States		6.7			2.4	%
Withholding taxes		22.4			8.1	%
Other		1.3			0.5	%
Luxembourg
Statutory tax rate difference between Luxembourg and United States		9.7			3.5	%
Imputed interest		(21.0	)		(7.6	)%
Other		(2.7	)		(1.0	)%
Switzerland
Statutory tax rate difference between Switzerland and United States		(7.4	)		(2.7	)%
Changes in valuation allowances		(42.5	)		(15.5	)%
Cantonal taxes		2.1			0.8	%
Other foreign jurisdictions		19.0			6.9	%
Other Adjustments		(0.8	)		(0.1	)%
Effective Tax Rate	$	47.3			17.2	%

(1)

State taxes in California, New York, Alabama, and Minnesota made up the majority (greater than 50 percent) of the tax effect in this category.

The following table presents the required disclosures prior to the Company’s adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the years ended December 31, 2024 and 2023:


	Year Ended December 31,
	2024			2023
	(in millions)
Tax expense at United States statutory rate	$	35.6		$	42.6
Increase (decrease) in tax resulting from:
Differences between U.S. and foreign tax rates on foreign income, including withholding taxes		30.2			90.3
U.S. tax expense (benefit) on foreign income, net of foreign tax credits		(12.0	)		1.1
Intra-entity transfers of intellectual property		(177.6	)		—
Deferred tax charge		18.5			(7.4	)
Increase (decrease) in valuation allowances		28.8			(61.0	)
State taxes, net of federal benefit		(2.2	)		(5.6	)
Unrecognized tax (benefits) expenses		(13.8	)		(6.1	)
Excess tax expense (benefits) on equity awards		6.5			5.2
U.S. research and development tax credit		(4.9	)		(4.4	)
Expenses not deductible for tax		6.3			3.2
Other		(0.3	)		2.9
Total	$	(84.9	)	$	60.8

Deferred Income Tax Assets and Liabilities

The significant categories of temporary differences that gave rise to deferred income tax assets and liabilities were as follows:


	December 31,
	2025			2024
	(in millions)
Deferred income tax assets:
Accruals not currently deductible	$	97.7		$	86.2
Tax loss and credit carryforwards of certain foreign subsidiaries		234.8			225.6
Tax loss and domestic tax credit carryforwards		154.4			161.6
Intellectual property		163.6			177.6
Deferred compensation plan		22.5			27.8
Deferred interest expense		100.6			77.6
Inventory reserve		5.0			5.9
Operating lease liabilities		43.1			42.2
Depreciation and amortization		46.7			77.0
Other		37.2			24.5
Gross deferred income tax assets		905.6			906.0
Less: valuation allowance		(336.8	)		(404.2	)
Total deferred income tax assets	$	568.8		$	501.8
Deferred income tax liabilities:
Intangible assets	$	69.4		$	71.9
Unremitted foreign earnings		16.1			11.7
Operating lease assets		37.9			37.3
Total deferred income tax liabilities		123.4			120.9
Total net deferred income tax assets	$	445.4		$	380.9

Schedule of Income Taxes Paid Net of Refunds

The Company adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and has included the following table as a result of its adoption, which presents income taxes paid, net of refunds received for the year ended December 31, 2025:


	Year Ended December 31,
	2025
	(in millions)
Federal	$	2.0
State		2.8
Foreign
India		68.9
Mexico		5.6
All other foreign		37.5
Income taxes paid, net of refunds received	$	116.8

Changes Occurred in Amount of Unrecognized Tax Benefits

The following changes occurred in the amount of unrecognized tax benefits during the years ended December 31, 2025, 2024, and 2023:


	Year Ended December 31,
	2025			2024			2023
	(in millions)
Beginning balance of unrecognized tax benefits	$	39.9		$	49.1		$	49.7
Additions for current year tax positions		5.5			6.8			9.7
Additions for prior year tax positions		0.8			4.3			1.0
Reductions for prior year tax positions		(6.3	)		(14.6	)		(6.6	)
Reductions for audit settlements		(0.3	)		(0.3	)		(0.2	)
Reductions for the expiration of statutes of limitations		(3.9	)		(4.1	)		(4.4	)
Changes due to foreign currency translation adjustments		0.5			(1.3	)		(0.1	)
Ending balance of unrecognized tax benefits (excluding interest and penalties)		36.2			39.9			49.1
Interest and penalties associated with unrecognized tax benefits		9.5			11.4			18.3
Ending balance of unrecognized tax benefits (including interest and penalties)	$	45.7		$	51.3		$	67.4