15.    Subsequent Events

On February 3, 2014, the Company announced that its board of directors authorized an increase in the existing share repurchase authorization to an available balance of $1.5 billion. The Company’s former share repurchase authorization of $1 billion had an available balance of $652.6 million as of December 31, 2013.

On February 18, 2014, the Company announced that its board of directors approved a quarterly cash dividend of $0.30 per common share to shareholders of record as of March 4, 2014, payable on March 18, 2014.

During February 2014, the Company initially issued $1 billion aggregate principal amount of convertible senior notes, or Convertible Notes, in a private offering to qualified institutional buyers, pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company granted an option to the initial purchasers to purchase up to an additional $150 million aggregate principal amount of Convertible Notes which was subsequently exercised in full during February 2014, resulting in a total issuance of $1.15 billion aggregate principal amount of Convertible Notes. The Convertible Notes pay interest at a rate of 2.00% per annum payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2014. The Convertible Notes mature on August 15, 2019, unless earlier repurchased or converted. The Company may not redeem the Convertible Notes prior to their stated maturity date. These Convertible Notes are not puttable by the note holders other than in the context of a defined fundamental change. Upon conversion, the Convertible Notes will be settled in cash and, if applicable, the Company’s common shares, based on the applicable conversion rate at such time. The Convertible Notes had an initial conversion rate of 11.5908 common shares per $1,000 principal amount of the Convertible Notes (which is equal to an initial conversion price of approximately $86.28 per common share), representing an initial conversion premium of approximately 25% above the last reported sale price of $69.02 per common share on February 3, 2014. The Company is also expected to incur approximately $26 million of deferred financing costs as a result of issuing these Convertible Notes.

During the first quarter of 2014, the $1.15 billion proceeds received from the issuance of the Convertible Notes must be allocated between total liabilities and shareholders’ equity within the Company’s consolidated balance sheet due to the fact the Convertible Notes may be partially settled in cash and that there is an existing equity conversion feature within the Convertible Notes that permits the Company to settle any amounts above the conversion price with its common shares. As of February 18, 2014, the $1.15 billion allocation between total liabilities and shareholders’ equity had not been finalized. Preliminarily, it is expected that a majority of the $1.15 billion will be allocated to total liabilities. As a result of this required allocation, the liability component will be measured based on the fair value of the Convertible Notes which will be discounted using the nonconvertible debt interest rate; therefore, this will result in discounted debt being recognized within total liabilities on the Company’s consolidated balance sheet. The difference between the proceeds received from the Convertible Notes issuance and this discounted debt would then be allocated to shareholders’ equity. Since the Company must still settle these Convertible Notes at face value at or prior to maturity, this discounted debt will be accreted up to its face value resulting in additional non-cash interest expense being recognized in subsequent periods within the Company’s consolidated statements of income while the Convertible Notes remain outstanding.

In connection with the issuance of Convertible Notes, the Company paid approximately $124 million to enter into capped call transactions with respect to its common shares, or the Capped Call Transactions, with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of the common shares is greater than the strike price of the Capped Call Transactions, with such reduction of potential dilution subject to a cap based on the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions will initially be $120.79 per common share, representing a premium of approximately 75% above the last reported sale price of $69.02 per common share on February 3, 2014, and is subject to certain adjustments under the terms of the Capped Call Transactions. As a result of this transaction, the Company’s additional paid-in capital within shareholders’ equity on its consolidated balance sheet was reduced by $124 million during the first quarter of 2014.

In addition, the Company paid approximately $686 million to enter into prepaid forward share repurchase transactions, or the Forward Transactions, with certain financial institutions, or Forward Counterparties, pursuant to which the Company purchased approximately 9.9 million common shares for settlement on or around the August 15, 2019 maturity date for the Convertible Notes, subject to the ability of each Forward Counterparty to elect to settle all or a portion of its Forward Transaction early. The Forward Transactions are generally expected to facilitate privately negotiated derivative transactions between the Forward Counterparties and holders of the Convertible Notes, including swaps, relating to the common shares by which holders of the Convertible Notes establish short positions relating to the common shares and otherwise hedge their investments in the Convertible Notes concurrently with, or shortly after, the pricing of the Convertible Notes. As a result of this transaction, the Company’s total shareholders’ equity within its consolidated balance sheet was reduced by approximately $686 million during the first quarter of 2014, with amounts being allocated between retained earnings and additional paid in capital within total shareholders’ equity. The Company will also record non-cash deferred financing costs and a corresponding amount to additional paid in capital reflecting the fair value of the Forward Transactions as these transactions were also executed to facilitate the issuance of the Company’s Convertible Notes as described above. As of February 18, 2014, the fair value was not finalized.

In February 2014, in connection with executing the Convertible Notes, Forward Transactions, and Capped Call Transactions, the Company also amended the Credit Facility. Pursuant to this amendment, the Company amended the terms of the Credit Facility to provide for technical amendments to the indebtedness, asset sale and dividend covenants and the cross-default event of default to accommodate the foregoing transactions. The amendment will also increase by 0.50% the highest applicable margin payable by Herbalife in the event that Herbalife’s consolidated total leverage ratio exceeds 2.50 to 1.00 and increase the permitted consolidated total leverage ratio of Herbalife under the Credit Facility.