Annual report pursuant to Section 13 and 15(d)

Segment Information

v2.4.0.6
Segment Information
 12 Months Ended
Dec. 31, 2011
Segment Information [Abstract]  
Segment Information

10.    Segment Information

The Company is a network marketing company that sells a wide range of weight management products, nutritional supplements and personal care products within one industry segment as defined under the FASB ASC Topic 280, Segment Reporting. The Company’s products are manufactured by third party providers and by the Company in its Suzhou, China facility and in its Lake Forest, California facility, and then are sold to independent distributors who sell Herbalife products to retail consumers or other distributors. Revenues reflect sales of products by the Company to distributors and are categorized based on geographic location.

 

As of December 31, 2011, the Company sells products in 79 countries throughout the world and is 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:The following table table broken into two for XBRL tagging.

 

 

                         
    Year Ended December 31,  
    2011     2010     2009  
    (In millions)  

Net Sales:

                        

Primary Reporting Segment:

                        

United States

   $ 676.9     $ 595.4     $ 512.9  

Mexico

     436.9       334.0       263.0  

South Korea

     343.5       208.9       115.0  

Others

     1,786.4       1,411.5       1,281.4  
   

 

 

    

 

 

    

 

 

  

Total Primary Reporting Segment

     3,243.7       2,549.8       2,172.3  

China

     210.8       184.4       152.3  
   

 

 

    

 

 

    

 

 

  

Total Net Sales

   $ 3,454.5     $ 2,734.2     $ 2,324.6  
   

 

 

    

 

 

    

 

 

  

 

                         

Contribution Margin(1):

                        

Primary Reporting Segment:

                        

United States

   $ 286.3     $ 257.0     $ 220.0  

Mexico

     191.1       131.7       104.0  

South Korea

     163.1       103.0       54.4  

Others

     810.0       618.5       558.9  
   

 

 

    

 

 

    

 

 

  

Total Primary Reporting Segment

     1,450.5       1,110.2       937.3  

China(2)

     186.4       165.0       132.6  
   

 

 

    

 

 

    

 

 

  

Total Contribution Margin

   $ 1,636.9     $ 1,275.2     $ 1,069.9  

Selling, general and administrative expense

     1,074.6       887.7       773.9  

Interest expense

     9.9       9.7       9.6  

Interest income

     7.4       2.3       4.5  
   

 

 

    

 

 

    

 

 

  

Income before income taxes

     559.8       380.1       290.9  

Income taxes

     147.2       80.9       87.6  
   

 

 

    

 

 

    

 

 

  

Net Income

   $ 412.6     $ 299.2     $ 203.3  
   

 

 

    

 

 

    

 

 

  

 

 

 

                         
    Year Ended December 31,  
    2011     2010     2009  
    (In millions)  

Capital Expenditures:

                        

United States

   $ 60.4     $ 51.0     $ 45.4  

Mexico

     3.5       2.5       1.4  

South Korea

     2.1       0.4       1.6  

China

     6.6       3.1       3.7  

Others

     18.3       11.1       8.0  
   

 

 

    

 

 

    

 

 

  

Total Capital Expenditures

   $ 90.9     $ 68.1     $ 60.1  
   

 

 

    

 

 

    

 

 

  

 

 

                         
    Year Ended December 31,  
    2011     2010     2009  
    (In millions)  

Net sales by product line:

                        

Weight Management

   $ 2,158.7     $ 1,698.9     $ 1,464.8  

Targeted Nutrition

     789.6       629.2       493.7  

Energy, Sports & Fitness

     169.8       121.3       98.7  

Outer Nutrition

     147.8       127.5       128.3  

Literature, Promotional and Other(3)

     188.6       157.3       139.1  
   

 

 

    

 

 

    

 

 

  

Total Net Sales

   $ 3,454.5     $ 2,734.2     $ 2,324.6  
   

 

 

    

 

 

    

 

 

  

 

                         

Net sales by geographic region:

                        

North America

   $ 698.6     $ 614.1     $ 529.0  

Mexico

     436.9       334.0       263.0  

South & Central America

     554.4       390.4       366.9  

EMEA

     615.2       527.8       504.2  

Asia Pacific

     938.6       683.5       509.2  

China

     210.8       184.4       152.3  
   

 

 

    

 

 

    

 

 

  

Total Net Sales

   $ 3,454.5     $ 2,734.2     $ 2,324.6  
   

 

 

    

 

 

    

 

 

  

 

 

(1) Contribution margin consists of net sales less cost of sales and royalty overrides. See Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report on Form 10-K for a description of net sales, cost of sales and royalty overrides.

 

(2) Compensation to China sales employees and service fees to China independent service providers totaling $96.8 million, $87.3 million and $79.1 million for the years ended December 31, 2011, 2010 and 2009, respectively, are included in selling, general and administrative expenses while distributor 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.

As of December 31, 2011 and 2010, total assets for the Company’s Primary Reporting Segment were $1,357.4 million and $1,162.1 million, respectively. Total assets for the China segment were $88.8 million and $70.1 million as of December 31, 2011 and 2010, respectively.

 

As of December 31, 2011 and 2010, goodwill allocated to the Company’s reporting units included in the Company’s Primary Reporting Segment was $102.4 million and $99.8 million, respectively. Goodwill allocated to the China segment was $3.1 million as of December 31, 2011 and 2010.

As of December 31, 2011, the net property, plant and equipment located in the U.S. and in all foreign countries was $144.2 million and $49.5 million, respectively. As of December 31, 2010, the net property, plant and equipment located in the U.S. and in all foreign countries was $141.1 million and $36.3 million, respectively.

As of December 31, 2011, the deferred tax assets related to the U.S. and all foreign countries was $65.4 million and $46.8 million, respectively. As of December 31, 2010, the deferred tax assets related to the U.S. and all foreign countries was $72.9 million and $34.8 million, respectively.

The majority of the Company’s foreign subsidiaries designate their local currencies as their functional currency. As of December 31, 2011 and 2010, the total amount of cash held by foreign subsidiaries reported in the Company’s consolidated balance sheet was $246.0 million and $188.2 million, respectively, of which $9.2 million and $5.8 million, respectively, was maintained or invested in U.S. dollars.