Herbalife Ltd. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Derivative Instruments and Hedging Activities (Tables)

Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Gains (Losses) Relating to Derivative Instruments Recorded in Other Comprehensive Loss

The following table summarizes gains (losses) relating to derivative instruments recorded in other comprehensive loss during the three and nine months ended September 30, 2019 and 2018:

	Amount of Loss Recognized in Other Comprehensive Loss
	Three Months Ended						Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
	(in millions)
Derivatives designated as hedging instruments:
Foreign exchange currency contracts relating to inventory and intercompany management fee hedges	$	(0.2	)	$	(6.0	)	$	(1.2	)	$	(5.5	)

Effect of Cash Flow Hedging Relationships on Condensed Consolidated Statements of Income

The effect of cash flow hedging relationships on the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2019 and 2018 was as follows:

	Location and Amount of Gain (Loss) Recognized in Income on Cash Flow Hedging Relationships
	Three Months Ended										Nine Months Ended
	September 30, 2019					September 30, 2018					September 30, 2019					September 30, 2018
	Cost of sales			Selling, general, and administrative expenses		Cost of sales		Selling, general, and administrative expenses			Cost of sales			Selling, general, and administrative expenses		Cost of sales		Selling, general, and administrative expenses
	(in millions)
Total amounts presented in the condensed consolidated statements of income	$	243.4		$	500.1	$	218.1	$	499.4		$	728.2		$	1,412.5	$	693.4	$	1,469.7

Foreign exchange currency contracts relating to inventory hedges:
Amount of (loss) gain reclassified from accumulated other comprehensive loss to income		(0.3	)		—		1.2		—			(0.2	)		—		3.2		—
Amount of loss excluded from assessment of effectiveness recognized in income(1)		(0.6	)		—		—		(0.9	)		(1.9	)		—		—		(4.0	)

Foreign exchange currency contracts relating to intercompany management fee hedges:
Amount of gain (loss) reclassified from accumulated other comprehensive loss to income		—			0.1		—		(0.4	)		—			0.9		—		(4.4	)
Amount of gain (loss) excluded from assessment of effectiveness recognized in income		—			0.1		—		(0.1	)		—			0.2		—		0.8

(1)

As a result of adopting ASU 2017-12 during the first quarter of 2019, for the three and nine months ended September 30, 2019, the Company recognized gains (losses) excluded from the assessment of effectiveness on foreign exchange currency contracts relating to inventory hedges in cost of sales within its condensed consolidated statements of income. Prior to the adoption of ASU 2017-12, for the three and nine months ended September 30, 2018, the Company recognized gains (losses) excluded from the assessment of effectiveness on foreign exchange currency contracts relating to inventory hedges in selling, general, and administrative expenses within its condensed consolidated statements of income.

Gains (Losses) Relating to Derivative Instruments Not Designated As Hedging Instruments Recorded to Income

The following table summarizes gains (losses) recorded to income relating to derivative instruments not designated as hedging instruments during the three and nine months ended September 30, 2019 and 2018:

	Amount of Gain (Loss) Recognized in Income
	Three Months Ended					Nine Months Ended
	September 30, 2019		September 30, 2018			September 30, 2019		September 30, 2018			Location of Gain (Loss) Recognized in Income
	(in millions)
Derivatives not designated as hedging instruments:
Foreign exchange currency contracts	$	0.4	$	(0.7	)	$	0.2	$	(2.3	)	Selling, general, and administrative expenses