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 Herbalife Reports Record Full Year 2016 Worldwide Volume; Number of Preferred Members in the U.S. Approximately 300,000; Record Worldwide Sales Leader Retention; Announces a New Share Buyback Authorization of $1.5 Billion
   Thursday, February 23, 2017 4:12:01 PM ET

--Full year 2016 net sales of $4.5 billion, consistent with prior year and an increase of 6% on a constant currency basis compared to the prior year period.

--Fourth quarter 2016 reported net sales of $1.0 billion

--Fourth quarter 2016 reported diluted EPS of $1.16 and adjusted(1) diluted EPS of $1.00, which both include an $0.11 negative impact due to currency fluctuations

--Approximately 300,000 have converted to or signed-up as Preferred Members in the U.S.

--Record worldwide sales leader retention of 60.9%, record U.S. sales leader retention of 75.3%

--Company announces board approval of a new 3 year $1.5 billion share buyback program

Herbalife Ltd. (HLF ) reports results for the fourth quarter and full year ended December 31, 2016.

Michael O. Johnson, chairman and CEO of Herbalife, stated, "2016 was a dynamic and record-breaking year. Our members continue to successfully build customer-focused businesses, which is evident in our record volume and retention metrics. In addition, our new share buyback authorization is a further testament of our commitment to enhance shareholder value."

The company reported record full year 2016 worldwide volume points of 5.6 billion, which represents an increase of approximately 5% compared to 2015. Reported full year 2016 net sales of $4.5 billion was flat, while constant currency net sales increased 6%, both compared to 2015.

On a reported basis, full year 2016 net income was $260.0 million, or $3.02 per diluted share, compared to net income of $339.1 million or $3.97 per diluted share for 2015.

Adjusted(1)earnings for 2016 was $4.85 per diluted share compared to $4.95(2) per diluted share for 2015. Due to the negative impact of currency, full year 2016 reported and adjusted(1) net income were each negatively impacted by $82.2 million, and reported diluted EPS and adjusted(1) diluted EPS were each negatively impacted by $0.95.

For the fourth quarter 2016, the company reported net sales of $1.0 billion and a volume point decline of 1% compared to the prior year period.

On a reported basis, fourth quarter 2016 net income was $99.4 million, or $1.16 per diluted share, compared to net income of $84.5 million or $0.98 per diluted share for the fourth quarter in 2015.

Adjusted(1)earnings for the fourth quarter was $1.00 per diluted share compared to $1.17(2) per diluted share for the comparable quarter in 2015. Due to the negative impact of currency, fourth quarter 2016 reported and adjusted(1) net income were each negatively impacted by $9.5 million, and reported diluted EPS and adjusted(1) diluted EPS were each negatively impacted by $0.11.

In a separate press release this afternoon, the Company announced that it has reached an agreement in principle to form a joint venture with China’s Tasly Holding Group. The press release can be found here http://ir.Herbalife.com .

Fourth Quarter and Fiscal 2016 Key Metrics(3)

Regional Volume Point Metrics

                                
----------------------- -------------------- ------------------------------------------------------------- --------------------------------------------------
                                     Volume Points (Mil)                             Volume Points (Mil)
Region                     4Q ’16    Yr/Yr % Chg   FY 2016       Yr/Yr % Chg
----------------------- -------------------- ------- -------------------- -------------------------------- ------- -------------------- ---------------------
North America                                  270.5       1 %                          1,248.6            8 %
Asia Pacific                                   273.2                          1 %                          1,076.4                               1 %
EMEA                                           260.0                          5 %                          1,049.6                              14 %
Mexico                                         226.7                          7 %                            919.8                               9 %
South & Central America                        163.9                        -16 %                            663.0                             -14 %
China                       136.5     -11 %         624.7            7 %
----------------------- -------------------- ------- -------------------- ----- ----- -------------------- ------- -------------------- ---------- ---------
Worldwide Total           1,330.8      -1 %       5,582.1            5 %
----------------------- -------------------- ------- -------------------- ----- ----- -------------------- ------- -------------------- ---------- ---------
                                                                                                                                         

Regional Net Sales and Foreign Exchange ("FX") Impact

                 
----------------------- -------------------- ------------------------------------------ ----------------------------------------- ---------------------
                            Reported Net Sales       Growth/Decline         Growth/Decline
Region                         4Q ’16 (mil)           including FX           excluding FX
----------------------- -------------------- ------------------------------------------ ----------------------------------------- ---------------------
North America                                         $      202.2                              -1 %                                      -1 %
Asia Pacific                                          $      225.9                              -3 %                                      -3 %
EMEA                                                  $      196.6                               2 %                                       5 %
Mexico                                                $      104.8                              -8 %                                       9 %
South & Central America                               $      120.8                             -11 %                                      -9 %
China                              $      194.7          -12 %                   -6 %
----------------------- -------------------- ---------- ---------- -------------------- ---------- --------- -------------------- ---------- ---------
Worldwide Total                    $    1,045.0           -5 %                   -1 %
----------------------- -------------------- ---------- ---------- -------------------- ---------- --------- -------------------- ---------- ---------
                                                                                                                                   
                 
----------------------- -------------------- ------------------------------------------ ----------------------------------------- ---------------------
                            Reported Net Sales       Growth/Decline         Growth/Decline
Region                         FY 2016 (mil)          including FX           excluding FX
----------------------- -------------------- ------------------------------------------ ----------------------------------------- ---------------------
North America                                         $      955.7                               9 %                                       9 %
Asia Pacific                                          $      913.0                              -3 %                                      -1 %
EMEA                                                  $      815.6                               8 %                                      14 %
Mexico                                                $      446.6                              -7 %                                      10 %
South & Central America                               $      488.7                             -14 %                                      -3 %
China                              $      868.8            3 %                    9 %
----------------------- -------------------- ---------- ---------- -------------------- ---------- --------- -------------------- ---------- ---------
Worldwide Total                    $    4,488.4            0 %                    6 %
----------------------- -------------------- ---------- ---------- -------------------- ---------- --------- -------------------- ---------- ---------
                                                                                                                                   

Outlook

John DeSimone, CFO of Herbalife, stated "the company’s new $1.45 billion debt deal and $1.5 billion share repurchase authorization combined with the strength of our balance sheet, allows us to capitalize on our global market potential, and gives us the financial flexibility to further create long-term shareholder value through investments that includes share repurchase."

With respect to guidance, the company cannot accurately predict the impact to its share base from any repurchases that may be made under the new authorization during 2017 and therefore the guidance table below excludes any impact thereof to EPS. However, the cost of the new debt deal is predictable and has been included.

                                                                                                           
                                                                 Three Months Ending                                                                Twelve Months Ending
                                                                   March 31, 2017                                                                     December 31, 2017
                                           ---------------------------------------------------------------                     ---------------------------------------------------------------
                                                    Low                   High                                       Low                   High
                                           ---------------------                     ---------------------                     ---------------------                     ---------------------
Volume Point Growth vs 2016                           (5 .0%)                                   (1 .0%)                                    2 .0%                                     5 .0%
Net Sales Growth vs 2016                              (9 .0%)                                   (5 .0%)                                    0 .3%                                     3 .3%
Diluted EPS (a)                                 $      0 .50                              $      0 .70                              $      2 .95                              $      3 .35
Adjusted(b) Diluted EPS                         $      0 .75                              $      0 .95                              $      3 .65                              $      4 .05
Cap Ex ($ millions)                             $     15 .0                               $     25 .0                               $    125 .0                               $    155 .0
Effective Tax Rate (a)                                26 .8%                                    28 .8%                                    26 .8%                                    28 .8%
Currency Adjusted Net Sales Growth vs 2016            (7 .2%)                                   (3 .2%)                                    3 .6%                                     6 .6%
Currency Adjusted Diluted EPS                   $      0 .85                              $      1 .05                              $      4 .20                              $      4 .60
                                                                                                                                                                          
(a) Excludes any ongoing tax effects from the exercise of
equity awards that could impact our tax rate beginning fiscal year
2017 due to a recently issued stock compensation accounting standard.
(b) Adjusted diluted EPS, for the purposes of 2017
guidance, excludes the impact of expenses relating to challenges
to the company’s business model, the impact of non-cash interest
costs associated with the company’s convertible notes, FTC
settlement implementation and expenses related to regulatory
inquiries. See Schedule A - "Reconciliation of Non-GAAP Financial
Measures" for a detailed reconciliation of adjusted net income to
net income calculated in accordance with GAAP and a reconciliation
of adjusted diluted EPS to diluted EPS calculated in accordance
with GAAP and a discussion of why we believe these non-GAAP
measures are useful.
 

Forward guidance is based on the average daily exchange rates of the first three weeks of January.

Adjusted(1) diluted EPS guidance for the first quarter 2017 includes a projected currency headwind of approximately $0.10 per diluted share versus the first quarter of 2016.

Full year 2017 adjusted(1) diluted EPS guidance includes a projected currency headwind of approximately $0.50 per diluted share, compared to 2016, which is higher than the $0.15 headwind included in the guidance the company provided on its third quarter earnings call.

The Herbalife Investor Relations website contains a significant amount of financial and other information about the company at http://ir.herbalife.com . The company encourages investors to visit its website from time to time, as information is updated and new information is posted.

Fourth Quarter and Full Year 2016 Earnings Conference Call

Herbalife senior management will host an investor conference call to discuss its recent financial results and provide an update on current business trends on Thursday, February 23, 2017, at 2:30 p.m. PT (5:30 p.m. ET).

The dial-in number for this conference call for domestic callers is (877) 317-1296, and (262) 320-2006 for international callers (conference ID 50583540). Live audio of the conference call will be simultaneously webcast in the investor relations section of the company’s website at http://ir.herbalife.com .

An audio replay will be available following the completion of the conference call in MP3 format or by dialing (855) 859-2056 for domestic callers or (404) 537-3406 for international callers (conference ID 50583540). The webcast of the teleconference will be archived and available on Herbalife’s website.

About Herbalife Ltd.

Herbalife is a global nutrition company that has been changing people’s lives with great products since 1980. Our nutrition, weight-management, energy and fitness and personal care products are available exclusively to and through dedicated Herbalife Independent Members in more than 90 countries. We are committed to fighting the worldwide problems of poor nutrition and obesity by offering high-quality products, one-on-one coaching with an Herbalife Member and a community that inspires customers to live a healthy, active life.

We support the Herbalife Family Foundation (HFF) and its Casa Herbalife programs to help bring good nutrition to children in need. We also sponsor more than 190 world-class athletes, teams and events around the globe, including Cristiano Ronaldo, the LA Galaxy and champions in many other sports.

The company has over 8,000 employees worldwide, and its shares are traded on the New York Stock Exchange (HLF ) with net sales of approximately $4.5 billion in 2016. To learn more, visit Herbalife.com or IAmHerbalife.com.

The company also encourages investors to visit its investor relations website at http://ir.herbalife.com as financial and other information is updated and new information is posted.

FORWARD-LOOKING STATEMENTS

This earnings release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, among others, the following:

-- our relationship with, and our ability to influence the actions of, our Members;

-- improper action by our employees or Members in violation of applicable law;

-- adverse publicity associated with our products or network marketing organization, including our ability to comfort the marketplace and regulators regarding our compliance with applicable laws;

-- changing consumer preferences and demands;

-- the competitive nature of our business;

-- regulatory matters governing our products, including potential governmental or regulatory actions concerning the safety or efficacy of our products and network marketing program, including the direct selling market in which we operate;

-- legal challenges to our network marketing program;

-- the consent order entered into with the FTC, the effects thereof and any failure to comply therewith;

-- risks associated with operating internationally and the effect of economic factors, including foreign exchange, inflation, disruptions or conflicts with our third party importers, pricing and currency devaluation risks, especially in countries such as Venezuela;

-- uncertainties relating to interpretation and enforcement of legislation in China governing direct selling;

-- our inability to obtain the necessary licenses to expand our direct selling business in China;

-- adverse changes in the Chinese economy;

-- our dependence on increased penetration of existing markets;

-- contractual limitations on our ability to expand our business;

-- our reliance on our information technology infrastructure and outside manufacturers;

-- the sufficiency of trademarks and other intellectual property rights;

-- product concentration;

-- our reliance upon, or the loss or departure of any member of, our senior management team which could negatively impact our Member relations and operating results;

-- U.S. and foreign laws and regulations applicable to our international operations;

-- uncertainties relating to the United Kingdom’s vote to exit from the European Union;

-- restrictions imposed by covenants in our credit facility;

-- uncertainties relating to the application of transfer pricing, duties, value added taxes, and other tax regulations, and changes thereto;

-- changes in tax laws, treaties or regulations, or their interpretation;

-- taxation relating to our Members;

-- product liability claims;

-- our incorporation under the laws of the Cayman Islands;

-- whether we will purchase any of our shares in the open markets or otherwise; and

-- share price volatility related to, among other things, speculative trading and certain traders shorting our common shares.

We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

RESULTS OF OPERATIONS:

 
                                                                                                                                             Herbalife Ltd. and Subsidiaries
                                                                                                                                       Condensed Consolidated Statements of Income
                                                                                                                                         (In millions, except per share amounts)
                                                                                                                                                       (Unaudited)
                                                                                                                                                          
                                                 -------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------
                                                                                                    Three Months Ended                                                                                                                            Twelve Months Ended
                                                 -------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------
                                                                     12/31/2016                                          12/31/2015                                                             12/31/2016                                          12/31/2015
                                                                                                                                                                                                                                                                       
North America                                                       $   202.2                                                              $   203.4                                                              $   955.7                                                              $   879.5
Mexico                                                                  104.8                                                                  113.7                                                                  446.6                                                                  479.9
South and Central America                                               120.8                                                                  136.4                                                                  488.7                                                                  569.7
EMEA                                                                    196.6                                                                  192.4                                                                  815.6                                                                  755.1
Asia Pacific                                                            225.9                                                                  232.1                                                                  913.0                                                                  938.6
China                                                194.7                            220.4                            868.8                            846.2  
                                                 -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
   Worldwide Net Sales                                                1,045.0                                                                1,098.4                                                                4,488.4                                                                4,469.0
Cost of Sales (1)                                    196.1                            204.4                            854.6                            856.0  
                                                 -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
     Gross Profit                                                       848.9                                                                  894.0                                                                3,633.8                                                                3,613.0
Royalty Overrides                                                       303.7                                                                  305.0                                                                1,272.6                                                                1,251.4
Selling, General and Administrative Expenses (2)                        421.7                                                                  449.5                                                                1,966.9                                                                1,784.5
Other Operating Income (3)                           (34.7 )                                              (3.1 )                                             (63.8 )                                              (6.5 )
                                                 -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
     Operating Income                                                   158.2                                                                  142.6                                                                  458.1                                                                  583.6
Interest Expense, net                                                    23.3                                                                   25.6                                                                   93.4                                                                   94.9
Other Expense, net (4)                                   -                                -                                -                              2.3  
                                                 -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
Income Before Income Taxes                                              134.9                                                                  117.0                                                                  364.7                                                                  486.4
Income Taxes                                          35.5                             32.5                            104.7                            147.3  
                                                 -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
Net Income                                                          $    99.4                                           $    84.5                                           $   260.0                                           $   339.1  
                                                 ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================
                                                                                                                                                                                                                                                                       
Weighted Average Shares Outstanding:
   Basic                                                                 83.2                                                                   82.7                                                                   83.0                                                                   82.6
   Diluted                                                               86.0                                                                   85.8                                                                   86.1                                                                   85.3
                                                                                                                                                                                                                                                                       
Earnings Per Share:
   Basic                                                            $    1.19                                           $    1.02                                           $    3.13                                           $    4.11  
                                                 ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================
   Diluted                                                          $    1.16                                           $    0.98                                           $    3.02                                           $    3.97  
                                                 ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================                      ==================== ======= ====================
                                                                                                                                                                                                                                                                       
                                                                                                                                  
------------------------------------------------ ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- --------------------------------------------------
                                                                                                                                                                                                                                                                       
(1) Cost of Sales includes $0.1 million and $2.0
million of inventory write downs related to Venezuela for the
three and twelve months ended December 31, 2015, respectively.
(2) Selling, General and Administrative Expenses
includes $203 million related to regulatory settlements for the
twelve months ended December 31, 2016 and $32.9 million pre-tax
unfavorable impact related to the remeasurement of Venezuela
Bolivar-denominated assets and liabilities at the SIMADI rate for
the twelve months ended December 31, 2015.
(3) Other Operating Income relates to certain China
grant income and the KPMG arbitration award.
(4) Other Expense, net relates to the impairment of
investments in Bolivar-denominated bonds for the twelve months
ended December 31, 2015.
 
 
                                                                                        Herbalife Ltd. and Subsidiaries
                                                                                     Condensed Consolidated Balance Sheets
                                                                                                 (In millions)
                                                                                                  (Unaudited)
 
                                                                                        Dec 31,                                              Dec 31,
                                                                                                            2016                                                                    2015
                                                                                    ----------------------------------------------------                     --------------------------------------------------
                                                                                                                                                              
ASSETS
Current Assets:
   Cash and cash equivalents                                                                           $     844.0                                                              $   889.8
   Receivables, net                                                                                           70.3                                                                   69.9
   Inventories                                                                                               371.3                                                                  332.0
   Prepaid expenses and other current assets                                                                 176.9                                                                  161.1
   Deferred income tax assets                                                                 -                            113.5  
                                                                                    -------------------- --------- --------------------                      -------------------- ------- --------------------
      Total Current Assets                                                                                 1,462.5                                                                1,566.3
                                                                                                                                                              
Property, plant and equipment, net                                                                           378.0                                                                  339.2
Deferred compensation plan assets                                                                             30.6                                                                   29.3
Other assets                                                                                                 294.3                                                                  141.1
Marketing related intangibles and other intangible assets, net                                               310.1                                                                  310.2
Goodwill                                                                                   89.9                             91.8  
                                                                                    -------------------- --------- --------------------                      -------------------- ------- --------------------
      Total Assets                                                                                     $   2,565,4                                           $ 2,477.9  
                                                                                    ==================== ========= ====================                      ==================== ======= ====================
                                                                                                                                                              
                                                                                                                                                              
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
   Accounts payable                                                                                    $      66.0                                                              $    71.1
   Royalty overrides                                                                                         261.2                                                                  249.9
   Accrued compensation                                                                                      125.8                                                                  128.8
   Accrued expenses                                                                                          236.9                                                                  228.7
   Current portion of long-term debt                                                                           9.5                                                                  229.5
   Advance sales deposits                                                                                     50.1                                                                   63.8
   Income taxes payable                                                                    42.0                             52.6  
                                                                                    -------------------- --------- --------------------                      -------------------- ------- --------------------
      Total Current Liabilities                                                                              791.5                                                                1,024.4
                                                                                                                                                              
Non-current liabilities
   Long-term debt, net of current portion                                                                  1,438.4                                                                1,392.5
   Deferred compensation plan liability                                                                       50.0                                                                   43.6
   Deferred income tax liabilities                                                                            15.3                                                                    0.4
   Other non-current liabilities                                                           73.9                             70.5  
                                                                                    -------------------- --------- --------------------                      -------------------- ------- --------------------
      Total Liabilities                                                                                    2,369.1                                                                2,531.4
                                                                                                                                                              
Commitments and Contingencies
                                                                                                                                                              
Shareholders’ equity (deficit):
   Common shares                                                                                               0.1                                                                    0.1
   Paid-in capital in excess of par value                                                                    467.6                                                                  438.2
   Accumulated other comprehensive loss                                                                     (205.1 )                                                               (165.5 )
   Accumulated deficit                                                                    (66.3 )                                            (326.3 )
                                                                                    -------------------- --------- --------------------                      -------------------- ------- --------------------
      Total Shareholders’ Equity (Deficit)                                                196.3                            (53.5 )
                                                                                    -------------------- --------- --------------------                      -------------------- ------- --------------------
                                                                                                                                           
                                                                                    ----------------------------------------------------                     --------------------------------------------------
      Total Liabilities and Shareholders’ Equity (Deficit)                                             $   2,565.4                                           $ 2,477.9  
                                                                                    ==================== ========= ====================                      ==================== ======= ====================
                                                                                                                                                              
 
                                                                                         Herbalife Ltd. and Subsidiaries
                                                                                 Condensed Consolidated Statements of Cash Flows
                                                                                                  (In millions)
                                                                                                   (Unaudited)
                                                    
                                                                                         ----------------------------------------------------------------------------------------------------------------
                                                                                                                                           Twelve Months Ended
                                                                                         -----------------------------------------------------------------------------------------------------------------------
                                                                                                            12/31/2016                                         12/31/2015
                                                                                         -------------------------------------------------                     -------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                                                  $  260.0                                                              $  339.1
Adjustments to reconcile net income to net cash provided by
operating activities:
   Depreciation and amortization                                                                                98.3                                                                  98.0
   Excess tax benefits from share-based payment arrangements                                                    (0.4 )                                                                (4.1 )
   Share-based compensation expenses                                                                            40.2                                                                  44.9
   Non-cash interest expense                                                                                    55.7                                                                  56.2
   Deferred income taxes                                                                                       (36.4 )                                                               (38.2 )
   Inventory write-downs                                                                                        15.8                                                                  25.3
   Foreign exchange transaction gain                                                                            (0.7 )                                                                (6.3 )
   Foreign exchange loss and other charges relating to Venezuela                                                 4.5                                                                  37.2
   Other                                                                                                       (11.8 )                                                                 6.5
Changes in operating assets and liabilities:
   Receivables                                                                                                     -                                                                  (6.2 )
   Inventories                                                                                                 (71.6 )                                                               (30.5 )
   Prepaid expenses and other current assets                                                                    21.1                                                                   4.4
   Other assets                                                                                                (26.3 )                                                               (21.3 )
   Accounts payable                                                                                             (1.3 )                                                                 6.0
   Royalty overrides                                                                                            20.9                                                                  21.6
   Accrued expenses and accrued compensation                                                                    22.9                                                                  71.1
   Advance sales deposits                                                                                      (11.1 )                                                                 2.3
   Income taxes                                                                                                (15.5 )                                                                21.8
   Deferred compensation plan liability                                                       3.0                             0.9  
                                                                                         -------------------- ------ --------------------                      -------------------- ------ --------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                   367.3                           628.7  
                                                                                         -------------------- ------ --------------------                      -------------------- ------ --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment                                                                    (143.4 )                                                               (79.0 )
Other                                                                                         2.1                             5.6  
                                                                                         -------------------- ------ --------------------                      -------------------- ------ --------------------
NET CASH USED IN INVESTING ACTIVITIES                                                      (141.3 )                                            (73.4 )
                                                                                         -------------------- ------ --------------------                      -------------------- ------ --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from senior secured credit facility and other debt                                                  200.0                                                                     -
Principal payments on senior secured credit facility and other debt                                           (438.8 )                                                              (227.6 )
Issuance costs relating to long-term debt                                                                          -                                                                  (6.2 )
Share repurchases                                                                                              (13.2 )                                                               (16.6 )
Excess tax benefits from share-based payment arrangements                                                        0.4                                                                   4.1
Other                                                                                        (0.7 )                                             (3.7 )
                                                                                         -------------------- ------ --------------------                      -------------------- ------ --------------------
NET CASH USED IN FINANCING ACTIVITIES                                                      (252.3 )                                           (250.0 )
                                                                                         -------------------- ------ --------------------                      -------------------- ------ --------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                     (19.5 )                                            (60.9 )
                                                                                         -------------------- ------ --------------------                      -------------------- ------ --------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                        (45.8 )                                                               244.4
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                                889.8                           645.4  
                                                                                         -------------------- ------ --------------------                      -------------------- ------ --------------------
CASH AND CASH EQUIVALENTS, END OF YEAR                                                                      $  844.0                                           $  889.8  
                                                                                         ==================== ====== ====================                      ==================== ====== ====================
                                                                                                                                                                
CASH PAID DURING THE YEAR
Interest paid                                                                                               $   45.4                                           $   50.5  
                                                                                         ==================== ====== ====================                      ==================== ====== ====================
Income taxes paid                                                                                           $  162.9                                           $  168.4  
                                                                                         ==================== ====== ====================                      ==================== ====== ====================
                                                                                                                                                                

SUPPLEMENTAL INFORMATION

SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited and unreviewed), (All tables provide Dollars in millions, except per Share Data)

In addition to its reported results and guidance calculated in accordance with GAAP, the company has included in this release adjusted net income and adjusted diluted EPS, performance measures that the Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that such non-GAAP financial measures, when read in conjunction with the company’s reported or forecasted results, in each case calculated in accordance with GAAP, can provide useful supplemental information for investors because they facilitate a period to period comparative assessment of the company’s operating performance relative to its performance based on reported or forecasted results under GAAP, while isolating the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the company’s operations and underlying operational performance. The company’s definition of adjusted net income and adjusted diluted earnings per share may not be comparable to similarly titled measures of other companies because other companies may not calculate them in the same manner as the company does and should not be viewed in isolation from nor as alternatives to net income or diluted EPS calculated in accordance with GAAP.

 
The following is a reconciliation of net income, presented and
reported in accordance with U.S. generally accepted accounting
principles, to net income adjusted for certain items:
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                             
                                                                                                                                            Three Months Ended                                                                                                                         Twelve Months Ended
                                                                                           ---------------------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------------------
                                                                                                              12/31/2016                                                           12/31/2015                                                           12/31/2016                                                           12/31/2015
                                                                                           ------------------------------------------------                     ------------------------------------------------                     ------------------------------------------------                     -------------------------------------------------
                                                                                                                                                                                                                     (in millions)
                                                                                                                                                                                                                                                                                                           
Net (loss) income, as reported                                                                                $  99.4                                                              $  84.5                                                              $ 260.0                                                              $  339.1
Remeasurement, impairment losses and other charges relating to                                                      -                                                                  4.3                                                                    -                                                                  42.5
Venezuela (1)(2)
Expenses incurred responding to attacks on the company’s business                                                 1.4                                                                  3.7                                                                 12.1                                                                  18.7
model (1) (2)
Expenses related to Regulatory inquiries (1) (2)                                                                  2.4                                                                  4.7                                                                 16.3                                                                  21.5
Expenses incurred for the recovery of re-audit expenses (1) (2)                                                   0.1                                                                  0.8                                                                  3.6                                                                   2.0
Foreign exchange loss (gain) from Euro/USD exposure on intercompany                                                 -                                                                    -                                                                    -                                                                  (7.4 )
balances (1) (2)
Non-cash interest expense and amortization of non-cash issuance costs                                            11.5                                                                 10.3                                                                 45.1                                                                  42.2
(1) (2) (3)
Regulatory settlements (1) (2)                                                                                      -                                                                    -                                                                203.0                                                                     -
China grant income (1) (2) (4)                                                                                   (5.1 )                                                               (3.1 )                                                              (34.2 )                                                                (6.5 )
FTC Consent Order implementation (1) (2) (5)                                                                      5.4                                                                    -                                                                 10.7                                                                     -
Recovery of defective manufacturing equipment previously impaired (1)                                               -                                                                    -                                                                    -                                                                  (3.1 )
(2)
Arbitration award related to the re-audit (1) (2)                                                               (29.7 )                                                                  -                                                                (29.7 )                                                                   -
Legal reserve for the Bostick case (1) (2)                                                                          -                                                                 (1.9 )                                                                  -                                                                  (1.9 )
Income tax adjustments for above items (1) (2)                                                 0.5                           (3.0 )                                           (69.4 )                                            (24.9 )
                                                                                           -------------------- ----- --------------------                      -------------------- ----- --------------------                      -------------------- ----- --------------------                      -------------------- ------ --------------------
Net income, as adjusted (4)(6)                                                                                $  85.9                                           $ 100.2                                           $ 417.4                                           $  422.3  
                                                                                           ==================== ===== ====================                      ==================== ===== ====================                      ==================== ===== ====================                      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                           
The following is a reconciliation of diluted earnings per share,
presented and reported in accordance with U.S. generally accepted
accounting principles, to diluted earnings per share adjusted for
certain items.
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                             
                                                                                                                                            Three Months Ended                                                                                                                         Twelve Months Ended
                                                                                           ---------------------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------------------
                                                                                                              12/31/2016                                                           12/31/2015                                                           12/31/2016                                                           12/31/2015
                                                                                           ------------------------------------------------                     ------------------------------------------------                     ------------------------------------------------                     -------------------------------------------------
                                                                                                                                                                                                                                                                                                           
Diluted (loss) earnings per share, as reported                                                                $  1.16                                                              $  0.98                                                              $  3.02                                                              $   3.97
Remeasurement, impairment losses and other charges relating to                                                      -                                                                 0.05                                                                    -                                                                  0.50
Venezuela (1)(2)
Expenses incurred responding to attacks on the company’s business                                                0.02                                                                 0.04                                                                 0.14                                                                  0.22
model (1) (2)
Expenses related to Regulatory inquiries (1) (2)                                                                 0.03                                                                 0.05                                                                 0.19                                                                  0.25
Expenses incurred for the recovery of re-audit expenses (1) (2)                                                     -                                                                 0.01                                                                 0.04                                                                  0.02
Foreign exchange loss (gain) from Euro/USD exposure on intercompany                                                 -                                                                    -                                                                    -                                                                 (0.09 )
balances (1) (2)
Non-cash interest expense and amortization of non-cash issuance costs                                            0.13                                                                 0.12                                                                 0.52                                                                  0.49
(1) (2) (3)
Regulatory settlements (1) (2)                                                                                      -                                                                    -                                                                 2.36                                                                     -
China grant income (1) (2) (4)                                                                                  (0.06 )                                                              (0.04 )                                                              (0.40 )                                                               (0.08 )
FTC Consent Order implementation (1) (2) (5)                                                                     0.06                                                                    -                                                                 0.12                                                                     -
Recovery of defective manufacturing equipment previously impaired (1)                                               -                                                                    -                                                                    -                                                                 (0.04 )
(2)
Arbitration award related to the re-audit (1) (2)                                                               (0.35 )                                                                  -                                                                (0.34 )                                                                   -
Legal reserve for the Bostick case (1) (2)                                                                          -                                                                (0.02 )                                                                  -                                                                 (0.02 )
Income tax adjustments for above items (1) (2)                                                0.01                          (0.04 )                                           (0.80 )                                            (0.29 )
                                                                                           -------------------- ----- --------------------                      -------------------- ----- --------------------                      -------------------- ----- --------------------                      -------------------- ------ --------------------
Diluted earnings per share, as adjusted (4)(6)                                                                $  1.00                                           $  1.17                                           $  4.85                                           $   4.95  
                                                                                           ==================== ===== ====================                      ==================== ===== ====================                      ==================== ===== ====================                      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                           
(1) Based on interim income tax reporting rules, these
expenses are not considered discrete items. As a result, the
company’s full year effective tax rate is impacted by these items.
When applying the full year effective tax rate to year-to-date
income, the company’s year-to-date tax provision recorded with
respect to these non-GAAP adjustments is different from the
forecasted full-year tax provision impact of these items. As a
consequence, adjustments to the year-to-date and quarterly tax
impacts will be recorded as the adjusted full year effective tax
rate is applied to income in subsequent periods.
                                                                                                                                                                                                                                                                                                         
(2) Excludes tax (benefit)/expense as follows:
                                                                                                                                           Three Months Ended                                                                                                                        Twelve Months Ended
                                                                                           -------------------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------------------
                                                                                                             12/31/2016                                                          12/31/2015                                                           12/31/2016                                                           12/31/2015
                                                                                           -----------------------------------------------                     -----------------------------------------------                     ------------------------------------------------                     -------------------------------------------------
                                                                                                                                                                                                                    (in millions)
                                                                                                                                                                                                                                                                                                         
Remeasurement, impairment losses and other charges relating to                                                     -                                                                (1.8 )                                                                  -                                                                 (14.9 )
Venezuela
Expenses incurred responding to attacks on the company’s business                                               (0.1 )                                                              (0.4 )                                                               (3.0 )                                                                (4.9 )
model
Expenses related to Regulatory inquiries                                                                        (0.2 )                                                              (0.8 )                                                               (5.5 )                                                                (7.3 )
Expenses incurred for the recovery of re-audit expenses                                                            -                                                                (0.2 )                                                               (1.0 )                                                                (0.7 )
Foreign exchange loss (gain) from Euro/USD exposure on intercompany                                                -                                                                (0.5 )                                                                  -                                                                  (0.8 )
balances
Non-cash interest expense and amortization of non-cash issuance costs                                           (1.8 )                                                              (0.9 )                                                                  -                                                                     -
Regulatory settlements                                                                                          (1.3 )                                                                 -                                                                (70.0 )                                                                   -
China grant income                                                                                               1.4                                                                 0.9                                                                  9.8                                                                   1.9
FTC Consent Order Implementation                                                                                (1.4 )                                                                 -                                                                 (3.6 )                                                                   -
Recovery of defective manufacturing equipment previously impaired                                                  -                                                                   -                                                                    -                                                                   1.1
Arbitration award related to the re-audit                                                                        3.9                                                                   -                                                                  3.9                                                                     -
Legal reserve for the Bostick case                                                              -                           0.7                              -                             0.7  
                                                                                           -------------------- ---- --------------------                      -------------------- ---- --------------------                      -------------------- ----- --------------------                      -------------------- ------ --------------------
Total income tax adjustments                                                                                  $  0.5                                           $ (3.0 )                                                            $ (69.4 )                                                            $  (24.9 )
                                                                                           ==================== ==== ====================                      ==================== ==== ====================                      ==================== ===== ====================                      ==================== ====== ====================
                                                                                                                                                                                                                                                                                                         
(3) Relates to non-cash expense on our convertible notes
and prepaid forward share repurchase contract.
(4) Prior year amounts have been updated for comparative
purposes to adjust for China grant income recognized in 2015.
(5) Includes $1.7 million of product discounts related to
preferred member conversions.
(6) Amounts may not total due to rounding.
 
 
The following is a reconciliation of diluted earnings per share
guidance, presented in accordance with U.S. generally accepted
accounting principles, to adjusted diluted earnings per share
guidance for certain items.
 
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             
                                                                                            Three Months Ending                     Twelve Months Ending
                                                                                              March 31, 2017       December 31, 2017
                                                                                           ------------------- -------------------- --------------------
                                                                                                                                     
Diluted EPS Guidance (1)                                                                       $0.50 - $0.70                            $2.95 - $3.35
Expenses incurred responding to attacks on the company’s business                                  0.02                                     0.06
model (2)
Non-cash interest expense and amortization of non-cash issuance costs                              0.13                                     0.50
(3)
FTC Consent Order Implementation (4) (5)                                                           0.08                                     0.12
Expenses related to Regulatory inquiries (6)                                                       0.03                                     0.06
Income tax adjustments for above items (7)                                                        (0.02)                                   (0.06)
                                                                                           -------------------                      --------------------
Adjusted Diluted EPS Guidance (8)                                                              $0.75 - $0.95                            $3.65 - $4.05
                                                                                           ===================                      ====================
 
---------------------------------------------------------------------------------------------------------------------------------------------------------
 
(1) Excludes the potential ongoing tax effects from the
exercise of equity awards that will impact our tax rate beginning
fiscal year 2017 due to a recently issued Stock Compensation
accounting standard.
(2) Excludes tax impact of $0.4 million and $1.5 million
for the three months ending March 31, 2017 and the twelve months
ending December 31, 2017, respectively.
(3) Relates to non-cash expense on our convertible notes
and prepaid forward share repurchase contract.
(4) Excludes tax impact of $2.0 million and $3.0 million
for the three months ending March 31, 2017 and the twelve months
ending December 31, 2017, respectively.
(5) Includes $3.0 million of product discounts related to
preferred member conversions.
(6) Excludes tax impact of $0.8 million and $1.5 million
for the three months ending March 31, 2017 and the twelve months
ending December 31, 2017, respectively.
(7) Aggregates the individual tax impacts of each item
as described in greater detail in footnotes 2, 4 and 6 above.
(8) Amounts may not total due to rounding.
 

-----------------------------

(1) Adjusted net income and adjusted diluted EPS are both non-GAAP measures and, for the purposes of reported results, exclude the impact of charges relating to Venezuela, expenses relating to challenges to the company’s business model, regulatory inquiries, expenses related to the recovery of re-audit expenses, foreign exchange impact from EUR/USD exposure, the impact of non-cash interest costs associated with the company’s convertible notes, regulatory settlements, China grant income, FTC settlement implementation, recovery of defective manufacturing equipment, arbitration award related to the re-audit and reserves related to the Bostick case. Adjusted diluted EPS, for the purposes of 2017 guidance, excludes the impact of expenses relating to challenges to the company’s business model, the impact of non-cash interest costs associated with the company’s convertible notes, FTC settlement implementation and expenses related to regulatory inquiries. See Schedule A - "Reconciliation of Non-GAAP Financial Measures" for a detailed reconciliation of adjusted net income to net income calculated in accordance with GAAP and a reconciliation of adjusted diluted EPS to diluted EPS calculated in accordance with GAAP and a discussion of why we believe these non-GAAP measures are useful.

(2) Prior year amounts have been updated for comparative purposes to adjust for China grant income recognized in 2015. See Schedule A - "Reconciliation of Non-GAAP Financial Measures" for a detailed reconciliation of adjusted net income to net income calculated in accordance with GAAP and a reconciliation of adjusted diluted EPS to diluted EPS calculated in accordance with GAAP and a discussion of why we believe these non-GAAP measures are useful.

(3) Supplemental tables that include Average Active Sales Leader and additional business metrics can be found at http://www.ir.herbalife.com .

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170223006641r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170223006641/en/

SOURCE: Herbalife Ltd.

Herbalife Ltd. 
Media Contact: 
Jennifer Butler, 213.745.0420 
VP, Media Relations 
or 
Investor Contact: 
Alan Quan, 213.745.0541 
VP, Investor Relations


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