HLF Herbalife Ltd

• First quarter worldwide volume growth of 9 percent compared to the prior year period.
• Adjusted EPS1 of $1.50 increased 18 percent as compared to the same period in the prior year. Reported EPS of $0.74 primarily reflects a foreign exchange loss for Venezuela and other items.
• Raises FY'14 adjusted2 diluted EPS guidance to a range of $6.10 to $6.30.
• Generated $191 million in operating cash flow in first quarter 2014.
• Board of Directors takes steps to accelerate cash returns to shareholders – terminates dividend, determines to utilize cash instead to repurchase stock during the second quarter.

Herbalife Ltd. (NYSE: HLF) today reported first quarter net sales of $1.3 billion, reflecting an increase of 12 percent compared to the same period in 2013 on volume point growth of 9 percent. Adjusted1 net income for the quarter was $151.1 million, or $1.50 per diluted share, as compared to 2013 first quarter adjusted net income of $137.4 million, or $1.27 per diluted share. GAAP net income for the quarter was $74.6 million, or $0.74 per diluted share, compared to $118.9 million, or $1.10 per diluted share for the same period in 2013, primarily due to a foreign exchange loss for Venezuela during the quarter ended March 31, 2014.

"We continue to achieve record earnings, strong sales growth and enhanced profitability," said Michael O. Johnson, Herbalife's chairman and CEO. “Our performance reflects the demand for our exceptional products, as well as the hard work of our independent members who continue to cultivate and grow their base of satisfied customers worldwide. In addition, we are pleased to raise our expectations for the balance of 2014. This reflects our confidence that Herbalife is well-positioned to continue to grow and play an increasingly important role in improving nutrition and reducing obesity around the world.”

For the quarter ended March 31, 2014 the company generated cash flow from operations of $190.6 million, an increase of 39 percent compared to 2013; paid cash dividends of $30.4 million; invested $49.7 million in capital expenditures; and spent $685.8 million for approximately 9.9 million outstanding common shares under our prepaid forward share repurchase agreement. As of April 25, 2014, the company has spent $255 million during the month of April to repurchase approximately 4.5 million outstanding common shares under our existing repurchase program and pursuant to a Rule 10b5-1 trading plan.

As of March 31, 2014 we moved to the SICAD I rate of 10.7 Venezuelan bolivar per U.S. dollar for US GAAP remeasurement purposes. This change impacted our 2014 Q1 reported results by $89.3 million before tax and we have normalized this impact out of our adjusted results.

First Quarter and Fiscal 2014 Key Metrics3,4

Regional Volume Point and Average Active Sales Leader Metrics

  Volume Points (Mil)     Average Active Sales Leaders Region 1Q'14   Yr/Yr % Chg 1Q'14   Yr/Yr % Chg North America 336.5 9 % 74,241 9 % Asia Pacific 302.1 (6 %) 71,627 4 % EMEA 202.2 25 % 54,113 17 % Mexico 220.2 7 % 63,568 6 % South & Central America 227.7 4 % 61,862 19 % China 91.1 91 % 16,648 40 % Worldwide Total 1,379.8 9 % 329,902 11 %  

2014 Second Quarter and Full Year Guidance

Forward guidance excludes the impact of expenses (primarily for legal and advisory services) relating to the company's response to information put into the marketplace by a short seller, which the company believes to be inaccurate and misleading, expenses related to a FTC inquiry, and the impact of non-cash interest costs associated with the company’s Convertible Notes. Forward guidance is based on the average daily exchange rates of the first two weeks of April. Included in the guidance is the use of the GAAP rate for Venezuela of 10.7 to 1 for the balance of the year and excludes the potential impact of future devaluation of the Venezuelan bolivar and future repatriation, if any, of existing cash balances in Venezuela.

  Three Months Ending   Twelve Months Ending June 30, 2014 December 31, 2014 Low   High Low   High Volume Point Growth vs 2013 7.0 % 9.0 % 8.0 % 10.0 % Net Sales Growth vs 2013 10.0 % 12.0 % 10.0 % 12.0 % Diluted EPS as adjusted $ 1.51 $ 1.55 $ 6.10 $ 6.30 Cap Ex ($ millions) $ 55.0 $ 65.0 $ 175.0 $ 195.0 Effective Tax Rate 28.0 % 30.0 % 28.0 % 30.0 %  

Board of Directors Accelerates Cash Returns to Shareholders

The company’s board of directors also announced today that, as part of its goal to accelerate cash returns to shareholders, it has approved terminating the company’s quarterly cash dividend and instead utilizing the cash to repurchase additional shares of the company’s outstanding common stock during the second quarter of 2014.

The company now expects to repurchase a total of $581 million of its outstanding common stock during the second quarter of 2014 as part of its previously announced $1.5 billion share repurchase program. The $581 million is comprised of the approximately $315 million expected to be purchased in April as part of a 10b5-1 trading plan ($255 million already completed as of Friday, April 25); plus the $50 million included in previous guidance and $216 million that otherwise was expected to be returned to shareholders in the form of quarterly cash dividends over the next eight quarters.

Mr. Johnson stated, “Our strong sustained financial performance and the current market valuation of our shares make repurchasing stock the most attractive method of returning capital to shareholders and reflects our continued commitment to creating long-term value for our shareholders.”

First Quarter 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 Tuesday, April 29, 2014 at 8 a.m. PDT (11 a.m. EDT).

The dial-in number for this conference call for domestic callers is (877) 317-1296 and (706) 634-5671 for international callers (conference ID 24490341). 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 24490341). The webcast of the teleconference will be archived and available on Herbalife's website.

About Herbalife Ltd.

Herbalife Ltd. (NYSE:HLF) is a global nutrition company that sells weight-management, nutrition and personal care products intended to support a healthy lifestyle. Herbalife products are sold in more than 90 countries to and through a network of independent members. The company supports the Herbalife Family Foundation and its Casa Herbalife program to help bring good nutrition to children. Herbalife's 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.

1 See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for more detail.2 Adjusted diluted EPS excludes non-cash interest expense associated with the company’s Convertible Notes, foreign exchange losses related to Venezuela, costs associated with the FTC inquiry and the defense against misinformation associated with a short seller.3 Supplemental tables that include additional business metrics can be found at http://www.ir.herbalife.com.4 Worldwide Average Active Sales Leaders may not equal the sum of the Average Active Sales Leaders in each region due to the calculation being an average of Sales Leaders active in a period, not a summation, and the fact that some Sales Leaders are active in more than one region but are counted only once in the worldwide amount.

FORWARD-LOOKING STATEMENTS

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;
• 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;
• 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;
• 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 the application of transfer pricing, duties, value added taxes, and other tax regulations, and changes thereto;
• uncertainties relating to interpretation and enforcement of legislation in China governing direct selling;
• uncertainties relating to the interpretation, enforcement or amendment of legislation in India governing direct selling;
• our inability to obtain the necessary licenses to expand our direct selling business in China;
• adverse changes in the Chinese economy, Chinese legal system or Chinese governmental policies;
• 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;
• changes in tax laws, treaties or regulations, or their interpretation;
• taxation relating to our Members;
• product liability claims;
• 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 thousands, except per share amounts) (Unaudited)       Three Months Ended 3/31/2014 3/31/2013   North America $ 247,860 $ 221,473 Mexico 142,663 132,889 South and Central America 244,623 219,515 EMEA 211,135 169,585 Asia Pacific 280,496 311,747 China   135,872   68,438 Worldwide net sales 1,262,649 1,123,647 Cost of Sales   251,165   225,977 Gross Profit 1,011,484 897,670 Royalty Overrides 381,819 364,029 Selling, General and Administrative Expenses (1)   502,062   364,720 Operating Income 127,603 168,921 Interest Expense, net 14,961 5,373 Other Expense, net (1)   3,161   - Income before income taxes 109,481 163,548 Income Taxes   34,853   44,675 Net Income   74,628   118,873   Basic Shares 95,397 104,121 Diluted Shares 100,780 108,068   Basic EPS $ 0.78 $ 1.14 Diluted EPS $ 0.74 $ 1.10   Dividends declared per share $ 0.30 $ 0.30            

(1) As discussed in Note 2 of the quarterly report on Form 10-Q for the quarter ended March 31, 2014, Selling, General and Administrative Expenses and Other Expense, net for the three months ended March 31, 2014 includes an $89.3 million pre-tax unfavorable impact related to the remeasurement of Venezuela Bolivar-denominated assets and liabilities at the SICAD I rate of 10.7 Venezuela Bolivars per U.S. dollar.

  Herbalife Ltd. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) (Unaudited)   Mar 31,   Dec 31,   2014     2013     ASSETS Current Assets: Cash & cash equivalents $ 1,261,921 $ 972,974 Receivables, net 118,610 100,326 Inventories 324,992 351,201 Prepaid expenses and other current assets 162,842 148,774 Deferred income taxes   67,739     69,845   Total Current Assets 1,936,104 1,643,120   Property, net 346,363 318,860 Deferred compensation plan assets 26,969 26,821 Deferred financing cost, net 27,367 4,896 Other assets 103,567 63,713 Marketing related intangibles and other intangible assets, net 310,729 310,801 Goodwill   105,490     105,490   Total Assets $ 2,856,589   $ 2,473,701       LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 87,174 $ 82,665 Royalty overrides 259,758 266,952 Accrued compensation 74,940 111,905 Accrued expenses 276,532 267,501 Current portion of long-term debt 87,509 81,250 Advance sales deposits 83,592 68,079 Income taxes payable   32,400     43,826   Total Current Liabilities 901,905 922,178   Non-current liabilities Long-term debt, net of current portion 1,760,778 850,019 Deferred compensation plan liability 40,523 37,226 Deferred income taxes 63,182 66,026 Other non-current liabilities   48,095     46,806   Total Liabilities 2,814,483 1,922,255   Contingencies   Shareholders' equity: Common shares 101 101 Paid-in capital in excess of par value 423,515 323,860 Accumulated other comprehensive loss (22,485 ) (19,794 ) (Accumulated deficit) retained earnings   (359,025 )   247,279   Total Shareholders' Equity   42,106     551,446       Total Liabilities and Shareholders' Equity $ 2,856,589   $ 2,473,701         Herbalife Ltd. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)   Three Months Ended   3/31/2014     3/31/2013   CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 74,628 $ 118,873 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 21,283 20,964 Excess tax benefits from share-based payment arrangements (3,154 ) (447 ) Share based compensation expenses 10,995 7,866 Non-cash interest expense and amortization of deferred financing and issuance costs 7,154 650 Deferred income taxes (2,313 ) (3,773 ) Inventory write-downs 11,037 6,554 Unrealized foreign exchange transaction loss (gain) 3,390 (10,971 ) Foreign exchange loss relating to Venezuela 86,108 15,116 Other 4,462 (890 ) Changes in operating assets and liabilities: Receivables (17,953 ) 3,216 Inventories 14,198 (1,542 ) Prepaid expenses and other current assets (23,850 ) (8,200 ) Other assets (5,180 ) (15 ) Accounts payable 6,224 4,900 Royalty overrides (3,703 ) (21,472 ) Accrued expenses and accrued compensation (12,487 ) (15,517 ) Advance sales deposits 17,416 (3,857 ) Income taxes (903 ) 23,097 Deferred compensation plan liability   3,297     3,075   NET CASH PROVIDED BY OPERATING ACTIVITIES   190,649     137,627   CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (58,517 ) (24,856 ) Proceeds from sale of property, plant and equipment 2 24 Investments in Venezuelan bonds   (3,224 )   -   NET CASH USED IN INVESTING ACTIVITIES   (61,739 )   (24,832 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (30,399 ) (30,904 ) Dividends received 3,444 - Payments for capped call transactions (123,825 ) - Borrowings from long-term debt 1,150,000 513,223 Principal payments on long-term debt (18,750 ) (25,509 ) Debt issuance costs (28,837 ) - Share repurchases (694,503 ) (164,485 ) Excess tax benefits from share-based payment arrangements 3,154 447 Proceeds from exercise of stock options and sale of stock under employee stock purchase plan   60     425   NET CASH PROVIDED BY FINANCING ACTIVITIES   260,344     293,197   EFFECT OF EXCHANGE RATE CHANGES ON CASH   (100,307 )   (17,052 ) NET CHANGE IN CASH AND CASH EQUIVALENTS 288,947 388,940 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   972,974     333,534   CASH AND CASH EQUIVALENTS, END OF PERIOD   1,261,921     722,474   CASH PAID DURING THE PERIOD Interest paid $ 7,533   $ 5,486   Income taxes paid $ 39,403   $ 31,853   NON CASH ACTIVITIES Accrued capital expenditures $ 20,452   $ 10,070      

SUPPLEMENTAL INFORMATION

SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES(unaudited and unreviewed), (dollars in thousands, except per share data)

In addition to its reported results, the company has included in the tables below adjusted results 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 results, can provide useful supplemental information for investors in analyzing period to period comparisons of the company’s results.

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 3/31/2014 3/31/2013 (in thousands)   Net income, as reported $ 74,628 $ 118,873 Remeasurement loss relating to Venezuela (1)(2) 66,602 10,524 Expenses incurred responding to attacks on the Company's business model (1)(3) 3,307 7,979 Expenses related to the FTC inquiry (1)(4) 670 - Non-cash interest expense and amortization of non-cash issuance costs (5)   5,843   - Net income, as adjusted $ 151,050 $ 137,376               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 3/31/2014 3/31/2013   Diluted earnings per share, as reported $ 0.74 $ 1.10 Remeasurement loss relating to Venezuela (1)(2) 0.66 0.10 Expenses incurred responding to attacks on the Company's business model (1)(3) 0.03 0.07 Expenses related to the FTC inquiry (1)(4) 0.01 - Non-cash interest expense and amortization of non-cash issuance costs (5)   0.06   - Diluted earnings per share, as adjusted $ 1.50 $ 1.27              

(1) Based on interim income tax reporting rules, these expenses are not considered discrete items. As a result, the company's 2014 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. Additionally, adjustments to items unrelated to these non-GAAP adjustments may have an effect on the income tax impact of these non-GAAP adjustments in subsequent periods. The company plans to update the income tax impact of these items in subsequent interim reporting periods.

(2) Net of $22,666 and $4,591 tax benefit for the three months ended March 31, 2014 and 2013, respectively. (3) Net of $995 and $1,515 tax benefit for the three months ended March 31, 2014 and 2013, respectively. (4) Net of $240 tax benefit for the three months ended March 31, 2014. (5) Relates to non-cash expense on our convertible notes and prepaid forward share repurchase contract  

The following is a reconciliation of total long-term debt to net debt:

    3/31/2014     12/31/2013     Total long-term debt (current and long-term portion) $ 1,848,287 $ 931,269 Less: Cash and cash equivalents   1,261,921   972,974   Net debt $ 586,366 $ (41,705 )  

Herbalife Ltd.Media Contact:Barbara HendersonSVP, Worldwide Corp. Comm.213.745.0517orInvestor Contact:Amy GreeneVP, Investor Relations213.745.0474