[February 26, 2015] |
|
Herbalife Ltd. Announces Fourth Quarter and Full Year 2014 Results, and 2015 Earnings Guidance
Herbalife Ltd. (NYSE: HLF) today reported fourth quarter net sales of
$1.1 billion, reflecting a decline of 11 percent, primarily due to the
unfavorable impact of currency fluctuations. Net sales, excluding
currency impact, were flat compared to the prior year. Adjusted net
income for the quarter was $121.0 million, or $1.41 per diluted share,
compared to $137.2 million, or $1.28 per diluted share for the same
period in 2013. On a reported basis, the company announced fourth
quarter net income of $103.3 million, or $1.21 per diluted share,
compared to $123.5 million, or $1.15 per diluted share for the same
period in 2013. Fourth quarter 2014 EPS was negatively impacted by a
$0.31 currency headwind.
For the twelve months ended December 31, 2014, the company reported net
sales of $5.0 billion, a 3 percent increase compared to 2013. Net sales,
excluding currency impact, increased 8 percent compared to 2013. For the
twelve months ended December 31, 2014, the company reported net income
of $308.7 million, or $3.40 per diluted share. On an adjusted basis, net
income of $538.5 million decreased 7 percent versus adjusted net income
of $577.4 million for the same period in 2013. Adjusted EPS for full
year 2014 of $5.93 increased by 10 percent versus adjusted EPS of $5.37
for full year 2013.
Michael Johnson, chairman and CEO stated, "2014 was a record year in
terms of net sales, volume and sales leader retention. It was also a
year of transition, as we continue to implement changes that we believe
will create a stronger company with the ideal combination of growth and
sustainability. We have seen the success of these changes in early
adopter markets and remain confident that our other markets will follow
a similar pattern through 2015 and beyond."
Johnson continued, "Our revised guidance reflects the currency landscape
faced by all global companies and the short-term volume impact of the
enhancements we are making. We believe we are executing the right
long-term strategy and are confident in our ability to create
sustainable value for our shareholders and the millions of Herbalife
members and their customers worldwide."
For the year ended December 31, 2014, the company generated cash flow
from operations of $511.4 million, invested $156.7 million in capital
expenditures, and repurchased approximately $1.3 billion in common
shares outstanding under the approved share repurchase program.
______________________________ 1 See Schedule A -
"Reconciliation of Non-GAAP Financial Measures" for more detail.
Fourth Quarter and Fiscal 2014 Key Metrics2,3
Regional Volume Point and Average Active Sales Leader Metrics
|
|
Volume Points (Mil)
|
|
Average Active Sales Leaders
|
Region
|
|
4Q'14
|
|
Yr/Yr % Chg
|
|
4Q'14
|
|
Yr/Yr % Chg
|
North America
|
|
268.6
|
|
-6%
|
|
77,490
|
|
5%
|
Asia Pacific
|
|
263.0
|
|
-10%
|
|
78,211
|
|
6%
|
EMEA
|
|
215.5
|
|
17%
|
|
66,422
|
|
24%
|
Mexico
|
|
204.9
|
|
-6%
|
|
68,242
|
|
3%
|
South & Central America
|
|
211.6
|
|
-24%
|
|
66,534
|
|
1%
|
China
|
|
118.2
|
|
15%
|
|
20,528
|
|
18%
|
Worldwide Total
|
|
1,281.8
|
|
-6%
|
|
366,489
|
|
8%
|
Venezuela
|
|
20.2
|
|
-68%
|
|
8,146
|
|
-32%
|
Worldwide Total excl Venezuela
|
|
1,261.6
|
|
-3%
|
|
358,963
|
|
9%
|
|
|
Volume Points (Mil)
|
|
Average Active Sales Leaders
|
Region
|
|
FY 2014
|
|
Yr/Yr % Chg
|
|
FY 2014
|
|
Yr/Yr % Chg
|
North America
|
|
1,244.0
|
|
0%
|
|
76,180
|
|
6%
|
Asia Pacific
|
|
1,189.8
|
|
-3%
|
|
75,351
|
|
5%
|
EMEA
|
|
835.4
|
|
20%
|
|
59,224
|
|
19%
|
Mexico
|
|
875.2
|
|
1%
|
|
65,861
|
|
4%
|
South & Central America
|
|
850.1
|
|
-12%
|
|
63,712
|
|
10%
|
China
|
|
448.5
|
|
34%
|
|
18,857
|
|
27%
|
Worldwide Total
|
|
5,443.0
|
|
2%
|
|
347,321
|
|
9%
|
Venezuela
|
|
91.1
|
|
-57%
|
|
8,593
|
|
-18%
|
Worldwide Total excl Venezuela
|
|
5,351.9
|
|
4%
|
|
339,395
|
|
10%
|
|
|
|
|
|
|
|
|
|
2 Supplemental tables that include additional business
metrics can be found at http://www.ir.herbalife.com. 3
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.
|
|
|
|
|
|
Regional Net Sales and FX Impact
|
|
|
|
|
|
|
|
|
|
|
|
Region
|
Reported Net Sales
4Q '14 (mil)
|
|
Growth/Decline
including FX
|
|
Growth/Decline
excluding FX
|
North America
|
$
|
204.8
|
|
-3
|
%
|
|
-3
|
%
|
Asia Pacific (ex. China)
|
$
|
245.6
|
|
-12
|
%
|
|
-10
|
%
|
EMEA
|
$
|
200.2
|
|
1
|
%
|
|
17
|
%
|
Mexico
|
$
|
132.7
|
|
-7
|
%
|
|
-1
|
%
|
South & Central America
|
$
|
173.2
|
|
-40
|
%
|
|
-12
|
%
|
China
|
$
|
177.1
|
|
19
|
%
|
|
20
|
%
|
Worldwide Total
|
$
|
1,133.6
|
|
-11
|
%
|
|
0
|
%
|
Venezuela
|
$
|
9.5
|
|
-90
|
%
|
|
-19
|
%
|
Worldwide Total excl Venezuela
|
$
|
1,124.1
|
|
-4
|
%
|
|
1
|
%
|
Region
|
Reported Net Sales
FY 2014 (mil)
|
|
Growth/Decline
including FX
|
|
Growth/Decline
excluding FX
|
North America
|
$
|
926.8
|
|
2
|
%
|
|
2
|
%
|
Asia Pacific (ex. China)
|
$
|
1,130.1
|
|
-4
|
%
|
|
-2
|
%
|
EMEA
|
$
|
843.1
|
|
15
|
%
|
|
20
|
%
|
Mexico
|
$
|
567.9
|
|
1
|
%
|
|
5
|
%
|
South & Central America
|
$
|
826.4
|
|
-15
|
%
|
|
4
|
%
|
China
|
$
|
664.3
|
|
41
|
%
|
|
41
|
%
|
Worldwide Total
|
$
|
4,958.6
|
|
3
|
%
|
|
8
|
%
|
Venezuela
|
$
|
140.3
|
|
-47
|
%
|
|
-1
|
%
|
Worldwide Total excl Venezuela
|
$
|
4,818.3
|
|
6
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
2015 Annual Sales Leader Requalification 4
Each year, by the end of January, sales leaders are required to
re-qualify to retain their sales leader status. A record number of sales
leaders were retained in 2015. The pool of sales leaders needing to
re-qualify increased by approximately 2% compared to the prior year, and
we retained 7% more of them than in the prior year. Our overall
retention rate increased to 54.2% compared to 51.8% from the prior year.
2015 First Quarter and Full Year Guidance
Guidance includes an unfavorable impact from currency rates. For the
first quarter, we expect an approximately $0.28 impact, inclusive of
approximately $0.10 resulting from Venezuela. Full year guidance
includes a currency headwind of approximately $1.19, including
approximately $0.45 from Venezuela.
Based on current business trends the company's first quarter fiscal 2015
and full year fiscal 2015 guidance is as follows:
|
Three Months Ending
|
|
Twelve Months Ending
|
|
March 31, 2015
|
|
December 31, 2015
|
|
Low
|
High
|
|
Low
|
High
|
Volume Point Growth vs 2014
|
(8.0%)
|
(5.0%)
|
|
(4.5%)
|
(1.5%)
|
Net Sales Growth vs 2014
|
(15.5%)
|
(12.5%)
|
|
(9.0%)
|
(6.0%)
|
Currency Adjusted Net Sales Growth vs 2014
|
(7.5%)
|
(4.5%)
|
|
(1.0%)
|
2.0%
|
Diluted EPS
|
$1.00
|
$1.10
|
|
$4.10
|
$4.50
|
Currency Adjusted EPS
|
$1.30
|
$1.40
|
|
$5.30
|
$5.70
|
Cap Ex ($ millions)
|
$30.0
|
$40.0
|
|
$120.0
|
$140.0
|
Effective Tax Rate
|
27.0%
|
29.0%
|
|
27.0%
|
29.0%
|
Free Cash Flow ($ millions)
|
|
|
|
$430.0
|
$460.0
|
|
|
|
|
|
|
Guidance excludes the impact of expenses primarily related to legal and
advisory services relating to the company's ongoing business matters,
expenses related to an FTC Civil Investigative Demand or CID, and the
impact of non-cash interest costs associated with the company's
Convertible Notes and the expenses incurred related to the effort to
recover costs related to the re-audits that occurred in 2013. Forward
guidance is based on the average daily exchange rates of the first three
weeks of January. With respect to Venezuela, the guidance assumes a rate
of 50 to 1 for all of 2015 and excludes the potential impact of the
recent and any future devaluation of the Venezuelan Bolivar and future
repatriation, if any, of existing cash balances in Venezuela.
______________________________ 4 Results exclude China,
Venezuela and Argentina
Fourth Quarter and Fiscal 2014 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 26, 2015 at 2:30 p.m. PST (5:30
p.m. EST).
The dial-in number for this conference call for domestic callers is
(877) 317-1296 and (706) 634-5671 for international callers (conference
ID 67375297). 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 67375297). The webcast of the teleconference will be archived and
available on Herbalife's website.
About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF) is a 35-year-old 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.
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;
• 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;
• 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 millions, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
12/31/2014
|
|
|
12/31/2013
|
|
|
12/31/2014
|
|
|
12/31/2013
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
204.8
|
|
$
|
210.3
|
|
$
|
926.8
|
|
$
|
908.0
|
Mexico
|
|
|
132.7
|
|
|
142.6
|
|
|
567.9
|
|
|
562.4
|
South and Central America
|
|
|
173.2
|
|
|
290.3
|
|
|
826.4
|
|
|
973.5
|
EMEA
|
|
|
200.2
|
|
|
197.7
|
|
|
843.1
|
|
|
735.2
|
Asia Pacific
|
|
|
245.6
|
|
|
279.6
|
|
|
1,130.1
|
|
|
1,174.6
|
China
|
|
|
177.1
|
|
|
148.4
|
|
|
664.3
|
|
|
471.6
|
Worldwide net sales
|
|
|
1,133.6
|
|
|
1,268.9
|
|
|
4,958.6
|
|
|
4,825.3
|
Cost of Sales (1)
|
|
|
219.6
|
|
|
251.8
|
|
|
982.9
|
|
|
963.4
|
Gross Profit
|
|
|
914.0
|
|
|
1,017.1
|
|
|
3,975.7
|
|
|
3,861.9
|
Royalty Overrides
|
|
|
334.6
|
|
|
380.7
|
|
|
1,471.1
|
|
|
1,497.5
|
Selling, General and Administrative Expenses (2)
|
|
|
417.4
|
|
|
454.6
|
|
|
1,991.1
|
|
|
1,629.1
|
Operating Income
|
|
|
162.0
|
|
|
181.8
|
|
|
513.5
|
|
|
735.3
|
Interest Expense, net
|
|
|
23.0
|
|
|
2.9
|
|
|
79.2
|
|
|
18.6
|
Other Expense, net (3)
|
|
|
0.0
|
|
|
-
|
|
|
13.0
|
|
|
-
|
Income before income taxes
|
|
|
139.0
|
|
|
178.9
|
|
|
421.3
|
|
|
716.7
|
Income Taxes
|
|
|
35.7
|
|
|
55.4
|
|
|
112.6
|
|
|
189.2
|
Net Income
|
|
$
|
103.3
|
|
$
|
123.5
|
|
$
|
308.7
|
|
$
|
527.5
|
|
|
|
|
|
|
|
|
|
Basic Shares
|
|
|
82.1
|
|
|
101.2
|
|
|
86.3
|
|
|
102.6
|
Diluted Shares
|
|
|
85.5
|
|
|
107.2
|
|
|
90.8
|
|
|
107.4
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$
|
1.26
|
|
$
|
1.22
|
|
$
|
3.58
|
|
$
|
5.14
|
Diluted EPS
|
|
$
|
1.21
|
|
$
|
1.15
|
|
$
|
3.40
|
|
$
|
4.91
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
|
|
$
|
-
|
|
$
|
0.30
|
|
$
|
0.30
|
|
$
|
1.20
|
(1) As discussed in Note 2 of the annual report on Form
10-K for the year ended December 31, 2014, Cost of Sales includes
$7.6 million of inventory write downs related to Venezuela for the
twelve months ended December 31, 2014.
|
(2) As discussed in Note 2 of the annual report on Form
10-K for the year ended December 31, 2014, Selling, General and
Administrative Expenses includes $103.4 million and $98.0 million
pre-tax unfavorable impact related to the remeasurement of Venezuela
Bolivar-denominated assets and liabilities at the SICAD I and SICAD
II rate, respectively, and $7.0 million loss on Venezuela asset
impairment for the twelve months ended December 31, 2014.
|
(3) As discussed in Note 2 of the annual report on Form
10-K for the year ended December 31, 2014, Other Expense, net
relates to the impairment of investments in Bolivar-denominated
bonds.
|
|
Herbalife Ltd. and Subsidiaries
|
Condensed Consolidated Balance Sheets
|
(In millions)
|
(Unaudited)
|
|
|
Dec 31,
|
|
Dec 31,
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
ASSETS
|
|
|
|
Current Assets:
|
|
|
|
Cash & cash equivalents
|
$
|
645.4
|
|
|
$
|
973.0
|
|
Receivables, net
|
|
83.6
|
|
|
|
100.3
|
|
Inventories
|
|
377.7
|
|
|
|
351.2
|
|
Prepaid expenses and other current assets
|
|
186.1
|
|
|
|
148.8
|
|
Deferred income tax assets
|
|
100.6
|
|
|
|
69.8
|
|
Total Current Assets
|
|
1,393.4
|
|
|
|
1,643.1
|
|
|
|
|
|
Property, net
|
|
366.7
|
|
|
|
318.9
|
|
Deferred compensation plan assets
|
|
27.4
|
|
|
|
26.8
|
|
Other assets
|
|
152.8
|
|
|
|
63.7
|
|
Deferred financing cost, net
|
|
22.0
|
|
|
|
4.9
|
|
Marketing related intangibles and other intangible assets, net
|
|
310.4
|
|
|
|
310.8
|
|
Goodwill
|
|
102.2
|
|
|
|
105.5
|
|
Total Assets
|
$
|
2,374.9
|
|
|
$
|
2,473.7
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
Current Liabilities:
|
|
|
|
Accounts payable
|
$
|
72.4
|
|
|
$
|
82.7
|
|
Royalty overrides
|
|
251.0
|
|
|
|
267.0
|
|
Accrued compensation
|
|
69.6
|
|
|
|
111.9
|
|
Accrued expenses
|
|
252.1
|
|
|
|
267.5
|
|
Current portion of long-term debt
|
|
100.0
|
|
|
|
81.3
|
|
Advance sales deposits
|
|
70.0
|
|
|
|
68.1
|
|
Income taxes payable
|
|
59.7
|
|
|
|
43.8
|
|
Total Current Liabilities
|
|
874.8
|
|
|
|
922.3
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
Long-term debt, net of current portion
|
|
1,711.7
|
|
|
|
850.0
|
|
Deferred compensation plan liability
|
|
42.9
|
|
|
|
37.2
|
|
Deferred income tax liabilities
|
|
15.3
|
|
|
|
66.0
|
|
Other non-current liabilities
|
|
64.6
|
|
|
|
46.8
|
|
Total Liabilities
|
|
2,709.3
|
|
|
|
1,922.3
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
Shareholders' (deficit) equity:
|
|
|
|
Common shares
|
|
0.1
|
|
|
|
0.1
|
|
Paid-in capital in excess of par value
|
|
409.1
|
|
|
|
323.9
|
|
Accumulated other comprehensive loss
|
|
(78.2
|
)
|
|
|
(19.8
|
)
|
(Accumulated deficit) retained earnings
|
|
(665.4
|
)
|
|
|
247.2
|
|
Total Shareholders' (Deficit) Equity
|
|
(334.4
|
)
|
|
|
551.4
|
|
|
|
|
|
Total Liabilities and Shareholders' (Deficit) Equity
|
$
|
2,374.9
|
|
|
$
|
2,473.7
|
|
|
|
|
|
|
|
|
|
Herbalife Ltd. and Subsidiaries
|
Condensed Consolidated Statements of Cash Flows
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
Twelve Months Ended
|
|
|
12/31/2014
|
|
|
|
12/31/2013
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
Net income
|
$
|
308.7
|
|
|
$
|
527.5
|
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
operating activities:
|
|
|
|
Depreciation and amortization
|
|
93.2
|
|
|
|
84.7
|
|
Excess tax benefits from share-based payment arrangements
|
|
(10.4
|
)
|
|
|
(15.6
|
)
|
Share-based compensation expenses
|
|
45.7
|
|
|
|
29.5
|
|
Non-cash interest expense
|
|
43.5
|
|
|
|
2.6
|
|
Deferred income taxes
|
|
(84.8
|
)
|
|
|
(24.9
|
)
|
Inventory write-downs
|
|
24.5
|
|
|
|
29.8
|
|
Unrealized foreign exchange transaction (gain) loss
|
|
(6.2
|
)
|
|
|
5.8
|
|
Foreign exchange loss from Venezuela currency devaluation
|
|
200.3
|
|
|
|
15.1
|
|
Impairments and write-downs relating to Venezuela currency
devaluation
|
|
27.5
|
|
|
|
-
|
|
Other
|
|
6.1
|
|
|
|
0.6
|
|
Changes in operating assets and liabilities:
|
|
|
|
Receivables
|
|
6.0
|
|
|
|
9.2
|
|
Inventories
|
|
(99.4
|
)
|
|
|
(54.8
|
)
|
Prepaid expenses and other current assets
|
|
(34.9
|
)
|
|
|
(9.4
|
)
|
Other assets
|
|
(36.7
|
)
|
|
|
(9.4
|
)
|
Accounts payable
|
|
(5.2
|
)
|
|
|
10.8
|
|
Royalty overrides
|
|
6.7
|
|
|
|
28.8
|
|
Accrued expenses and accrued compensation
|
|
(11.5
|
)
|
|
|
86.0
|
|
Advance sales deposits
|
|
10.4
|
|
|
|
22.0
|
|
Income taxes
|
|
22.2
|
|
|
|
26.8
|
|
Deferred compensation plan liability
|
|
5.7
|
|
|
|
7.8
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
511.4
|
|
|
|
772.9
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
Purchases of property, plant and equipment
|
|
(173.7
|
)
|
|
|
(146.9
|
)
|
Proceeds from sale of property, plant and equipment
|
|
-
|
|
|
|
0.2
|
|
Investments in Venezuelan bonds
|
|
(12.6
|
)
|
|
|
(4.1
|
)
|
Deposit in escrow
|
|
(15.0
|
)
|
|
|
-
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
(201.3
|
)
|
|
|
(150.8
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
Dividends paid
|
|
(30.4
|
)
|
|
|
(123.1
|
)
|
Dividends received
|
|
3.4
|
|
|
|
-
|
|
Payments for Capped Call Transactions
|
|
(123.8
|
)
|
|
|
-
|
|
Borrowings from senior secured credit facility and other debt
|
|
50.0
|
|
|
|
763.1
|
|
Proceeds from senior convertible notes
|
|
1,150.0
|
|
|
|
-
|
|
Principal payments on senior secured credit facility and other debt
|
|
(131.3
|
)
|
|
|
(319.4
|
)
|
Issuance costs relating to long-term debt and senior convertible
notes
|
|
(28.9
|
)
|
|
|
-
|
|
Share repurchases
|
|
(1,291.9
|
)
|
|
|
(306.5
|
)
|
Excess tax benefits from share-based payment arrangements
|
|
10.4
|
|
|
|
15.6
|
|
Proceeds from exercise of stock options and sale of stock under
employee stock purchase plan
|
|
3.0
|
|
|
|
1.0
|
|
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
|
(389.5
|
)
|
|
|
30.7
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
|
(248.2
|
)
|
|
|
(13.3
|
)
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
(327.6
|
)
|
|
|
639.5
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
973.0
|
|
|
|
333.5
|
|
CASH AND CASH EQUIVALENTS, END OF YEAR
|
$
|
645.4
|
|
|
$
|
973.0
|
|
CASH PAID DURING THE YEAR
|
|
|
|
Interest paid
|
$
|
39.2
|
|
|
$
|
23.0
|
|
Income taxes paid
|
$
|
180.8
|
|
|
$
|
197.1
|
|
NON CASH INVESTING ACTIVITIES
|
|
|
|
Accrued capital expenditures
|
$
|
12.3
|
|
|
$
|
29.6
|
|
NON CASH FINANCING ACTIVITIES
|
|
|
|
Forward transaction non-cash issuance cost
|
$
|
35.8
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
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
|
|
Twelve Months Ended
|
|
|
12/31/2014
|
|
|
|
12/31/2013
|
|
|
12/31/2014
|
|
|
12/31/2013
|
|
(in millions)
|
|
|
|
|
|
|
|
|
Net income, as reported
|
$
|
103.3
|
|
|
$
|
123.5
|
|
$
|
308.7
|
|
$
|
527.5
|
Remeasurement and impairment losses relating to Venezuela (1)
(2)
|
|
(0.4
|
)
|
|
|
1.4
|
|
|
152.4
|
|
|
9.8
|
Non-recurring expenses associated with Member payments related to
Venezuela (1)
|
|
1.8
|
|
|
|
-
|
|
|
1.8
|
|
|
-
|
Expenses incurred responding to attacks on the Company's business
model (1) (3)
|
|
3.1
|
|
|
|
3.9
|
|
|
16.6
|
|
|
24.5
|
Expenses incurred for the re-audit of 2010 to 2012 financial
statements (1) (4)
|
|
-
|
|
|
|
8.3
|
|
|
-
|
|
|
15.6
|
Expenses related to the FTC inquiry (1) (5)
|
|
2.8
|
|
|
|
-
|
|
|
9.4
|
|
|
-
|
Expenses incurred for the recovery of re-audit fees (1) (6)
|
|
0.1
|
|
|
|
-
|
|
|
0.4
|
|
|
-
|
Non-cash interest expense and amortization of non-cash issuance costs
(1) (7)
|
|
10.8
|
|
|
|
-
|
|
|
36.7
|
|
|
-
|
Legal reserve for the Bostick case (1) (8)
|
|
(0.4
|
)
|
|
|
-
|
|
|
10.9
|
|
|
-
|
Impairment of newly acquired defective manufacturing equipment (1)
(9)
|
|
(0.1
|
)
|
|
|
-
|
|
|
1.6
|
|
|
-
|
Net income, as adjusted (10)
|
$
|
121.0
|
|
|
$
|
137.2
|
|
$
|
538.5
|
|
$
|
577.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
12/31/2014
|
|
|
|
12/31/2013
|
|
|
12/31/2014
|
|
|
12/31/2013
|
|
|
|
|
|
|
|
|
Diluted earnings per share, as reported
|
$
|
1.21
|
|
|
$
|
1.15
|
|
$
|
3.40
|
|
$
|
4.91
|
Remeasurement and impairment losses relating to Venezuela (1)
(2)
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
1.68
|
|
|
0.09
|
Non-recurring expenses associated with Member payments related to
Venezuela (1)
|
|
0.02
|
|
|
|
|
|
0.02
|
|
|
Expenses incurred responding to attacks on the Company's business
model (1) (3)
|
|
0.04
|
|
|
|
0.04
|
|
|
0.18
|
|
|
0.23
|
Expenses incurred for the re-audit of 2010 to 2012 financial
statements (1) (4)
|
|
-
|
|
|
|
0.08
|
|
|
-
|
|
|
0.14
|
Expenses related to the FTC inquiry (1) (5)
|
|
0.03
|
|
|
|
-
|
|
|
0.10
|
|
|
-
|
Expenses incurred for the recovery of re-audit fees (1) (6)
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
Non-cash interest expense and amortization of non-cash issuance costs
(1) (7)
|
|
0.13
|
|
|
|
-
|
|
|
0.40
|
|
|
-
|
Legal reserve for the Bostick case (1) (8)
|
|
-
|
|
|
|
-
|
|
|
0.12
|
|
|
-
|
Impairment of newly acquired defective manufacturing equipment (1)
(9)
|
|
-
|
|
|
|
-
|
|
|
0.02
|
|
|
-
|
Diluted earnings per share, as adjusted (10)
|
$
|
1.41
|
|
|
$
|
1.28
|
|
$
|
5.93
|
|
$
|
5.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) Net of $0.4 million and $(1.4 million) tax benefit
for the three months ended Dec. 31, 2014 and 2013, respectively; and
net of $76.6 million and $5.4 million tax benefit for the twelve
months ended Dec. 31, 2014 and 2013, respectively.
|
(3) Net of $3.7 million and $1.4 million tax benefit for
the three months ended Dec. 31, 2014 and 2013, respectively; and net
of $8.5 million and $4.6 million tax benefit for the twelve months
ended Dec. 31, 2014 and 2013, respectively.
|
(4) Net of $2.5 million and $4.9 million tax benefit for
the three and twelve months ended Dec. 31, 2013, respectively.
|
(5) Net of $1.6 million and $5.7 million tax benefit for
the three and twelve months ended Dec. 31, 2014, respectively.
|
(6) Net of $0.1 million and $0.2 million tax benefit for
the three and twelve months ended Dec. 31, 2014, respectively.
|
(7) Relates to non-cash expense on our convertible notes
and prepaid forward share repurchase contract.
|
(8) Net of $0.4 million and $6.6 million tax benefit for
the three and twelve months ended Dec 31, 2014, respectively.
|
(9) Net of $0.1 million and $1.0 million tax benefit for
the three and twelve months ended Dec. 31, 2014, respectively.
|
(10) Amounts may not total due to rounding.
|
|
The following is a reconciliation of total long-term debt to net debt:
|
|
|
12/31/2014
|
|
|
12/31/2013
|
|
|
|
(in millions)
|
|
|
|
|
|
Total long-term debt (current and long-term portion)
|
|
$
|
1,811.7
|
|
$
|
931.3
|
|
Less: Cash and cash equivalents
|
|
|
645.4
|
|
|
973.0
|
|
Net debt
|
|
$
|
1,166.3
|
|
$
|
(41.7
|
)
|
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|