Herbalife Ltd. Announces Record Fourth Quarter 2012 and Record Full Year Results, and Raises 2013 Earnings Guidance

• Fourth quarter worldwide volume growth of 18 percent with double-digit increases in each of its six regions compared to the prior year period.
• Fourth quarter EPS of $1.05 increased 22 percent compared to the prior year.
• Raising FY’13 EPS guidance to a range of $4.45 to $4.65.
• Annual sales leader retention of approximately 51.8 percent.
• Repurchased 4.0 million shares of stock since December 31, 2012.
• Board of directors approved a $0.30 per share quarterly dividend.

LOS ANGELES--(BUSINESS WIRE)--Herbalife Ltd. (NYSE: HLF) today reported fourth quarter net sales of $1.1 billion, reflecting an increase of 20 percent compared to the same time period in 2011 on volume point growth of 18 percent. Net income for the quarter of $117.8 million, or $1.05 per diluted share, compares to 2011 fourth quarter net income of $105.4 million and EPS of $0.86, respectively.

“Herbalife continues to deliver record results in sales and profitability as our independent distributors go deeper into existing markets, developing more and more customers using our nutrition products every day”

For the twelve months ended December 31, 2012, the company reported record net sales of $4.1 billion, an 18 percent increase on 20 percent growth in volume compared to 2011. For the same period, the company reported net income of $477.2 million, or $4.05 per diluted share, reflecting an increase of 16 percent and 23 percent, respectively, compared to the 2011 results of $412.6 million and $3.30 per diluted share.

“Herbalife continues to deliver record results in sales and profitability as our independent distributors go deeper into existing markets, developing more and more customers using our nutrition products every day,” said Michael O. Johnson, Herbalife’s chairman and CEO. “Obesity and poor nutrition are global public health problems. Our distributors are proud to be part of the solution.”

For the year ended December 31, 2012 the company generated cash flow from operations of $567.8 million, an increase of 11 percent compared to 2011; paid dividends of $135.1 million; invested $122.8 million in capital expenditures; and repurchased $527.8 million in common shares outstanding under our share repurchase program.

Fourth Quarter and Fiscal 2012 Regional Key Metrics^1,2

Regional Volume Point and Average Active Sales Leader Metrics

	Volume Points (Mil)		Average Active Sales Leaders
Region	4Q'12	Yr/Yr % Chg	4Q'12	Yr/Yr % Chg
North America	267.0	15%	68,029	14%
Asia Pacific	304.6	18%	69,553	26%
EMEA	156.6	14%	47,226	14%
Mexico	208.9	13%	61,836	19%
South & Central America	222.5	34%	50,874	28%
China	50.5	17%	12,560	25%
Worldwide Total	1,210.1	18%	300,521	20%

	Volume Points (Mil)		Average Active Sales Leaders
Region	FY'12	Yr/Yr % Chg	FY'12	Yr/Yr % Chg
North America	1,157.8	17%	66,054	16%
Asia Pacific	1,197.8	25%	63,255	31%
EMEA	602.5	11%	44,098	14%
Mexico	815.4	16%	57,651	21%
South & Central America	740.4	30%	44,980	29%
China	206.5	34%	11,683	33%
Worldwide Total	4,720.4	20%	277,803	22%

2012 Annual Sales Leader Requalification

By the end of January of each year, sales leaders are required to re-qualify to retain their sales leader status. A record number of sales leaders were retained in 2012. The overall pool of sales leaders needing to re-qualify increased by approximately 21% compared to the prior year and we retained 20% more of them than in the prior year. While size of the group needing to re-qualify increased for the year, our overall retention rate remained fairly constant at 51.8%.

________________________________________
¹Supplemental tables that include additional business metrics can be found at http://www.ir.herbalife.com.

²Worldwide 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.

Updated 2013 Guidance

Guidance for fully diluted 2013 EPS is based on the average daily exchange rates of January 2013, which in aggregate are not materially different from the foreign currency exchange rates assumed in our prior guidance. Our 2013 guidance continues to assume a Venezuelan exchange rate of 10 to 1. The guidance does not include the one-time impact associated with the revaluation of our bolivar denominated monetary assets and monetary liabilities, which includes our bolivar denominated cash, due to the recent devaluation of the Venezuelan bolivar, or any potential one-time impact from a future devaluation or the repatriation of existing cash balances. Guidance for the year also excludes one-time costs of $10 million to $20 million, mostly legal and advisory services, relating to the Company’s response to information put into the marketplace by a short seller which information the Company believes to be inaccurate and misleading.

Based on current business trends the company’s first quarter fiscal 2013 and fiscal 2013 guidance is provided below.

	Three Months Ending		Twelve Months Ending
	March 31, 2013		December 31, 2013
	Low	High	Low	High
Volume Point Growth vs 2012	11.5%	13.5%	8.5%	10.5%
Net Sales Growth vs 2012	15.0%	17.0%	12.0%	14.0%
Diluted EPS	$1.03	$1.07	$4.45	$4.65
Cap Ex ($ millions)	$20.0	$30.0	$165.0	$185.0
Effective Tax Rate	28.5%	30.5%	27.5%	29.5%

Announces Quarterly Dividend

The company reported today that its board of directors has approved a dividend of $0.30 per share to shareholders of record March 5, 2013, payable on March 19, 2013.

Share Repurchase Program Update

Subsequent to December 31, 2012, the company has repurchased 4.0 million shares at an average cost of $40.61. There is currently $787.6 million remaining on the existing $1 billion share repurchase authorization.

Fourth Quarter and Fiscal 2012 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 Wednesday, February 20, 2013 at 8 a.m. PST (11 a.m. EST).

The dial-in number for this conference call for domestic callers is [phone] and [phone] for international callers (conference ID 90082326). 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 [phone] for domestic callers or [phone] for international callers (conference ID 90082326). 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 over 80 countries through and to a network of independent distributors. 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 information about Herbalife, including financial and other information for investors 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:

• any collateral impact resulting from the ongoing worldwide financial environment including the availability of liquidity to us, our customers and our suppliers or the willingness of our customers to purchase products in a difficult economic environment;

• our relationship with, and our ability to influence the actions of, our distributors;

• improper action by our employees or distributors 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 distributor 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, 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 distributors;

• 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.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
	Three Months Ended					Twelve Months Ended
		12/31/2012		12/31/2011			12/31/2012		12/31/2011
North America	$	197,052	$	165,737		$	841,243	$	698,631
Mexico		132,070		106,192			496,101		436,930
South and Central America		203,252		155,373			688,799		554,439
EMEA		164,684		151,556			627,801		615,180
Asia Pacific		295,166		247,015			1,139,867		938,590
China		67,096		58,696			278,519		210,767
Worldwide net sales		1,059,320		884,569			4,072,330		3,454,537
Cost of Sales		211,105		170,960			812,583		680,084
Gross Profit		848,215		713,609			3,259,747		2,774,453
Royalty Overrides		355,658		293,109			1,338,633		1,137,560
SGA		332,764		286,151			1,259,667		1,074,623
Operating Income		159,793		134,349			661,447		562,270
Interest Expense - net		2,453		(1,357	)		10,541		2,491
Income before income taxes		157,340		135,706			650,906		559,779
Income Taxes		39,459		30,349			173,716		147,201
Net Income		117,881		105,357			477,190		412,578
Basic Shares		107,444		115,989			112,359		117,540
Diluted Shares		112,230		122,640			117,856		124,846
Basic EPS	$	1.10	$	0.91		$	4.25	$	3.51
Diluted EPS	$	1.05	$	0.86		$	4.05	$	3.30
Dividends declared per share	$	0.30	$	0.20		$	1.20	$	0.73

Herbalife Ltd.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
	Dec 31,			Dec 31,
		2012			2011
ASSETS
Current Assets:
Cash & cash equivalents	$	333,534		$	258,775
Receivables, net		116,139			89,660
Inventories		339,411			247,696
Prepaid expenses and other current assets		125,425			117,073
Deferred income taxes		49,339			55,615
Total Current Assets		963,848			768,819
Property, plant and equipment, net		242,886			193,703
Deferred compensation plan assets		24,267			20,511
Other assets		48,805			41,125
Deferred financing cost, net		7,462			4,797
Marketing related intangibles and other intangible assets, net		311,186			311,764
Goodwill		105,490			105,490
Total Assets	$	1,703,944		$	1,446,209
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	75,209		$	57,095
Royalty overrides		243,351			197,756
Accrued compensation		95,220			76,435
Accrued expenses		181,523			152,744
Current portion of long term debt		56,302			1,542
Advance sales deposits		49,432			31,702
Income taxes payable		15,854			31,415
Total Current Liabilities		716,891			548,689
Non-current liabilities
Long-term debt, net of current portion		431,305			202,079
Deferred compensation plan liability		29,454			23,702
Deferred income taxes		62,982			72,348
Other non-current liabilities		42,557			39,203
Total Liabilities		1,283,189			886,021
Commitments and Contingencies
Shareholders' equity:
Common shares		107			116
Paid-in capital in excess of par value		303,975			291,950
Accumulated other comprehensive loss		(31,695	)		(37,809	)
Retained earnings		148,368			305,931
Total Shareholders' Equity		420,755			560,188
Total Liabilities and Shareholders' Equity	$	1,703,944		$	1,446,209

Herbalife Ltd.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Twelve Months Ended
	12/31/2012			12/31/2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	477,190		$	412,578
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		74,384			71,853
Excess tax benefits from share-based payment arrangements		(29,684	)		(27,450	)
Share based compensation expenses		27,906			24,133
Amortization of discount and deferred financing costs		1,797			1,007
Deferred income taxes		(9,050	)		(12,984	)
Unrealized foreign exchange transaction loss (gain)		2,121			9,403
Write-off of deferred financing costs		-			914
Other		532			2,206
Changes in operating assets and liabilities:
Receivables		(28,186	)		(9,687	)
Inventories		(82,177	)		(84,880	)
Prepaid expenses and other current assets		249			3,229
Other assets		(5,288	)		(13,864	)
Accounts payable		17,034			15,427
Royalty overrides		41,868			44,041
Accrued expenses and accrued compensation		39,440			28,749
Advance sales deposits		17,790			(1,538	)
Income taxes		16,106			42,659
Deferred compensation plan liability		5,752			3,535
NET CASH PROVIDED BY OPERATING ACTIVITIES		567,784			509,331
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(121,524	)		(90,408	)
Proceeds from sale of property, plant and equipment		280			297
Deferred compensation plan assets		(3,756	)		(1,975	)
NET CASH USED IN INVESTING ACTIVITIES		(125,000	)		(92,086	)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid		(135,091	)		(85,489	)
Borrowings from long-term debt		1,430,560			914,200
Principal payments on long-term debt		(1,146,580	)		(888,865	)
Deferred financing costs		(4,460	)		(5,718	)
Share repurchases		(556,727	)		(321,639	)
Excess tax benefits from share-based payment arrangements		29,684			27,450
Proceeds from exercise of stock options and sale of stock under
employee stock purchase plan		11,373			22,262
NET CASH USED IN FINANCING ACTIVITIES		(371,241	)		(337,799	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		3,216			(11,221	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		74,759			68,225
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		258,775			190,550
CASH AND CASH EQUIVALENTS, END OF YEAR		333,534			258,775
CASH PAID DURING THE YEAR
Interest paid	$	14,268		$	8,800
Income taxes paid	$	169,725		$	118,906

SUPPLEMENTAL INFORMATION

SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited), (Dollars in Thousand, 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 investor in analyzing period to period comparisons of the Company’s results.

The following is a reconciliation of net income and diluted earnings per share, 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
	12/31/2012	12/31/2011	12/31/2012	12/31/2011
Net income, as reported	$ 117,881	$ 105,357	$ 477,190	$ 412,578
Write-off of unamortized deferred financing cost
from debt refinancing (net of $214 tax benefit)	-	-	-	700
Net income, as adjusted	$ 117,881	$ 105,357	$ 477,190	$ 413,278

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
	12/31/2012	12/31/2011	12/31/2012	12/31/2011
Diluted earnings per share, as reported	$ 1.05	$ 0.86	$ 4.05	$ 3.30
Write-off of unamortized deferred financing cost
from debt refinancing	-	-	-	0.01
Diluted earnings per share, as adjusted	$ 1.05	$ 0.86	$ 4.05	$ 3.31

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

		12/31/2012		12/31/2011
Total long-term debt (current and long-term portion)	$	487,607	$	203,621
Less: Cash and cash equivalents		333,534		258,775
Net debt	$	154,073	$	(55,154	)