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10-Q - FORM 10-Q - HERBALIFE LTD.d319010d10q.htm
EX-32.1 - SECTION 906 CEO AND CFO CERTIFICATION - HERBALIFE LTD.d319010dex321.htm
EX-31.2 - SECTION 302 CFO CERTIFICATION - HERBALIFE LTD.d319010dex312.htm
EX-31.1 - SECTION 302 CEO CERTIFICATION - HERBALIFE LTD.d319010dex311.htm
EXCEL - IDEA: XBRL DOCUMENT - HERBALIFE LTD.Financial_Report.xls
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v2.4.0.6
Segment Information
3 Months Ended
Mar. 31, 2012
Segment Information [Abstract]  
Segment Information

6. Segment Information

The Company is a nutrition company that sells a wide range of weight management products, nutritional supplements and personal care products within one industry segment as defined under the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 280, Segment Reporting. The Company’s products are manufactured by third party providers and by the Company in its Suzhou, China facility and in its Lake Forest, California facility, and then are sold to independent distributors who sell Herbalife products to retail consumers or other distributors. Revenues reflect sales of products by the Company to distributors and are categorized based on geographic location.

As of March 31, 2012, the Company sold products in 81 countries throughout the world and was organized and managed by geographic regions. The Company aggregates its operating segments, excluding China, into one reporting segment, or the Primary Reporting Segment, as management believes that the Company’s operating segments have similar operating characteristics and similar long term operating performance. In making this determination, management believes that the operating segments are similar in the nature of the products sold, the product acquisition process, the types of customers to whom products are sold, the methods used to distribute the products, and the nature of the regulatory environment. China has been identified as a separate reporting segment as it does not meet the criteria for aggregation. The operating information for the Primary Reporting Segment and China, and sales by product line are as follows:

 

                 
    Three Months Ended  
    March 31,
2012
    March 31,
2011
 
    (In millions)  

Net Sales:

               

Primary Reporting Segment

               

United States

  $ 204.5     $ 162.2  

Mexico

    117.1       103.9  

South Korea

    93.1       62.1  

Others

    492.6       421.2  
   

 

 

   

 

 

 

Total Primary Reporting Segment

    907.3       749.4  

China

    56.9       45.7  
   

 

 

   

 

 

 

Total Net Sales

  $ 964.2     $ 795.1  
   

 

 

   

 

 

 

Contribution Margin(1)(2):

               

Primary Reporting Segment

               

United States

  $ 95.4     $ 68.4  

Mexico

    43.9       40.4  

South Korea

    42.0       27.2  

Others

    218.1       191.6  
   

 

 

   

 

 

 

Total Primary Reporting Segment

    399.4       327.6  

China

    51.2       40.3  
   

 

 

   

 

 

 

Total Contribution Margin

  $ 450.6     $ 367.9  
   

 

 

   

 

 

 

Selling, general and administrative expenses(2)

    296.4       244.5  

Interest expense, net

    1.4       2.6  
   

 

 

   

 

 

 

Income before income taxes

    152.8       120.8  

Income taxes

    44.6       32.8  
   

 

 

   

 

 

 

Net Income

  $ 108.2     $ 88.0  
   

 

 

   

 

 

 

Net sales by product line:

               

Weight Management

  $ 601.8     $ 498.6  

Targeted Nutrition

    224.9       180.2  

Energy, Sports and Fitness

    48.1       35.5  

Outer Nutrition

    36.7       36.6  

Literature, promotional and other(3)

    52.7       44.2  
   

 

 

   

 

 

 

Total Net Sales

  $ 964.2     $ 795.1  
   

 

 

   

 

 

 

Net sales by geographic region:

               

North America

  $ 210.7     $ 167.0  

Mexico

    117.1       103.9  

South and Central America

    165.5       125.3  

EMEA

    154.0       153.9  

Asia Pacific

    260.0       199.3  

China

    56.9       45.7  
   

 

 

   

 

 

 

Total Net Sales

  $ 964.2     $ 795.1  
   

 

 

   

 

 

 

 

(1) Contribution margin consists of net sales less cost of sales and royalty overrides. See Part I, Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q for a description of net sales, cost of sales and royalty overrides.

 

(2) Compensation to China sales employees and service fees to China independent service providers totaling $25.8 million and $21.8 million for the three months ended March 31, 2012 and 2011, respectively, are included in selling, general and administrative expenses while distributor compensation for all other countries is included in contribution margin.

 

(3) Product buybacks and returns in all product categories are included in the literature, promotional and other category.

As of March 31, 2012 and December 31, 2011, total assets for the Company’s Primary Reporting Segment were $1,435.8 million and $1,357.4 million, respectively. Total assets for the China segment were $96.6 million and $88.8 million as of March 31, 2012 and December 31, 2011, respectively.