XML 27 R17.htm IDEA: XBRL DOCUMENT
v3.20.2

Shareholders' Deficit | 6 Months Ended
--- | ---
Jun. 30, 2020
Equity [Abstract] |
Shareholders' Deficit | 10. Shareholders’ Deficit Changes in shareholders’ deficit for the three months ended June 30, 2020 and 2019 were as follows:
|  | Three Months Ended June 30, 2020 |
|  | Common Shares |  |  | Treasury Stock |  |  | Paid-in Capital in Excess of Par Value |  |  | Accumulated Other Comprehensive Loss |  |  | Accumulated Deficit |  |  | Total Shareholders' Deficit |
|  | (in millions) |
Balance as of March 31, 2020 |  | $ | 0.1 |  |  | $ | (328.9 | ) |  | $ | 373.0 |  |  | $ | (263.0 | ) |  | $ | (169.7 | ) |  | $ | (388.5 | )
Issuance of 0.3 common shares from exercise of stock options, SARs, restricted stock units, employee stock purchase plan, and other |  |  | — |  |  |  |  |  |  |  | 0.8 |  |  |  |  |  |  |  |  |  |  |  | 0.8 |  |
Additional capital from share-based compensation |  |  |  |  |  |  |  |  |  |  | 12.2 |  |  |  |  |  |  |  |  |  |  |  | 12.2 |
Repurchases of 0.5 common shares |  |  | — |  |  |  |  |  |  |  | (5.3 | ) |  |  |  |  |  |  | (16.0 | ) |  |  | (21.3 | )
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 115.1 |  |  |  | 115.1 |
Foreign currency translation adjustment, net of income taxes of $(2.3) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 17.2 |  |  |  |  |  |  |  | 17.2 |
Unrealized loss on derivatives, net of income taxes of $— |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (0.3 | ) |  |  |  |  |  |  | (0.3 | )
Balance as of June 30, 2020 |  | $ | 0.1 |  |  | $ | (328.9 | ) |  | $ | 380.7 |  |  | $ | (246.1 | ) |  | $ | (70.6 | ) |  | $ | (264.8 | )
|  | Three Months Ended June 30, 2019 |
|  | Common Shares |  |  | Treasury Stock |  |  | Paid-in Capital in Excess of Par Value |  |  | Accumulated Other Comprehensive Loss |  |  | Accumulated Deficit |  |  | Total Shareholders' Deficit |
|  | (in millions) |
Balance as of March 31, 2019 |  | $ | 0.1 |  |  | $ | (328.9 | ) |  | $ | 333.8 |  |  | $ | (204.1 | ) |  | $ | (430.0 | ) |  | $ | (629.1 | )
Issuance of 0.2 common shares from exercise of stock options, SARs, restricted stock units, employee stock purchase plan, and other |  |  | — |  |  |  |  |  |  |  | 0.9 |  |  |  |  |  |  |  |  |  |  |  | 0.9 |
Additional capital from share-based compensation |  |  |  |  |  |  |  |  |  |  | 9.9 |  |  |  |  |  |  |  |  |  |  |  | 9.9 |
Repurchases of 0.1 common shares |  |  | — |  |  |  |  |  |  |  | (1.4 | ) |  |  |  |  |  |  |  |  |  |  | (1.4 | )
Reclassification from temporary equity |  |  |  |  |  |  |  |  |  |  | 11.3 |  |  |  |  |  |  |  |  |  |  |  | 11.3 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 76.5 |  |  |  | 76.5 |
Foreign currency translation adjustment, net of income taxes of $(1.5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1.8 | ) |  |  |  |  |  |  | (1.8 | )
Unrealized loss on derivatives, net of income taxes of $— |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (0.5 | ) |  |  |  |  |  |  | (0.5 | )
Balance as of June 30, 2019 |  | $ | 0.1 |  |  | $ | (328.9 | ) |  | $ | 354.5 |  |  | $ | (206.4 | ) |  | $ | (353.5 | ) |  | $ | (534.2 | )
Changes in shareholders’ deficit for the six months ended June 30, 2020 and 2019 were as follows:
|  | Six Months Ended June 30, 2020 |
|  | Common Shares |  |  | Treasury Stock |  |  | Paid-in Capital in Excess of Par Value |  |  | Accumulated Other Comprehensive Loss |  |  | Accumulated Deficit |  |  | Total Shareholders' Deficit |
|  | (in millions) |
Balance as of December 31, 2019 |  | $ | 0.1 |  |  | $ | (328.9 | ) |  | $ | 366.6 |  |  | $ | (212.5 | ) |  | $ | (215.3 | ) |  | $ | (390.0 | )
Issuance of 0.7 common shares from exercise of stock options, SARs, restricted stock units, employee stock purchase plan, and other |  |  | — |  |  |  |  |  |  |  | 1.6 |  |  |  |  |  |  |  |  |  |  |  | 1.6 |  |
Additional capital from share-based compensation |  |  |  |  |  |  |  |  |  |  | 22.5 |  |  |  |  |  |  |  |  |  |  |  | 22.5 |
Repurchases of 0.6 common shares |  |  | — |  |  |  |  |  |  |  | (10.0 | ) |  |  |  |  |  |  | (16.0 | ) |  |  | (26.0 | )
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 160.7 |  |  |  | 160.7 |
Foreign currency translation adjustment, net of income taxes of $(4.8) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (39.9 | ) |  |  |  |  |  |  | (39.9 | )
Unrealized loss on derivatives, net of income taxes of $(0.3) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 6.3 |  |  |  |  |  |  |  | 6.3 |
Balance as of June 30, 2020 |  | $ | 0.1 |  |  | $ | (328.9 | ) |  | $ | 380.7 |  |  | $ | (246.1 | ) |  | $ | (70.6 | ) |  | $ | (264.8 | )
|  | Six Months Ended June 30, 2019 |
|  | Common Shares |  |  | Treasury Stock |  |  | Paid-in Capital in Excess of Par Value |  |  | Accumulated Other Comprehensive Loss |  |  | Accumulated Deficit |  |  | Total Shareholders' Deficit |
|  | (in millions) |
Balance as of December 31, 2018 |  | $ | 0.1 |  |  | $ | (328.9 | ) |  | $ | 341.5 |  |  | $ | (209.8 | ) |  | $ | (526.3 | ) |  | $ | (723.4 | )
Issuance of 0.6 common shares from exercise of stock options, SARs, restricted stock units, employee stock purchase plan, and other |  |  | — |  |  |  |  |  |  |  | 1.5 |  |  |  |  |  |  |  |  |  |  |  | 1.5 |
Additional capital from share-based compensation |  |  |  |  |  |  |  |  |  |  | 20.5 |  |  |  |  |  |  |  |  |  |  |  | 20.5 |
Repurchases of 0.2 common shares |  |  | — |  |  |  |  |  |  |  | (9.0 | ) |  |  |  |  |  |  |  |  |  |  | (9.0 | )
Forward Counterparties' delivery of 2.0 common shares to the Company |  |  | — |  |  |  |  |  |  |  | — |  |  |  |  |  |  |  |  |  |  |  | — |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 172.8 |  |  |  | 172.8 |
Foreign currency translation adjustment, net of income taxes of $(1.0) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5.3 |  |  |  |  |  |  |  | 5.3 |
Unrealized loss on derivatives, net of income taxes of $— |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1.9 | ) |  |  |  |  |  |  | (1.9 | )
Balance as of June 30, 2019 |  | $ | 0.1 |  |  | $ | (328.9 | ) |  | $ | 354.5 |  |  | $ | (206.4 | ) |  | $ | (353.5 | ) |  | $ | (534.2 | )
Dividends The Company has not declared or paid cash dividends since 2014. The declaration of future dividends is subject to the discretion of the Company’s board of directors and will depend upon various factors, including its earnings, financial condition, Herbalife Nutrition Ltd.’s available distributable reserves under Cayman Islands law, restrictions imposed by the 2018 Credit Facility and the terms of any other indebtedness that may be outstanding, cash requirements, future prospects and other factors deemed relevant by its board of directors. Share Repurchases On October 30, 2018, the Company’s board of directors authorized a new five-year $1.5 billion share repurchase program that will expire on October 30, 2023, which replaced the Company’s prior share repurchase authorization that was set to expire on February 21, 2020 and had approximately $113.3 million of remaining authorized capacity when it was replaced. This share repurchase program allows the Company, which includes an indirect wholly-owned subsidiary of Herbalife Nutrition Ltd., to repurchase the Company’s common shares at such times and prices as determined by management, as market conditions warrant, and to the extent Herbalife Nutrition Ltd.’s distributable reserves are available under Cayman Islands law. The 2018 Credit Facility permits the Company to repurchase its common shares as long as no default or event of default exists and other conditions, such as specified consolidated leverage ratios, are met. As of June 30, 2020, the remaining authorized capacity under the Company’s $1.5 billion share repurchase program was $1,482.9 million. In conjunction with the issuance of the 2019 Convertible Notes during February 2014, the Company paid approximately $685.8 million to enter into Forward Transactions with certain financial institutions, or the Forward Counterparties, pursuant to which the Company purchased approximately 19.9 million common shares, at an average cost of $34.51 per share, for settlement on or around the August 15, 2019 maturity date for the 2019 Convertible Notes, subject to the ability of each Forward Counterparty to elect to settle all or a portion of its Forward Transactions early. The Forward Transactions were generally expected to facilitate privately negotiated derivative transactions between the Forward Counterparties and holders of the 2019 Convertible Notes, including swaps, relating to the common shares by which holders of the 2019 Convertible Notes establish short positions relating to the common shares and otherwise hedge their investments in the 2019 Convertible Notes concurrently with, or shortly after, the pricing of the 2019 Convertible Notes. The approximate 19.9 million common shares effectively repurchased through the Forward Transactions were treated as retired shares for basic and diluted EPS purposes. As of June 30, 2020, the Forward Counterparties had delivered all of the approximate 19.9 million common shares effectively repurchased through the Forward Transactions and no shares remained legally outstanding. As a result of the Forward Transactions, the Company’s total shareholders’ equity within its condensed consolidated balance sheet was reduced by approximately $685.8 million during the first quarter of 2014, with amounts of $653.9 million and $31.9 million being allocated between retained earnings and additional paid-in capital, respectively, within total shareholders’ equity. Also, upon executing the Forward Transactions, the Company recorded, at fair value, $35.8 million in non-cash issuance costs to other assets and a corresponding amount to additional paid-in capital within its condensed consolidated balance sheet. These non-cash issuance costs were amortized to interest expense over the contractual term of the Forward Transactions. During the three and six months ended June 30, 2019, the Company recognized $0.3 million and $1.0 million, respectively, of non-cash interest expense relating to amortization of these non-cash issuance costs within its condensed consolidated statements of income. During the six months ended June 30, 2020, the Company repurchased approximately 0.4 million of its common shares through open market purchases at an aggregate cost of approximately $17.1 million, or an average cost of $39.27 per share, and subsequently retired these shares. During the six months ended June 30, 2019, the Company did not repurchase any of its common shares through open market purchases. As of both June 30, 2020 and December 31, 2019, the Company held approximately 10.0 million of treasury shares for U.S. GAAP purposes. These treasury shares increased the Company’s shareholders’ deficit and are reflected at cost within the Company’s accompanying condensed consolidated balance sheets. Although these shares are owned by an indirect wholly-owned subsidiary of the Company and remain legally outstanding, they are reflected as treasury shares under U.S. GAAP and therefore reduce the number of common shares outstanding within the Company’s condensed consolidated financial statements and the weighted-average number of common shares outstanding used in calculating earnings per share. The common shares of Herbalife Nutrition Ltd. held by the indirect wholly-owned subsidiary, however, remain outstanding on the books and records of the Company’s transfer agent and therefore still carry voting and other share rights related to ownership of the Company’s common shares, which may be exercised. So long as it is consistent with applicable laws, such shares will be voted by such subsidiary in the same manner, and to the maximum extent possible in the same proportion, as all other votes cast with respect to any matter properly submitted to a vote of Herbalife Nutrition Ltd.’s shareholders. The number of shares issued upon vesting or exercise for certain restricted stock units and SARs granted pursuant to the Company’s share-based compensation plans is net of the statutory withholding requirements that the Company pays on behalf of its employees. Although shares withheld are not issued, they are treated as common share repurchases in the Company’s condensed consolidated financial statements, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the Company’s share repurchase program described above. During the three and six months ended June 30, 2020 and 2019, the Company withheld shares on its vested restricted stock units and exercised SARs relating to its share-based compensation plans. The Company reflects the aggregate purchase price of its common shares repurchased as an increase to shareholders’ deficit. The Company generally allocated the purchase price of the repurchased shares to accumulated deficit, common shares, and additional paid-in capital, with the exception of treasury shares, which are recorded separately on the Company’s condensed consolidated balance sheets. For the six months ended June 30, 2020 and 2019, the Company’s share repurchases, inclusive of transaction costs, were $17.1 million and zero, respectively, under the Company’s share repurchase programs, and $8.9 million and $9.0 million, respectively, due to shares withheld for tax purposes related to the Company’s share-based compensation plans. For the six months ended June 30, 2020 and 2019, the Company’s total share repurchases, including shares withheld for tax purposes, were $26.0 million and $9.0 million, respectively, and have been recorded as an increase to shareholders’ deficit within the Company’s condensed consolidated balance sheets. Capped Call Transactions In February 2014, in connection with the issuance of the 2019 Convertible Notes, the Company paid approximately $123.8 million to enter into Capped Call Transactions with certain financial institutions. The Capped Call Transactions were expected generally to reduce the potential dilution upon conversion of the 2019 Convertible Notes in the event that the market price of the common shares was greater than the strike price of the Capped Call Transactions, initially set at $43.14 per common share, with such reduction of potential dilution subject to a cap based on the cap price initially set at $60.39 per common share. The strike price and cap price were subject to certain adjustments under the terms of the Capped Call Transactions. Therefore, as a result of executing the Capped Call Transactions, the Company in effect was only exposed to potential net dilution once the market price of its common shares exceeded the adjusted cap price. As a result of the Capped Call Transactions, the Company’s additional paid-in capital within shareholders’ equity on its condensed consolidated balance sheet was reduced by $123.8 million during the first quarter of 2014. During March 2018, in connection with the Company’s repurchase of a portion of the 2019 Convertible Notes, the Company entered into partial settlement agreements with the option counterparties to the Capped Call Transactions to terminate a portion of such existing transactions, in each case, in a notional amount corresponding to the aggregate principal amount of 2019 Convertible Notes that were repurchased. As a result of terminating a portion of the Capped Call Transactions, which were in a favorable position, the Company received $55.9 million in cash and recognized an offsetting increase to additional paid-in capital during 2018. On August 15, 2019, the 2019 Convertible Notes matured and the remaining Capped Call Transactions expired unexercised. The expiration of the Capped Call Transactions did not have an impact on the Company’s condensed consolidated financial statements. Accumulated Other Comprehensive Loss The following table summarizes changes in accumulated other comprehensive loss by component during the three months ended June 30, 2020 and 2019:
|  | Changes in Accumulated Other Comprehensive Loss by Component |
|  | Three Months Ended |
|  | June 30, 2020 |  |  | June 30, 2019 |
|  | Foreign Currency Translation Adjustments |  |  | Unrealized Gain (Loss) on Derivatives |  |  | Total |  |  | Foreign Currency Translation Adjustments |  |  | Unrealized Gain (Loss) on Derivatives |  |  | Total |
|  | (in millions) |
Beginning balance |  | $ | (268.7 | ) |  | $ | 5.7 |  |  | $ | (263.0 | ) |  | $ | (204.5 | ) |  | $ | 0.4 |  |  | $ | (204.1 | )
Other comprehensive income (loss) before reclassifications, net of tax |  |  | 17.2 |  |  |  | (1.3 | ) |  |  | 15.9 |  |  |  | (1.8 | ) |  |  | — |  |  |  | (1.8 | )
Amounts reclassified from accumulated other comprehensive loss to income, net of tax(1) |  |  | — |  |  |  | 1.0 |  |  |  | 1.0 |  |  |  | — |  |  |  | (0.5 | ) |  |  | (0.5 | )
Total other comprehensive income (loss), net of reclassifications |  |  | 17.2 |  |  |  | (0.3 | ) |  |  | 16.9 |  |  |  | (1.8 | ) |  |  | (0.5 | ) |  |  | (2.3 | )
Ending balance |  | $ | (251.5 | ) |  | $ | 5.4 |  |  | $ | (246.1 | ) |  | $ | (206.3 | ) |  | $ | (0.1 | ) |  | $ | (206.4 | )
(1) | See Note 9, Derivative Instruments and Hedging Activities, for information regarding the location in the condensed consolidated statements of income of gains (losses) reclassified from accumulated other comprehensive loss into income during the three months ended June 30, 2020 and 2019.
Other comprehensive loss before reclassifications was net of tax benefit of $2.3 million for foreign currency translation adjustments for the three months ended June 30, 2020. Other comprehensive income before reclassifications was net of tax benefit of $1.5 million for foreign currency translation adjustments for the three months ended June 30, 2019. The following table summarizes changes in accumulated other comprehensive loss by component during the six months ended June 30, 2020 and 2019:
|  | Changes in Accumulated Other Comprehensive Loss by Component |
|  | Six Months Ended |
|  | June 30, 2020 |  |  | June 30, 2019 |
|  | Foreign Currency Translation Adjustments |  |  | Unrealized (Loss) Gain on Derivatives |  |  | Total |  |  | Foreign Currency Translation Adjustments |  |  | Unrealized Gain (Loss) on Derivatives |  |  | Total |
|  | (in millions) |
Beginning balance |  | $ | (211.6 | ) |  | $ | (0.9 | ) |  | $ | (212.5 | ) |  | $ | (211.6 | ) |  | $ | 1.8 |  |  | $ | (209.8 | )
Other comprehensive (loss) income before reclassifications, net of tax |  |  | (39.9 | ) |  |  | 5.1 |  |  |  | (34.8 | ) |  |  | 5.3 |  |  |  | (1.0 | ) |  |  | 4.3 |
Amounts reclassified from accumulated other comprehensive loss to income, net of tax(1) |  |  | — |  |  |  | 1.2 |  |  |  | 1.2 |  |  |  | — |  |  |  | (0.9 | ) |  |  | (0.9 | )
Total other comprehensive (loss) income, net of reclassifications |  |  | (39.9 | ) |  |  | 6.3 |  |  |  | (33.6 | ) |  |  | 5.3 |  |  |  | (1.9 | ) |  |  | 3.4 |
Ending balance |  | $ | (251.5 | ) |  | $ | 5.4 |  |  | $ | (246.1 | ) |  | $ | (206.3 | ) |  | $ | (0.1 | ) |  | $ | (206.4 | )
(1) | See Note 9, Derivative Instruments and Hedging Activities, for information regarding the location in the condensed consolidated statements of income of gains (losses) reclassified from accumulated other comprehensive loss into income during the six months ended June 30, 2020 and 2019.
Other comprehensive loss before reclassifications was net of tax benefit of $4.8 million and $0.3 million for foreign currency translation adjustments and unrealized gain (loss) on derivatives, respectively, for the six months ended June 30, 2020. Other comprehensive income before reclassifications was net of tax benefit of $1.0 million for foreign currency translation adjustments for the six months ended June 30, 2019.

X
- References No definition available. + Details
Name: | us-gaap_EquityAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
Name: | us-gaap_StockholdersEquityNoteDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration