<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
For the quarterly period ended March 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________________ to ___________________
Commission file number 0-15712
HERBALIFE INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
NEVADA 22-2695420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1800 Century Park East, Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)
(310) 410-9600
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes /X/ No
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes / / No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the registrant's classes of
Common Stock, as of April 25, 1997: 30,533,463
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
HERBALIFE INTERNATIONAL, INC.
Index to Financial Statements and Exhibits
Filed with the Quarterly Report of the Company on Form 10-Q
For the Three Months Ended March 31, 1997
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements: Page No.
--------
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7 - 9
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10 - 12
Signature 13
<PAGE>
HERBALIFE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
December 31, March 31,
1996 1997
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 87,481,000 $ 76,553,000
Marketable securities 43,558,000 47,416,000
Receivables 29,258,000 29,451,000
Inventories 46,204,000 46,125,000
Prepaid income taxes 1,821,000 1,283,000
Prepaid expenses and other current assets 5,243,000 4,293,000
Deferred income taxes 15,882,000 16,348,000
------------ ------------
Total current assets 229,447,000 221,469,000
------------ ------------
Property - at cost 52,377,000 57,499,000
Less accumulated depreciation and
amortization (27,404,000) (28,879,000)
------------ ------------
Property-net 24,973,000 28,620,000
Other assets 11,062,000 15,634,000
Goodwill, net of accumulated amortization of
$1,225,000 (1996) and $1,269,000 (1997) 3,632,000 3,588,000
------------ ------------
TOTAL $269,114,000 $269,311,000
------------ ------------
------------ ------------
See the accompanying notes to consolidated financial statements
2
<PAGE>
HERBALIFE INTERNATIONAL, INC.
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, March 31,
1996 1997
------------ ------------
CURRENT LIABILITIES:
Accounts payable $ 17,287,000 $ 14,602,000
Royalty overrides 42,676,000 40,640,000
Accrued expenses 35,960,000 32,103,000
Dividends payable 4,453,000 4,454,000
Current portion of contracts payable and
bank loans 2,493,000 2,541,000
Advance sales deposits 9,045,000 8,596,000
Income taxes payable 7,871,000 7,585,000
------------ ------------
Total current liabilities 119,785,000 110,521,000
NON-CURRENT LIABILITIES:
Contracts payable, net of current portion 2,306,000 2,817,000
Deferred income taxes 1,103,000 1,102,000
Other non-current liabilities and deferred
credits 6,780,000 7,654,000
------------ ------------
Total liabilities 129,974,000 122,094,000
------------ ------------
MINORITY INTEREST 672,000 868,000
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; authorized
100,000,000 shares, issued 30,205,338
(1996) and 30,499,463 (1997) shares 302,000 305,000
Paid-in-capital in excess of par value 43,258,000 46,861,000
Retained earnings includes cumulative
translation adjustment of $(981,000)
(1996) and $(2,369,000) (1997) 95,353,000 101,346,000
Treasury stock (1,661,000)
Unearned compensation (412,000) (347,000)
Unrealized loss on marketable securities (33,000) (155,000)
------------ ------------
Total stockholders' equity 138,468,000 146,349,000
------------ ------------
TOTAL $269,114,000 $269,311,000
------------ ------------
------------ ------------
See the accompanying notes to consolidated financial statements
3
<PAGE>
HERBALIFE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED
--------------------------------
March 31, 1996 March 31, 1997
-------------- --------------
Retail sales $276,572,000 $323,944,000
Less: Distributor allowances on product
purchases 130,349,000 153,967,000
-------------- ---------------
Net sales 146,223,000 169,977,000
Cost of sales 40,466,000 45,731,000
Royalty overrides 43,218,000 50,895,000
Marketing, distribution and administrative
expenses 48,704,000 54,836,000
Interest income - net 918,000 1,179,000
-------------- --------------
Income before income taxes and minority
interest 14,753,000 19,694,000
Income taxes 5,533,000 7,582,000
-------------- --------------
Income before minority interest 9,220,000 12,112,000
Minority interest 196,000
-------------- --------------
NET INCOME $ 9,220,000 $ 11,916,000
-------------- --------------
-------------- --------------
WEIGHTED AVERAGE SHARES OUTSTANDING 31,011,269 31,725,201
-------------- --------------
-------------- --------------
EARNINGS PER SHARE $0.30 $0.38
-------------- --------------
-------------- --------------
CASH DIVIDENDS PER COMMON SHARE $0.15 $0.15
-------------- --------------
-------------- --------------
See the accompanying notes to consolidated financial statements
4
<PAGE>
HERBALIFE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
March 31, 1996 March 31, 1997
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 9,220,000 $ 11,916,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,289,000 2,225,000
Deferred income taxes 684,000 (225,000)
Amortization of unearned compensation 201,000 65,000
Stock Grant 582,000
Unrealized Foreign exchange gain (137,000) (51,000)
Minority interest in earnings 196,000
Other 7,000 16,000
Changes in operating assets and liabilities:
Receivables (1,168,000) (1,395,000)
Inventories (2,763,000) (1,208,000)
Prepaid expenses and other current assets (2,051,000) 1,067,000
Other assets 632,000 (5,166,000)
Accounts payable (1,997,000) (2,022,000)
Royalty overrides (4,597,000) (1,169,000)
Accrued expenses 7,614,000 (4,039,000)
Advance sales deposits (7,436,000) (100,000)
Income taxes payable 1,891,000 1,338,000
Other liabilities 874,000
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,389,000 2,904,000
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property (2,776,000) (3,336,000)
Proceeds from sale of property 9,000
Changes in marketable securities 3,622,000 (3,981,000)
-------------- --------------
NET CASH PROVIDED BY (USED) IN INVESTING
ACTIVITIES 846,000 (7,308,000)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (4,480,000) (4,534,000)
Additions to loans payable 207,000
Principal payments on loans payable (490,000) (834,000)
Exercise of stock options 105,000 1,980,000
Stock repurchases (1,839,000) (1,661,000)
Other 98,000 (2,000)
-------------- --------------
NET CASH USED BY FINANCING ACTIVITIES (6,399,000) (5,051,000)
-------------- --------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (664,000) (1,474,000)
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS (3,828,000) (10,928,000)
CASH AND CASH EQUIVALENTS AT JANUARY 1 69,176,000 87,481,000
-------------- --------------
CASH AND CASH EQUIVALENTS AT MARCH 31 $65,348,000 $76,553,000
-------------- --------------
-------------- --------------
See the accompanying notes to consolidated financial statements
5
<PAGE>
HERBALIFE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The unaudited interim financial information of Herbalife International, Inc.
(the "Company") has been prepared in accordance with Article 10 of the
Securities and Exchange Commission's Regulation S-X. In the opinion of
management, the accompanying interim financial information contains all
adjustments, consisting of normal recurring adjustments, necessary to
present fairly the Company's financial statements as of March 31, 1997 and
for the three month periods ended March 31, 1996 and 1997.
2. EARNINGS PER SHARE
Primary earnings per share are computed by dividing net income by the
weighted average number of common and equivalent shares. Fully diluted
earnings per share assumes the maximum dilutive effect of stock options.
Three Month Ended
March 31, March 31,
1996 1997
---------- ----------
Weighted average shares outstanding
Primary 30,997,617 31,725,194
Fully diluted 31,011,269 31,725,201
3. CONTINGENCIES
The Company's French and Italian subsidiaries have been subject to tax audits
by tax authorities in those countries, who are proposing that material value
added, withholding, and income taxes are due. The Company and its tax
advisors believe that the Company has substantial defenses and the Company is
vigorously contesting the additional proposed taxes and related charges.
However, the ultimate resolution of these matters may take several years.
Furthermore, the Company is from time to time engaged in routine litigation
incident to the conduct of its business. The Company regularly reviews all
pending litigation matters in which it is involved and, estimating the impact
of such litigation matters, establishes reserves considered appropriate by
management. The Company's estimates of the impact of these matters may
change as the matters progress and are ultimately resolved.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Throughout this report "retail sales" are determined as the gross sales
amounts reflected on the Company's invoices to its distributors. The Company
does not receive the amount reported as "retail sales", and the Company does
not monitor the actual retail prices charged for the Company's products.
"Net sales" represent the actual purchase prices paid to the Company by its
distributors, after giving effect to distributor discounts (referred to as
"distributor allowances"), which total approximately 50% of suggested retail
sales prices. The Company receives its net sales price in cash or through
credit card payments upon receipt of orders from distributors. The Company's
"gross profit" consists of net sales less (i) "cost of sales," consisting of
the prices paid by the Company to its manufacturers for products and costs
related to product shipments, foreign duties and tariffs and similar
expenses, and (ii) "royalty overrides," currently consisting of (a) royalties
(5% to 15%) and bonuses (up to 6%) on the suggested retail sales prices of
products earned by qualifying distributors on the sales of other distributors
within their distributor organizations, and (b) the President's Team Bonus
payable to certain of the Company's most senior distributors in the aggregate
amount of up to an additional 1% of product retail sales and (c) other one
time incentive cash bonuses to qualifying distributors. Royalty overrides as
reported in the Consolidated Statements of Income are net of a handling fee
(6% of retail sales) charged by the Company to its distributors on purchases
of products from the Company.
The Company's use of "retail sales" in reporting financial and operating data
reflects the fundamental role of "retail sales" in the Company's accounting
systems, internal controls and operations, including the basis upon which
distributor bonuses are paid. The retail sales price of the Company's
products is reflected in distributor invoices as the price charged to
distributors together with, in most cases, a deduction for the corresponding
distributor allowance. The retail sales price is used by the Company to
calculate, among other things, royalty overrides and "volume points" earned
by distributors. Volume points are point values assigned to each of the
Company's products that are equal in all countries, and are used as a
supervisor qualification criteria. In addition, management relies upon
"retail sales" data reflected in daily sales reports to monitor results of
operations in each of the Company's markets.
The significance of the Company's "net sales" is to reflect, generally, the
prices actually received by the Company after deducting the basic distributor
allowance, but before deducting royalty overrides and bonuses. The ratio of
the Company's "retail sales" to "net sales" is relatively constant because
distributor allowances historically total approximately 50% of suggested
retail sales prices. Accordingly, factors that affect "retail sales"
generally have a corresponding and proportionate effect on "net sales." To
the extent the ratio of "retail sales" to "net sales" varies from period to
period, such variances have resulted principally from sales of the Company's
distributor kits and other educational and promotional materials, for which
there are no distributor allowances. Sales of such items initially decreased
and thereafter stabilized as a percentage of total retail sales since 1991,
but such decreases have not had a material impact on the ratio of the
Company's "retail sales" to "net sales" or on the Company's operating margin.
The Company believes that, in certain of its markets, the opening of other
new markets within the same geographic region or with the same or similar
language or cultural bases has resulted in a corresponding tendency of some
key distributors to focus their attention on business opportunities provided
by new markets instead of developing their established downline organizations
in existing markets. Additionally, in certain instances, the Company has
become aware that certain sales in certain existing markets were attributable
to purchasers who distributed such product in countries which had not yet
been opened. When these coutries were opened, such sales in existing
markets shifted to the newly opened markets, resulting in a decline in sales
in the existing market.
The Company's results of operations for the periods described below are not
necessarily indicative of results of operations for future periods, which
depend upon numerous factors including the Company's ability in the future to
enter new markets and introduce additional and new products into its markets.
COMPARISON OF FIRST QUARTER 1997 TO 1996
Retail sales of $323.9 million for the three months ended March 31, 1997
increased 17.1% from $276.6 million in the corresponding prior year period.
Regionally, retail sales in the first quarter of 1997 compared to the first
quarter of 1996 increased 135.2% in Asia/Pacific Rim while The Americas
decreased 21.3%. Retail sales in Europe remained flat on a year to year
basis. In Asia/Pacific Rim, retail sales increased from $53.3 million in
1996 to $125.5 million in 1997. Retail sales in The
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
COMPARISON OF FIRST QUARTER 1997 TO 1996 (CONTINUED)
Americas of $117.1 million in 1996 decreased to $92.2 million in 1997. In
Europe, retail sales were $106.1 million in 1996 compared to $106.3 million
in 1997.
In The Americas, retail sales in 1997 decreased $25.0 million, or 21.3%, when
compared to 1996. This was primarily due to retail sales declines in Brazil
and the United States. The decrease in retail sales in Brazil primarily
resulted from the continuing impact of adverse publicity in that country
concerning the Company and its product lines, while the decline in U.S. retail
sales was attributable in part to commencement of operations in Russia.
Within The Americas, U.S. retail sales accounted for $71.8 million, or 22.2%
of total worldwide retail sales in 1997, compared to $81.9 million or 29.6%
of total worldwide retail sales in 1996. The decline in U.S. retail sales as
a percentage of worldwide retail sales resulted from sales growth in certain
foreign markets, combined with the decline in U.S. retail sales. Although
U.S. retail sales declined in comparison to the prior year quarter, retail
sales in the U.S. increased 9.7% from $65.5 million in the fourth quarter of
1996.
The growth in Asia/Pacific Rim primarily resulted from a $58.6 million
increase in retail sales in Japan, or 139.0% as compared to the same period
of the prior year, and a $9.0 million retail sales increase in Taiwan or
389.6%. However, retail sales in Japan declined $12.7 million from the
fourth quarter of 1996. This decline was principally caused by the continued
strength of the U.S. Dollar, as well as a lower volume of sales resulting
from seasonal factors.
In Europe, retail sales were relatively flat at $106.3 million for the first
quarter of 1997 as compared to retail sales of $106.1 million for the same
period of 1996. Within Europe, Russia led in retail sales growth with an
increase of $16.1 million, or 63.7%, as compared to 1996. Also posting
retail sales increases in the first quarter of 1997, as compared to 1996,
were Italy, Norway, Sweden, and the Netherlands. Offsetting the retail sales
growth were declines in retail sales for the comparative periods primarily in
Germany, South Africa and Finland.
The Company's first quarter gross profit of $73.4 million increased $10.9
million, or 17.3%, as compared to $62.5 million in 1996. As a percentage of
retail sales, gross profit for 1997 remained flat at 22.6% as compared to the
prior year. Cost of sales, as a percent of retail sales, decreased slightly
in the first quarter of 1997 as compared to 1996 primarily due to the higher
gross profit margin on products sold in Japan combined with the increased
proportion of Japanese retail sales as a percentage of total retail sales.
This was partially offset by higher royalty override expenses resulting from
a new distributor incentive program designed to motivate distributors to
achieve incremental growth.
Marketing, distribution and administrative expenses as a percentage of retail
sales decreased to 16.9% in 1997 from 17.6% in 1996. These expenses
increased 12.6% to $54.8 million in the first quarter of 1997 from $48.7
million in the prior year period. The increase in these expenses is
attributable to: (a) higher in-country distribution expenses primarily due
to facility and staff expansions in Japan and new country openings in South
Korea and Chile and (b) increased administrative expenses due to staff
additions and other costs related primarily to the expansion in foreign
countries. Such increases were partially offset by a decrease in sales
promotion expenses in the first quarter of 1997 as compared to the same
period in 1996.
The recent devaluation of the Japanese Yen against the U.S. dollar resulted
in proportunately lower revenues, expenses, and ultimately income when
translated into the U.S. dollar reporting currency. The effect of the
devalued Japanese Yen on the first quarter 1997 operations, as compared to
the first quarter of 1996, was to reduce the Company's net income by
approximately $.08 per fully diluted share.
Income taxes increased $2.1 million to $7.6 million in 1997 from $5.5 million
in 1996. As a percentage of pre-tax income, income taxes increased from
37.5% in 1996 to 38.5% in 1997. The increase is in part due to an increased
proportion of profits in countries which have a higher effective tax rate.
Net income increased 29.2% to $11.9 million in 1997 from $9.2 million in 1996
as a result of the factors described above.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically met its working capital and capital expenditure
requirements, including funding for expansion of operations, through net cash
provided by operating activities. For the three months ended March 31, 1997,
net cash provided by operating activities was $2.9 million, compared to $2.4
million for the three months ended March 31, 1996. The increase primarily
resulted from improved net income, and a smaller reduction in advanced sales
deposits primarily resulting from timing differences. These increases were
partially offset by liquidity used to pay for expenses accrued at December
31, including the President's Team bonus, and to fund certain employee
benefit plans.
Capital expenditures for the three months ended March 31, 1997 were $3.3
million compared to $2.8 million for the corresponding prior year period. The
majority of the 1997 expenditures were made to expand office facilities and
equipment in the U.S. and to support growth in Japan. For 1997, the Company
is planning to invest up to $11.0 million in management information systems
and expansion of new and existing facilities. In connection with its entry
into each new market, the Company funds inventory requirements and typically
establishes either a full-service distribution center, sales office, a
fulfillment center or compliance office, or a combination of the foregoing.
While the capital requirements associated with entry into new markets vary,
the Company estimates that approximately $7 million will be required for
pre-opening expenses and capital expenditures associated with its 1997 new
market expansion activities.
Stockholders' equity increased $7.9 million to $146.3 million during the
three months ended March 31, 1997. In 1997, net income of $11.9 million and
the issuance of capital stock, including related tax benefits on
non-qualified stock option exercises, of $3.6 million was partially offset by
$4.5 million of dividends declared, stock repurchases of $1.7 million and
translation adjustments of $1.4 million. The payment of dividends is
determined by the Board of Directors at its discretion and the amounts of
dividends declared and paid in future quarters will depend, among other
factors, on profitability, as well as other planned uses of the Company's
cash resources.
In total, cash and cash equivalents totaled $76.6 million at March 31, 1997
compared to $87.5 million at December 31, 1996. At March 31, 1997, the
Company's cash, cash equivalents and marketable securities aggregate balance
was $124.0 million, which represents a $7.1 million decrease from the balance
as of December 31, 1996.
The Company has not been subjected to material price increases by its
suppliers for several years. The Company believes that it has the ability to
respond to a portion or possibly all of any price increases by raising the
price of its products. Purchases by the Company from its suppliers are made
in U.S. dollars, while sales to distributors are generally made in local
currencies. Consequently, strengthening of the U.S. dollar versus a foreign
currency can have a negative impact on operating margins and can generate
transaction losses on intercompany transactions. The Company enters into
forward exchange contracts and other hedging arrangements to manage its
foreign currency risks. Foreign exchange transaction losses were immaterial
for the first quarter of 1997 and 1996.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See discussion under "Legal Proceedings" in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 and in footnote
three to the Financial Statements included in Item 1 of this document.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
HERBALIFE INTERNATIONAL, INC.
EXHIBIT INDEX
- -------------------------------------------------------------------------------
EXHIBIT NUMBER DESCRIPTION PAGE NO./(FOOTNOTE)
- -------------------------------------------------------------------------------
3.1 Articles of Incorporation (2)
3.2 Articles of Amendment to the Articles
of Incorporation dated December 10,
1986 (2)
3.3 Articles of Amendment to the Articles of
Incorporation dated November 22, 1989 (2)
3.4 Certificate of Determination relating
to the Company's Senior Convertible
Preferred Stock dated February 11, 1993 (6)
3.5 Certificate of Amendment to Articles of
Incorporation dated May 14, 1993 (6)
3.6 Amended and Restated Bylaws (6)
4.1 Form of Common Stock Certificate (6)
10.1 Agreement between Herbalife International
of America, Inc. and D&F Industries, Inc.
dated May 12, 1993 (6)
10.2 Agreement between Herbalife International
of America, Inc. and Raven Industries, Inc.
dated May 12, 1993 (6)
10.3 Agreement between Herbalife International
of America, Inc. and Dynamic Products, Inc.
dated May 12, 1993 (6)
10.4 Master Lease between the Company and Trizec
Properties, Inc. dated July 17, 1991 (4)
10.5 Equipment Lease Agreement between the
Company and Hewlett Packard dated
May 21, 1992 (5)
10.6 Final Judgment and Permanent Injunction,
entered into on October, 1986 by the parties
to that action entitled People of the State
of California, et al., v Herbalife
International, Inc. et al., Case No. 92767
in the Superior Court of the State of
California for the County of Santa Cruz (1)
10.7 The Company's 1988 Incentive Plan (1)
10.8 The Company's 1991 Stock Option Plan, as
amended (11)
10.9 The Company's Executive Incentive
Compensation Plan, as amended (6),(11)
10.10 Form of Individual Participation Agreement
relating to the Company's Executive
Compensation Plan (6)
10
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
- -------------------------------------------------------------------------------
EXHIBIT NUMBER DESCRIPTION PAGE NO./(FOOTNOTE)
- -------------------------------------------------------------------------------
10.11 Amendment to Employment Agreement between
the Company and David Addis dated
June 29, 1993 (6)
10.12 Form of Letter Agreement between the
Compensation Committee of the Board of
Directors of the Company and Mark Hughes (6)
10.13 Form of Indemnity Agreement between
the Company and certain officers and
directors of the Company (6)
10.14 Trust Agreement among the Company,
Citicorp Trust, N.A. and certain
officers and directors of the Company (6)
10.15 Form of Stock Appreciation Rights
Agreement between the Company and certain
directors of the Company (6)
10.16 1994 Performance Based Annual Incentive
Compensation Plan (8),(11)
10.17 Form of Promissory Note for Advances
under the Company's 1994 Performance Based
Annual Incentive Compensation Plan (9)
10.18 Employment Agreement between the Company
and Chris Pair dated April 3, 1994 (7)
10.19 Deferred Compensation Agreement between
the Company and Michael Rosen (9)
10.20 Office lease agreement between the Company
and State Teacher's Retirement System,
dated July 20, 1995 (10)
10.21 Form of stock appreciation rights
agreements between the Company and certain
directors of the Company (10)
10.22 The Company's Senior Executive Deferred
Compensation Plan, effective January 1, 1996 (10)
10.23 The Company's Management Deferred
Compensation Plan, effective January 1, 1996 (10)
10.24 Master Trust Agreement between the company
and Imperial Trust Company, Inc., effective
January 1, 1996 (10)
10.25 The Company's 401K Plan (10)
10.26 Agreement Concerning Share Allocation Plan
for Specific Directors of Herbalife of
Japan K.K. dated December 30, 1996. (12)
10.27 Consulting Agreement between David Addis
and Herbalife of America, Inc. Dated
January 27, 1997. (12)
21 List of subsidiaries of the Company (12)
27 Financial Data Schedule (13)
- -------------------------------------------------------------------------------
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
(1) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1987.
(2) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1989.
(3) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1990.
(4) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991.
(5) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992.
(6) Incorporated by reference to the Company's Registration Statement on
Form S-1 (No. 33-66576) declared effective by the Securities and
Exchange Commission on October 8, 1993.
(7) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the three months ended June 30, 1994.
(8) Incorporated by reference to the Company's Definitive Proxy Statement
relating to its 1994 Annual Meeting of Stockholders.
(9) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.
(10) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
(11) Incorporated by reference to the Company's definitive Proxy Statement
relating to its 1996 Annual Meeting of Stockholders.
(12) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996.
(13) Filed herewith.
(b) REPORTS ON FORM 8-K
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: May 9, 1997
HERBALIFE INTERNATIONAL, INC.
(Registrant)
By: /s/TIMOTHY GERRITY
-----------------
Timothy Gerrity
Executive Vice President and
Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 76,553,000
<SECURITIES> 47,416,000
<RECEIVABLES> 29,451,000
<ALLOWANCES> 0
<INVENTORY> 46,125,000
<CURRENT-ASSETS> 221,469,000
<PP&E> 57,499,000
<DEPRECIATION> 28,879,000
<TOTAL-ASSETS> 269,311,000
<CURRENT-LIABILITIES> 110,521,000
<BONDS> 2,817,000
0
0
<COMMON> 305,000
<OTHER-SE> 146,044,000
<TOTAL-LIABILITY-AND-EQUITY> 269,311,000
<SALES> 169,977,000
<TOTAL-REVENUES> 323,944,000
<CGS> 45,731,000
<TOTAL-COSTS> 96,626,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 19,694,000
<INCOME-TAX> 7,582,000
<INCOME-CONTINUING> 11,916,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,916,000
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
