Herbalife Ltd. Announces Record Third-Quarter Net Sales of $401.0 Million; All Regions Report Net Sales Growth in the Quarter

Herbalife Ltd. (NYSE:HLF) today reported recordthird-quarter net sales of $401.0 million, an increase of 25.4 percentcompared to the same period of 2004. All of the company's regions: theAmericas, Asia Pacific, Europe, and Japan achieved net sales growth of55.7 percent, 21.2 percent, 2.8 percent, and 7.0 percent,respectively, compared to the same period of 2004. Michael O. Johnson,the company's chief executive officer, said, "Reflecting strong andunified distributor leadership, coupled with the implementation ofnumerous strategic initiatives throughout our 60 markets, we arepleased to report record net sales for the quarter, and moreimportantly, revenue growth across all of the company's four regionsfor the first time in over 7 years." Additionally, during the quarter,the number of new Distributor Supervisors increased 24.5 percentversus the third quarter of 2004. The company's high-level PresidentsTeam expanded to 819 members during the third quarter of 2005, up 11percent versus the third quarter of 2004. These distributor statisticscoupled with the addition of one new Chairman's Club member, reflectsstrength in the company's independent distributor organization.

Financial Performance

For the quarter ended September 30, 2005, the company reported netincome of $27.1 million, or $0.37 per diluted share compared to netincome of $11.5 million, or $0.21 per diluted share in 2004. Thestronger than expected revenue growth during the past several quartersand management's outlook that a mid-teens revenue growth rate willcontinue throughout 2006, had a significant impact on the company'sworldwide transfer pricing and tax structure, resulting in anadjustment in the third quarter of its full year 2005 effective taxrate. During the quarter the company's effective tax rate was 49.1percent, reflecting the impact of increasing the full year rate. Inaddition to the effective tax rate adjustment, the third quarter 2005figures include a favorable non-cash, pre-tax royalty expenseadjustment of $4.0 million or $0.03 per diluted share related to achange in estimate of the provision for uncollectible royalty overridereceivables. Excluding the royalty expense adjustment, net incomewould be $0.34 per diluted share.

For the nine months ended September 30, 2005, the company reportednet income of $63.2 million, or $0.87 per diluted share, up 173.6percent compared to net income of $23.1 million, or $0.42 per dilutedshare reported for the same period in 2004. Excluding the effect ofrecapitalization transaction expenses of $14.2 million and $15.4million in the first quarters of 2005 and 2004 respectively, the $5.5million non-cash tax charge associated with moving its Chinasubsidiary within the global corporate structure in the second quarterof 2005, and the favorable $4.0 million royalty expense adjustment,the company's net income would be $80.6 million or $1.11 per dilutedshare.

Third-Quarter 2005 Highlights

In addition to record sales growth, Herbalife made progressexecuting the company's key strategies during the quarter. Brandingefforts continued to gain traction. During the quarter, the companyannounced event sponsorships such as the Association of VolleyballProfessionals (AVP) Tour, London Triathlon, Hong Kong Dragon BoatRaces, J.P. Morgan Chase Open, Nautica Malibu Triathlon, and theLaguna Phuket Triathlon. In addition, the company announcedsponsorships of athletes such as Elaine Youngs, Rachel Wacholder,Jason Ring, Stein Metzger, Olly Freeman, Lucilla Perrotta, and DanielaGatelli. The company also entered into a multi-year agreement with theAnschutz Entertainment Group (AEG), providing Herbalife with namingrights at a variety of global venues that host events focused onhealthy, active lifestyles. "We are proud of the strategicsponsorships and alliances formed with organizations like the AVP andAEG. These relationships enhance the Herbalife brand and provide ourdistributors access to events where they can retail and sample ourproducts as well as recruit new distributors," Johnson said.

The company continued to roll-out new products during the quarter.The Shapeworks(TM) weight management program was introduced in Brazil,Taiwan, and parts of Eastern Europe during the quarter. Niteworks(R)launched in Japan, South Africa, Germany, Italy, the Netherlands,United Kingdom, Sweden, Austria, Belgium, and Ireland. In addition,the company launched its energy drink, Liftoff(TM) in Canada. Thecompany will continue rolling out these products globally inaccordance with local registration timelines. The company alsolaunched a comprehensive "Healthy Heart Line" at its HerbalifeUniversity event in Anaheim, California in October. This product linefeatures the endorsed signature of Dr. Lou Ignarro, Nobel Laureate,who assisted in the development of the line along with the company'steam of scientists.

Continuing to expand its presence in China, the company openedstores in four key provinces: Fujian, Jiangsu, Liaoning, and Shandong.These stores represent a test launch to prepare for the larger scaleexpansion expected throughout 2006. Greg Probert, the company'spresident and chief operating officer, said, "We are excited with thelevel of distributor support for our strategic plans related to theChina marketplace and very pleased with the progress our Chinamanagement team has made executing these initiatives. We will continueour expansion in an efficient and planned manner." The companyanticipates officially applying for its direct selling license inDecember this year and remains optimistic that the company willreceive its license in 2006.

During the third quarter, the company invested $9.5 million incapital expenditures, primarily related to the ongoing roll-out of itsOracle ERP system, the development of its BizWorks online distributortool and other Internet applications to improve distributor supportand productivity, the implementation of the MicroStrategy(R) BusinessIntelligence software, and investments in China. In addition, thecompany prepaid $45 million of its $200 million bank term loan duringthe quarter.

Regional Performance

The Americas, which comprised 45.1 percent of worldwide sales,reported net sales of $180.7 million in the third quarter, up 55.7percent versus the same period of 2004. Excluding currencyfluctuations, net sales increased 46.3 percent. The performance wasdriven by continued strong sales growth in Mexico, up 132.2 percent,Brazil, up 71.2 percent, and the U.S., up 15.1 percent versus thethird quarter of 2004. Total supervisors for the third quarterincreased 26.4 percent versus the same period of 2004. On ayear-to-date basis, the Americas reported net sales of $488.1 million,up 42.1 percent versus the first nine months of 2004. Excludingcurrency fluctuations, net sales increased 36.6 percent.

Europe, which comprised 32.7 percent of worldwide sales, reportednet sales of $131.2 million in the third quarter, up 2.8 percentversus the same period of 2004. Excluding currency fluctuations, netsales increased 2.3 percent. Net sales in two of the region's keymarkets, Germany and the Netherlands, which were down 14.7 percent and15.3 percent, respectively, were offset by growth in other marketssuch as Spain, up 17.1 percent, France, up 28.7 percent, and SouthAfrica, up 72.2 percent compared to the same period of 2004. Totalsupervisors in the region decreased 8.2 percent versus the thirdquarter of 2004. On a year-to-date basis, the region reported netsales of $417.6 million, up 4.0 percent versus the first nine monthsof 2004. Excluding currency fluctuations, net sales increased 0.9percent.

Asia Pacific, which comprised 16.2 percent of worldwide sales,reported net sales of $65.1 million in the third quarter, up 21.2percent versus the same period of 2004 due to strong sales in Korea,up 67.0 percent and Taiwan, up 34.1 percent. Excluding currencyfluctuations, net sales increased 14.7 percent. Total supervisors forthe third quarter increased 13.4 percent versus the same period of2004. On a year-to-date basis, the Asia Pacific region reported netsales of $180.9 million, up 21.4 percent versus the first nine monthsof 2004. Excluding currency fluctuations, net sales in the regionincreased 14.9 percent.

Japan, which comprised 6.0 percent of worldwide sales, reportednet sales of $24.0 million in the third quarter, up 7.0 percent versusthe same period of 2004. This represents the first year-over-yearquarterly net sales growth since the first quarter of 1999. Probertadded, "We are extremely pleased with the return to positive salesgrowth in this very important region, which we attribute to unifieddistributor leadership, strong country management, and new productintroductions." Excluding currency fluctuations, net sales increased8.2 percent. Total supervisors declined 23.2 percent versus the thirdquarter of 2004. On a year-to-date basis, Japan reported net sales of$71.1 million, down 3.8 percent versus the first nine months of 2004.Excluding currency fluctuations, net sales decreased 4.9 percent.

2005 and 2006 Key Initiatives

Herbalife continues to execute and invest in its five keystrategies in the areas of distributors, consumers, products, Chinaexpansion, and infrastructure. The plans for investment in these keyareas are progressing according to management's expectations. Thecompany expects to expand its e-commerce capabilities later this year.A larger scale test is expected in the first half of 2006 in Canadawith a roll-out in the United States planned in the second half of2006. In China, the company anticipates that it will expand itspresence into over 20 provinces by the end of 2006, which will beanother net loss, investment year in this important market. Inaddition, the company continues to invest in strengthening the abilityof its distributors to retail, recruit, and retain distributors andcustomers. In addition, investments in company personnel, technology,product sourcing, and global manufacturing are key elements of ourinfrastructure strategy.

Earnings Per Share Guidance

Fourth-quarter 2005 earnings per diluted share are expected to bein the range of $0.39 - $0.41, reflecting continued strong salesgrowth in Herbalife's key geographic markets. The company is raisingits full-year 2005 diluted earnings per share guidance to a range of$1.50 - $1.52, excluding $14.2 million of pre-tax expenses associatedwith the claw-back of its 9 1/2 percent Notes during the first quarterof 2005, the $5.5 million non-cash tax charge associated with itsChina subsidiary during the second quarter of 2005, and the favorable$4.0 million non-cash, royalty expense adjustment in the third quarterof 2005. The company's full year guidance has been increased toreflect the strong year-to-date actual results and the positiveoperating income outlook for the fourth quarter. The company isexpecting full-year 2006 diluted earnings per share to be in the rangeof $1.80 - $1.85.

Third Quarter Earnings Call

Herbalife's third quarter 2005 earnings conference call will beconducted on November 8, 2005 at 9 a.m. P.T. (noon E.T.) Theconference call numbers are (866) 802-4324 for domestic calls and(703) 639-1321 for calls made from outside the United States.Additionally, the conference call will be webcast. The link to thewebcast can be obtained on the Investor Relations section of thecompany's Web site at www.Herbalife.com. An audio replay will beavailable following the completion of the conference call in MP3format or by dialing (866) 219-1444 (domestic callers) and (703)925-2474 (international callers) and entering reservation code 783896.The webcast of the teleconference will be archived and available onHerbalife's Web site.

About Herbalife Ltd.

Herbalife is a global network marketing company offering a rangeof science-based weight management products, nutritional supplementsand personal care products intended to support weight management and ahealthy lifestyle. (HLFE)

Disclosure Regarding Forward-Looking Statements

Except for historical information contained herein, the mattersset forth in this press release are "forward-looking statements." Allstatements other than statements of historical fact are"forward-looking statements" for purposes of federal and statesecurities laws, including any projections of earnings, revenue orother financial items; any statements of the plans, strategies andobjectives of management for future operations; any statementsconcerning proposed new services or developments; any statementsregarding future economic conditions or performance; any statements ofbelief; and any statements of assumptions underlying any of theforegoing. Forward-looking statements may include the words, "may,""will," "estimate," "intend," "continue," "believe," "expect," or"anticipate" and any other similar words.

Although we believe that the expectations reflected in any of ourforward-looking statements are reasonable, actual results could differmaterially from those projected or assumed in any of ourforward-looking statements. Our future financial condition and resultsof operations, as well as any forward-looking statements, are subjectto change and to inherent risks and uncertainties, such as thosedisclosed in this press release. Important factors that could causeour actual results, performance and achievements, or industry resultsto differ materially from estimates or projections contained inforward-looking statements include, among others, the following:

-- our relationships with, and our ability to influence the actions of, our distributors;

-- adverse publicity associated with our products or network marketing organization;

-- uncertainties relating to interpretation and enforcement of recently enacted legislation in China governing direct selling;

-- changing consumer preferences and demands;

-- 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;

-- risks associated with operating internationally, including foreign exchange risks;

-- 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;

-- our reliance on our management team;

-- product liability claims;

-- uncertainties relating to the application of transfer pricing and similar tax regulations;

-- taxation relating to our distributors.
Herbalife Ltd.
Consolidated Statements of Income
(In thousands, except per share data)

Three Months Ended Nine Months Ended
--------------------- ---------------------
9/30/2004 9/30/2005 9/30/2004 9/30/2005
---------- ---------- ---------- ----------

Europe $127,552 $131,179 $401,637 $417,601
The Americas 116,105 180,723 343,465 488,123
Asia/Pacific Rim 53,722 65,098 148,978 180,871
Japan 22,430 23,997 73,941 71,129
---------- ---------- ---------- ----------
Worldwide net sales 319,809 400,997 968,021 1,157,724
Cost of Sales 68,961 79,482 198,824 232,592
---------- ---------- ---------- ----------
Gross Profit 250,848 321,515 769,197 925,132
Royalty Overrides 111,978 138,618 342,366 410,875
SGA 102,772 121,584 315,811 349,430
---------- ---------- ---------- ----------
Operating Income 36,098 61,313 111,020 164,827
Interest Expense - net 13,604 7,950 55,233 37,598
---------- ---------- ---------- ----------
Income before income taxes 22,494 53,363 55,787 127,229
Income Taxes 11,004 26,226 32,693 64,042
---------- ---------- ---------- ----------
Net Income 11,490 27,137 23,094 63,187
========== ========== ========== ==========

Basic Shares 52,265 69,077 52,121 68,800
Diluted Shares 55,660 73,455 55,246 72,373

Basic EPS $0.22 $0.39 $0.44 $0.92
========== ========== ========== ==========
Diluted EPS $0.21 $0.37 $0.42 $0.87
========== ========== ========== ==========


Herbalife Ltd.
Consolidated Balance Sheets
(In thousands)

December 31, Sept 30,
2004 2005
------------- -------------
ASSETS
Current Assets:
Cash & cash equivalents $201,577 $105,180
Inventory, net 71,092 86,376
Other current assets 97,244 89,066
------------- -------------
Total Current Assets 369,913 280,622

Property and equipment, net 55,390 62,108
Other Assets 26,869 24,360
Goodwill 167,517 144,553
Intangible assets, net 329,012 315,759

------------- -------------
Total Assets $948,701 $827,402
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 24,457 27,640
Royalty Overrides 85,304 81,239
Accrued expenses 114,243 123,499
Current portion of long term debt 120,291 7,004
Other current liabilities 27,174 31,842
------------- -------------
Total Current Liabilities 371,469 271,224

Long-term debt, net of current portion 365,926 281,324
Other long-term liabilities 146,964 144,038
------------- -------------
Total Liabilities 884,359 696,586

Shareholders' equity:
Common shares 137 139
Preferred shares - -
Additional paid in capital 74,593 78,836
Accumulated other comprehensive income 3,923 2,965
Retained earnings (accumulated deficit) (14,311) 48,876
------------- -------------
Total Shareholders' Equity 64,342 130,816

------------- -------------
Total Liabilities and Shareholders'
Equity $948,701 $827,402
============= =============


Herbalife Ltd.
Supervisors by Market

Sep 30, Sep 30,
Region 2004 2005 % Chg
-----------------------------------------------------

The Americas 108,024 136,536 26%
Europe 94,064 86,364 -8%
Asia/Pacific Rim 48,308 54,804 13%
Japan 16,056 12,327 -23%
---------------------------
Worldwide 266,452 290,031 9%
===========================


Herbalife Ltd.
Volume Points by Market
(In millions)

Quarter Ended Nine Months Ended
------------------------- -------------------------
Region 09/30/04 09/30/05 % Chg 09/30/04 09/30/05 % Chg
-------------------------- --------- ----- --------- --------- -----

The Americas 192.6 281.5 46% 556.3 771.5 39%
Europe 133.5 140.5 5% 437.3 432.4 -1%
Asia/Pacific Rim 73.3 83.6 14% 196.2 225.6 15%
Japan 16.5 18.3 11% 55.0 52.5 -5%
--------- --------- ----- --------- --------- -----
Worldwide 415.9 523.9 26% 1,244.8 1,482.0 19%
========= ========= ===== ========= ========= =====


Herbalife Ltd.
2005 Guidance
For Quarter Ending December 31, 2005

Low High
---------- ----------

Net Sales Growth Rate vs. 2004 16.0% 18.0%

Gross Profit % Net Sales 79.6% 80.0%

Royalty Overrides % Net Sales 35.5% 36.0%

SGA % Net Sales 29.4% 30.9%

Operating Income % Net Sales 12.8% 15.1%

Interest Income/(Expense) ($ mm's) $(6.0) $(6.5)

Effective Tax Rate (1) (2) 41.0% 42.0%

EPS (1) (2) $0.39 $0.41

Capex ($ mm's) $8.0 $13.0

(1) Excludes approximately $5.5 million unfavorable tax impact of
restructuring the ownership of the company's China subsidiary
within the global organization.

(2) Excludes $14.2mm of costs associated with the 40% claw-back of the
9 1/2% Notes in the first quarter.


Herbalife Ltd.
2005 Guidance
For Year Ending December 31, 2005

Low High
--------- -----------

Net Sales Growth Rate vs. 2004 18.7% 19.2%

Gross Profit % Net Sales 79.8% 79.9%

Royalty Overrides % Net Sales (1) 35.7% 35.9%

SGA % Net Sales 30.0% 30.4%

Operating Income % Net Sales (1) 13.6% 14.2%

Interest Income/(Expense) ($ mm's) (2) $(29.4) $(29.9)

Effective Tax Rate (2) (3) 41.0% 42.0%

EPS (1) (2) (3) $1.50 $1.52

Capex ($ mm's) $30.0 $35.0

(1) Excludes favorable one-time non-cash pre-tax royalty adjustment of
$4.0 million

(2) Excludes $14.2mm of costs associated with the 40% claw-back of the
9 1/2% Notes in the first quarter.

(3) Excludes approximately $5.5 million unfavorable tax impact of
restructuring the ownership of the company's China subsidiary
within the global organization.


Herbalife Ltd.
2006 Guidance
For Year Ending December 31, 2006

Low High
--------- ---------

Net Sales Growth Rate vs. 2005 14.0% 18.0%

Gross Profit % Net Sales 79.5% 80.5%

Royalty Overrides % Net Sales 35.5% 36.5%

SGA % Net Sales 30.2% 31.8%

Operating Income % Net Sales 13.0% 14.0%

Interest Income/(Expense) ($ mm's) $(20.0) $(24.0)

Effective Tax Rate 39.5% 40.5%

EPS $1.80 $1.85

Capex ($ mm's) $35.0 $45.0

(HLFE)