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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
_________________________________________________________________
 
FORM 10-Q 
(Mark One)
 
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended June 30, 2020
 
OR
 
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from            to            .
 
Commission File Number: 001-34483
natr-20200630_g1.jpg 
NATURE’S SUNSHINE PRODUCTS, INC.
(Exact name of Registrant as specified in its charter) 
Utah 87-0327982
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
 
2901 Bluegrass Boulevard, Suite 100
Lehi, Utah 84043
(Address of principal executive offices and zip code)
 
(801) 341-7900
(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valueNATRNasdaq Capital Market

 
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  ý  No  o
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ý  No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  o
 
Accelerated filer  x
   
Non-accelerated filer  o
 
Smaller reporting company  
  
Emerging growth company  
 


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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes    No  ý.
 
The number of shares of Common Stock, no par value, outstanding on July 24, 2020, was 19,510,764 shares.



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NATURE’S SUNSHINE PRODUCTS, INC.
FORM 10-Q
 
For the Quarter Ended June 30, 2020
 
Table of Contents
 
    
 
    
  
  
  
  
  
  
    
 
    
 
    
 
    
    
 
    
 
    
 
    
 
    
 
    
 
    
 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
Certain information included or incorporated herein by reference in this report may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies. All statements (other than statements of historical fact) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. For example, information appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are more fully described in this report, including the risks set forth under “Risk Factors” in Item 1A, and in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, but include the following:

adverse impacts of the global COVID-19 pandemic;
laws and regulations regarding direct selling may prohibit or restrict our ability to sell our products in some markets or require us to make changes to our business model in some markets;
extensive government regulations to which the Company's products, business practices and manufacturing activities are subject;
legal challenges to the Company's direct selling program or to the classification of its independent distributors;
impact of anti-bribery laws, including the U.S. Foreign Corrupt Practices Act;
the Company’s ability to attract and retain independent distributors;
the loss of one or more key independent distributors who have a significant sales network;
the Company’s joint venture for operations in China with Fosun Industrial Co., Ltd.;
registration of products for sale in foreign markets, or difficulty or increased cost of importing products into foreign markets;
cybersecurity threats and exposure to data loss;
the storage, processing, and use of data, some of which contain personal information, are subject to complex and evolving privacy and data protection laws and regulations;
reliance on information technology infrastructure;
the effect of fluctuating foreign exchange rates;
liabilities and obligations arising from improper activity by the Company’s independent distributors;
failure of the Company’s independent distributors to comply with advertising laws;
changes to the Company’s independent distributor compensation plans;
geopolitical issues and conflicts;
negative consequences resulting from difficult economic conditions, including the availability of liquidity or the willingness of the Company’s customers to purchase products;
risks associated with the manufacturing of the Company's products;
uncertainties relating to the application of transfer pricing, duties, value-added taxes, and other tax regulations, and changes thereto;
changes in tax laws, treaties or regulations, or their interpretation;
actions on trade relations by the U.S. and foreign governments;
product liability claims;
the sufficiency of trademarks and other intellectual property rights; and
our cannabidiol (CBD) product line is subject to varying, rapidly changing laws, regulations, and rules.

All forward-looking statements speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this report. Except as is required by law, we expressly disclaims any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this report. Throughout this report, we refer to Nature’s Sunshine Products, Inc., together with our subsidiaries, as "we," "us," "our," "our Company" or “the Company.”

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PART I FINANCIAL INFORMATION
 
Item 1. FINANCIAL STATEMENTS
 
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
 June 30,
2020
December 31,
2019
Assets  
Current assets:  
Cash and cash equivalents$70,255  $53,629  
Accounts receivable, net of allowance for doubtful accounts of $423 and $407, respectively
7,075  7,319  
Inventories50,166  46,666  
Prepaid expenses and other6,577  5,091  
Total current assets134,073  112,705  
Property, plant and equipment, net56,687  59,512  
Operating lease right-of-use assets20,572  23,951  
Investment securities - trading1,035  1,150  
Intangible assets, net511  567  
Deferred income tax assets3,977  4,899  
Other assets10,074  10,284  
Total assets$226,929  $213,068  
Liabilities and Shareholders’ Equity  
Current liabilities:  
Accounts payable$4,100  $4,406  
Accrued volume incentives and service fees20,172  18,893  
Accrued liabilities25,424  25,531  
Deferred revenue1,845  1,266  
Related party notes payable1,537  1,518  
Income taxes payable2,038  1,392  
Current portion of operating lease liabilities4,416  4,941  
Current portion of note payable2,407    
Total current liabilities61,939  57,947  
Liability related to unrecognized tax benefits1,364  1,499  
Long-term portion of operating lease liabilities17,530  20,213  
Long-term note payable2,967    
Deferred compensation payable1,035  1,150  
Deferred income tax liabilities1,645  1,655  
Other liabilities1,214  1,168  
Total liabilities87,694  83,632  
Shareholders’ equity:  
Common stock, no par value, 50,000 shares authorized, 19,510 and 19,410 shares issued and outstanding, respectively
136,661  135,741  
Retained earnings13,409  4,693  
Noncontrolling interest650  227  
Accumulated other comprehensive loss(11,485) (11,225) 
Total shareholders’ equity139,235  129,436  
Total liabilities and shareholders’ equity$226,929  $213,068  
 
See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share information)
(Unaudited) 
 Three Months Ended
June 30,
 20202019
Net sales$87,286  $90,724  
Cost of sales23,017  23,865  
Gross profit64,269  66,859  
Operating expenses:  
Volume incentives29,165  31,302  
Selling, general and administrative28,504  31,019  
Operating income6,600  4,538  
Other income, net1,509  306  
Income before provision for income taxes8,109  4,844  
Provision for income taxes1,976  2,215  
Net income6,133  2,629  
Net income (loss) attributable to noncontrolling interests379  (60) 
Net income attributable to common shareholders$5,754  $2,689  
Basic and diluted net income per common share:  
Basic earnings per share attributable to common shareholders$0.30  $0.14  
Diluted earnings per share attributable to common shareholders$0.29  $0.14  
Weighted average basic common shares outstanding19,491  19,291  
Weighted average diluted common shares outstanding19,783  19,602  
 
See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share information)
(Unaudited) 
 Six Months Ended
June 30,
 20202019
Net sales$183,212  $181,996  
Cost of sales47,698  47,294  
Gross profit135,514  134,702  
Operating expenses:  
Volume incentives62,183  62,315  
Selling, general and administrative59,569  64,871  
Operating income13,762  7,516  
Other income (loss), net(901) 258  
Income before provision for income taxes12,861  7,774  
Provision for income taxes3,722  3,416  
Net income9,139  4,358  
Net income (loss) attributable to noncontrolling interests423  (88) 
Net income attributable to common shareholders$8,716  $4,446  
Basic and diluted net income per common share:  
Basic earnings per share attributable to common shareholders$0.45  $0.23  
Diluted earnings per share attributable to common shareholders$0.44  $0.23  
Weighted average basic common shares outstanding19,472  19,280  
Weighted average diluted common shares outstanding19,725  19,596  

See accompanying notes to condensed consolidated financial statements.
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(Unaudited) 
 Three Months Ended
June 30,
 20202019
Net income$6,133  $2,629  
Foreign currency translation loss (net of tax)(151) (530) 
Total comprehensive income$5,982  $2,099  
 
Six Months Ended
June 30,
 20202019
Net income$9,139  $4,358  
Foreign currency translation loss (net of tax)(260) (846) 
Total comprehensive income$8,879  $3,512  
 
See accompanying notes to condensed consolidated financial statements.

 
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands)
(Unaudited) 
 Common StockRetained Earnings (Accumulated Deficit)Noncontrolling
Interest
Accumulated
Other
Comprehensive
Loss
Total
 SharesAmount
Balance at December 31, 201919,410  $135,741  $4,693  $227  $(11,225) $129,436  
Share-based compensation expense—  394  —  —  —  394  
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax60  (159) —  —  —  (159) 
Net income—  —  2,962  44  —  3,006  
Other comprehensive loss—  —  —  —  (109) (109) 
Balance at March 31, 202019,470  $135,976  $7,655  $271  $(11,334) $132,568  
Share-based compensation expense—  736  —  —  —  736  
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax40  (51) —  —  —  (51) 
Net income—  —  5,754  379  —  6,133  
Other comprehensive loss—  —  —  —  (151) (151) 
Balance at June 30, 202019,510  $136,661  $13,409  $650  $(11,485) $139,235  

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Common StockRetained Earnings (Accumulated Deficit)Noncontrolling
Interest
Accumulated
Other
Comprehensive
Loss
Total
SharesAmount
Balance at December 31, 201819,204  $133,684  $(2,072) $63  $(11,107) $120,568  
Share-based compensation expense—  230  —  —  —  230  
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax69  (189) —  —  —  (189) 
Net income (loss)—  —  1,757  (28) —  1,729  
Other comprehensive loss—  —  —  —  (316) (316) 
Balance at March 31, 201919,273  $133,725  $(315) $35  $(11,423) $122,022  
Share-based compensation expense—  621  —  —  —  621  
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax29  (4) —  —  —  (4) 
Net income (loss)—  —  2,689  (60) —  2,629  
Other comprehensive loss—  —  —  —  (530) (530) 
Balance at June 30, 201919,302  $134,342  $2,374  $(25) $(11,953) $124,738  

See accompanying notes to condensed consolidated financial statements.
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited) 
 Six Months Ended
June 30,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income$9,139  $4,358  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:  
Provision for doubtful accounts17  30  
Depreciation and amortization5,070  4,987  
Non-cash lease expense2,257  2,792  
Share-based compensation expense1,130  851  
Loss on sale of property, plant and equipment6  3  
Deferred income taxes912  365  
Purchase of trading investment securities(35) (57) 
Proceeds from sale of trading investment securities146  105  
Realized and unrealized losses (gains) on investments4  (173) 
Foreign exchange losses (gains)996  (205) 
Changes in assets and liabilities:  
Accounts receivable173  (1,035) 
Inventories(4,114) (2,052) 
Prepaid expenses and other current assets(1,523) (259) 
Other assets(69) (767) 
Accounts payable(138) (1,226) 
Accrued volume incentives and service fees1,523  (235) 
Accrued liabilities59  (6,203) 
Deferred revenue582  1,039  
Lease liabilities(2,072) (2,340) 
Income taxes payable607  (1,207) 
Liability related to unrecognized tax benefits(135) (40) 
Deferred compensation payable(115) 125  
Net cash provided by (used in) operating activities14,420  (1,144) 
CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchases of property, plant and equipment(2,210) (2,774) 
Net cash used in investing activities(2,210) (2,774) 
CASH FLOWS FROM FINANCING ACTIVITIES:  
Principal payments of revolving credit facility  (547) 
Proceeds from revolving credit facility  547  
Proceeds from note payable5,374    
Tax benefit from stock awards(210) (193) 
Net cash provided by (used in) financing activities5,164  (193) 
Effect of exchange rates on cash and cash equivalents(748) (186) 
Net increase (decrease) in cash and cash equivalents16,626  (4,297) 
Cash and cash equivalents at the beginning of the period53,629  50,638  
Cash and cash equivalents at the end of the period$70,255  $46,341  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:  
Cash paid for income taxes, net of refunds$2,143  $3,895  
Cash paid for interest3  63  
 
See accompanying notes to condensed consolidated financial statements.
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
(1) Basis of Presentation
 
We are a natural health and wellness company primarily engaged in the manufacturing and direct selling of nutritional and personal care products. We are a Utah corporation with our principal place of business in Lehi, Utah, and sell our products to a sales force of independent distributors who uses the products themselves or resells them to consumers.
 
Principles of Consolidation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation of our financial information as of June 30, 2020, and for the three and six-month periods ended June 30, 2020 and 2019. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2020.
 
It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities, in these financial statements and accompanying notes. Actual results could differ from these estimates due to the uncertainty around the magnitude and duration of the COVID-19 pandemic, as well as other factors and those differences could have a material effect on our financial position and results of operations.

The significant accounting estimates inherent in the preparation of our financial statements include estimates associated with our determination of liabilities related to Manager and Distributor incentives, the determination of income tax assets and liabilities, certain other non-income tax and value-added tax contingencies, and legal contingencies. In addition, significant estimates form the basis for allowances with respect to inventory valuations. Various assumptions and other factors enter into the determination of these significant estimates. The process of determining significant estimates takes into account historical experience and current and expected economic conditions.

Noncontrolling Interests

Noncontrolling interests changed as a result of the net income attributable to noncontrolling interests of $0.4 million and $0.4 million for the three and six months ended June 30, 2020, respectively. Net losses attributable to the noncontrolling interests were $0.1 million and $0.1 million for the three and six months ended June 30, 2019, respectively. As of June 30, 2020 and December 31, 2019, noncontrolling interests were $0.7 million and $0.2 million, respectively.

Restructuring Related Accruals and Expenses

We recorded $0 and $0.1 million of restructuring related expenses during the three and six months ended June 30, 2020, respectively. We recorded $0.4 million and $0.2 million restructuring related expenses during the three and six months ended June 30, 2019. Accrued severance and restructuring related costs were $10,000 and $0.4 million as of June 30, 2020 and December 31, 2019, respectively.

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Recent Accounting Pronouncements
 
In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements on fair value measurements in Topic 820 based on the consideration of costs and benefits to promote the appropriate exercise and discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. The amendments in this update are effective for reporting periods beginning after December 15, 2019, with early adoption permitted. The adoption of this ASU did not have a significant impact on our Consolidated Financial Statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating taxes during the quarters and the recognition of deferred tax liabilities for outside basis differences. The amendments in this update are effective for reporting periods beginning after December 15, 2020, with early adoption permitted. The adoption of this ASU is not expected to have a significant impact on our Consolidated Financial Statements.

(2) Inventories
 
The composition of inventories is as follows (dollar amounts in thousands):
 
June 30,
2020
December 31,
2019
Raw materials$14,697  $13,329  
Work in progress1,288  1,426  
Finished goods34,181  31,911  
Total inventories$50,166  $46,666  

(3) Investment Securities - Trading
 
Our trading securities portfolio totaled $1.0 million at June 30, 2020, and $1.2 million at December 31, 2019, and generated gains of $93,000 and $40,000 for the three months ended June 30, 2020 and 2019, respectively, and losses of $4,000 and gains of $173,000 for the six months ended June 30, 2020 and 2019, respectively.
 
(4) Revolving Credit Facility and Other Obligations

On July 11, 2017, we entered into a revolving credit agreement with Bank of America, N.A., with a borrowing limit of $25.0 million (the “Credit Agreement”). On June 11, 2020 the credit agreement was amended to extend the term to mature on July 1, 2023. The amendment also allows for additional borrowings of $15.0 million or up to three separate increases of no less than $5.0 million each. We pay interest on any borrowings under the Credit Agreement, which through June 10, 2020, was at LIBOR plus 1.25 percent (3.05 percent as of December 31, 2019), and an annual commitment fee of 0.2 percent on the unused portion of the commitment. Interest under the amended Credit Agreement is at LIBOR, or the Index floor of 0.75 percent, plus 2.25 percent (3.00 percent as of June 30, 2020), and an annual commitment fee of 0.25 percent on the unused portion of the commitment. We are required to settle our net borrowings under the Credit Agreement only upon maturity, and as a result, have classified prior outstanding borrowings as non-current on our condensed consolidated balance sheet. At June 30, 2020, there was no outstanding balance under the Credit Agreement.

The Credit Agreement contains customary financial covenants, including financial covenants relating to our solvency and leverage. In addition, the Credit Agreement restricts certain capital expenditures, lease expenditures, other indebtedness, liens on assets, guarantees, loans and advances, dividends, mergers, consolidations and transfers of assets except as permitted in the Credit Agreement. The Credit Agreement is collateralized by our manufacturing facility, accounts receivable balance, inventory balance and other assets. As of June 30, 2020, we were in compliance with the debt covenants set forth in the Credit Agreement.

On April 21, 2020, we entered into a credit agreement with Banc of America Leasing and Capital, LLC, with a borrowing limit of $6.0 million, that matures sixty months from the Base Date, which must not be later than April 30, 2021 (the "Capital Credit Agreement"). We pay interest on any borrowings under the Capital Credit Agreement at the Indicative Index
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plus 2.75 percent (3.50 percent as of June 30, 2020). We are required to settle our borrowings under the Capital Credit Agreement in sixty monthly payments, each equal to 1.82 percent of the loan amount. The Capital Credit Agreement is collateralized by any new equipment purchased under the agreement. As of June 30, 2020, there was no outstanding balance under the Capital Credit Agreement.

On April 14, 2020, we obtained a loan (the “Loan”) from Bank of America, B.A. in the amount of $5.4 million under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The PPP is a loan designed to provide an incentive for qualifying businesses to maintain their employees on the payroll despite significant economic uncertainty. We applied to receive the Loan based on the significant economic uncertainty facing the Company in the U.S. and globally.

The Loan matures on April 14, 2022 and bears interest at a rate of 1.00 percent per annum, payable monthly commencing on November 15, 2020. We may prepay the Loan at any time prior to maturity with no prepayment penalties. The principal amount of the Loan and accrued interest are eligible for forgiveness after either eight weeks or 26 weeks if we use the Loan proceeds for qualifying expenses, including payroll, rent, and utilities during the eight week period commencing on the date the Loan has been advanced. The amount of the Loan eligible for forgiveness will be reduced to the extent that we have (i) terminated full-time employees during the period commencing February 15, 2020 and ending April 26, 2020 and (ii) reduced salaries (beyond a statutorily prescribed threshold) during the eight week period commencing on the date the Loan has been advanced. We will be obligated to repay any portion of the principal amount of the Note that is not forgiven, together with accrued interest thereon at the rate set forth above until such unforgiven portion is paid in full. As of June 30, 2020, there was $5.4 million outstanding under the PPP, $2.4 million of which was classified as current.

.(5) Net Income Per Share
 
Basic net income per common share (“Basic EPS”), is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share.

Following is a reconciliation of the numerator and denominator of Basic EPS to the numerator and denominator of Diluted EPS for the three and six months ended June 30, 2020 and 2019 (dollar and share amounts in thousands, except for per share information): 
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Net income attributable to common shareholders$5,754  $2,689  $8,716  $4,446  
Basic weighted average shares outstanding19,491  19,291  19,472  19,280  
Basic earnings per share attributable to common shareholders$0.30  $0.14  $0.45  $0.23  
Diluted shares outstanding:    
Basic weighted-average shares outstanding19,491  19,291  19,472  19,280  
Stock-based awards292  311  253  316  
Diluted weighted-average shares outstanding19,783  19,602  19,725  19,596  
Diluted earnings per share attributable to common shareholders$0.29  $0.14  $0.44  $0.23  
Dilutive shares excluded from diluted-per-share amounts:    
Stock options844  445  844  445  
Anti-dilutive shares excluded from diluted-per-share amounts:    
Stock options264  838  239  862  
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Potentially dilutive shares excluded from diluted-per-share amounts include performance-based options to purchase shares of common stock for which certain earnings metrics have not been achieved. Potentially anti-dilutive shares excluded from diluted-per-share amounts include both non-qualified stock options and unearned performance-based options to purchase shares of common stock with exercise prices greater than the weighted-average share price during the period and shares that would be anti-dilutive to the computation of diluted net income per share for each of the periods presented.
 
(6) Capital Transactions
 
Share-Based Compensation
 
During the year ended December 31, 2012, our shareholders adopted and approved the Nature’s Sunshine Products, Inc. 2012 Stock Incentive Plan (the “2012 Incentive Plan”). The 2012 Incentive Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards. The Compensation Committee of the Board of Directors has authority and discretion to determine the type of award, as well as the amount, terms and conditions of each award under the 2012 Incentive Plan, subject to the limitations of the 2012 Incentive Plan. A total of 1,500,000 shares of our common stock were originally authorized for the granting of awards under the 2012 Incentive Plan. In 2015, our shareholders approved an amendment to the 2012 Incentive Plan, to increase the number of shares of Common Stock reserved for issuance by 1,500,000 shares. The number of shares available for awards, as well as the terms of outstanding awards, are subject to adjustment as provided in the 2012 Incentive Plan for stock splits, stock dividends, recapitalizations and other similar events.
 
We also maintain a stock incentive plan, which was approved by shareholders in 2009 (the “2009 Incentive Plan”). The 2009 Incentive Plan also provided for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards. Under the 2012 Incentive Plan, any shares subject to award, or awards forfeited or reacquired by the Company issued under the 2009 Incentive Plan are available for award up to a maximum of 400,000 shares.
 
Stock Options
 
Our outstanding stock options include time-based stock options, which vest over differing periods of time ranging from the date of issuance to up to 48 months from the option grant date, and performance-based stock options, which have already vested upon achieving operating income margins of six, eight and ten percent as reported in four of five consecutive quarters over the term of the options.
 
Stock option activity for the six-month period ended June 30, 2020, is as follows (amounts in thousands, except per share information):
 Number of
Shares
Weighted Average
Exercise
Price Per Share
Options outstanding at December 31, 2019290  $11.49  
Granted    
Forfeited or canceled    
Exercised(25) 5.79  
Options outstanding at June 30, 2020265  12.03  

There was no share-based compensation expense for the three- and six-month periods ended June 30, 2020 and 2019 for stock options. As of June 30, 2020 and December 31, 2019, there was no unrecognized share-based compensation expense related to the grants described above.
 
At June 30, 2020, the aggregate intrinsic value of outstanding and exercisable stock options to purchase 265,000 shares of common stock was $11,000. At December 31, 2019, the aggregate intrinsic value of outstanding and exercisable options to purchase 290,000 shares of common stock was $0.1 million.

For the six-month periods ended June 30, 2020 and 2019, we issued 25,000 and 1,000 shares of common stock upon the exercise of stock options at an average exercise price of $5.79 and $2.35 per share, respectively. The aggregate intrinsic value of options exercised during the six-month periods ended June 30, 2020 and 2019, was $0.1 million and $10,000, respectively.
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For the six-month periods ended June 30, 2020 and 2019, the Company recognized $48,000 and $3,000 of tax benefits from the exercise of stock options, respectively.

As of June 30, 2020 and December 31, 2019, we did not have any unvested performance-based stock options outstanding.
 
Restricted Stock Units
 
Our outstanding restricted stock units (“RSUs”), include time-based RSUs, which vest over differing periods of time ranging from 12 months to up to 36 months from the RSU grant date, as well as performance-based RSUs, which vest upon achieving targets relating to revenue and earnings growth, earnings-per-share, and/or stock price levels. RSUs granted to members of the Board of Directors contain a restriction period in which the shares are not issued until two years after vesting. At June 30, 2020 and December 31, 2019, there were 100,000 and 95,000 vested RSUs, respectively, granted to the Board of Directors with a restriction period.

 Restricted stock unit activity for the six-month period ended June 30, 2020, is as follows (amounts in thousands, except per share information):
 Number of
Shares
Weighted Average
Grant Date
Fair Value
Restricted Stock Units outstanding at December 31, 2019821  $7.43  
Granted686  5.77  
Forfeited(2) 8.68  
Issued(114) 9.74