Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.5.0.2
Segment Information
 6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Segment Information
Segment Information
 
The Company has four business segments. These business segments are components of the Company for which separate information is available that is evaluated regularly by the chief executive officer in deciding how to allocate resources and in assessing relative performance.
 
The Company's four business segments are divided based on the different characteristics of their distributor bases, selling and distributor compensation plans and product formulations, as well as the internal organization of its officers and their responsibilities and business operations.  Three business segments operate under the Nature’s Sunshine Products brand (NSP Americas; NSP Russia, Central and Eastern Europe; and China and New Markets). The Company’s China and New Markets segment anticipates deploying a multi-channel go-to-market strategy that offers select Nature’s Sunshine branded products through a direct selling model across China as well as through e-commerce channels.  The time to market will be dependent upon regulatory processes including product registration and permit approvals. The China and New Markets segment also includes the Company’s wholesale business, in which the Company sells its products to various locally managed entities independent of the Company that have distribution rights for the relevant market. All of the net sales revenue to date in the China and New Markets segment is through the Company’s wholesale business to foreign markets, and beginning in the second quarter of 2016, pre-opening product sales through Hong Kong. The fourth business segment operates under the Synergy® WorldWide brand.

Reportable business segment information is as follows (dollar amounts in thousands):
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Net sales revenue:
 

 
 

 
 

 
 

NSP Americas
$
44,725

 
$
45,050

 
$
89,908

 
$
91,560

NSP Russia, Central and Eastern Europe
6,269

 
6,815

 
12,621

 
14,258

Synergy WorldWide
33,013

 
28,480

 
62,861

 
57,248

China and New Markets
5,359

 
902

 
6,378

 
2,059

Total net sales revenue
89,366

 
81,247

 
171,768

 
165,125

 
 
 
 
 
 
 
 
Contribution margin (1):
 

 
 

 
 

 
 

NSP Americas
19,103

 
19,027

 
38,020

 
38,547

NSP Russia, Central and Eastern Europe
2,065

 
2,314

 
4,246

 
4,910

Synergy WorldWide
10,245

 
8,820

 
19,184

 
17,868

China and New Markets
4,084

 
415

 
4,552

 
911

Total contribution margin
35,497

 
30,576

 
66,002

 
62,236

 
 
 
 
 
 
 
 
Selling, general and administrative (2)
31,249

 
27,392

 
59,634

 
53,722

Operating income
4,248

 
3,184

 
6,368

 
8,514

 
 
 
 
 
 
 
 
Other income (expense), net
(622
)
 
(2
)
 
937

 
(320
)
Income from continuing operations before provision for income taxes
$
3,626

 
$
3,182

 
$
7,305

 
$
8,194

_________________________________________

(1)   Contribution margin consists of net sales revenue less cost of sales and volume incentives expense. For the China and New Markets segment, contribution margin does not includes services fees related to pre-opening product sales through Hong Kong.

(2)  Service fees in the China and New Markets segment related to pre-opening product sales through Hong Kong totaled $2.0 million for the three and six month periods ended June 30, 2016, and $0.0 million for the three and six month periods ended June 30, 2015. These service fees are included in selling, general and administrative expense.

From an individual country perspective, only the United States and South Korea comprise 10 percent or more of consolidated net sales revenue for the three and six-month periods ended June 30, 2016 and 2015, as follows (dollar amounts in thousands):
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Net sales revenue:
 

 
 

 
 

 
 

United States
$
37,598

 
$
37,054

 
$
75,893

 
$
75,576

South Korea
15,473

 
12,070

 
28,671

 
24,150

Other
36,295

 
32,123

 
67,204

 
65,399

 
$
89,366

 
$
81,247

 
$
171,768

 
$
165,125


 
Revenue generated by each of the Company’s product lines is set forth below (dollar amounts in thousands):
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
NSP Americas:
 

 
 

 
 

 
 

General health
$
20,234

 
$
19,456

 
$
39,851

 
$
39,488

Immune
3,738

 
5,038

 
9,314

 
11,255

Cardiovascular
3,418

 
3,543

 
6,530

 
6,644

Digestive
11,845

 
13,263

 
24,924

 
26,628

Personal care
2,853

 
870

 
3,783

 
1,840

Weight management
2,637

 
2,880

 
5,506

 
5,705

 
44,725

 
45,050

 
89,908

 
91,560

NSP Russia, Eastern and Central Europe:
 

 
 

 
 

 
 

General health
$
2,501

 
$
2,799

 
$
5,224

 
$
5,678

Immune
857

 
763

 
1,397

 
1,676

Cardiovascular
493

 
446

 
970

 
899

Digestive
1,407

 
1,852

 
3,528

 
3,822

Personal care
853

 
627

 
1,102

 
1,509

Weight management
158

 
328

 
400

 
674

 
6,269

 
6,815

 
12,621

 
14,258

Synergy WorldWide:
 

 
 

 
 

 
 

General health
$
9,694

 
$
7,645

 
$
18,334

 
$
15,347

Immune
41

 
84

 
250

 
277

Cardiovascular
13,505

 
12,411

 
26,198

 
25,067

Digestive
3,442

 
2,374

 
5,929

 
4,668

Personal care
1,948

 
1,732

 
3,887

 
3,562

Weight management
4,383

 
4,234

 
8,263

 
8,327

 
33,013

 
28,480

 
62,861

 
57,248

China and New Markets:
 

 
 

 
 

 
 

General health
$
1,537

 
$
426

 
$
2,008

 
$
957

Immune
216

 
103

 
347

 
261

Cardiovascular
1,450

 
73

 
1,523

 
154

Digestive
1,262

 
225

 
1,522

 
515

Personal care
439

 
19

 
461

 
46

Weight management
455

 
56

 
517

 
126

 
5,359

 
902

 
6,378

 
2,059

 
$
89,366

 
$
81,247

 
$
171,768

 
$
165,125



Beginning in 2016, for the Synergy WorldWide segment, the Company changed its allocation of products sold within promotional product kits from the category associated with the predominant product, to each individual product being included in its respective category. Prior periods have been reclassified to conform to the current period’s presentation.

From an individual country perspective, only the United States comprised 10 percent or more of consolidated property, plant and equipment as follows (dollar amounts in thousands):
 
 
June 30,
2016
 
December 31,
2015
Property, plant and equipment:
 

 
 

United States
$
68,089

 
$
66,044

Other
2,334

 
2,684

Total property, plant and equipment
$
70,423

 
$
68,728