Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.10.0.1
Segment Information
 9 Months Ended
Sep. 30, 2018
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 and 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 and customer bases, 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 NSP China), and one business segment operates under the Synergy® WorldWide brand. Net sales for each segment have been reduced by intercompany sales as they are not included in the measure of segment profit or loss reviewed by the chief executive officer. The Company evaluates performance based on contribution margin (loss) by segment before consideration of certain inter-segment transfers and expenses.

In the fourth quarter of 2017, the Company moved the reporting of its wholesale business, in which the Company sells its products to a locally managed entity independent of the Company that has distribution rights for the market, from the NSP China segment to the NSP Russia, Central and Eastern Europe segment. The net sales and contribution margin for the three and nine months ended September 30, 2017 were recast to reflect that change.

Reportable business segment information is as follows (dollar amounts in thousands):
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Net sales:
 

 
 

 
 

 
 

NSP Americas
$
38,512

 
$
41,301

 
$
118,769

 
$
125,367

NSP Russia, Central and Eastern Europe
8,841

 
7,681

 
27,799

 
23,286

Synergy WorldWide
34,497

 
34,470

 
103,034

 
92,146

NSP China
6,978

 
5,849

 
17,834

 
12,944

Total net sales
88,828

 
89,301

 
267,436

 
253,743

 
 
 
 
 
 
 
 
Contribution margin (1):
 

 
 

 
 

 
 

NSP Americas
17,006

 
17,764

 
49,530

 
53,454

NSP Russia, Central and Eastern Europe
3,098

 
2,592

 
9,437

 
6,173

Synergy WorldWide
9,652

 
10,160

 
30,915

 
27,769

NSP China
5,400

 
4,564

 
14,037

 
11,930

Total contribution margin
35,156

 
35,080

 
103,919

 
99,326

 
 
 
 
 
 
 
 
Selling, general and administrative expenses (2)
31,643

 
32,926

 
97,339

 
95,098

Operating income
3,513

 
2,154

 
6,580

 
4,228

 
 
 
 
 
 
 
 
Other income (loss), net
(353
)
 
193

 
(1,420
)
 
1,909

Income before provision for income taxes
$
3,160

 
$
2,347

 
$
5,160

 
$
6,137

_________________________________________

(1)   Contribution margin consists of net sales less cost of sales and volume incentives expense.

(2)  Service fees in the NSP China segment related to sales in China, occurring after the Company’s receipt of its direct selling license and pre-opening product sales through Hong Kong, totaled $2.7 million and $6.7 million for the three and nine-month periods ended September 30, 2018, respectively, compared to $2.1 million and $4.7 million for the three and nine-month periods ended September 30, 2017. These service fees are included in the Company’s selling, general and administrative expenses.

From an individual country perspective, the United States and South Korea comprise 10 percent or more of consolidated net sales for the three and nine-month periods ended September 30, 2018 and 2017, as follows (dollar amounts in thousands):
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Net sales:
 

 
 

 
 

 
 

United States
$
33,182

 
$
35,124

 
$
101,322

 
$
106,664

South Korea
18,271

 
14,371

 
52,463

 
38,203

Other
37,375

 
39,806

 
113,651

 
108,876

 
$
88,828

 
$
89,301

 
$
267,436

 
$
253,743



Net sales generated by each of the Company’s product lines is set forth below (dollar amounts in thousands):
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
NSP Americas:
 

 
 

 
 

 
 

General health
$
16,706

 
$
18,211

 
$
51,506

 
$
56,258

Immune
4,304

 
4,938

 
13,693

 
13,180

Cardiovascular
3,000

 
3,434

 
8,974

 
9,570

Digestive
11,013

 
11,084

 
33,967

 
34,892

Personal care
1,735

 
2,114

 
5,070

 
5,487

Weight management
1,754

 
1,520

 
5,559

 
5,980

 
38,512

 
41,301

 
118,769

 
125,367

NSP Russia, Eastern and Central Europe:
 

 
 

 
 

 
 

General health
$
3,632

 
$
3,449

 
$
11,883

 
$
10,594

Immune
886

 
861

 
2,808

 
2,397

Cardiovascular
681

 
592

 
2,048

 
1,699

Digestive
2,196

 
2,110

 
7,137

 
6,348

Personal care
1,222

 
472

 
3,084

 
1,556

Weight management
224

 
197

 
839

 
692

 
8,841

 
7,681

 
27,799

 
23,286

Synergy WorldWide:
 

 
 

 
 

 
 

General health
$
10,544

 
$
9,268

 
$
29,747

 
$
23,579

Immune
57

 
119

 
346

 
357

Cardiovascular
14,798

 
14,369

 
43,511

 
38,075

Digestive
3,803

 
4,428

 
11,665

 
12,047

Personal care
1,520

 
1,891

 
5,968

 
5,884

Weight management
3,775

 
4,395

 
11,797

 
12,204

 
34,497

 
34,470

 
103,034

 
92,146

NSP China:
 

 
 

 
 

 
 

General health
$
627

 
$
1,151

 
$
1,764

 
$
2,470

Immune
156

 
179

 
312

 
310

Cardiovascular
850

 
911

 
3,259

 
2,368

Digestive
3,032

 
2,433

 
8,357

 
5,557

Personal care
1,128

 
115

 
2,388

 
184

Weight management
1,185

 
1,060

 
1,754

 
2,055

 
6,978

 
5,849

 
17,834

 
12,944

 
$
88,828

 
$
89,301

 
$
267,436

 
$
253,743



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):
 
 
September 30,
2018
 
December 31,
2017
Property, plant and equipment:
 

 
 

United States
$
62,504

 
$
65,928

Other
3,027

 
3,178

Total property, plant and equipment
$
65,531

 
$
69,106