Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.3.0.814
Segment Information
 9 Months Ended
Sep. 30, 2015
Segment Information  
Segment Information

 

(10)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 has three business segments that operate under the Nature’s Sunshine® Products brand and are divided based on the characteristics of their Distributor base, similarities in compensation plans, as well as the internal organization of NSP’s officers and their responsibilities (NSP Americas; NSP Russia, Central and Eastern Europe; and NSP China and New Markets). The Company’s fourth business segment operates under the Synergy® WorldWide brand, which distributes its products through different selling and Distributor compensation plans and has products with formulations that are sufficiently different from those of NSP Americas; NSP Russia, Central and Eastern Europe; and NSP China and New Markets to warrant accounting for these operations as a separate business segment. The Company’s  China and New Markets segment is 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 e-commerce. The time to market will be dependent upon regulatory processes including product registration and permit approvals. Due to a change in the Chinese regulatory environment, the Company has indefinitely deferred its entry into the retail channel.  The China and New Markets segment also includes the Company’s wholesale sales 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 outside of China set forth above that were previously part of NSP Americas. Net sales revenues 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 2014, the Company created the China and New Markets segment. 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 Americas segment to the China and New Markets segment during the year ended December 31, 2014, as well as the results of its NSP Peru and United Kingdom markets, which were converted to wholesale markets during the prior year.

 

Reportable business segment information is as follows:

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

Net sales revenue:

 

 

 

 

 

 

 

 

 

NSP Americas

 

$
44,483

 

$
45,774

 

$
136,043

 

$
138,447

 

NSP Russia, Central and Eastern Europe

 
6,321

 
11,753

 
20,579

 
39,628

 

Synergy WorldWide

 
27,797

 
34,732

 
85,045

 
97,262

 

China and New Markets

 
985

 
1,147

 
3,044

 
4,367

 

 

 

 

 

 

 

 

 

 

 

Total net sales revenue

 
79,586

 
93,406

 
244,711

 
279,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution margin (1):

 

 

 

 

 

 

 

 

 

NSP Americas

 
18,685

 
18,968

 
57,232

 
56,819

 

NSP Russia, Central and Eastern Europe

 
2,287

 
4,186

 
7,197

 
14,145

 

Synergy WorldWide

 
8,809

 
12,010

 
26,677

 
34,495

 

China and New Markets

 
472

 
582

 
1,383

 
2,048

 

 

 

 

 

 

 

 

 

 

 

Total contribution margin

 
30,253

 
35,746

 
92,489

 
107,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 
27,115

 
30,200

 
80,837

 
89,293

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 
3,138

 
5,546

 
11,652

 
18,214

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 
(247

)
(42

)
(567

)
(383

)

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

$
2,891

 

$
5,504

 

$
11,085

 

$
17,831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Contribution margin consists of net sales revenue less cost of sales and volume incentives 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 nine-month periods ended September 30, 2015 and 2014, as follows:

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

Net sales revenue:

 

 

 

 

 

 

 

 

 

United States

 

$
36,603 

 

$
36,209 

 

$
112,179 

 

$
112,507 

 

South Korea

 
12,191 

 
16,252 

 
36,341 

 
42,959 

 

Other

 
30,792 

 
40,945 

 
96,191 

 
124,238 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
79,586 

 

$
93,406 

 

$
244,711 

 

$
279,704 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue generated by each of the Company’s product lines is set forth below:

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

NSP Americas:

 

 

 

 

 

 

 

 

 

General health

 

$
20,119 

 

$
19,704 

 

$
59,607 

 

$
59,522 

 

Immune

 
5,095 

 
5,721 

 
16,350 

 
16,763 

 

Cardiovascular

 
3,026 

 
3,204 

 
9,670 

 
9,773 

 

Digestive

 
12,521 

 
13,489 

 
39,149 

 
40,859 

 

Personal care

 
952 

 
994 

 
2,792 

 
3,050 

 

Weight management

 
2,770 

 
2,662 

 
8,475 

 
8,480 

 

 

 

 

 

 

 

 

 

 

 

 

 
44,483 

 
45,774 

 
136,043 

 
138,447 

 

 

 

 

 

 

 

 

 

 

 

NSP Russia, Central and Eastern Europe:

 

 

 

 

 

 

 

 

 

General health

 

$
2,532 

 

$
4,507 

 

$
8,210 

 

$
14,883 

 

Immune

 
770 

 
1,492 

 
2,446 

 
4,960 

 

Cardiovascular

 
391 

 
730 

 
1,290 

 
2,457 

 

Digestive

 
1,829 

 
3,093 

 
5,651 

 
10,491 

 

Personal care

 
563 

 
1,410 

 
2,072 

 
4,746 

 

Weight management

 
236 

 
521 

 
910 

 
2,091 

 

 

 

 

 

 

 

 

 

 

 

 

 
6,321 

 
11,753 

 
20,579 

 
39,628 

 

 

 

 

 

 

 

 

 

 

 

Synergy WorldWide:

 

 

 

 

 

 

 

 

 

General health

 

$
11,381 

 

$
12,367 

 

$
32,317 

 

$
34,809 

 

Immune

 
157 

 
243 

 
641 

 
710 

 

Cardiovascular

 
8,221 

 
11,500 

 
25,821 

 
33,596 

 

Digestive

 
4,016 

 
6,069 

 
12,938 

 
16,039 

 

Personal care

 
1,343 

 
1,981 

 
4,403 

 
5,451 

 

Weight management

 
2,679 

 
2,572 

 
8,925 

 
6,657 

 

 

 

 

 

 

 

 

 

 

 

 

 
27,797 

 
34,732 

 
85,045 

 
97,262 

 

 

 

 

 

 

 

 

 

 

 

China and New Markets

 

 

 

 

 

 

 

 

 

General health

 

$
471 

 

$
497 

 

$
1,428 

 

$
1,849 

 

Immune

 
123 

 
145 

 
384 

 
583 

 

Cardiovascular

 
70 

 
65 

 
224 

 
256 

 

Digestive

 
240 

 
356 

 
755 

 
1,257 

 

Personal care

 
24 

 
20 

 
70 

 
74 

 

Weight management

 
57 

 
64 

 
183 

 
348 

 

 

 

 

 

 

 

 

 

 

 

 

 
985 

 
1,147 

 
3,044 

 
4,367 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
79,586 

 

$
93,406 

 

$
244,711 

 

$
279,704 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From an individual country perspective, only the United States comprised 10 percent or more of consolidated property, plant and equipment as follows:

 

 

 

September 30,
2015

 

December 31,
2014

 

Property, plant and equipment:

 

 

 

 

 

United States

 

$
62,390 

 

$
48,013 

 

Other

 
2,693 

 
3,330 

 

 

 

 

 

 

 

Total property, plant and equipment

 

$
65,083 

 

$
51,343