Annual report pursuant to Section 13 and 15(d)

OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION

v3.3.1.900
OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION
 12 Months Ended
Dec. 31, 2015
Segment Reporting [Abstract]  
OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION
OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION 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 two 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 and NSP Russia, Central and Eastern Europe). The Company’s third 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 and NSP Russia, Central and Eastern Europe to warrant accounting for these operations as a separate business segment. The Company’s fourth business segment, China and New Markets, anticipates deploying a multi-brand, multi-channel go-to-market strategy that offers select Nature’s Sunshine branded products through Fosun Pharma’s retail locations across China as well as ecommerce, and select Synergy branded products through a direct selling model.  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 Company’s export 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 export 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. The net sales revenue and contribution margin of this business for the year ended December 31, 2015 were $4.1 million and $1.9 million, respectively. The net sales revenue and contribution margin of this business for the year ended December 31, 2014 were $5.6 million and $2.6 million, respectively. The net sales revenue and contribution margin of this business for the year ended December 31, 2013 were $8.1 million and $3.2 million, respectively.
 
Reportable business segment information for the years ended December 31, 2015, 2014, and 2013 is as follows (dollar amounts in thousands):
Year Ended December 31,
 
2015
 
2014
 
2013
Net sales revenue:
 
 

 
 

 
 

NSP Americas
 
$
179,151

 
$
182,395

 
$
190,684

NSP Russia, Central and Eastern Europe
 
27,408

 
50,274

 
62,747

Synergy WorldWide
 
114,081

 
128,101

 
108,290

China and New Markets
 
4,065

 
5,597

 
8,105

Total net sales revenue
 
324,705

 
366,367

 
369,826

Contribution margin (1):
 
 

 
 

 
 

NSP Americas
 
74,953

 
74,603

 
78,171

NSP Russia, Central and Eastern Europe
 
9,474

 
17,851

 
22,542

Synergy WorldWide
 
35,277

 
43,888

 
38,011

China and New Markets
 
1,870

 
2,633

 
3,242

Total contribution margin
 
121,574

 
138,975

 
141,966

 
 
 
 
 
 
 
Selling, general and administrative
 
107,702

 
119,927

 
118,383

Operating income
 
13,872

 
19,048

 
23,583

 
 
 
 
 
 
 
Other income (loss), net
 
(592
)
 
(34
)
 
1,993

Income from continuing operations before provision for income taxes
 
$
13,280

 
$
19,014

 
$
25,576

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

Year Ended December 31,
 
2015
 
2014
 
2013
Capital expenditures:
 
 

 
 

 
 

NSP Americas
 
$
21,437

 
$
25,581

 
$
8,018

NSP Russia, Central and Eastern Europe
 
—

 
8

 
4

Synergy WorldWide
 
302

 
1,321

 
534

China and New Markets
 
487

 
—

 
—

Total capital expenditures
 
$
22,226

 
$
26,910

 
$
8,556

 
 
 
 
 
 
 
Depreciation and amortization:
 
 

 
 

 
 

NSP Americas
 
$
3,603

 
$
3,438

 
$
3,568

NSP Russia, Central and Eastern Europe
 
26

 
25

 
27

Synergy WorldWide
 
885

 
946

 
871

China and New Markets
 
11

 
—

 
—

Total depreciation and amortization
 
$
4,525

 
$
4,409

 
$
4,466

As of December 31,
 
2015
 
2014
Assets:
 
 

 
 

NSP Americas
 
$
141,428

 
$
129,371

NSP Russia, Central and Eastern Europe
 
5,122

 
6,679

Synergy WorldWide
 
38,048

 
40,797

China and New Markets
 
15,922

 
19,952

Total assets
 
$
200,520

 
$
196,799


 
From an individual country perspective, only the United States and South Korea comprises approximately 10 percent or more of consolidated net sales revenue for any of the years ended December 31, 2015, 2014, and 2013 as follows (dollar amounts in thousands):
Year Ended December 31,
 
2015
 
2014
 
2013
Net sales revenue:
 
 

 
 

 
 

United States
 
$
147,553

 
$
148,219

 
$
152,209

South Korea
 
48,476

 
54,314

 
34,207

Other
 
128,676

 
163,834

 
183,410

Total net sales revenue
 
$
324,705

 
$
366,367

 
$
369,826



Revenue generated by each of the Company’s product lines is set forth below (dollars in thousands):
Year Ended December 31,
 
2015
 
2014
 
2013
NSP Americas:
 
 

 
 

 
 

General health
 
$
80,315

 
$
78,218

 
$
80,379

Immunity
 
22,042

 
23,549

 
23,374

Cardiovascular
 
12,331

 
12,566

 
13,018

Digestive
 
49,239

 
53,133

 
55,936

Personal care
 
3,575

 
4,000

 
5,162

Weight management
 
11,649

 
10,929

 
12,815

 
 
179,151

 
182,395

 
190,684

NSP Russia, Central and Eastern Europe:
 
 

 
 

 
 

General health
 
$
11,433

 
$
18,841

 
$
22,690

Immunity
 
3,328

 
6,512

 
7,902

Cardiovascular
 
1,714

 
3,104

 
4,324

Digestive
 
7,167

 
13,171

 
15,693

Personal care
 
2,716

 
6,073

 
8,817

Weight management
 
1,050

 
2,573

 
3,321

 
 
27,408

 
50,274

 
62,747

Synergy WorldWide:
 
 

 
 

 
 

General health
 
$
43,829

 
$
46,546

 
$
36,723

Immunity
 
752

 
974

 
1,394

Cardiovascular
 
34,191

 
42,449

 
42,154

Digestive
 
17,746

 
20,839

 
16,897

Personal care
 
5,697

 
7,196

 
7,097

Weight management
 
11,866

 
10,097

 
4,025

 
 
114,081

 
128,101

 
108,290

China and New Markets:
 
 

 
 

 
 

General health
 
$
1,903

 
$
2,370

 
$
3,259

Immunity
 
525

 
777

 
1,006

Cardiovascular
 
292

 
334

 
461

Digestive
 
1,011

 
1,608

 
2,365

Personal care
 
93

 
108

 
126

Weight management
 
241

 
400

 
888

 
 
4,065

 
5,597

 
8,105

Total net sales revenue
 
$
324,705

 
$
366,367

 
$
369,826


 
From an individual country perspective, only the United States comprise 10 percent or more of consolidated property, plant and equipment as follows (dollar amounts in thousands):
As of December 31 
 
2015
 
2014
Property, plant and equipment
 
 

 
 

United States
 
$
66,044

 
$
48,013

Other
 
2,684

 
3,330

Total property, plant and equipment
 
$
68,728

 
$
51,343


 
Due to the continual currency devaluation of the Venezuelan bolivar, as of September 30, 2014, the Company incurred a $2.9 million impairment charge to write down the value of its fixed assets in Venezuela to $0.