Annual report pursuant to Section 13 and 15(d)

OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION

v3.8.0.1
OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION
 12 Months Ended
Dec. 31, 2017
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 four business segments that 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. The NSP Russia, Central and Eastern Europe 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 the Company has granted distribution rights for the relevant market. 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 China and New Markets segment to the NSP Russia, Central and Eastern Europe segment. The net sales and contribution margin for the years ended December 31, 2016 and 2015 were recast to reflect that change.
 
Reportable business segment information for the years ended December 31, 2017, 2016, and 2015 is as follows (dollar amounts in thousands):
Year Ended December 31,
 
2017
 
2016
 
2015
Net sales:
 
 

 
 

 
 

NSP Americas
 
$
166,017

 
$
175,922

 
$
179,151

NSP Russia, Central and Eastern Europe
 
32,190

 
29,998

 
31,469

Synergy WorldWide
 
123,833

 
124,793

 
114,081

NSP China
 
19,989

 
10,446

 
4

Total net sales
 
342,029

 
341,159

 
324,705

Contribution margin (1):
 
 

 
 

 
 

NSP Americas
 
69,408

 
75,005

 
74,953

NSP Russia, Central and Eastern Europe
 
10,930

 
10,525

 
11,340

Synergy WorldWide
 
35,377

 
38,034

 
35,277

NSP China
 
15,307

 
6,748

 
4

Total contribution margin
 
131,022

 
130,312

 
121,574

 
 
 
 
 
 
 
Selling, general and administrative (2)
 
129,635

 
120,273

 
107,702

Operating income
 
1,387

 
10,039

 
13,872

 
 
 
 
 
 
 
Other income (loss), net
 
1,835

 
(773
)
 
(592
)
Income from continuing operations before provision for income taxes
 
$
3,222

 
$
9,266

 
$
13,280

___________________________
(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 sales through Hong Kong, totaled $7.2 million, $4.3 million, and $0 for the years ended December 31, 2017, 2016, and 2015, respectively. These service fees are included in the Company's selling, general and administrative expenses.

Year Ended December 31,
 
2017
 
2016
 
2015
Capital expenditures:
 
 

 
 

 
 

NSP Americas
 
$
3,965

 
$
8,999

 
$
21,437

NSP Russia, Central and Eastern Europe
 
55

 
131

 
—

Synergy WorldWide
 
763

 
564

 
302

NSP China
 
603

 
430

 
487

Total capital expenditures
 
$
5,386

 
$
10,124

 
$
22,226

 
 
 
 
 
 
 
Depreciation and amortization:
 
 

 
 

 
 

NSP Americas
 
$
7,884

 
$
3,997

 
$
3,603

NSP Russia, Central and Eastern Europe
 
60

 
42

 
26

Synergy WorldWide
 
621

 
713

 
885

NSP China
 
69

 
56

 
11

Total depreciation and amortization
 
$
8,634

 
$
4,808

 
$
4,525

As of December 31,
 
2017
 
2016
Assets:
 
 

 
 

NSP Americas
 
$
127,246

 
$
146,761

NSP Russia, Central and Eastern Europe
 
6,664

 
6,106

Synergy WorldWide
 
44,047

 
39,083

NSP China
 
17,238

 
13,620

Total assets
 
$
195,195

 
$
205,570


 
From an individual country perspective, only the United States and South Korea comprises approximately 10 percent or more of consolidated net sales for any of the years ended December 31, 2017, 2016, and 2015 as follows (dollar amounts in thousands):
Year Ended December 31,
 
2017
 
2016
 
2015
Net sales:
 
 

 
 

 
 

United States
 
$
140,860

 
$
148,060

 
$
147,553

South Korea
 
52,020

 
57,637

 
48,476

Other
 
149,149

 
135,462

 
128,676

Total net sales
 
$
342,029

 
$
341,159

 
$
324,705



Revenue generated by each of the Company’s product lines is set forth below (dollars in thousands):
Year Ended December 31,
 
2017
 
2016
 
2015
NSP Americas:
 
 

 
 

 
 

General health
 
$
74,492

 
$
78,187

 
$
80,315

Immunity
 
20,451

 
19,185

 
22,042

Cardiovascular
 
11,454

 
12,677

 
12,331

Digestive
 
45,231

 
47,659

 
49,239

Personal care
 
7,260

 
7,537

 
3,575

Weight management
 
7,129

 
10,677

 
11,649

 
 
166,017

 
175,922

 
179,151

NSP Russia, Central and Eastern Europe:
 
 

 
 

 
 

General health
 
$
14,813

 
$
12,907

 
$
13,332

Immunity
 
3,530

 
3,349

 
3,853

Cardiovascular
 
2,166

 
2,212

 
2,006

Digestive
 
8,261

 
8,009

 
8,178

Personal care
 
2,330

 
2,370

 
2,809

Weight management
 
1,090

 
1,151

 
1,291

 
 
32,190

 
29,998

 
31,469

Synergy WorldWide:
 
 

 
 

 
 

General health
 
$
31,973

 
$
35,283

 
$
43,829

Immunity
 
508

 
620

 
752

Cardiovascular
 
50,702

 
51,684

 
34,191

Digestive
 
16,121

 
12,536

 
17,746

Personal care
 
8,532

 
8,981

 
5,697

Weight management
 
15,997

 
15,689

 
11,866

 
 
123,833

 
124,793

 
114,081

NSP China:
 
 

 
 

 
 

General health
 
$
3,738

 
$
1,551

 
$
4

Immunity
 
468

 
370

 
—

Cardiovascular
 
3,886

 
2,617

 
—

Digestive
 
8,361

 
4,323

 
—

Personal care
 
350

 
629

 
—

Weight management
 
3,186

 
956

 
—

 
 
19,989

 
10,446

 
4

Total net sales
 
$
342,029

 
$
341,159

 
$
324,705


 
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 
 
2017
 
2016
Property, plant and equipment
 
 

 
 

United States
 
$
65,928

 
$
70,770

Other
 
3,178

 
2,502

Total property, plant and equipment
 
$
69,106

 
$
73,272