Annual report pursuant to Section 13 and 15(d)

OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION

v3.10.0.1
OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION
 12 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION
OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION
 
We have 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.
 
Our 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 our 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 our wholesale business, in which we sell our products to various locally-managed entities independent of the Company that we have 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. We evaluate performance based on contribution margin (loss) by segment before consideration of certain inter-segment transfers and expenses.

In the fourth quarter of 2017, we moved the reporting of our wholesale business from the China and New Markets segment to the NSP Russia, Central and Eastern Europe segment. The net sales and contribution margin for the year ended December 31, 2016 were recast to reflect the change.
 
Reportable business segment information for the years ended December 31, 2018, 2017, and 2016 is as follows (dollar amounts in thousands):
Year Ended December 31,
 
2018
 
2017
 
2016
Net sales:
 
 

 
 

 
 

NSP Americas
 
$
156,117

 
$
166,017

 
$
175,922

NSP Russia, Central and Eastern Europe
 
38,585

 
32,190

 
29,998

Synergy WorldWide
 
141,028

 
123,833

 
124,793

NSP China
 
29,080

 
19,989

 
10,446

Total net sales
 
364,810

 
342,029

 
341,159

Contribution margin (1):
 
 

 
 

 
 

NSP Americas
 
64,366

 
69,408

 
75,005

NSP Russia, Central and Eastern Europe
 
13,042

 
10,930

 
10,525

Synergy WorldWide
 
43,118

 
35,377

 
38,034

NSP China
 
23,256

 
15,307

 
6,748

Total contribution margin
 
143,782

 
131,022

 
130,312

 
 
 
 
 
 
 
Selling, general and administrative (2)
 
138,431

 
129,635

 
120,273

Operating income
 
5,351

 
1,387

 
10,039

 
 
 
 
 
 
 
Other income (loss), net
 
(2,151
)
 
1,835

 
(773
)
Income before provision for income taxes
 
$
3,200

 
$
3,222

 
$
9,266

___________________________
(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 receipt of our direct selling license and pre-opening sales through Hong Kong, totaled $11.5 million, $7.2 million, and $4.3 million for the years ended December 31, 2018, 2017, and 2016, respectively. These service fees are included in our selling, general and administrative expenses.

Year Ended December 31,
 
2018
 
2017
 
2016
Capital expenditures:
 
 

 
 

 
 

NSP Americas
 
$
3,162

 
$
3,965

 
$
8,999

NSP Russia, Central and Eastern Europe
 
16

 
55

 
131

Synergy WorldWide
 
1,304

 
763

 
564

NSP China
 
321

 
603

 
430

Total capital expenditures
 
$
4,803

 
$
5,386

 
$
10,124

 
 
 
 
 
 
 
Depreciation and amortization:
 
 

 
 

 
 

NSP Americas
 
$
8,791

 
$
7,884

 
$
3,997

NSP Russia, Central and Eastern Europe
 
70

 
60

 
42

Synergy WorldWide
 
878

 
621

 
713

NSP China
 
67

 
69

 
56

Total depreciation and amortization
 
$
9,806

 
$
8,634

 
$
4,808

As of December 31,
 
2018
 
2017
Assets:
 
 

 
 

NSP Americas
 
$
115,322

 
$
127,246

NSP Russia, Central and Eastern Europe
 
7,664

 
6,664

Synergy WorldWide
 
49,936

 
44,047

NSP China
 
20,094

 
17,238

Total assets
 
$
193,016

 
$
195,195


 
From an individual country perspective, only the United States and South Korea comprise approximately 10 percent or more of consolidated net sales for any of the years ended December 31, 2018, 2017, and 2016 as follows (dollar amounts in thousands):
Year Ended December 31,
 
2018
 
2017
 
2016
Net sales:
 
 

 
 

 
 

United States
 
$
133,677

 
$
140,860

 
$
148,060

South Korea
 
72,207

 
52,020

 
57,637

Other
 
158,926

 
149,149

 
135,462

Total net sales
 
$
364,810

 
$
342,029

 
$
341,159



Revenue generated by each of our product lines is set forth below (dollars in thousands):
Year Ended December 31,
 
2018
 
2017
 
2016
NSP Americas:
 
 

 
 

 
 

General health
 
$
68,134

 
$
74,492

 
$
78,187

Immunity
 
18,430

 
20,451

 
19,185

Cardiovascular
 
11,491

 
11,454

 
12,677

Digestive
 
44,370

 
45,231

 
47,659

Personal care
 
6,701

 
7,260

 
7,537

Weight management
 
6,991

 
7,129

 
10,677

 
 
156,117

 
166,017

 
175,922

NSP Russia, Central and Eastern Europe:
 
 

 
 

 
 

General health
 
$
16,088

 
$
14,813

 
$
12,907

Immunity
 
4,095

 
3,530

 
3,349

Cardiovascular
 
2,841

 
2,166

 
2,212

Digestive
 
9,725

 
8,261

 
8,009

Personal care
 
4,711

 
2,330

 
2,370

Weight management
 
1,125

 
1,090

 
1,151

 
 
38,585

 
32,190

 
29,998

Synergy WorldWide:
 
 

 
 

 
 

General health
 
$
40,953

 
$
31,973

 
$
35,283

Immunity
 
481

 
508

 
620

Cardiovascular
 
59,765

 
50,702

 
51,684

Digestive
 
15,950

 
16,121

 
12,536

Personal care
 
7,873

 
8,532

 
8,981

Weight management
 
16,006

 
15,997

 
15,689

 
 
141,028

 
123,833

 
124,793

NSP China:
 
 

 
 

 
 

General health
 
$
2,720

 
$
3,738

 
$
1,551

Immunity
 
2,594

 
468

 
370

Cardiovascular
 
4,860

 
3,886

 
2,617

Digestive
 
10,978

 
8,361

 
4,323

Personal care
 
2,981

 
350

 
629

Weight management
 
4,947

 
3,186

 
956

 
 
29,080

 
19,989

 
10,446

Total net sales
 
$
364,810

 
$
342,029

 
$
341,159


 
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 
 
2018
 
2017
Property, plant and equipment
 
 

 
 

United States
 
$
60,606

 
$
65,928

Other
 
3,455

 
3,178

Total property, plant and equipment
 
$
64,061

 
$
69,106