Annual report pursuant to Section 13 and 15(d)

OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION

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OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION
 12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION OPERATING BUSINESS SEGMENT AND INTERNATIONAL OPERATION INFORMATION
 
We have four business segments (Asia, Europe, North America, and Latin America and Other) based primarily upon the geographic region where each segment operates, as well as the internal organization of our officers and their responsibilities. Each of the geographic segments operate under the Nature’s Sunshine Products and Synergy® WorldWide brands. The Latin America and Other segment includes our wholesale business in which we sell products to various locally-managed entities, independent of the Company, that we have granted distribution rights for the relevant market.

Historically, our operating segments were based on brand, customer base, geographical operations with three operating business segments under the Nature’s Sunshine Products brand (NSP Americas; NSP Russia, Central and Eastern Europe; and NSP China), and one operating business segment under the Synergy® WorldWide brand.

During the second quarter of 2019, we realigned into geographic focused operating business segments across brands to further align regional strategies and drive synergies in product, organizational and go-to-market strategies in local markets. Our internal reporting structure was reorganized to support the new reporting segments and the chief operating decision maker now
reviews the operating results of the four segments utilizing a geographic focused format. The presentation of the comparative information has been recast to conform to the 2019 presentation.
 
Reportable business segment information for the years ended December 31, 2019 and 2018 is as follows (dollar amounts in thousands):
Year Ended December 31, 2019 2018
Net sales:    
Asia $ 138,536    $ 139,031   
Europe 62,523    56,314   
North America 138,163    144,264   
Latin America and Other 22,993    25,201   
Total net sales 362,215    364,810   
Contribution margin (1):    
Asia 65,871    67,733   
Europe 19,954    17,845   
North America 49,327    48,448   
Latin America and Other 9,713    9,756   
Total contribution margin 144,865    143,782   
Selling, general and administrative (2) 128,740    138,431   
Operating income 16,125    5,351   
Other income (loss), net (483)   (2,151)  
Income before provision for income taxes $ 15,642    $ 3,200   
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(1) Contribution margin consists of net sales less cost of sales and volume incentives expense.

(2)  Service fees in China totaled $9.4 million and $11.5 million for the years ended December 31, 2019 and 2018, respectively. These service fees are included in our selling, general and administrative expenses.

Year Ended December 31, 2019 2018
Capital expenditures:    
Asia $ 3,262    $ 1,557   
Europe 27    85   
North America 2,605    3,143   
Latin America and Other 21    18   
Total capital expenditures $ 5,915    $ 4,803   
Depreciation and amortization:    
Asia $ 1,544    $ 799   
Europe 75    107   
North America 8,855    8,718   
Latin America and Other 125    182   
Total depreciation and amortization $ 10,599    $ 9,806   
As of December 31, 2019 2018
Assets:    
Asia $ 65,959    $ 59,983   
Europe 15,187    16,414   
North America 124,337    109,091   
Latin America and Other 7,585    7,528   
Total assets $ 213,068    $ 193,016   
 
From an individual country perspective, only the United States and South Korea comprise approximately 10 percent or more of consolidated net sales for the years ended December 31, 2019 and 2018 as follows (dollar amounts in thousands):
Year Ended December 31, 2019 2018
Net sales:    
United States $ 128,019    $ 133,677   
South Korea 70,556    72,207   
Other 163,640    158,926   
Total net sales $ 362,215    $ 364,810   
Revenue generated by each of our product lines is set forth below (dollars in thousands):
Year Ended December 31, 2019 2018
Asia:    
General health $ 37,795    $ 32,519   
Immunity 940    3,086   
Cardiovascular 44,541    49,210   
Digestive 24,434    24,015   
Personal care 13,753    10,286   
Weight management 17,073    19,915   
  138,536    139,031   
Europe:    
General health $ 22,469    $ 20,932   
Immunity 5,130    3,775   
Cardiovascular 10,672    11,307   
Digestive 14,456    12,478   
Personal care 7,463    5,253   
Weight management 2,333    2,569   
  62,523    56,314   
North America:    
General health $ 59,847    $ 62,519   
Immunity 15,341    16,202   
Cardiovascular 18,750    19,518   
Digestive 33,077    33,925   
Personal care 6,170    5,751   
Weight management 4,978    6,349   
  138,163    144,264   
Latin America and Other:    
General health $ 6,919    $ 7,584   
Immunity 2,453    2,565   
Cardiovascular 1,446    1,427   
Digestive 10,258    11,360   
Personal care 1,056    1,214   
Weight management 861    1,051   
  22,993    25,201   
Total net sales $ 362,215    $ 364,810   
 
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  2019 2018
Property, plant and equipment    
United States $ 54,470    $ 60,606   
Other 5,042    3,455   
Total property, plant and equipment $ 59,512    $ 64,061