Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v2.4.1.9
Segment Information
 3 Months Ended
Mar. 31, 2015
Segment Information  
Segment Information

(9)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 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 is deploying a multi-brand, multi-channel go-to-market strategy that offers select Nature’s Sunshine branded products through 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. The China and New Markets segment also includes the 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 export business, in which the Company sells our 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 & United Kingdom markets, which were converted to export markets during the prior year.

 

Reportable business segment information is as follows:

 

 

 

Three Months Ended
March 31,

 

 

 

2015

 

2014

 

Net sales revenue:

 

 

 

 

 

NSP Americas

 

$
46,510

 

$
46,366

 

NSP Russia, Central and Eastern Europe

 
7,443

 
15,037

 

Synergy WorldWide

 
28,768

 
30,043

 

China and New Markets

 
1,157

 
2,021

 

Total net sales revenue

 
83,878

 
93,467

 

 

 

 

 

 

 

Contribution margin (1):

 

 

 

 

 

NSP Americas

 
19,520

 
19,071

 

NSP Russia, Central and Eastern Europe

 
2,596

 
5,396

 

Synergy WorldWide

 
9,048

 
10,653

 

China and New Markets

 
496

 
873

 

Total contribution margin

 
31,660

 
35,993

 

 

 

 

 

 

 

Selling, general and administrative

 
26,330

 
29,152

 

Operating income

 
5,330

 
6,841

 

 

 

 

 

 

 

Other income (expense), net

 
(318

)
(262

)

Income from continuing operations before provision for income taxes

 

$
5,012

 

$
6,579

 

 

(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-month periods ended March 31, 2015 and 2014, as follows:

 

 

 

Three Months Ended
March 31,

 

 

 

2015

 

2014

 

Net sales revenue:

 

 

 

 

 

United States

 

$
38,522 

 

$
37,615 

 

South Korea

 
12,080 

 
12,371 

 

Other

 
33,276 

 
43,481 

 

 

 

$
83,878 

 

$
93,467 

 

 

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

 

 

 

Three Months Ended
March 31,

 

 

 

2015

 

2014

 

NSP Americas:

 

 

 

 

 

General health

 

$
20,032 

 

$
19,366 

 

Immune

 
6,217 

 
5,959 

 

Cardiovascular

 
3,101 

 
3,354 

 

Digestive

 
13,365 

 
13,693 

 

Personal care

 
970 

 
1,021 

 

Weight management

 
2,825 

 
2,973 

 

 

 
46,510 

 
46,366 

 

NSP Russia, Eastern and Central Europe:

 

 

 

 

 

General health

 

$
2,879 

 

$
5,545 

 

Immune

 
913 

 
1,968 

 

Cardiovascular

 
453 

 
938 

 

Digestive

 
1,970 

 
3,947 

 

Personal care

 
882 

 
1,868 

 

Weight management

 
346 

 
771 

 

 

 
7,443 

 
15,037 

 

Synergy WorldWide:

 

 

 

 

 

General health

 

$
10,137 

 

$
10,753 

 

Immune

 
233 

 
211 

 

Cardiovascular

 
8,881 

 
10,444 

 

Digestive

 
4,594 

 
5,017 

 

Personal care

 
1,612 

 
1,736 

 

Weight management

 
3,311 

 
1,882 

 

 

 
28,768 

 
30,043 

 

China and New Markets:

 

 

 

 

 

General health

 

$
531 

 

$
800 

 

Immune

 
158 

 
282 

 

Cardiovascular

 
81 

 
136 

 

Digestive

 
290 

 
550 

 

Personal care

 
27 

 
31 

 

Weight management

 
70 

 
222 

 

 

 
1,157 

 
2,021 

 

 

 

$
83,878 

 

$
93,467 

 

 

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

 

 

 

March 31,
2015

 

December 31,
2014

 

Property, plant and equipment:

 

 

 

 

 

United States

 

$
53,856 

 

$
48,013 

 

Other

 
3,083 

 
3,330 

 

Total property, plant and equipment

 

$
56,939 

 

$
51,343