Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.2.0.727
Segment Information
 6 Months Ended
Jun. 30, 2015
Segment Information  
Segment Information

(10)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
June 30,

 

Six Months Ended
June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

Net sales revenue:

 

 

 

 

 

 

 

 

 

NSP Americas

 

$
45,050

 

$
46,308

 

$
91,560

 

$
92,674

 

NSP Russia, Central and Eastern Europe

 
6,815

 
12,838

 
14,258

 
27,875

 

Synergy WorldWide

 
28,480

 
32,487

 
57,248

 
62,530

 

China and New Markets

 
902

 
1,198

 
2,059

 
3,219

 

 

 

 

 

 

 

 

 

 

 

Total net sales revenue

 
81,247

 
92,831

 
165,125

 
186,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution margin (1):

 

 

 

 

 

 

 

 

 

NSP Americas

 
19,027

 
18,779

 
38,547

 
37,851

 

NSP Russia, Central and Eastern Europe

 
2,314

 
4,563

 
4,910

 
9,959

 

Synergy WorldWide

 
8,820

 
11,831

 
17,868

 
22,485

 

China and New Markets

 
415

 
595

 
911

 
1,466

 

 

 

 

 

 

 

 

 

 

 

Total contribution margin

 
30,576

 
35,768

 
62,236

 
71,761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 
27,392

 
29,941

 
53,722

 
59,093

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 
3,184

 
5,827

 
8,514

 
12,668

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 
(2

)
(79

)
(320

)
(341

)

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

$
3,182

 

$
5,748

 

$
8,194

 

$
12,327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 and six-month periods ended June 30, 2015 and 2014, as follows:

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

Net sales revenue:

 

 

 

 

 

 

 

 

 

United States

 

$
37,054 

 

$
37,932 

 

$
75,576 

 

$
75,547 

 

South Korea

 
12,070 

 
14,336 

 
24,150 

 
26,707 

 

Other

 
32,123 

 
40,563 

 
65,399 

 
84,044 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
81,247 

 

$
92,831 

 

$
165,125 

 

$
186,298 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

NSP Americas:

 

 

 

 

 

 

 

 

 

General health

 

$
19,456 

 

$
20,453 

 

$
39,488 

 

$
39,819 

 

Immune

 
5,038 

 
5,083 

 
11,255 

 
11,042 

 

Cardiovascular

 
3,543 

 
3,215 

 
6,644 

 
6,569 

 

Digestive

 
13,263 

 
13,677 

 
26,628 

 
27,370 

 

Personal care

 
870 

 
1,035 

 
1,840 

 
2,056 

 

Weight management

 
2,880 

 
2,845 

 
5,705 

 
5,818 

 

 

 

 

 

 

 

 

 

 

 

 

 
45,050 

 
46,308 

 
91,560 

 
92,674 

 

 

 

 

 

 

 

 

 

 

 

NSP Russia, Central and Eastern Europe:

 

 

 

 

 

 

 

 

 

General health

 

$
2,799 

 

$
4,831 

 

$
5,678 

 

$
10,376 

 

Immune

 
763 

 
1,500 

 
1,676 

 
3,468 

 

Cardiovascular

 
446 

 
789 

 
899 

 
1,727 

 

Digestive

 
1,852 

 
3,451 

 
3,822 

 
7,398 

 

Personal care

 
627 

 
1,468 

 
1,509 

 
3,336 

 

Weight management

 
328 

 
799 

 
674 

 
1,570 

 

 

 

 

 

 

 

 

 

 

 

 

 
6,815 

 
12,838 

 
14,258 

 
27,875 

 

 

 

 

 

 

 

 

 

 

 

Synergy WorldWide:

 

 

 

 

 

 

 

 

 

General health

 

$
10,799 

 

$
11,689 

 

$
20,936 

 

$
22,442 

 

Immune

 
251 

 
256 

 
484 

 
467 

 

Cardiovascular

 
8,719 

 
11,652 

 
17,600 

 
22,096 

 

Digestive

 
4,328 

 
4,953 

 
8,922 

 
9,970 

 

Personal care

 
1,448 

 
1,734 

 
3,060 

 
3,470 

 

Weight management

 
2,935 

 
2,203 

 
6,246 

 
4,085 

 

 

 

 

 

 

 

 

 

 

 

 

 
28,480 

 
32,487 

 
57,248 

 
62,530 

 

 

 

 

 

 

 

 

 

 

 

China and New Markets

 

 

 

 

 

 

 

 

 

General health

 

$
426 

 

$
551 

 

$
957 

 

$
1,351 

 

Immune

 
103 

 
156 

 
261 

 
438 

 

Cardiovascular

 
73 

 
55 

 
154 

 
191 

 

Digestive

 
225 

 
351 

 
515 

 
901 

 

Personal care

 
19 

 
23 

 
46 

 
54 

 

Weight management

 
56 

 
62 

 
126 

 
284 

 

 

 

 

 

 

 

 

 

 

 

 

 
902 

 
1,198 

 
2,059 

 
3,219 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
81,247 

 

$
92,831 

 

$
165,125 

 

$
186,298 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

June 30,
2015

 

December 31,
2014

 

Property, plant and equipment:

 

 

 

 

 

United States

 

$
59,505 

 

$
48,013 

 

Other

 
2,744 

 
3,330 

 

 

 

 

 

 

 

Total property, plant and equipment

 

$
62,249 

 

$
51,343