SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2017

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

6. SEGMENT INFORMATION

As a result of the Company's management changes in the first quarter of 2017, the Company concluded that the Chief Operating Decision Maker, as defined in ASC 280 is now comprised of the CEO, President and CFO. This change required the Company to reevaluate its determination of operating segments. The Company's operating segments are based on geographic regions that generate revenue and hold its long-lived assets. The Company sells and distributes its products through a global network of customers and sales leaders in approximately 50 markets. The Company has divided these markets into seven operating segments, which are the Company's reportable segments: Mainland China, Hong Kong/Taiwan, South Korea, Japan, South Asia/Pacific, Americas and EMEA. The seven reportable segments generate revenue from the sale of personal care products and nutritional supplements under the Nu Skin and Pharmanex brands, have similar business characteristics and align with how the CODM function began assessing performance and allocating resources in the first quarter of 2017.

Profitability by segment as reported under US GAAP is driven primarily by the Company's international taxation policies. Segment contribution, which is the Company's segment profitability metric presented in the table below, excludes certain intercompany charges, specifically royalties, license fees, transfer pricing, discrete charges and other miscellaneous items. These charges have been included in Corporate and other expenses. Corporate and other expenses also include costs related to the Company's executive and administrative offices, information technology, research and development, marketing and supply chain functions not recorded at the segment level.

The accounting policies of the segments are the same as those described in Note 1 - The Company. The Company evaluates the performance of its segments based on revenue and segment contribution. Each segment records direct expenses related to its employees and its operations.

Summarized financial information for the Company's reportable segments is shown in the following tables. Asset information is not reviewed or included with the Company's internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.

Revenue by Segment

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. dollars in thousands)	2017		2016		2017		2016
Mainland China	$	172,098	$	184,344	$	322,102	$	302,999
South Korea		86,917		93,036		169,388		179,154
Americas		77,096		67,884		142,754		133,632
South Asia/Pacific		67,935		92,297		137,733		155,875
Japan		64,796		72,849		125,952		137,940
Hong Kong/Taiwan		43,071		52,372		79,019		92,428
EMEA		38,188		37,693		72,252		70,278
Total	$	550,101	$	600,475	$	1,049,200	$	1,072,306

Segment Contribution

	Three Months Ended June 30,						Six Months Ended June 30,
(U.S. dollars in thousands)	2017			2016			2017			2016
Mainland China	$	52,283		$	56,709		$	87,710		$	75,010
South Korea		22,278			24,195			46,790			48,252
Americas		11,646			12,177			21,742			22,649
South Asia/Pacific		14,439			24,348			28,419			36,801
Japan		10,922			15,933			23,348			27,980
Hong Kong/Taiwan		7,766			7,070			12,849			15,428
EMEA		3,617			2,833			5,408			3,180
Total segment contribution		122,951			143,265			226,266			229,300
Corporate and other		(58,212	)		(63,467	)		(115,265	)		(141,353	)
Operating income		64,739			79,798			111,001			87,947
Other income (expense)		(2,731	)		(11,060	)		(7,298	)		(13,923	)
Income before provision for income taxes	$	62,008		$	68,738		$	103,703		$	74,024

Depreciation and Amortization

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. dollars in thousands)	2017		2016		2017		2016
Mainland China	$	3,681	$	4,117	$	7,652	$	8,144
South Korea		1,654		1,723		3,286		3,364
Americas		448		679		978		1,338
South Asia/Pacific		585		597		1,148		1,160
Japan		899		953		1,779		1,846
Hong Kong/Taiwan		344		547		646		1,111
EMEA		322		367		594		671
Corporate and other		9,522		8,756		18,997		17,050
Total	$	17,455	$	17,739	$	35,080	$	34,684

Capital Expenditures

	Three Months Ended June 30,				Six Months Ended June 30,
(U.S. dollars in thousands)	2017		2016		2017		2016
Mainland China	$	760	$	2,098	$	1,663	$	6,998
South Korea		16		109		464		379
Americas		313		211		564		489
South Asia/Pacific		347		1,466		530		1,743
Japan		21		128		97		867
Hong Kong/Taiwan		511		37		1,117		265
EMEA		118		202		311		667
Corporate and other		9,737		9,521		23,005		13,306
Total	$	11,823	$	13,772	$	27,751	$	24,714

Revenue by Major Market

A major market is defined as one with total revenue greater than 10% of consolidated total revenue.  Based on this criteria, the Company has identified three major markets: Mainland China, South Korea and Japan. There are approximately 50 other markets, each of which individually is less than 10%. No single customer accounted for 10% or more of net sales for the periods presented.  Sales are recorded in the jurisdiction in which the transactions occurred.

Revenue by Product Line

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Nu Skin	$	345,287	$	365,266	$	647,160	$	655,255
Pharmanex		202,912		234,014		399,015		414,728
Other		1,902		1,195		3,025		2,323
Totals	$	550,101	$	600,475	$	1,049,200	$	1,072,306

Long-Lived Assets by Major Market

A major market is defined as a market with long-lived assets greater than 10% of consolidated long-lived assets and also includes the Company's country of domicile (the U.S.). Long-lived assets in Mainland China consist primarily of property, plant and equipment related to manufacturing, distribution facilities and the Mainland China headquarters. Long-lived assets in the U.S. consist primarily of property, plant and equipment, including the Company's corporate offices and distribution facilities. Long-lived assets by major markets are set forth below for the periods ended June 30, 2017 and December 31, 2016 (U.S. dollars in thousands):

	June 30, 2017		December 31, 2016
United States	$	291,906	$	283,868
Mainland China		93,855		97,867
South Korea		41,748		41,545
Japan		10,261		11,517
All others		12,937		9,935
Total	$	450,707	$	444,732