☑ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED SEPTEMBER 30, 2018
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
PERIOD FROM _____________ TO _____________
|
NU SKIN ENTERPRISES, INC.
|
||
(Exact name of registrant as specified in its charter)
|
Delaware
|
87-0565309
|
|
(State or other jurisdiction of incorporation or organization)
|
75 WEST CENTER STREET
PROVO, UTAH 84601
|
(IRS Employer Identification No.)
|
(Address of principal executive offices, including zip code)
|
(801) 345-1000
|
||
(Registrant’s telephone number, including area code)
|
Large accelerated filer ☑
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company ☐
|
Emerging growth company ☐
|
Page
|
|||
Part I.
|
Financial Information
|
||
Item 1.
|
|||
1
|
|||
2 |
|||
3 |
|||
4 |
|||
5 |
|||
Item 2.
|
22
|
||
Item 3.
|
32
|
||
Item 4.
|
32
|
||
Part II.
|
Other Information
|
||
Item 1.
|
32
|
||
Item 1A.
|
33
|
||
Item 2.
|
35
|
||
Item 3.
|
35
|
||
Item 4.
|
35
|
||
Item 5.
|
35
|
||
Item 6.
|
35
|
||
36
|
September 30,
2018
|
December 31,
2017
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
390,066
|
$
|
426,399
|
||||
Current investments
|
11,388
|
11,847
|
||||||
Accounts receivable
|
57,175
|
33,196
|
||||||
Inventories, net
|
289,291
|
253,454
|
||||||
Prepaid expenses and other
|
78,395
|
52,893
|
||||||
826,315
|
777,789
|
|||||||
Property and equipment, net
|
496,704
|
464,587
|
||||||
Goodwill
|
187,423
|
114,954
|
||||||
Other intangible assets, net
|
91,957
|
67,647
|
||||||
Other assets
|
143,838
|
164,895
|
||||||
Total assets
|
$
|
1,746,237
|
$
|
1,589,872
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
52,843
|
$
|
50,341
|
||||
Accrued expenses
|
292,962
|
319,189
|
||||||
Current portion of long-term debt
|
82,455
|
77,840
|
||||||
428,260
|
447,370
|
|||||||
Long-term debt
|
365,767
|
310,790
|
||||||
Other liabilities
|
120,076
|
127,116
|
||||||
Total liabilities
|
914,103
|
885,276
|
||||||
Commitments and contingencies (Note 10)
|
||||||||
Stockholders’ equity:
|
||||||||
Class A common stock – 500 million shares authorized, $.001 par value, 90.6 million shares issued
|
91
|
91
|
||||||
Additional paid-in capital
|
545,234
|
466,349
|
||||||
Treasury stock, at cost – 34.9 million and 37.9 million shares
|
(1,306,012
|
)
|
(1,304,694
|
)
|
||||
Accumulated other comprehensive loss
|
(82,555
|
)
|
(66,318
|
)
|
||||
Retained earnings
|
1,675,376
|
1,609,168
|
||||||
832,134
|
704,596
|
|||||||
Total liabilities and stockholders’ equity
|
$
|
1,746,237
|
$
|
1,589,872
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Revenue
|
$
|
675,312
|
$
|
563,698
|
$
|
1,995,721
|
$
|
1,612,898
|
||||||||
Cost of sales
|
157,457
|
120,832
|
472,287
|
353,619
|
||||||||||||
Gross profit
|
517,855
|
442,866
|
1,523,434
|
1,259,279
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Selling expenses
|
271,509
|
235,285
|
801,968
|
672,646
|
||||||||||||
General and administrative expenses
|
165,671
|
143,219
|
499,037
|
411,270
|
||||||||||||
Total operating expenses
|
437,180
|
378,504
|
1,301,005
|
1,083,916
|
||||||||||||
Operating income
|
80,675
|
64,362
|
222,429
|
175,363
|
||||||||||||
Other income (expense), net
|
(6,982
|
)
|
(1,172
|
)
|
(16,940
|
)
|
(8,470
|
)
|
||||||||
Income before provision for income taxes
|
73,693
|
63,190
|
205,489
|
166,893
|
||||||||||||
Provision for income taxes
|
20,547
|
21,518
|
65,843
|
55,691
|
||||||||||||
Net income
|
$
|
53,146
|
$
|
41,672
|
$
|
139,646
|
$
|
111,202
|
||||||||
Net income per share (Note 2):
|
||||||||||||||||
Basic
|
$
|
0.96
|
$
|
0.79
|
$
|
2.54
|
$
|
2.10
|
||||||||
Diluted
|
$
|
0.94
|
$
|
0.76
|
$
|
2.47
|
$
|
2.04
|
||||||||
Weighted-average common shares outstanding (000s):
|
||||||||||||||||
Basic
|
55,603
|
52,873
|
55,075
|
52,834
|
||||||||||||
Diluted
|
56,704
|
54,834
|
56,539
|
54,519
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net income
|
$
|
53,146
|
$
|
41,672
|
$
|
139,646
|
$
|
111,202
|
||||||||
Other comprehensive income, net of tax:
|
||||||||||||||||
Foreign currency translation adjustment, net of taxes of $(346) and $(3,054) for the three months ended September 30, 2018 and 2017, respectively, and $(51) and $(1,376) for the nine months ended September 30, 2018 and 2017, respectively
|
(7,095
|
)
|
5,497
|
(16,095
|
)
|
15,273
|
||||||||||
Net unrealized gains/(losses) on foreign currency cash flow
hedges, net of taxes of zero and $15 for the three months ended September 30, 2018 and 2017, respectively, and $18 and
$114 for the nine months ended September 30, 2018 and 2017, respectively
|
—
|
(27
|
)
|
(160
|
)
|
(207
|
)
|
|||||||||
Reclassification adjustment for realized losses/(gains) in current
earnings, net of taxes of zero and $(22) for the three months ended September 30, 2018 and 2017, respectively, and
$(2) and $97 for the nine months ended September 30, 2018 and 2017, respectively
|
—
|
40
|
18
|
(177
|
)
|
|||||||||||
(7,095
|
)
|
5,510
|
(16,237
|
)
|
14,889
|
|||||||||||
Comprehensive income
|
$
|
46,051
|
$
|
47,182
|
$
|
123,409
|
$
|
126,091
|
Nine Months Ended
September 30,
|
||||||||
2018
|
2017
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
139,646
|
$
|
111,202
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
62,833
|
52,525
|
||||||
Equity method earnings
|
(456
|
)
|
(655
|
)
|
||||
Gain on step acquisitions
|
(13,644
|
)
|
—
|
|||||
Loss on extinguishment of debt
|
7,220
|
—
|
||||||
Foreign currency losses
|
14,960
|
(2,381
|
)
|
|||||
Stock-based compensation
|
20,311
|
14,493
|
||||||
Deferred taxes
|
(658
|
)
|
6,711
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(14,345
|
)
|
(5,115
|
)
|
||||
Inventories, net
|
(26,865
|
)
|
5,039
|
|||||
Prepaid expenses and other
|
(28,387
|
)
|
(16,455
|
)
|
||||
Other assets
|
(2,150
|
)
|
(3,960
|
)
|
||||
Accounts payable
|
(3,821
|
)
|
(906
|
)
|
||||
Accrued expenses
|
(33,178
|
)
|
(9,701
|
)
|
||||
Other liabilities
|
(7,616
|
)
|
5,009
|
|||||
Net cash provided by operating activities
|
113,850
|
155,806
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
(42,293
|
)
|
(38,965
|
)
|
||||
Proceeds on investment sales
|
11,536
|
11,269
|
||||||
Purchases of investments
|
(11,420
|
)
|
(8,244
|
)
|
||||
Acquisitions (net of cash acquired)
|
(28,311
|
)
|
—
|
|||||
Investment in equity investee
|
(4,750
|
)
|
(31,745
|
)
|
||||
Net cash used in investing activities
|
(75,238
|
)
|
(67,685
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Exercise of employee stock options and taxes paid related to the net shares settlement of stock awards
|
8,993
|
16,377
|
||||||
Payments on long-term debt
|
(534,341
|
)
|
(72,260
|
)
|
||||
Payment of cash dividends
|
(60,395
|
)
|
(57,065
|
)
|
||||
Payment of debt issuance costs
|
(7,243
|
)
|
—
|
|||||
Proceeds from debt
|
582,398
|
67,000
|
||||||
Repurchases of shares of common stock
|
(48,222
|
)
|
(47,835
|
)
|
||||
Net cash used in financing activities
|
(58,810
|
)
|
(93,783
|
)
|
||||
Effect of exchange rate changes on cash
|
(16,135
|
)
|
12,185
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(36,333
|
)
|
6,523
|
|||||
Cash and cash equivalents, beginning of period
|
426,399
|
357,246
|
||||||
Cash and cash equivalents, end of period
|
$
|
390,066
|
$
|
363,769
|
2. |
NET INCOME PER SHARE
|
3. |
DIVIDENDS PER SHARE
|
4. |
DERIVATIVE FINANCIAL INSTRUMENTS
|
Derivatives not
designated as
hedging instruments:
|
Location of
Gain (Loss)
Recognized
in Income
|
Amount of Gain (Loss) Recognized in Income
|
||||||||||||||||||
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||||||
|
2018
|
2017
|
2018
|
2017 | ||||||||||||||||
Foreign currency contracts
|
Other income (expense)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
(485
|
) |
|
Derivatives
designated as
hedging instruments:
|
Amount of Gain (Loss)
Recognized in Other Comprehensive Loss
|
|||||||||||||||
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Foreign currency forward contracts related to intercompany
license fee, product sales, and selling expense hedges
|
$
|
—
|
$
|
(27
|
)
|
$
|
(160
|
)
|
$
|
(207
|
)
|
Derivatives designated as
hedging instruments:
|
Location of
Gain (Loss)
Reclassified from
Accumulated
Other
Comprehensive
Loss into Income
|
Amount of Gain (Loss) Reclassified from
Accumulated Other Comprehensive Loss into Income
|
||||||||||||||||
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||||
Foreign currency forward contracts related to intercompany license fees and product sales hedges
|
Revenue
|
$
|
—
|
$
|
(67
|
)
|
$
|
18
|
$
|
42
|
||||||||
Foreign currency forward contracts related to intercompany selling expense hedges
|
Selling expenses
|
$
|
—
|
$
|
5
|
$
|
—
|
$
|
233
|
5. |
REPURCHASES OF COMMON STOCK
|
6. |
SEGMENT INFORMATION
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Mainland China
|
$
|
226,645
|
$
|
172,556
|
$
|
669,432
|
$
|
494,658
|
||||||||
Americas/Pacific
|
93,580
|
85,672
|
289,859
|
240,094
|
||||||||||||
South Korea
|
89,963
|
89,238
|
270,517
|
258,626
|
||||||||||||
Southeast Asia
|
86,307
|
71,141
|
236,390
|
194,711
|
||||||||||||
Japan
|
63,649
|
62,513
|
190,986
|
188,465
|
||||||||||||
Hong Kong/Taiwan
|
44,949
|
41,050
|
138,147
|
120,069
|
||||||||||||
EMEA
|
42,819
|
40,133
|
131,810
|
112,385
|
||||||||||||
Other
|
27,400
|
1,395
|
68,580
|
3,890
|
||||||||||||
Total
|
$
|
675,312
|
$
|
563,698
|
$
|
1,995,721
|
$
|
1,612,898
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Mainland China
|
$
|
71,185
|
$
|
42,375
|
$
|
189,901
|
$
|
130,085
|
||||||||
Americas/Pacific
|
11,848
|
14,106
|
38,088
|
37,884
|
||||||||||||
South Korea
|
24,754
|
23,713
|
75,836
|
70,503
|
||||||||||||
Southeast Asia
|
21,204
|
17,380
|
58,245
|
43,763
|
||||||||||||
Japan
|
15,162
|
12,786
|
41,777
|
36,134
|
||||||||||||
Hong Kong/Taiwan
|
8,100
|
8,096
|
23,781
|
20,945
|
||||||||||||
EMEA
|
2,614
|
2,896
|
10,438
|
8,304
|
||||||||||||
Total segment contribution
|
154,867 |
121,352
|
438,066
|
347,618
|
||||||||||||
Corporate and other
|
(74,192
|
)
|
(56,990
|
)
|
(215,637
|
)
|
(172,255
|
)
|
||||||||
Operating income
|
80,675
|
64,362
|
222,429
|
175,363
|
||||||||||||
Other income (expense)
|
(6,982
|
)
|
(1,172
|
)
|
(16,940
|
)
|
(8,470
|
)
|
||||||||
Income before provision for income taxes
|
$
|
73,693
|
$
|
63,190
|
$
|
205,489
|
$
|
166,893
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Mainland China
|
$
|
3,132
|
$
|
3,550
|
$
|
10,063
|
$
|
11,202
|
||||||||
Americas/Pacific
|
229
|
375
|
722
|
1,425
|
||||||||||||
South Korea
|
1,421
|
1,586
|
4,664
|
4,872
|
||||||||||||
Southeast Asia
|
525
|
551
|
1,648
|
1,628
|
||||||||||||
Japan
|
873
|
898
|
2,688
|
2,677
|
||||||||||||
Hong Kong/Taiwan
|
279
|
353
|
923
|
999
|
||||||||||||
EMEA
|
238
|
226
|
589
|
820
|
||||||||||||
Other
|
15,994
|
9,906
|
41,536
|
28,902
|
||||||||||||
Total
|
$
|
22,691
|
$
|
17,455
|
$
|
62,833
|
$
|
52,525
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Mainland China
|
$
|
2,117
|
$
|
688
|
$
|
5,015
|
$
|
2,351
|
||||||||
Americas/Pacific
|
223
|
136
|
652
|
697
|
||||||||||||
South Korea
|
135
|
—
|
179
|
464
|
||||||||||||
Southeast Asia
|
357
|
281
|
552
|
814
|
||||||||||||
Japan
|
125
|
109
|
508
|
206
|
||||||||||||
Hong Kong/Taiwan
|
31
|
2
|
629
|
1,119
|
||||||||||||
EMEA
|
348
|
571
|
425
|
882
|
||||||||||||
Other
|
10,528
|
9,427
|
34,333
|
32,432
|
||||||||||||
Total
|
$
|
13,864
|
$
|
11,214
|
$
|
42,293
|
$
|
38,965
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Nu Skin
|
$
|
384,635
|
$
|
338,305
|
$
|
1,237,547
|
$
|
985,465
|
||||||||
Pharmanex
|
261,892
|
224,031
|
687,789
|
623,046
|
||||||||||||
Other
|
28,785
|
1,362
|
70,385
|
4,387
|
||||||||||||
Totals
|
$
|
675,312
|
$
|
563,698
|
$
|
1,995,721
|
$
|
1,612,898
|
September 30,
2018
|
December 31,
2017
|
|||||||
United States
|
$
|
357,426
|
$
|
302,884
|
||||
Mainland China
|
84,680
|
97,046
|
||||||
South Korea
|
36,609
|
42,211
|
||||||
Japan
|
7,195
|
9,342
|
||||||
All others
|
10,794
|
13,104
|
||||||
Total
|
$
|
496,704
|
$
|
464,587
|
7. |
GOODWILL
|
September 30,
2018
|
December 31,
2017
|
|||||||
Mainland China
|
$
|
32,179
|
$
|
32,179
|
||||
Americas/Pacific
|
9,449
|
9,449
|
||||||
South Korea
|
29,261
|
29,261
|
||||||
Southeast Asia
|
18,537
|
18,537
|
||||||
Japan
|
16,019
|
16,019
|
||||||
Hong Kong/Taiwan
|
6,634
|
6,634
|
||||||
EMEA
|
2,875
|
2,875
|
||||||
Other
|
72,469
|
—
|
||||||
Total
|
$
|
187,423
|
$
|
114,954
|
8. |
INVENTORY
|
September 30,
2018
|
December 31,
2017
|
|||||||
Raw materials
|
$
|
89,830
|
$
|
87,683
|
||||
Finished goods
|
199,461
|
165,771
|
||||||
$
|
289,291
|
$
|
253,454
|
9. |
INCOME TAXES
|
10. |
COMMITMENTS AND CONTINGENCIES
|
11. |
DEBT
|
Facility or
Arrangement
|
Original
Principal
Amount
|
Balance as of
September 30,
2018(1)(2)
|
Balance as of
December 31,
2017(2)
|
Interest
Rate
|
Repayment terms
|
|||||
October 2014 Credit Agreement term loan facility:
|
||||||||||
U.S. dollar denominated:
|
$127.5 million
|
—
|
$94.8 million
|
Variable
30 day:
4.627%
|
Principal amount was paid in full during April 2018.
|
|||||
Japanese yen denominated:
|
6.6 billion yen
|
—
|
4.9 billion yen ($43.5 million as of December 31, 2017)
|
Variable
30 day:
2.7595%
|
Principal amount was paid in full during April 2018.
|
|||||
October 2014 Credit Agreement revolving credit facility:
|
—
|
$47.5 million
|
Variable
30 day:
4.594%
|
Principal amount was paid in full during April 2018 and credit line was closed.
|
||||||
April 2018 Credit Agreement term loan facility:
|
||||||||||
U.S. dollar denominated:
|
$400.0 million
|
$390.0 million
|
—
|
Variable
30 day:
4.49%
|
35% of the principal amount is payable in increasing quarterly installments over a five-year period that began on June 30, 2018, with the remainder payable at
the end of the five-year term.
|
|||||
April 2018 Credit Agreement revolving credit facility:
|
$62.5 million
|
—
|
Variable
30 day:
4.49%
|
Revolving line of credit expires April 18, 2023.
|
||||||
Japan subsidiary loan:
|
2.1 billion yen
|
—
|
0.7 billion yen ($5.9 million as of December 31, 2017)
|
0.66%
|
Principal amount was paid in full during July 2018.
|
|||||
Convertible note:
|
$210.0 million
|
—
|
$210.0 million
|
4.75%
|
Principal amount was paid in full during April 2018.
|
(1) |
As of September 30, 2018, the current portion of the Company’s debt (i.e. becoming due in the next 12 months) included $20.0 million of the balance of its U.S. dollar denominated
debt under the New Credit Agreement facility. The Company has classified the $62.5 million borrowed under the revolving line of credit as short-term debt because it is the Company’s intention to use the line of credit to borrow and
pay back funds over short periods of time.
|
(2) |
The carrying value of the debt reflects the amounts stated in the above table less debt issuance costs of $4.2 million as of September 30, 2018 related to the credit agreement; and
a debt discount of $9.1 million and debt issuance costs of $4.0 million (consisting of $11.1 million related to the Convertible Note and $2.0 million related to the credit agreement) as of December 31, 2017, which is not reflected
in this table.
|
12. |
FAIR VALUE
|
▪
|
Level 1 – quoted prices in active markets for identical assets or liabilities;
|
▪ |
Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;
|
▪
|
Level 3 – unobservable inputs based on the Company’s own assumptions.
|
Fair Value at September 30, 2018
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Financial assets (liabilities):
|
||||||||||||||||
Cash equivalents and current investments
|
$
|
38,282
|
$
|
—
|
$
|
—
|
$
|
38,282
|
||||||||
Other long-term assets
|
3,582
|
—
|
—
|
3,582
|
||||||||||||
Forward contracts
|
—
|
—
|
—
|
—
|
||||||||||||
Life insurance contracts
|
—
|
—
|
39,248
|
39,248
|
||||||||||||
Total
|
$
|
41,864
|
$
|
—
|
$
|
39,248
|
$
|
81,112
|
Fair Value at December 31, 2017
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Financial assets (liabilities):
|
||||||||||||||||
Cash equivalents and current investments
|
$
|
36,531
|
$
|
—
|
$
|
—
|
$
|
36,531
|
||||||||
Other long-term assets
|
3,726
|
—
|
—
|
3,726
|
||||||||||||
Forward contracts
|
—
|
158
|
—
|
158
|
||||||||||||
Life insurance contracts
|
—
|
—
|
37,737
|
37,737
|
||||||||||||
Total
|
$
|
40,257
|
$
|
158
|
$
|
37,737
|
$
|
78,152
|
Life Insurance Contracts
|
||||
Beginning balance at January 1, 2018
|
$
|
37,737
|
||
Actual return on plan assets
|
1,746
|
|||
Purchases and issuances
|
—
|
|||
Sales and settlements
|
(235
|
)
|
||
Transfers into Level 3
|
—
|
|||
Ending balance at September 30, 2018
|
$
|
39,248
|
13. |
ACCOUNTING PRONOUNCEMENTS
|
14. |
COST OF SALES
|
15. |
ACQUISITIONS
|
Innuvate
|
Treviso
|
L&W
Holdings
|
Total
|
|||||||||||||
Total cash consideration
|
$
|
17,587
|
$
|
14,648
|
$
|
—
|
$
|
32,235
|
||||||||
Shares issued in conjunction with acquisition
|
5,863
|
69,252
|
25,000
|
100,115
|
||||||||||||
Total consideration
|
$
|
23,450
|
$
|
83,900
|
$
|
25,000
|
132,350
|
|||||||||
Previously held equity interest in equity method Investments(1)
|
8,748
|
30,281
|
—
|
39,029
|
||||||||||||
Total
|
$
|
32,198
|
$
|
114,181
|
$
|
25,000
|
$
|
171,379
|
(1) |
The acquisitions of Innuvate and Treviso are considered step acquisitions, and accordingly, the Company remeasured its pre-existing 27% equity interest in
Innuvate and 35% of Treviso immediately prior to completion of the acquisition to its estimated fair value of approximately $39.0 million. As a result of the remeasurement, the Company recorded a gain of approximately $13.6 million
within other income (expense), during the first quarter of 2018, representing the excess of the approximate $39.0 million estimated fair value of its pre-existing 27% equity interest in Innuvate and 35% equity interest of Treviso over
its transaction date carrying value of approximately $25.4 million.
|
Innuvate
|
Treviso
|
L&W Holdings
|
||||||||||||||
|
Life
|
Amount
|
Life
|
Amount
|
Life
|
Amount
|
||||||||||
Total current assets
|
$
|
6,219
|
$
|
19,659
|
$
|
7,353
|
||||||||||
Fixed assets
|
9,291
|
33,282
|
114
|
|||||||||||||
Customer list
|
9 years
|
5,100
|
9 years
|
16,500
|
7 years
|
6,500
|
||||||||||
Order backlog
|
5 months
|
200
|
10 months
|
4,700
|
4 months
|
900
|
||||||||||
Trademarks
|
7 years
|
900
|
6 years
|
1,300
|
5 years
|
600
|
||||||||||
Total current liabilities
|
(3,942
|
)
|
(3,740
|
)
|
(1,495
|
)
|
||||||||||
Other non-current liabilities
|
—
|
—
|
(1,731
|
)
|
||||||||||||
Total identifiable net assets acquired
|
17,768
|
71,701
|
12,241
|
|||||||||||||
Goodwill
|
17,230
|
42,480
|
12,759
|
|||||||||||||
Fair value of noncontrolling interest
|
(2,800
|
)
|
—
|
—
|
||||||||||||
Total consideration and value to be allocated to net assets
|
$
|
32,198
|
$
|
114,181
|
$
|
25,000
|
16. |
REVENUE RECOGNITION
|
Three Months Ended
September 30,
|
Change
|
|
Constant
Currency
Change(1)
|
Nine Months Ended
September 30,
|
Change
|
Constant
Currency
Change(1)
|
||||||||||||||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||||||||||||||||||
Mainland China
|
$
|
226,645
|
$
|
172,556
|
31
|
%
|
34
|
%
|
$
|
669,432
|
$
|
494,658
|
35
|
%
|
30
|
%
|
||||||||||||||||
Americas/Pacific
|
93,580
|
85,672
|
9
|
%
|
20
|
%
|
289,859
|
240,094
|
21
|
%
|
27
|
%
|
||||||||||||||||||||
South Korea
|
89,963
|
89,238
|
1
|
%
|
- |
|
270,517
|
258,626
|
5
|
%
|
- |
|
||||||||||||||||||||
Southeast Asia
|
86,307
|
71,141
|
21
|
%
|
24
|
%
|
236,390
|
194,711
|
21
|
%
|
20
|
%
|
||||||||||||||||||||
Japan
|
63,649
|
62,513
|
2
|
%
|
2
|
%
|
190,986
|
188,465
|
1
|
%
|
(1
|
%)
|
||||||||||||||||||||
Hong Kong/Taiwan
|
44,949
|
41,050
|
9
|
%
|
10
|
%
|
138,147
|
120,069
|
15
|
%
|
14
|
%
|
||||||||||||||||||||
EMEA
|
42,819
|
40,133
|
7
|
%
|
8
|
%
|
131,810
|
112,385
|
17
|
%
|
10
|
%
|
||||||||||||||||||||
Other
|
27,400
|
1,395
|
1864
|
%
|
1864
|
%
|
68,580
|
3,890
|
1663
|
%
|
1663
|
%
|
||||||||||||||||||||
Total
|
$
|
675,312
|
$
|
563,698
|
20
|
%
|
23
|
%
|
$
|
1,995,721
|
$
|
1,612,898
|
24
|
%
|
21
|
%
|
(1) |
Constant-currency revenue change is a non-GAAP financial measure. See “Non-GAAP Financial Measures,” below.
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|||||||||||||
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
Mainland China
|
$
|
71,185
|
|
|
$
|
42,375
|
|
|
$
|
189,901
|
|
|
$
|
130,085
|
||
Americas/Pacific
|
|
11,848 |
|
|
|
14,106
|
|
|
|
38,088 |
|
|
|
37,884
|
||
South Korea
|
24,754
|
23,713
|
75,836
|
70,503
|
||||||||||||
Southeast Asia
|
21,204
|
17,380
|
58,245
|
43,763
|
||||||||||||
Japan
|
15,162
|
12,786
|
41,777
|
36,134
|
||||||||||||
Hong Kong/Taiwan
|
8,100
|
8,096
|
23,781
|
20,945
|
||||||||||||
EMEA
|
2,614
|
2,896
|
10,438
|
8,304
|
As of
September 30, 2018
|
As of
September 30, 2017
|
% Increase (Decrease)
|
||||||||||||||||||||||
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
|||||||||||||||||||
Mainland China
|
210,000
|
33,300
|
190,000
|
25,600
|
11
|
%
|
30
|
%
|
||||||||||||||||
Americas/Pacific
|
277,000
|
8,500
|
237,000
|
8,000
|
17
|
%
|
6
|
%
|
||||||||||||||||
South Korea
|
180,000
|
7,700
|
185,000
|
8,400
|
(3
|
%)
|
(8
|
%)
|
||||||||||||||||
Southeast Asia
|
147,000
|
8,700
|
127,000
|
7,100
|
16
|
%
|
23
|
%
|
||||||||||||||||
Japan
|
131,000
|
6,200
|
131,000
|
6,500
|
-
|
|
(5
|
%)
|
||||||||||||||||
Hong Kong/Taiwan
|
76,000
|
4,400
|
71,000
|
4,300
|
7
|
%
|
2
|
%
|
||||||||||||||||
EMEA
|
145,000
|
4,300
|
128,000
|
4,300
|
13
|
%
|
- |
|
||||||||||||||||
Total
|
1,166,000
|
73,100
|
1,069,000
|
64,200
|
9
|
%
|
14
|
%
|
• |
the expansion and upgrade of facilities in our various markets; and
|
• |
purchases and expenditures for computer systems and equipment, software and application development, including for digital experience, social selling and technology modernization
initiatives.
|
(a)
|
(b)
|
(c)
|
(d)
|
|||||||||||||
Period
|
Total Number
of Shares
Purchased
|
Average Price
Paid per Share
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
|
Approximate Dollar Value
of Shares that May Yet Be
Purchased Under the
Plans or Programs
(in millions)(1)
|
||||||||||||
July 1 – 31, 2018
|
68,819
|
$
|
76.25
|
68,819
|
$
|
499.6
|
||||||||||
August 1 – 31, 2018
|
54,997
|
79.20
|
54,997
|
$
|
495.2
|
|||||||||||
September 1 – 30, 2018
|
34,230
|
81.67
|
34,230
|
$
|
492.4
|
|||||||||||
Total
|
158,046
|
$
|
78.45
|
158,046
|
(1) |
In October 2015, we announced that our board of directors approved a stock repurchase plan. Under this plan, our board of directors authorized the repurchase of up to $500 million of
our outstanding Class A common stock on the open market or in privately negotiated transactions. In July 2018, our board terminated the 2015 stock repurchase plan and approved a new repurchase plan with an initial authorization amount
of $500 million.
|
Exhibits
Regulation S-K
Number
|
Description
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
NU SKIN ENTERPRISES, INC.
|
||
By:
|
/s/ Mark H. Lawrence
|
|
Mark H. Lawrence
|
||
Chief Financial Officer
|
||
(Duly Authorized Officer and Principal Financial and Accounting Officer)
|
Date:
|
November 7, 2018
|
/s/ Ritch N. Wood
|
|
Ritch N. Wood
|
|||
Chief Executive Officer
|
Date:
|
November 7, 2018
|
/s/ Mark H. Lawrence
|
|
Mark H. Lawrence
|
|||
Chief Financial Officer
|
Date: | November 7, 2018 | |
/s/ Ritch N. Wood
|
||
Ritch N. Wood
|
||
Chief Executive Officer
|
Date: |
November 7, 2018 | |
/s/ Mark H. Lawrence
|
||
Mark H. Lawrence
|
||
Chief Financial Officer
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Oct. 31, 2018 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | NU SKIN ENTERPRISES INC | |
Entity Central Index Key | 0001021561 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Common Class A [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 55,549,288 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Stockholders' equity: | ||
Common stock, shares authorized (in shares) | 500.0 | 500.0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued (in shares) | 90.6 | 90.6 |
Treasury stock (in shares) | 34.9 | 37.9 |
Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Consolidated Statements of Income (Unaudited) [Abstract] | ||||
Revenue | $ 675,312 | $ 563,698 | $ 1,995,721 | $ 1,612,898 |
Cost of sales | 157,457 | 120,832 | 472,287 | 353,619 |
Gross profit | 517,855 | 442,866 | 1,523,434 | 1,259,279 |
Operating expenses: | ||||
Selling expenses | 271,509 | 235,285 | 801,968 | 672,646 |
General and administrative expenses | 165,671 | 143,219 | 499,037 | 411,270 |
Total operating expenses | 437,180 | 378,504 | 1,301,005 | 1,083,916 |
Operating income | 80,675 | 64,362 | 222,429 | 175,363 |
Other income (expense), net | (6,982) | (1,172) | (16,940) | (8,470) |
Income before provision for income taxes | 73,693 | 63,190 | 205,489 | 166,893 |
Provision for income taxes | 20,547 | 21,518 | 65,843 | 55,691 |
Net income | $ 53,146 | $ 41,672 | $ 139,646 | $ 111,202 |
Net income per share (Note 2): | ||||
Basic (in dollars per share) | $ 0.96 | $ 0.79 | $ 2.54 | $ 2.10 |
Diluted (in dollars per share) | $ 0.94 | $ 0.76 | $ 2.47 | $ 2.04 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 55,603 | 52,873 | 55,075 | 52,834 |
Diluted (in shares) | 56,704 | 54,834 | 56,539 | 54,519 |
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustment, tax | $ (346) | $ (3,054) | $ (51) | $ (1,376) |
Net unrealized gains/(losses) on foreign currency cash flow hedges, tax | 0 | 15 | 18 | 114 |
Reclassification adjustment for realized losses/(gains) in current earnings, tax | $ 0 | $ (22) | $ (2) | $ 97 |
THE COMPANY |
9 Months Ended | ||
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Sep. 30, 2018 | |||
THE COMPANY [Abstract] | |||
THE COMPANY |
Nu Skin Enterprises, Inc. (the “Company”) is a leading, global direct selling company that develops and distributes premium-quality, innovative personal care products and nutritional supplements that are sold worldwide under the Nu Skin and Pharmanex brands and a small number of other products and services. Over the last several years, the Company has introduced new Pharmanex nutritional supplements and Nu Skin personal care products under its ageLOC anti-aging brand. The Company reports revenue from seven segments: Mainland China; South Korea; Southeast Asia, which consists of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam; Americas/Pacific, which consists of Australia, Canada, Latin America, New Caledonia, New Zealand and the United States; Japan; Hong Kong/Taiwan; and Europe, Middle East and Africa (“EMEA”), which consists of several markets in Europe as well as Israel, Russia, Ukraine and South Africa (the Company's subsidiaries operating in these markets in each segment are collectively referred to as the “Subsidiaries”). The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The unaudited consolidated financial statements include the accounts of the Company and its Subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial information as of September 30, 2018, and for the three- and nine-month periods ended September 30, 2018 and 2017. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. The consolidated balance sheet as of December 31, 2017 has been prepared using information from the audited financial statements at that date. For further information, refer to the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
NET INCOME PER SHARE |
9 Months Ended | ||
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Sep. 30, 2018 | |||
NET INCOME PER SHARE [Abstract] | |||
NET INCOME PER SHARE |
Net income per share is computed based on the weighted-average number of common shares outstanding during the periods presented. Additionally, diluted earnings per share data gives effect to all potentially dilutive common shares that were outstanding during the periods presented. For the three-month periods ended September 30, 2018 and 2017, stock options of 0.5 million and 0.2 million, respectively, and for the nine-month periods ended September 30, 2018 and 2017, stock options of 0.9 million and 0.4 million, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive. |
DIVIDENDS PER SHARE |
9 Months Ended | ||
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Sep. 30, 2018 | |||
DIVIDENDS PER SHARE [Abstract] | |||
DIVIDENDS PER SHARE |
In February, April and July 2018, the Company’s board of directors declared a quarterly cash dividend of $0.365 per share. These quarterly cash dividends of $19.8 million, $20.3 million and $20.3 million were paid on March 14, 2018, June 13, 2018 and September 12, 2018 to stockholders of record on February 26, 2018, May 25, 2018 and August 31, 2018. In October 2018, the Company’s board of directors declared a quarterly cash dividend of $0.365 per share to be paid on December 12, 2018 to stockholders of record on November 30, 2018. |
DERIVATIVE FINANCIAL INSTRUMENTS |
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DERIVATIVE FINANCIAL INSTRUMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS |
The Company enters into non-designated foreign currency derivatives, primarily comprised of foreign currency forward contracts, for which hedge accounting does not apply. The changes in the fair market value of these non-designated derivatives are included in other income/expense in the Company’s consolidated statements of income. The Company uses non-designated foreign currency derivatives to hedge foreign-currency-denominated intercompany transactions and to partially mitigate the impact of foreign-currency fluctuations. The fair value of the non-designated foreign currency derivatives is based on third-party quotes. The following table summarizes gains (losses) related to derivative instruments not designated as hedging instruments during the three- and nine-month periods ended September 30, 2018 and 2017 (U.S. dollars in thousands):
The Company designates as cash-flow hedges those foreign currency forward contracts it enters to hedge forecasted intercompany transactions that are subject to foreign currency exposures. Changes in the fair value of these forward contracts designated as cash-flow hedges are recorded as a component of accumulated other comprehensive loss within shareholders’ equity (deficit), and are recognized in the consolidated statement of income during the period which approximates the time the hedged transaction is settled. As of September 30, 2018, the Company held no forward contracts designated as foreign currency cash flow hedges compared to notional amounts of 1.4 billion Japanese yen ($12.4 million) as of September 30, 2017, to hedge forecasted foreign-currency-denominated intercompany transactions. The fair value of these hedges were zero and $0.3 million as of September 30, 2018 and 2017, respectively. The following table summarizes gains (losses) related to derivative instruments recorded in other comprehensive income (loss) during the three- and nine-month periods ended September 30, 2018 and 2017 (U.S. dollars in thousands):
The following table summarizes gains (losses) relating to derivative instruments reclassified from accumulated other comprehensive loss into income during the three- and nine-month periods ended September 30, 2018 and 2017 (U.S. dollars in thousands):
As of September 30, 2018 and December 31, 2017, there were zero and $0.1 million, respectively, of unrealized gains/(losses) included in accumulated other comprehensive loss related to foreign currency cash flow hedges. The remaining $82.6 million and $66.4 million as of September 30, 2018 and December 31, 2017, respectively, in accumulated other comprehensive loss are related to cumulative translation adjustments. The Company assesses hedge effectiveness at least quarterly. During the three- and nine- month periods ended September 30, 2018 and 2017, all hedges were determined to be effective. The Company reports its derivatives at fair value as either other current assets or accrued expenses within its consolidated balance sheet. See Note 12 - Fair Value. |
REPURCHASES OF COMMON STOCK |
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Sep. 30, 2018 | |||
REPURCHASES OF COMMON STOCK [Abstract] | |||
REPURCHASES OF COMMON STOCK |
During the three-month periods ended September 30, 2018 and 2017, the Company repurchased 0.2 million and 0.4 million shares of its Class A common stock under its open market stock repurchase plans for $12.4 million and $25.7 million, respectively. During the nine-month periods ended September 30, 2018 and September 30, 2017, the Company repurchased 0.6 million and 0.8 million shares of its Class A common stock under its open market repurchase plans for $48.2 million and $47.8 million, respectively. In July 2018, the previous stock repurchase plan was terminated and replaced by a new repurchase plan with an initial authorization amount of $500 million. As of September 30, 2018, $492.4 million was available for repurchases under the Company’s open market stock repurchase plan. |
SEGMENT INFORMATION |
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SEGMENT INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, Southeast Asia, Americas/Pacific and EMEA. The 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. The Other category includes the manufacturing and product-packaging companies that the Company acquired during the first quarter of 2018. Segment information for the three- and nine-month periods ended September 30, 2017 has been recast to reflect the move of the Pacific components from the "Southeast Asia/Pacific" operating segment to the "Americas/Pacific" operating segment. Consolidated financial information is not affected. Profitability by segment as determined under US GAAP is driven primarily by the Company’s transfer pricing 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, and 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
Segment Contribution
Depreciation and Amortization
Capital Expenditures
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
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 September 30, 2018 and December 31, 2017 (U.S. dollars in thousands):
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GOODWILL |
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GOODWILL [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL |
During the first quarter of 2017, the Company realigned its operational segments and reporting structure to reflect how the business will be managed going forward. As part of this realignment, the Company divided its single operating segment into seven geographical reporting segments. The Company’s reporting units for goodwill are its operating segments, which are also its reportable segments. As a result of the segment changes, the historical goodwill of $115.0 million was allocated to the seven reportable segments. The following table presents goodwill allocated to the Company’s reportable segments for the periods ended September 30, 2018 and December 31, 2017 (U.S. dollars in thousands):
The Other category represents goodwill allocated to the companies acquired in the first quarter of 2018 (see Note 15 – Acquisitions). |
INVENTORY |
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY |
Inventories consist of the following (U.S. dollars in thousands):
The total inventory balance as of September 30, 2018 includes $23.3 million of inventory held by the companies acquired in the first quarter of 2018 (see Note 15 - Acquisitions). |
INCOME TAXES |
9 Months Ended | ||
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Sep. 30, 2018 | |||
INCOME TAXES [Abstract] | |||
INCOME TAXES |
Provision for income taxes for the three- and nine-month periods of 2018 was $20.5 million and $65.8 million, compared to $21.5 million and $55.7 million for the prior-year periods. The effective tax rates for the three- and nine-month periods were 27.9% and 32.0% of pre-tax income compared to 34.1% and 33.4% in the prior-year periods. The decrease in the effective tax rate in the third quarter of 2018 reflects a benefit due to a change in accounting method related to capitalization of research and development costs, which allowed us to utilize foreign tax credits that previously had a valuation allowance. In addition, in the second quarter of 2018 we designated $60 million of our earnings in Mainland China as permanently reinvested, which allows us to remove a withholding tax liability on those earnings. The Company accounts for income taxes in accordance with the Income Taxes Topic of the Financial Accounting Standards Codification. These standards establish financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities during the current and preceding years. The Company takes an asset and liability approach for financial accounting and reporting of income taxes. The Company pays income taxes in many foreign jurisdictions based on the profits realized in those jurisdictions, which can be significantly impacted by terms of intercompany transactions between the Company and its foreign affiliates. Deferred tax assets and liabilities are created in this process. The Company has netted these deferred tax assets and deferred tax liabilities by jurisdiction. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be ultimately realized. The Company had net deferred tax assets of $5.4 million and net deferred tax liabilities of $2.9 million as of September 30, 2018 and December 31, 2017, respectively. In accordance with ASU 2018-05 and SAB 118, the Company recognized the provisional tax impacts related to the re-measurement of our deferred income tax assets and liabilities and the one-time, mandatory transition tax on deemed repatriation during the year ended December 31, 2017. As of September 30, 2018, the Company has not made any additional measurement-period adjustments related to these items. Such adjustments may be necessary in future periods due to, among other things, the significant complexity of the Act and anticipated additional regulatory guidance that may be issued by the Internal Revenue Service (“IRS”), changes in analysis, interpretations and assumptions the Company has made and actions the Company may take as a result of the Act. The Company is continuing to gather information to assess the application of the Act and expects to complete its analysis by December 2018. The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. The Company is no longer subject to tax examinations from the IRS for all years for which tax returns have been filed before 2011. With a few exceptions, the Company is no longer subject to state and local income tax examination by tax authorities for the years before 2011. In 2009, the Company entered into a voluntary program with the IRS called Compliance Assurance Process (“CAP”). The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. The Company has elected to participate in the CAP program for 2018 and may elect to continue participating in CAP for future tax years; the Company may withdraw from the program at any time. In major foreign jurisdictions, the Company is generally no longer subject to income tax examinations for years before 2011. However, statutes in certain countries may be as long as ten years. Along with the IRS examination of 2011, the Company is currently under examination in certain foreign jurisdictions; however, the outcomes of those reviews are not yet determinable. In the first quarter of 2018 there was a discrete income tax charge of $5.8 million booked. The charge was primarily related to additional reserves as the result of an Income Tax audit in Indonesia. The Company's unrecognized tax benefits relate to multiple jurisdictions. Due to potential increases in unrecognized tax benefits from the multiple jurisdictions in which the Company operates, as well as the expiration of various statutes of limitation, it is reasonably possible that the Company's gross unrecognized tax benefits, net of foreign currency adjustments, may decrease within the next 12 months by a range of approximately $0.1 to $1 million. |
COMMITMENTS AND CONTINGENCIES |
9 Months Ended | ||
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Sep. 30, 2018 | |||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||
COMMITMENTS AND CONTINGENCIES |
The Company is subject to government regulations pertaining to product formulation, labeling and packaging, product claims and advertising, and the Company's direct selling system. The Company is also subject to the jurisdiction of numerous foreign tax and customs authorities. Any assertions or determination that either the Company or the Company's sales force is not in compliance with existing statutes, laws, rules or regulations could have a material adverse effect on the Company's operations. In addition, in any country or jurisdiction, the adoption of new statutes, laws, rules or regulations or changes in the interpretation of existing statutes, laws, rules or regulations could have a material adverse effect on the Company and its operations. No assurance can be given that the Company's compliance with applicable statutes, laws, rules and regulations will not be challenged by foreign authorities or that such challenges will not have a material adverse effect on the Company's financial position, results of operations or cash flows. The Company and its Subsidiaries are defendants in litigation, investigations and other proceedings involving various matters. In the opinion of the Company's management, based upon advice of its counsel handling such litigation, investigations and other proceedings, adverse outcomes, if any, are not currently expected to result in a material effect on the Company's consolidated financial condition, results of operations or cash flows. The Company is subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. The Company believes it has appropriately provided for income taxes for all years. Several factors drive the calculation of its tax reserves. Some of these factors include: (i) the expiration of various statutes of limitations; (ii) changes in tax law and regulations; (iii) issuance of tax rulings; and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to the Company's reserves, which would impact its reported financial results. |
DEBT |
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DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT |
Existing Credit Agreement On October 9, 2014, the Company entered into a Credit Agreement (the “Existing Credit Agreement”) with various financial institutions, and Bank of America, N.A. as administrative agent. The Existing Credit Agreement provided for a $127.5 million term loan facility, a 6.6 billion Japanese yen term loan facility and a $187.5 million revolving credit facility, each with a term of five years. On October 10, 2014, the Company drew the full amount of the term loan facilities. On April 18, 2018, the Company repaid the full balance that was outstanding under the Existing Credit Agreement. As of September 30, 2018 and December 31, 2017, the Company had an outstanding balance of zero and $47.5 million, respectively, on the revolving credit facility. The Existing Credit Agreement required that the Company maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. New Credit Agreement On April 18, 2018, the Company entered into a Credit Agreement (the “New Credit Agreement”) with several financial institutions as lenders and Bank of America, N.A., as administrative agent. The New Credit Agreement provides for a $400 million term loan facility and a $350 million revolving credit facility, each with a term of five years. Concurrently with the closing of the New Credit Agreement, the Company drew the full amount of the term loan facility and $78.5 million of the revolving facility, each of which initially bear interest at the London Interbank Offered Rate (“LIBOR”), plus 2.25%. The interest rate applicable to the facilities is subject to adjustment based on the Company’s consolidated leverage ratio. The term loan facility will amortize in quarterly installments in amounts resulting in an annual amortization of 5.0% during the first and second years, 7.5% during the third and fourth years and 10.0% during the fifth year after the closing date of the New Credit Agreement, with the remainder payable at final maturity. The New Credit Agreement requires the Company to maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. Convertible Note On June 16, 2016, the Company issued $210.0 million of convertible senior notes (the “Convertible Notes”) in a private offering to a Chinese investor (the “Holder”). The Convertible Notes were senior unsecured obligations which ranked equal in right of payment to all senior unsecured indebtedness of the Company and ranked senior in right of payment to any indebtedness that was contractually subordinated to the Convertible Notes. Interest on the Convertible Notes was payable semiannually in arrears on June 15 and December 15 of each year at a rate of 4.75% per annum. The Convertible Notes had a stated maturity date of June 15, 2020, unless repurchased or converted prior to maturity. Prior to the stated maturity date, the Company could, at its option, redeem all or part of the Convertible Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, provided that its common stock share price was equal to or exceeded 180% of the applicable conversion price for 20 or more trading days (including the final three trading days) in the 30 consecutive trading days prior to the Company’s exercise of such redemption right. The Holder of the Convertible Notes could, at its option, cause the Company to repurchase all of such Holder’s Convertible Notes or any portion thereof that was equal to $1,000 in principal amount or multiples of $1,000 upon a change in control or a termination of trading of the Company’s common stock, as those terms were defined in the indenture governing the Convertible Notes. In addition, the Holder of the Convertible Notes had the right, at such Holder’s option, to convert all or any portion thereof that is equal to $1,000 in principal amount or multiples of $1,000 at any time beginning six calendar months following June 16, 2016, at the then-applicable conversion rate. Upon conversion by the Holder, the Convertible Notes would be settled in cash with respect to principal and any accrued and unpaid interest to such date and in the Company’s common shares with respect to any additional amounts, based on the applicable conversion rate at such time. The Convertible Notes had an initial conversion rate of 21.5054 common shares per $1,000 principal amount of the Convertible Notes (which is equal to an initial conversion price of approximately $46.50 per common share). Throughout the term of the Convertible Notes, the conversion rate could be adjusted upon the occurrence of certain specified events. Of the $210.0 million in proceeds received from the issuance of the Convertible Notes, $199.1 million was originally allocated to long-term debt (the “Liability Component”) and $10.9 million was allocated to additional paid-in capital (the “Equity Component”) within the Company’s consolidated balance sheet. The Liability Component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The amount allocated to the Equity Component, representing the conversion option, was calculated by deducting the fair value of the Liability Component from the par value of the Convertible Notes. The Company determined that the conversion option did not require separate accounting treatment as a derivative instrument because it was both indexed to the Company’s own stock and would be classified in stockholders’ equity if freestanding. The Equity Component would not be remeasured as long as it continued to meet the conditions for equity classification. The excess of the principal amount of the Liability Component over its carrying amount (the “Debt Discount”) was amortized to interest expense over the term of the Convertible Notes. As a result, the Liability Component was accreted up to the Convertible Notes’ $210.0 million face value, resulting in additional non-cash interest expense being recognized within the Company’s consolidated statement of income. The effective interest rate on the Convertible Notes was approximately 7.1% per annum. The Company incurred approximately $6.6 million of issuance costs related to the issuance of the Convertible Notes. Of the $6.6 million in issuance costs incurred, $6.3 million and $0.3 million were recorded to deferred financing cost and additional paid-in capital, respectively, in proportion to the allocation of the proceeds of the Convertible Notes. The $6.3 million recorded to deferred financing cost on the Company’s consolidated balance sheet as a reduction of long-term debt was amortized over the contractual term of the Convertible Notes using the effective interest method. During the first quarter of 2018 the issuance costs were expensed due to the conversion of the Notes. During the three- and nine-months ended September 30, 2018, the Company recognized zero and $3.5 million, respectively in interest expense related to the Convertible Notes, which included zero and $3.0 million, respectively of contractual interest and zero and 0.5 million, respectively in amortization of debt issuance costs and in amortization of the Debt Discount prior to the conversion of the Notes. During the first quarter of 2018, the Holder elected to convert the Convertible Notes pursuant to their terms in the indenture. The Company satisfied the equity portion of its conversion obligation on February 28, 2018 by issuing 1,535,652 shares of the Company’s Class A Common Stock to the Holder and, on April 18, 2018, satisfied and discharged its obligations under the Convertible Notes and the indenture governing the Convertible Notes by paying the Holder $213.4 million which included $3.4 million of accrued interest from December 15, 2017 through April 17, 2018. The early conversion of the notes resulted in a $7.2 million charge to other income (expense) during the first quarter of 2018 for a loss on extinguishment of debt. The following table summarizes the Company’s debt facilities as of September 30, 2018 and December 31, 2017:
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FAIR VALUE |
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FAIR VALUE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE |
The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate fair values due to the short-term nature of these instruments. The Company’s current investments as of September 30, 2018 include certificates of deposits and pre-refunded municipal bonds that are classified by management as held-to-maturity as the Company had the positive intent and ability to hold to maturity. The carrying value of these current investments approximate fair values due to the short-term nature of these instruments. The Company has classified these instruments as Level 2 in the fair value hierarchy. Fair value estimates are made at a specific point in time, based on relevant market information. The FASB Codification defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. On a quarterly basis, the Company measures at fair value certain financial assets, including cash equivalents. Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:
Accounting standards permit companies, at their option, to measure certain financial instruments and other eligible items at fair value. The Company has elected not to apply the fair value option to existing eligible items beyond what is required by US GAAP. The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (U.S. dollars in thousands):
The following table provides a summary of changes in fair value of the Company’s Level 3 marketable securities (U.S. dollars in thousands):
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ACCOUNTING PRONOUNCEMENTS |
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Sep. 30, 2018 | |||
ACCOUNTING PRONOUNCEMENTS [Abstract] | |||
ACCOUNTING PRONOUNCEMENTS |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard was effective for the Company in the first quarter of 2018. As a result of adopting this new accounting guidance, the Company has changed the method of accounting for its loyalty points program from a cost provision method to a deferred revenue method. The Company adopted the new standard effective January 1, 2018 using the modified retrospective transition method. The cumulative impact of adoption was a $11.2 million net reduction to beginning retained earnings. See Note 16 – Revenue Recognition. In February 2016, the FASB issued ASU 2016-02, Leases (Subtopic 842). ASU 2016-02 will require companies to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impacts that this standard will have on its Consolidated Financial Statements. The Company expects the adoption will result in a material increase to the assets and liabilities on the Consolidated Balance Sheet, but we do not expect a material impact on the Consolidated Statements of Income or Consolidated Statements of Cash Flows. The Company will adopt the standard in the first quarter of 2019 and apply the standard prospectively as of the adoption date. In March 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The objective of this update was to simplify several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes related to share-based compensation, the related classification in the statement of cash-flows, and accounting for share award forfeitures. This ASU was effective for the Company beginning on January 1, 2017. Prior to January 1, 2017, excess tax benefits were recognized in equity. As permitted, the Company elected to classify excess tax benefits as an operating activity in the Statement of Cash Flows instead of as a financing activity on a prospective basis and did not retroactively adjust prior periods. As also permitted by the new guidance, beginning January 1, 2017 the Company has elected to account for share award forfeitures as they occur. Previously, share-based compensation expense was recorded net of estimated forfeitures. A cumulative adjustment of $2.8 million was recorded to retained earnings and additional paid-in capital as of January 1, 2017. Prior periods were not retroactively adjusted. In the second half of 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, and 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The objective of these updates is to reduce the diversity in practice in the classification of certain cash receipts and cash payments, and the presentation of restricted cash within an entity’s statement of cash flows, respectively. These ASUs are effective for interim and annual fiscal periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This guidance revises the definition of a business as it relates to acquisitions, disposals, goodwill impairments and consolidations. This ASU is effective for annual periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance simplifies the required test of goodwill for impairment by eliminating Step 2 from the goodwill impairment test. If a company determines in Step 1 of the goodwill impairment test that the carrying value of a reporting unit is less than the fair value, an impairment in that amount should be recorded to the income statement, rather than proceeding to Step 2. This ASU is effective for interim and annual impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. In December 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The new standard makes more financial and non-financial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This guidance provides an option to reclassify from accumulated other comprehensive income to retained earnings the stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. This ASU is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This guidance modifies, removes, and adds certain disclosure requirements on fair value measurements. This ASU is effective for annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements. |
COST OF SALES |
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Sep. 30, 2018 | |||
COST OF SALES [Abstract] | |||
COST OF SALES |
The Tokyo District Court and, on appeal in 2017, the Tokyo High Court upheld the Japan customs authorities' customs assessments related to the importation of several of the Company's products into Japan. The Company appealed the High Court's decision to the Japan Supreme Court. In May 2018, the Japan Supreme Court declined to hear the Company’s appeal. Accordingly, this matter is now closed. As previously disclosed, the Company already recorded a charge of $31.4 million to cost of sales in the first quarter of 2016, when the District Court issued its decision. This charge represents the full amount being disputed. It was a non-cash item because the Company was previously required to pay the assessments. |
ACQUISITIONS |
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ACQUISITIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS |
On January 22, 2018, the Company acquired the remaining 73% ownership in Innuvate Health Sciences, LLC ("Innuvate"), which owns a 92% interest in a nutritional product manufacturer. Prior to this acquisition, the Company owned 27% of Innuvate and accounted for it using the equity method. The remaining 8% ownership in the manufacturer will continue to be held by an unrelated third party. Under the terms of the agreement, the Company paid $23.5 million in cash and shares of the Company in exchange for the 73% ownership in Innuvate, subject to adjustment for certain closing items. Innuvate is a contract manufacturer that specializes in softgel and hardshell capsule manufacturing. On February 12, 2018, the Company acquired the remaining 65% ownership in Treviso, LLC ("Treviso"), making Treviso a wholly owned subsidiary of the Company. Treviso is a personal care product manufacturer. Prior to this acquisition, the Company owned 35% of Treviso and accounted for it using the equity method. Under the terms of the purchase agreement, the Company has paid $83.9 million in cash and shares of the Company in exchange for the 65% ownership in Treviso, subject to adjustment for certain closing items. Treviso is a liquid contract manufacturing laboratory for premium personal care products. On February 12, 2018, the Company acquired 100% ownership in L&W Holdings, Inc. ("L&W") making L&W a wholly owned subsidiary of the Company. L&W is a packaging supplier company. Under the terms of the purchase agreement, the Company paid $25.0 million in shares of the Company in exchange for 100% ownership in L&W, subject to adjustment for certain closing items. L&W specializes in the distribution and packaging of products in the cosmetic and nutritional industries. The following table summarizes the fair value of consideration transferred for the acquisitions disclosed above (in thousands):
The following table summarizes the fair value of the assets acquired for the acquisitions disclosed above (in thousands):
Pro forma and historical results of operations for the acquired companies have not been presented because they are not material, either individually or in the aggregate, to the company’s consolidated financial statements. |
REVENUE RECOGNITION |
9 Months Ended | ||
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Sep. 30, 2018 | |||
REVENUE RECOGNITION [Abstract] | |||
REVENUE RECOGNITION |
Adoption of ASC Topic 606, "Revenue from Contracts with Customers" On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. The Company recorded a net reduction to opening retained earnings of $11.2 million, net of tax, as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact primarily related to our loyalty point program deferrals. The impact to revenues as a result of applying Topic 606 for the three- and nine-months ended September 30, 2018 was an increase of $0.1 million and a decrease of $1.2 million, respectively. Revenue Recognition Net sales include products and shipping and handling charges, net of estimates for product returns and any related sales incentives. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. The Company recognizes revenue by transferring the promised products to the customer, with revenue recognized at shipping point, the point in time the customer obtains control of the products. The Company recognizes revenue for shipping and handling charges at the time the products are delivered to or picked up by the customer. The Company estimates product returns based on historical return rates. The majority of the Company’s contracts have a single performance obligation and are short term in nature. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Contract Liabilities – Customer Loyalty Programs Contract liabilities, recorded as deferred revenue within the accrued expenses line in the Condensed Consolidated Balance Sheets, include loyalty point program deferrals with certain customers which are accounted for as a reduction in the transaction price and are generally recognized as points are redeemed for additional products on an annual basis. The Company recorded customer loyalty points under the cost provision method prior to the adoption of Topic 606. The loyalty point liability under the cost provision methodology was $1.9 million as of December 31, 2017. The Company recorded an additional liability of $11.2 million due to the cumulative impact of adopting Topic 606. The balance of deferred revenue related to contract liabilities was $14.2 million as of September 30, 2018, and $13 million as of the beginning period upon adoption of the Topic 606. Disaggregation of Revenue Please refer to Note 6 - Segment Information for revenue by segment and product line. Arrangements with Multiple Performance Obligations The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenues to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers for individual products sales to customers. Practical Expedients and Exemptions The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling expenses. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. |
THE COMPANY (Policies) |
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Sep. 30, 2018 | |
THE COMPANY [Abstract] | |
Basis of Accounting | The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The unaudited consolidated financial statements include the accounts of the Company and its Subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial information as of September 30, 2018, and for the three- and nine-month periods ended September 30, 2018 and 2017. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. The consolidated balance sheet as of December 31, 2017 has been prepared using information from the audited financial statements at that date. For further information, refer to the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
ACCOUNTING PRONOUNCEMENTS (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
ACCOUNTING PRONOUNCEMENTS [Abstract] | |
Accounting Pronouncements | In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard was effective for the Company in the first quarter of 2018. As a result of adopting this new accounting guidance, the Company has changed the method of accounting for its loyalty points program from a cost provision method to a deferred revenue method. The Company adopted the new standard effective January 1, 2018 using the modified retrospective transition method. The cumulative impact of adoption was a $11.2 million net reduction to beginning retained earnings. See Note 16 – Revenue Recognition. In February 2016, the FASB issued ASU 2016-02, Leases (Subtopic 842). ASU 2016-02 will require companies to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impacts that this standard will have on its Consolidated Financial Statements. The Company expects the adoption will result in a material increase to the assets and liabilities on the Consolidated Balance Sheet, but we do not expect a material impact on the Consolidated Statements of Income or Consolidated Statements of Cash Flows. The Company will adopt the standard in the first quarter of 2019 and apply the standard prospectively as of the adoption date. In March 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The objective of this update was to simplify several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes related to share-based compensation, the related classification in the statement of cash-flows, and accounting for share award forfeitures. This ASU was effective for the Company beginning on January 1, 2017. Prior to January 1, 2017, excess tax benefits were recognized in equity. As permitted, the Company elected to classify excess tax benefits as an operating activity in the Statement of Cash Flows instead of as a financing activity on a prospective basis and did not retroactively adjust prior periods. As also permitted by the new guidance, beginning January 1, 2017 the Company has elected to account for share award forfeitures as they occur. Previously, share-based compensation expense was recorded net of estimated forfeitures. A cumulative adjustment of $2.8 million was recorded to retained earnings and additional paid-in capital as of January 1, 2017. Prior periods were not retroactively adjusted. In the second half of 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, and 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The objective of these updates is to reduce the diversity in practice in the classification of certain cash receipts and cash payments, and the presentation of restricted cash within an entity’s statement of cash flows, respectively. These ASUs are effective for interim and annual fiscal periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This guidance revises the definition of a business as it relates to acquisitions, disposals, goodwill impairments and consolidations. This ASU is effective for annual periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance simplifies the required test of goodwill for impairment by eliminating Step 2 from the goodwill impairment test. If a company determines in Step 1 of the goodwill impairment test that the carrying value of a reporting unit is less than the fair value, an impairment in that amount should be recorded to the income statement, rather than proceeding to Step 2. This ASU is effective for interim and annual impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. In December 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The new standard makes more financial and non-financial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This guidance provides an option to reclassify from accumulated other comprehensive income to retained earnings the stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. This ASU is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This guidance modifies, removes, and adds certain disclosure requirements on fair value measurements. This ASU is effective for annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements. |
REVENUE RECOGNITION (Policies) |
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REVENUE RECOGNITION [Abstract] | |
Revenue Recognition | Net sales include products and shipping and handling charges, net of estimates for product returns and any related sales incentives. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. The Company recognizes revenue by transferring the promised products to the customer, with revenue recognized at shipping point, the point in time the customer obtains control of the products. The Company recognizes revenue for shipping and handling charges at the time the products are delivered to or picked up by the customer. The Company estimates product returns based on historical return rates. The majority of the Company’s contracts have a single performance obligation and are short term in nature. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. |
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
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DERIVATIVE FINANCIAL INSTRUMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (Losses) Related to Derivative Instruments Not Designated as Hedging Instruments | The following table summarizes gains (losses) related to derivative instruments not designated as hedging instruments during the three- and nine-month periods ended September 30, 2018 and 2017 (U.S. dollars in thousands):
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Gains (Losses) Related to Derivative Instruments Designated as Cash Flow Hedges | The following table summarizes gains (losses) related to derivative instruments recorded in other comprehensive income (loss) during the three- and nine-month periods ended September 30, 2018 and 2017 (U.S. dollars in thousands):
The following table summarizes gains (losses) relating to derivative instruments reclassified from accumulated other comprehensive loss into income during the three- and nine-month periods ended September 30, 2018 and 2017 (U.S. dollars in thousands):
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SEGMENT INFORMATION (Tables) |
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Revenue by Segment | Revenue by Segment
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Segment Contribution | Segment Contribution
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Depreciation and Amortization and Capital Expenditures | Depreciation and Amortization
Capital Expenditures
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Revenue by Product Line | Revenue by Product Line
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Long-lived Assets by Major Markets | 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 September 30, 2018 and December 31, 2017 (U.S. dollars in thousands):
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GOODWILL (Tables) |
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Goodwill | The following table presents goodwill allocated to the Company’s reportable segments for the periods ended September 30, 2018 and December 31, 2017 (U.S. dollars in thousands):
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INVENTORY (Tables) |
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Inventories | Inventories consist of the following (U.S. dollars in thousands):
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DEBT (Tables) |
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DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Facilities | The following table summarizes the Company’s debt facilities as of September 30, 2018 and December 31, 2017:
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FAIR VALUE (Tables) |
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Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (U.S. dollars in thousands):
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Changes in Fair Value of Level 3 Marketable Securities | The following table provides a summary of changes in fair value of the Company’s Level 3 marketable securities (U.S. dollars in thousands):
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ACQUISITIONS (Tables) |
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ACQUISITIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | The following table summarizes the fair value of consideration transferred for the acquisitions disclosed above (in thousands):
The following table summarizes the fair value of the assets acquired for the acquisitions disclosed above (in thousands):
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THE COMPANY (Details) |
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Sep. 30, 2018
Segment
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THE COMPANY [Abstract] | |
Number of segments | 7 |
NET INCOME PER SHARE (Details) - shares shares in Millions |
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Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Stock Options [Member] | ||||
Net Income per Share [Abstract] | ||||
Anti-dilutive shares excluded from calculation of diluted earnings per share (in shares) | 0.5 | 0.2 | 0.9 | 0.4 |
REPURCHASES OF COMMON STOCK (Details) - Common Class A [Member] - USD ($) shares in Millions, $ in Millions |
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Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Repurchases of Common Stock [Abstract] | |||||
Common stock repurchased (in shares) | 0.2 | 0.4 | 0.6 | 0.8 | |
Common stock repurchased | $ 12.4 | $ 25.7 | $ 48.2 | $ 47.8 | |
Authorized amount for repurchase program | $ 500.0 | ||||
Available for repurchase under the repurchase program | $ 492.4 | $ 492.4 |
SEGMENT INFORMATION, Revenue by Major Market (Details) |
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Market
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SEGMENT INFORMATION [Abstract] | |
Number of major markets | 3 |
Number of markets | 50 |
SEGMENT INFORMATION, Revenue by Product Line (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenue by Product Line [Abstract] | ||||
Revenue | $ 675,312 | $ 563,698 | $ 1,995,721 | $ 1,612,898 |
Nu Skin [Member] | ||||
Revenue by Product Line [Abstract] | ||||
Revenue | 384,635 | 338,305 | 1,237,547 | 985,465 |
Pharmanex [Member] | ||||
Revenue by Product Line [Abstract] | ||||
Revenue | 261,892 | 224,031 | 687,789 | 623,046 |
Other [Member] | ||||
Revenue by Product Line [Abstract] | ||||
Revenue | $ 28,785 | $ 1,362 | $ 70,385 | $ 4,387 |
SEGMENT INFORMATION, Long-Lived Assets by Major Market (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Long-Lived Assets by Major Market [Abstract] | ||
Long-lived assets | $ 496,704 | $ 464,587 |
Major Markets [Member] | United States [Member] | ||
Long-Lived Assets by Major Market [Abstract] | ||
Long-lived assets | 357,426 | 302,884 |
Major Markets [Member] | Mainland China [Member] | ||
Long-Lived Assets by Major Market [Abstract] | ||
Long-lived assets | 84,680 | 97,046 |
Major Markets [Member] | South Korea [Member] | ||
Long-Lived Assets by Major Market [Abstract] | ||
Long-lived assets | 36,609 | 42,211 |
Major Markets [Member] | Japan [Member] | ||
Long-Lived Assets by Major Market [Abstract] | ||
Long-lived assets | 7,195 | 9,342 |
Major Markets [Member] | All Others [Member] | ||
Long-Lived Assets by Major Market [Abstract] | ||
Long-lived assets | $ 10,794 | $ 13,104 |
GOODWILL (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018
USD ($)
Segment
|
Dec. 31, 2017
USD ($)
|
|
Goodwill [Abstract] | ||
Number of segments | Segment | 7 | |
Goodwill | $ 187,423 | $ 114,954 |
Mainland China [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 32,179 | 32,179 |
Americas/Pacific [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 9,449 | 9,449 |
South Korea [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 29,261 | 29,261 |
Southeast Asia [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 18,537 | 18,537 |
Japan [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 16,019 | 16,019 |
Hong Kong/Taiwan [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 6,634 | 6,634 |
EMEA [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 2,875 | 2,875 |
Other [Member] | ||
Goodwill [Abstract] | ||
Goodwill | $ 72,469 | $ 0 |
INVENTORY (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventories [Abstract] | ||
Raw materials | $ 89,830 | $ 87,683 |
Finished goods | 199,461 | 165,771 |
Inventories | 289,291 | $ 253,454 |
Companies Acquired in Q1-2018 [Member] | ||
Inventories [Abstract] | ||
Inventories | $ 23,300 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Income Taxes [Abstract] | |||||||
Provision for income taxes | $ 20,547 | $ 21,518 | $ 65,843 | $ 55,691 | |||
Effective tax rate | 27.90% | 34.10% | 32.00% | 33.40% | |||
Net deferred tax assets | $ 5,400 | $ 5,400 | |||||
Net deferred tax liabilities | $ 2,900 | ||||||
Minimum [Member] | |||||||
Income Taxes [Abstract] | |||||||
Decrease in unrecognized tax benefits within the next 12 months that is reasonably possible | 100 | $ 100 | |||||
Maximum [Member] | |||||||
Income Taxes [Abstract] | |||||||
Statute of limitations related to income tax examinations | 10 years | ||||||
Income Taxes [Abstract] | |||||||
Decrease in unrecognized tax benefits within the next 12 months that is reasonably possible | $ 1,000 | $ 1,000 | |||||
Mainland China [Member] | |||||||
Income Taxes [Abstract] | |||||||
Foreign earnings permanently reinvested | $ 60,000 | ||||||
Indonesia [Member] | |||||||
Income Taxes [Abstract] | |||||||
Tax assessment | $ 5,800 |
DEBT, Existing Credit Agreement (Details) $ in Millions, ¥ in Billions |
9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2018
JPY (¥)
|
Dec. 31, 2017
USD ($)
|
[1] |
Dec. 31, 2017
JPY (¥)
|
[1] |
Oct. 09, 2014
USD ($)
|
Oct. 09, 2014
JPY (¥)
|
|||
Existing Credit Agreement [Member] | Maximum [Member] | ||||||||||
Debt [Abstract] | ||||||||||
Consolidated leverage ratio | 2.25 | |||||||||
Existing Credit Agreement [Member] | Minimum [Member] | ||||||||||
Debt [Abstract] | ||||||||||
Consolidated interest coverage ratio | 3.00 | |||||||||
Term Loan Facility [Member] | ||||||||||
Debt [Abstract] | ||||||||||
Original principal amount | $ 127.5 | $ 127.5 | ||||||||
Term of facility | 5 years | |||||||||
Outstanding balance | $ 0.0 | $ 94.8 | ||||||||
Japanese Yen Term Loan Facility [Member] | ||||||||||
Debt [Abstract] | ||||||||||
Original principal amount | ¥ | ¥ 6.6 | ¥ 6.6 | ||||||||
Term of facility | 5 years | |||||||||
Outstanding balance | $ 0.0 | ¥ 0.0 | 43.5 | ¥ 4.9 | ||||||
Revolving Credit Facility [Member] | ||||||||||
Debt [Abstract] | ||||||||||
Borrowing capacity | $ 187.5 | |||||||||
Term of facility | 5 years | |||||||||
Outstanding balance | $ 0.0 | $ 47.5 | ||||||||
|
Debt, Debt Facilities (Details) $ in Thousands, ¥ in Billions |
9 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2018
JPY (¥)
|
Apr. 18, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2017
JPY (¥)
|
Jun. 16, 2016
USD ($)
|
Oct. 09, 2014
USD ($)
|
Oct. 09, 2014
JPY (¥)
|
||||||||
Debt [Abstract] | |||||||||||||||
Current portion of debt | $ 82,455 | $ 77,840 | |||||||||||||
Unamortized debt issuance costs | 4,200 | 4,000 | |||||||||||||
Unamortized debt discount | 9,100 | ||||||||||||||
October 2014 Credit Agreement Term Loan Facility [Member] | |||||||||||||||
Debt [Abstract] | |||||||||||||||
Original principal amount | 127,500 | $ 127,500 | |||||||||||||
Balance | $ 0 | 94,800 | [1] | ||||||||||||
Interest rate | Variable 30 day: 4.627% | ||||||||||||||
Interest rate | 4.627% | 4.627% | |||||||||||||
Term of variable rate | 30 days | ||||||||||||||
Repayment terms | Principal amount was paid in full during April 2018. | ||||||||||||||
Term of loan | 5 years | ||||||||||||||
Current portion of debt | $ 20,000 | ||||||||||||||
October 2014 Credit Agreement Japanese Yen Term Loan Facility [Member] | |||||||||||||||
Debt [Abstract] | |||||||||||||||
Original principal amount | ¥ | ¥ 6.6 | ¥ 6.6 | |||||||||||||
Balance | $ 0 | ¥ 0.0 | 43,500 | [1] | ¥ 4.9 | [1] | |||||||||
Interest rate | Variable 30 day: 2.7595% | ||||||||||||||
Interest rate | 2.7595% | 2.7595% | |||||||||||||
Term of variable rate | 30 days | ||||||||||||||
Repayment terms | Principal amount was paid in full during April 2018. | ||||||||||||||
Term of loan | 5 years | ||||||||||||||
October 2014 Credit Agreement Revolving Credit Facility [Member] | |||||||||||||||
Debt [Abstract] | |||||||||||||||
Balance | $ 0 | 47,500 | [1] | ||||||||||||
Interest rate | Variable 30 day: 4.594% | ||||||||||||||
Interest rate | 4.594% | 4.594% | |||||||||||||
Term of variable rate | 30 days | ||||||||||||||
Repayment terms | Principal amount was paid in full during April 2018 and credit line was closed. | ||||||||||||||
Term of loan | 5 years | ||||||||||||||
April 2018 Credit Agreement Term Loan Facility [Member] | |||||||||||||||
Debt [Abstract] | |||||||||||||||
Original principal amount | $ 400,000 | $ 400,000 | |||||||||||||
Balance | $ 390,000 | [1],[2] | 0 | ||||||||||||
Interest rate | Variable 30 day: 4.49% | ||||||||||||||
Interest rate | 4.49% | 4.49% | |||||||||||||
Term of variable rate | 30 days | ||||||||||||||
Repayment terms | 35% of the principal amount is payable in increasing quarterly installments over a five-year period that began on June 30, 2018, with the remainder payable at the end of the five-year term. | ||||||||||||||
Percentage of principal payable in installments | 35.00% | ||||||||||||||
Frequency of payment | Quarterly | ||||||||||||||
Term of loan | 5 years | ||||||||||||||
April 2018 Credit Agreement Revolving Credit Facility [Member] | |||||||||||||||
Debt [Abstract] | |||||||||||||||
Balance | $ 62,500 | [1],[2] | 0 | ||||||||||||
Interest rate | Variable 30 day: 4.49% | ||||||||||||||
Interest rate | 4.49% | 4.49% | |||||||||||||
Term of variable rate | 30 days | ||||||||||||||
Repayment terms | Revolving line of credit expires April 18, 2023. | ||||||||||||||
Term of loan | 5 years | ||||||||||||||
Japan Subsidiary Loan [Member] | |||||||||||||||
Debt [Abstract] | |||||||||||||||
Original principal amount | ¥ | ¥ 2.1 | ||||||||||||||
Balance | $ 0 | ¥ 0.0 | 5,900 | ¥ 0.7 | |||||||||||
Interest rate | 0.66% | 0.66% | |||||||||||||
Repayment terms | Principal amount was paid in full during July 2018. | ||||||||||||||
Convertible Note [Member] | |||||||||||||||
Debt [Abstract] | |||||||||||||||
Original principal amount | $ 210,000 | $ 210,000 | |||||||||||||
Balance | $ 0 | 210,000 | [1] | ||||||||||||
Interest rate | 7.10% | 7.10% | |||||||||||||
Interest rate | 4.75% | 4.75% | |||||||||||||
Repayment terms | Principal amount was paid in full during April 2018. | ||||||||||||||
Unamortized debt discount and debt issuance costs | 11,100 | ||||||||||||||
Credit Agreement [Member] | |||||||||||||||
Debt [Abstract] | |||||||||||||||
Unamortized debt discount and debt issuance costs | $ 2,000 | ||||||||||||||
|
ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
ASC Topic 606 [Member] | ||
Accounting Pronouncements [Abstract] | ||
Cumulative impact on opening retained earnings | $ 11.2 | |
ASU 2016-09 [Member] | Retained Earnings [Member] | ||
Accounting Pronouncements [Abstract] | ||
Cumulative adjustment | $ (2.8) | |
ASU 2016-09 [Member] | Additional Paid-in Capital [Member] | ||
Accounting Pronouncements [Abstract] | ||
Cumulative adjustment | $ 2.8 |
COST OF SALES (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
COST OF SALES [Abstract] | |
Customs expense | $ 31.4 |
REVENUE RECOGNITION, Adoption of ASC Topic 606 (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Adoption of ASC Topic 606 [Abstract] | |||||
Revenues | $ (675,312) | $ (563,698) | $ (1,995,721) | $ (1,612,898) | |
ASC Topic 606 [Member] | |||||
Adoption of ASC Topic 606 [Abstract] | |||||
Cumulative impact on opening retained earnings | $ 11,200 | ||||
Impact of Adopting ASC Topic 606 [Member] | ASC Topic 606 [Member] | |||||
Adoption of ASC Topic 606 [Abstract] | |||||
Revenues | $ 100 | $ (1,200) |
REVENUE RECOGNITION, Contract Liabilities - Customer Loyalty Programs (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Contract Liabilities - Customer Loyalty Programs [Abstract] | ||
Contract liabilities for customer loyalty programs | $ 14.2 | $ 13.0 |
Calculated under Cost Provision Methodology [Member] | ||
Contract Liabilities - Customer Loyalty Programs [Abstract] | ||
Contract liabilities for customer loyalty programs | 1.9 | |
Impact of Adopting ASC Topic 606 [Member] | ||
Contract Liabilities - Customer Loyalty Programs [Abstract] | ||
Contract liabilities for customer loyalty programs | $ 11.2 |
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