QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________ |
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices, including zip code) |
( |
||
(Registrant’s telephone number, including area code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
||
Accelerated filer ☐ |
|
Non-accelerated filer ☐ |
Smaller reporting company |
Emerging growth company |
Page |
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Part I. |
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Item 1. |
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1 |
|||
2 |
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3 |
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4 |
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6 |
|||
7 |
|||
Item 2. |
15 |
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Item 3. |
22 |
||
Item 4. |
22 |
||
Part II. |
|||
Item 1. |
23 |
||
Item 1A. |
23 |
||
Item 2. |
25 |
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Item 3. |
25 |
||
Item 4. |
25 |
||
Item 5. |
25 |
||
Item 6. |
26 |
||
27 |
June 30, 2020 |
December 31, 2019 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Current investments |
||||||||
Accounts receivable, net |
||||||||
Inventories, net |
||||||||
Prepaid expenses and other |
||||||||
Total current assets |
||||||||
Property and equipment, net |
||||||||
Right-of-use assets |
||||||||
Goodwill |
||||||||
Other intangible assets, net |
||||||||
Other assets |
||||||||
Total assets |
$ |
$ |
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
$ |
||||||
Accrued expenses |
||||||||
Current portion of long-term debt |
||||||||
Total current liabilities |
||||||||
Operating lease liabilities |
||||||||
Long-term debt |
||||||||
Other liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (Note 10) |
||||||||
Stockholders’ equity: |
||||||||
Class A common stock – |
||||||||
Additional paid-in capital |
||||||||
Treasury stock, at cost – |
( |
) |
( |
) |
||||
Accumulated other comprehensive loss |
( |
) |
( |
) |
||||
Retained earnings |
||||||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ |
$ |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Revenue |
$ |
$ |
$ |
$ |
||||||||||||
Cost of sales |
||||||||||||||||
Gross profit |
||||||||||||||||
Operating expenses: |
||||||||||||||||
Selling expenses |
||||||||||||||||
General and administrative expenses |
||||||||||||||||
Total operating expenses |
||||||||||||||||
Operating income |
||||||||||||||||
Other income (expense), net |
( |
) |
( |
) |
( |
) |
||||||||||
Income before provision for income taxes |
||||||||||||||||
Provision for income taxes |
||||||||||||||||
Net income |
$ |
$ |
$ |
$ |
||||||||||||
Net income per share (Note 6): |
||||||||||||||||
Basic |
$ |
$ |
$ |
$ |
||||||||||||
Diluted |
$ |
$ |
$ |
$ |
||||||||||||
Weighted-average common shares outstanding (000s): |
||||||||||||||||
Basic |
||||||||||||||||
Diluted |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Net income |
$ |
$ |
$ |
$ |
||||||||||||
Other comprehensive income, net of tax: |
||||||||||||||||
Foreign currency translation adjustment, net of taxes of $ |
( |
) |
( |
) |
( |
) |
||||||||||
Comprehensive income |
$ |
$ |
$ |
$ |
For the Three Months Ended June 30, 2020 |
||||||||||||||||||||||||
Class A Common Stock |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||
Balance at April 1, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
||||||||||||||
Net income |
||||||||||||||||||||||||
Other comprehensive loss, net of tax |
||||||||||||||||||||||||
Repurchase of Class A common stock (Note 6) |
( |
) |
( |
) |
||||||||||||||||||||
Exercise of employee stock options ( |
||||||||||||||||||||||||
Stock-based compensation |
||||||||||||||||||||||||
Cash dividends |
( |
) |
( |
) |
||||||||||||||||||||
Balance at June 30, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
For the Three Months Ended June 30, 2019 |
||||||||||||||||||||||||
Class A Common Stock |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||
Balance at April 1, 2019 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
||||||||||||||
Net income |
||||||||||||||||||||||||
Other comprehensive income, net of tax |
( |
) |
( |
) |
||||||||||||||||||||
Repurchase of Class A common stock (Note 6) |
||||||||||||||||||||||||
Exercise of employee stock options ( |
( |
) |
( |
) |
||||||||||||||||||||
Stock-based compensation |
||||||||||||||||||||||||
Cash dividends |
( |
) |
( |
) |
||||||||||||||||||||
Balance at June 30, 2019 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
For the Six Months Ended June 30, 2020 |
||||||||||||||||||||||||
Class A Common Stock |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||
Balance at January 1, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
||||||||||||||
Net income |
||||||||||||||||||||||||
Other comprehensive income, net of tax |
( |
) |
( |
) |
||||||||||||||||||||
Repurchase of Class A common stock (Note 6) |
( |
) |
( |
) |
||||||||||||||||||||
Exercise of employee stock options ( |
( |
) |
||||||||||||||||||||||
Stock-based compensation |
||||||||||||||||||||||||
Cash dividends |
( |
) |
( |
) |
||||||||||||||||||||
Balance at June 30, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
For the Six Months Ended June 30, 2019 |
||||||||||||||||||||||||
Class A Common Stock |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||
Balance at January 1, 2019 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
||||||||||||||
Cumulative effect adjustment from adoption of ASC 842 |
||||||||||||||||||||||||
Net income |
||||||||||||||||||||||||
Other comprehensive income, net of tax |
( |
) |
( |
) |
||||||||||||||||||||
Repurchase of Class A common stock (Note 6) |
( |
) |
( |
) |
||||||||||||||||||||
Exercise of employee stock options ( |
( |
) |
( |
) |
||||||||||||||||||||
Stock-based compensation |
||||||||||||||||||||||||
Cash dividends |
( |
) |
( |
) |
||||||||||||||||||||
Balance at June 30, 2019 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ |
$ |
||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
||||||||
Foreign currency losses |
||||||||
Stock-based compensation |
||||||||
Loss on disposal of assets |
||||||||
Deferred taxes |
||||||||
Non-cash lease expense |
||||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
( |
) |
( |
) |
||||
Inventories, net |
||||||||
Prepaid expenses and other |
( |
) |
( |
) |
||||
Other assets |
( |
) |
( |
) |
||||
Accounts payable |
||||||||
Accrued expenses |
( |
) |
||||||
Other liabilities |
||||||||
Net cash provided by operating activities |
||||||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment |
( |
) |
( |
) |
||||
Proceeds on investment sales |
||||||||
Purchases of investments |
( |
) |
( |
) |
||||
Acquisitions and investments in equity investees |
( |
) |
||||||
Net cash used in investing activities |
( |
) |
( |
) |
||||
Cash flows from financing activities: |
||||||||
Exercise of employee stock options and taxes paid related to the net shares settlement of stock awards |
( |
) |
||||||
Payments of debt |
( |
) |
( |
) |
||||
Payment of cash dividends |
( |
) |
( |
) |
||||
Proceeds from debt |
||||||||
Repurchases of shares of common stock |
( |
) |
( |
) |
||||
Net cash used in financing activities |
( |
) |
( |
) |
||||
Effect of exchange rate changes on cash |
( |
) |
||||||
Net increase (decrease) in cash and cash equivalents |
( |
) |
||||||
Cash and cash equivalents, beginning of period |
||||||||
Cash and cash equivalents, end of period |
$ |
$ |
1. | The Company |
2. | Summary of Significant Accounting Policies |
June 30, 2020 |
December 31, 2019 |
|||||||
Raw materials |
$ |
$ |
||||||
Finished goods |
||||||||
Total Inventory, net |
$ |
$ |
3. | Goodwill |
June 30, 2020 |
December 31, 2019 |
|||||||
Nu Skin |
||||||||
Mainland China |
$ |
$ |
||||||
Americas/Pacific |
||||||||
South Korea |
||||||||
Southeast Asia |
||||||||
Japan |
||||||||
EMEA |
||||||||
Hong Kong/Taiwan |
||||||||
Manufacturing |
||||||||
Grow Tech |
||||||||
Total |
$ |
$ |
4. | Debt |
Facility or Arrangement |
Original Principal Amount |
Balance as of June 30, 2020(1)(2) |
Balance as of December 31, 2019(2) |
Interest Rate |
Repayment Terms |
||||||||
Credit Agreement term loan facility |
$ |
$ |
$ |
||||||||||
Credit Agreement revolving credit facility |
$ |
$ |
(1) |
(2) |
5. | Leases |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Operating lease cost |
$ |
$ |
$ |
$ |
||||||||||||
Variable lease cost |
||||||||||||||||
Short-term lease cost |
||||||||||||||||
Sublease income |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Total lease expense |
$ |
$ |
$ |
$ |
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Operating cash outflow from operating leases |
$ |
$ |
||||||
Right-of-use assets obtained in exchange for lease obligations |
$ |
$ |
Year Ending December 31, |
Operating leases |
|||
2020 |
$ |
|||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
Thereafter |
||||
Total |
||||
Less: Finance charges |
||||
Total principal liability |
$ |
6. | Capital Stock |
7. | 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 June 30, 2020 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Financial assets: |
||||||||||||||||
Cash equivalents and current investments |
$ |
$ |
$ |
$ |
||||||||||||
Other long-term assets |
||||||||||||||||
Life insurance contracts |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
Fair Value at December 31, 2019 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Financial assets: |
||||||||||||||||
Cash equivalents and current investments |
$ |
$ |
$ |
$ |
||||||||||||
Other long-term assets |
||||||||||||||||
Life insurance contracts |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
Beginning balance at January 1, 2020 |
$ |
|||
Actual return on plan assets |
( |
) |
||
Purchase and issuances |
||||
Sales and settlements |
||||
Transfers into Level 3 |
||||
Ending balance at June 30, 2020 |
$ |
8. | Income Taxes |
9. | Segment Information |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(U.S. dollars in thousands) |
2020 |
2019 |
2020 |
2019 |
||||||||||||
Nu Skin |
||||||||||||||||
Mainland China |
$ |
$ |
$ |
$ |
||||||||||||
Americas/Pacific |
||||||||||||||||
South Korea |
||||||||||||||||
Southeast Asia |
||||||||||||||||
Japan |
||||||||||||||||
EMEA |
||||||||||||||||
Hong Kong/Taiwan |
||||||||||||||||
Other |
( |
) |
( |
) |
||||||||||||
Total Nu Skin |
||||||||||||||||
Manufacturing (1) |
||||||||||||||||
Grow Tech |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
(1) |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(U.S. dollars in thousands) |
2020 |
2019 |
2020 |
2019 |
||||||||||||
Nu Skin |
||||||||||||||||
Mainland China |
$ |
$ |
$ |
$ |
||||||||||||
Americas/Pacific |
||||||||||||||||
South Korea |
||||||||||||||||
Southeast Asia |
||||||||||||||||
Japan |
||||||||||||||||
EMEA |
||||||||||||||||
Hong Kong/Taiwan |
||||||||||||||||
Nu Skin contribution |
||||||||||||||||
Manufacturing |
||||||||||||||||
Grow Tech |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Total segment contribution |
||||||||||||||||
Corporate and other |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Operating income |
||||||||||||||||
Other income (expense) |
( |
) |
( |
) |
( |
) |
||||||||||
Income before provision for income taxes |
$ |
$ |
$ |
$ |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(U.S. dollars in thousands) |
2020 |
2019 |
2020 |
2019 |
||||||||||||
Nu Skin |
||||||||||||||||
Mainland China |
$ |
$ |
$ |
$ |
||||||||||||
Americas/Pacific |
||||||||||||||||
South Korea |
||||||||||||||||
Southeast Asia |
||||||||||||||||
Japan |
||||||||||||||||
EMEA |
||||||||||||||||
Hong Kong/Taiwan |
||||||||||||||||
Total Nu Skin |
||||||||||||||||
Manufacturing |
||||||||||||||||
Grow Tech |
||||||||||||||||
Corporate and other |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(U.S. dollars in thousands) |
2020 |
2019 |
2020 |
2019 |
||||||||||||
Nu Skin |
||||||||||||||||
Mainland China |
$ |
$ |
$ |
$ |
||||||||||||
Americas/Pacific |
||||||||||||||||
South Korea |
||||||||||||||||
Southeast Asia |
||||||||||||||||
Japan |
||||||||||||||||
EMEA |
||||||||||||||||
Hong Kong/Taiwan |
||||||||||||||||
Total Nu Skin |
||||||||||||||||
Manufacturing |
||||||||||||||||
Grow Tech |
||||||||||||||||
Corporate and other |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
10. | Commitments and Contingencies |
11. | Restructuring |
Beginning balance at January 1, 2019 |
$ |
|||
Amounts paid |
( |
) |
||
Adjustments |
( |
) |
||
Ending balance at March 31, 2019 |
$ |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended June 30, |
Constant- Currency |
Six Months Ended June 30, |
Constant- Currency |
|||||||||||||||||||||||||||||
2020 |
2019 |
Change |
Change(1) |
2020 |
2019 |
Change |
Change(1) |
|||||||||||||||||||||||||
Nu Skin |
||||||||||||||||||||||||||||||||
Mainland China |
$ |
146,332 |
$ |
185,333 |
(21 |
)% |
(18 |
)% |
$ |
284,028 |
$ |
393,821 |
(28 |
)% |
(25 |
)% |
||||||||||||||||
Americas/Pacific |
127,919 |
92,841 |
38 |
% |
48 |
% |
202,492 |
179,297 |
13 |
% |
21 |
% |
||||||||||||||||||||
South Korea |
76,915 |
84,732 |
(9 |
)% |
(5 |
)% |
152,634 |
168,585 |
(9 |
)% |
(5 |
)% |
||||||||||||||||||||
Southeast Asia |
66,829 |
75,395 |
(11 |
)% |
(9 |
)% |
136,415 |
147,890 |
(8 |
)% |
(6 |
)% |
||||||||||||||||||||
Japan |
68,291 |
65,251 |
5 |
% |
2 |
% |
129,591 |
127,360 |
2 |
% |
— |
|||||||||||||||||||||
EMEA |
50,776 |
43,400 |
17 |
% |
21 |
% |
86,179 |
85,218 |
1 |
% |
4 |
% |
||||||||||||||||||||
Hong Kong/Taiwan |
37,161 |
43,712 |
(15 |
)% |
(17 |
)% |
72,988 |
84,270 |
(13 |
)% |
(15 |
)% |
||||||||||||||||||||
Other |
(85 |
) |
1,249 |
(107 |
)% |
(107 |
)% |
688 |
(177 |
) |
(489 |
)% |
(488 |
)% |
||||||||||||||||||
Total Nu Skin |
574,138 |
591,913 |
(3 |
)% |
— |
1,065,015 |
1,186,264 |
(10 |
)% |
(7 |
)% |
|||||||||||||||||||||
Manufacturing |
37,918 |
31,557 |
20 |
% |
20 |
% |
65,065 |
60,829 |
7 |
% |
7 |
% |
||||||||||||||||||||
Grow Tech |
310 |
30 |
933 |
% |
933 |
% |
314 |
30 |
947 |
% |
947 |
% |
||||||||||||||||||||
Total |
$ |
612,366 |
$ |
623,500 |
(2 |
)% |
1 |
% |
$ |
1,130,394 |
$ |
1,247,123 |
(9 |
)% |
(7 |
)% |
(1) | Constant-currency revenue change is a non-GAAP financial measure. See “Non-GAAP Financial Measures,” below. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||
2020 |
2019 |
Change |
2020 |
2019 |
Change |
|||||||||||||||||||
Nu Skin |
||||||||||||||||||||||||
Mainland China |
$ |
43,668 |
$ |
51,087 |
(15 |
)% |
$ |
81,055 |
$ |
110,254 |
(26 |
)% |
||||||||||||
Americas/Pacific |
24,343 |
16,420 |
48 |
% |
34,928 |
28,439 |
23 |
% |
||||||||||||||||
South Korea |
24,090 |
25,979 |
(7 |
)% |
48,189 |
51,647 |
(7 |
)% |
||||||||||||||||
Southeast Asia |
16,977 |
20,840 |
(19 |
)% |
33,695 |
38,832 |
(13 |
)% |
||||||||||||||||
Japan |
16,455 |
15,823 |
4 |
% |
31,047 |
29,929 |
4 |
% |
||||||||||||||||
EMEA |
3,342 |
3,234 |
3 |
% |
3,973 |
4,585 |
(13 |
)% |
||||||||||||||||
Hong Kong/Taiwan |
6,839 |
9,217 |
(26 |
)% |
13,777 |
16,691 |
(17 |
)% |
||||||||||||||||
Total Nu Skin |
135,714 |
142,600 |
(5 |
)% |
246,664 |
280,377 |
(12 |
)% |
||||||||||||||||
Manufacturing |
5,402 |
3,375 |
60 |
% |
8,251 |
7,021 |
18 |
% |
||||||||||||||||
Grow Tech |
(5,487 |
) |
(4,582 |
) |
(20 |
)% |
(12,337 |
) |
(8,211 |
) |
(50 |
)% |
As of June 30, 2020 |
As of June 30, 2019 |
% Increase (Decrease) |
||||||||||||||||||||||
Customers |
Sales Leaders |
Customers |
Sales Leaders |
Customers |
Sales Leaders |
|||||||||||||||||||
Mainland China |
321,946 |
17,104 |
226,877 |
24,336 |
42 |
% |
(30 |
)% |
||||||||||||||||
Americas/Pacific |
424,236 |
10,787 |
253,684 |
8,161 |
67 |
% |
32 |
% |
||||||||||||||||
South Korea |
159,926 |
6,881 |
180,365 |
7,239 |
(11 |
)% |
(5 |
)% |
||||||||||||||||
Southeast Asia |
155,822 |
6,790 |
137,450 |
7,417 |
13 |
% |
(8 |
)% |
||||||||||||||||
Japan |
125,332 |
6,011 |
127,900 |
5,931 |
(2 |
)% |
1 |
% |
||||||||||||||||
EMEA |
247,057 |
5,120 |
164,055 |
4,256 |
51 |
% |
20 |
% |
||||||||||||||||
Hong Kong/Taiwan |
65,581 |
3,343 |
70,089 |
4,223 |
(6 |
)% |
(21 |
)% |
||||||||||||||||
Total |
1,499,900 |
56,036 |
1,160,420 |
61,563 |
29 |
% |
(9 |
)% |
● | the expansion and upgrade of our facilities and equipment; |
● | purchases and expenditures for computer systems and equipment, software, and application development; and |
● | purchases of equipment and development of our technology in our Grow Tech initiative. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
● | the possibility that a government might ban or severely restrict our sales compensation and business models; |
● | the possibility that local civil unrest, political instability, or changes in diplomatic or trade relationships might disrupt our operations in one or more markets; |
● | the lack of well-established or reliable legal systems in certain areas where we operate; |
● | the presence of high inflation in the economies of international markets in which we operate; |
● | the possibility that a government authority might impose legal, tax, customs, or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets; |
● | the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and |
● | the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
(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) |
||||||||
April 1 - 30, 2020 |
1,111,923 |
$ |
22.90 |
1,111,923 |
$ |
383.8 |
||||||
May 1 - 31, 2020 |
471,635 |
31.82 |
471,635 |
$ |
368.8 |
|||||||
June 1 - 30, 2020 |
155,856 |
38.52 |
155,856 |
$ |
362.8 |
|||||||
Total |
1,739,414 |
$ |
26.72 |
1,739,414 |
(1) | In August 2018, 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. |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
Exhibits Regulation S-K Number |
Description |
|
Third Amended and Restated 2010 Omnibus Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed June 3, 2020, file no. 333-238908). |
||
Certification by Ritch N. Wood, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
||
Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
||
Certification by Ritch N. Wood, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
||
Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
||
101.INS |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
|
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
NU SKIN ENTERPRISES, INC. |
||
By: |
/s/ Mark H. Lawrence |
|
Mark H. Lawrence |
||
Chief Financial Officer |
||
(Duly Authorized Officer and Principal Financial Officer) |
1. |
I have reviewed this quarterly report on Form 10-Q of Nu Skin Enterprises, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
|
Date: August 5, 2020
|
/s/ Ritch N. Wood
|
|
|
Ritch N. Wood
|
|
|
Chief Executive Officer
|
|
1. |
I have reviewed this quarterly report on Form 10-Q of Nu Skin Enterprises, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
|
/s/ Mark H. Lawrence
|
|
|
|
Mark H. Lawrence
|
|
|
Chief Financial Officer
|
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 5, 2020
|
/s/ Ritch N. Wood
|
|
|
Ritch N. Wood
|
|
|
Chief Executive Officer
|
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 5, 2020
|
/s/ Mark H. Lawrence
|
|
|
Mark H. Lawrence
|
|
|
Chief Financial Officer
|
|
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
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) | 39.1 | 35.0 |
Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Consolidated Statements of Income (Unaudited) [Abstract] | ||||
Revenue | $ 612,366 | $ 623,500 | $ 1,130,394 | $ 1,247,123 |
Cost of sales | 154,110 | 154,028 | 279,903 | 300,692 |
Gross profit | 458,256 | 469,472 | 850,491 | 946,431 |
Operating expenses: | ||||
Selling expenses | 248,628 | 245,828 | 454,670 | 495,536 |
General and administrative expenses | 151,554 | 149,442 | 301,182 | 308,040 |
Total operating expenses | 400,182 | 395,270 | 755,852 | 803,576 |
Operating income | 58,074 | 74,202 | 94,639 | 142,855 |
Other income (expense), net | 1,581 | (3,326) | (4,593) | (6,174) |
Income before provision for income taxes | 59,655 | 70,876 | 90,046 | 136,681 |
Provision for income taxes | 17,804 | 24,527 | 28,465 | 47,330 |
Net income | $ 41,851 | $ 46,349 | $ 61,581 | $ 89,351 |
Net income per share (Note 6): | ||||
Basic (in dollars per share) | $ 0.81 | $ 0.83 | $ 1.15 | $ 1.61 |
Diluted (in dollars per share) | $ 0.81 | $ 0.83 | $ 1.15 | $ 1.59 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 51,872 | 55,536 | 53,466 | 55,486 |
Diluted (in shares) | 51,925 | 55,943 | 53,502 | 56,030 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Consolidated Statements of Comprehensive Income (Unaudited) [Abstract] | ||||
Net income | $ 41,851 | $ 46,349 | $ 61,581 | $ 89,351 |
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustment, net of taxes of $8 and $362 for the three months ended June 30, 2020 and 2019, respectively, and $6 and $217 for the six months ended June 30, 2020 and 2019, respectively | 6,848 | (5,482) | (8,149) | (1,342) |
Comprehensive income | $ 48,699 | $ 40,867 | $ 53,432 | $ 88,009 |
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustment, tax | $ 8 | $ 362 | $ 6 | $ 217 |
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands |
Common Stock [Member]
Class A [Member]
|
Additional Paid-in Capital [Member] |
Treasury Stock [Member] |
Accumulated Other Comprehensive Loss [Member] |
Retained Earnings [Member] |
Total |
Cumulative Effect Adjustment [Member]
Common Stock [Member]
Class A [Member]
|
Cumulative Effect Adjustment [Member]
Additional Paid-in Capital [Member]
|
Cumulative Effect Adjustment [Member]
Treasury Stock [Member]
|
Cumulative Effect Adjustment [Member]
Accumulated Other Comprehensive Loss [Member]
|
Cumulative Effect Adjustment [Member]
Retained Earnings [Member]
|
Cumulative Effect Adjustment [Member] |
---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at beginning of period at Dec. 31, 2018 | $ 91 | $ 552,564 | $ (1,326,605) | $ (79,934) | $ 1,635,751 | $ 781,867 | ||||||
Balance at beginning of period (ASC 842 [Member]) at Dec. 31, 2018 | $ 0 | $ 0 | $ 0 | $ 0 | $ 657 | $ 657 | ||||||
Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 0 | 0 | 0 | 0 | 89,351 | 89,351 | ||||||
Other comprehensive (loss) income, net of tax | 0 | 0 | 0 | (1,342) | 0 | (1,342) | ||||||
Repurchase of Class A common stock (Note 6) | 0 | 0 | (825) | 0 | 0 | (825) | ||||||
Exercise of employee stock options/vesting of stock awards | 0 | (4,904) | 2,596 | 0 | 0 | (2,308) | ||||||
Stock-based compensation | 0 | 8,634 | 0 | 0 | 0 | 8,634 | ||||||
Cash dividends | 0 | 0 | 0 | 0 | (41,084) | (41,084) | ||||||
Balance at end of period at Jun. 30, 2019 | 91 | 556,294 | (1,324,834) | (81,276) | 1,684,675 | 834,950 | ||||||
Balance at beginning of period at Mar. 31, 2019 | 91 | 553,270 | (1,325,251) | (75,794) | 1,658,879 | 811,195 | ||||||
Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 0 | 0 | 0 | 0 | 46,349 | 46,349 | ||||||
Other comprehensive (loss) income, net of tax | 0 | 0 | 0 | (5,482) | 0 | (5,482) | ||||||
Repurchase of Class A common stock (Note 6) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||
Exercise of employee stock options/vesting of stock awards | 0 | (569) | 417 | 0 | 0 | (152) | ||||||
Stock-based compensation | 0 | 3,593 | 0 | 0 | 0 | 3,593 | ||||||
Cash dividends | 0 | 0 | 0 | 0 | (20,553) | (20,553) | ||||||
Balance at end of period at Jun. 30, 2019 | 91 | 556,294 | (1,324,834) | (81,276) | 1,684,675 | 834,950 | ||||||
Balance at beginning of period at Dec. 31, 2019 | 91 | 557,544 | (1,324,826) | (85,292) | 1,727,772 | 875,289 | ||||||
Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 0 | 0 | 0 | 0 | 61,581 | 61,581 | ||||||
Other comprehensive (loss) income, net of tax | 0 | 0 | 0 | (8,149) | 0 | (8,149) | ||||||
Repurchase of Class A common stock (Note 6) | 0 | 0 | (107,367) | 0 | 0 | (107,367) | ||||||
Exercise of employee stock options/vesting of stock awards | 0 | (2,753) | 5,129 | 0 | 0 | 2,376 | ||||||
Stock-based compensation | 0 | 8,324 | 0 | 0 | 0 | 8,324 | ||||||
Cash dividends | 0 | 0 | 0 | 0 | (40,042) | (40,042) | ||||||
Balance at end of period at Jun. 30, 2020 | 91 | 563,115 | (1,427,064) | (93,441) | 1,749,311 | 792,012 | ||||||
Balance at beginning of period at Mar. 31, 2020 | 91 | 557,916 | (1,384,036) | (100,289) | 1,726,816 | 800,498 | ||||||
Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 0 | 0 | 0 | 0 | 41,851 | 41,851 | ||||||
Other comprehensive (loss) income, net of tax | 0 | 0 | 0 | 6,848 | 0 | 6,848 | ||||||
Repurchase of Class A common stock (Note 6) | 0 | 0 | (46,481) | 0 | 0 | (46,481) | ||||||
Exercise of employee stock options/vesting of stock awards | 0 | 330 | 3,453 | 0 | 0 | 3,783 | ||||||
Stock-based compensation | 0 | 4,869 | 0 | 0 | 0 | 4,869 | ||||||
Cash dividends | 0 | 0 | 0 | 0 | (19,356) | (19,356) | ||||||
Balance at end of period at Jun. 30, 2020 | $ 91 | $ 563,115 | $ (1,427,064) | $ (93,441) | $ 1,749,311 | $ 792,012 |
Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Stockholders' Equity [Roll Forward] | ||||
Exercise of employee stock options (in shares) | 0.2 | 0.0 | 0.3 | 0.2 |
The Company |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2020 | |||
The Company [Abstract] | |||
The Company |
Nu Skin Enterprises, Inc. (the “Company”) is a holding company, with Nu Skin, a leading global direct selling company, being the primary operating unit. Nu Skin develops and distributes premium-quality, innovative personal care products and wellness products that are sold worldwide under the Nu Skin, Pharmanex and ageLOC brands and a small number of other products and services. The Company reports revenue from nine segments, consisting of its seven geographic Nu Skin segments—Mainland China; South Korea; Southeast Asia, which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam; Americas/Pacific, which includes Australia, Canada, Latin America, New Zealand and the United States; Japan; Hong Kong/Taiwan, which also includes Macau; and Europe, Middle East and Africa (“EMEA”), which includes several markets in Europe as well as Israel, Russia and South Africa—its Manufacturing segment, which includes manufacturing and packaging subsidiaries; and its Grow Tech segment, which focuses on developing controlled-environment agriculture technologies (the Company’s subsidiaries operating within each segment are collectively referred to as the “Subsidiaries”).
|
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) 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 US GAAP 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 June 30, 2020, and for the three- and six-month periods ended June 30, 2020 and 2019. 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, 2019 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, 2019. Additionally, based on the duration and severity of the novel coronavirus (“COVID-19”) pandemic, including but not limited to limitations of holding sales meetings, supply chain disruptions, reduced travel and closed walk-in locations, the Company remains uncertain of the ultimate impact COVID-19 could have on the business. To date, the pandemic has not increased the Company’s costs of or access to capital under the revolving credit facility, and at this time the Company cannot provide assurance it will not in the future. This uncertainty could have an impact in future periods on certain estimates used in the preparation of the second quarter financial results, including, but not limited to impairment of goodwill and other long-lived assets, income tax provision and recoverability of inventory.
Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance modifies the measurement of expected credit losses of certain financial instruments. This ASU is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods and should be applied on a modified retrospective basis to all periods presented. This ASU was effective for the Company beginning on January 1, 2020. The adoption of the new standard did not have a material impact on the Company’s 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, and early adoption is permitted. This ASU was effective for the Company beginning on January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. This ASU was effective for the Company beginning on January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
Inventory
Inventories consist of the following (U.S. dollars in thousands):
Revenue Recognition
Contract Liabilities – Customer Loyalty Programs
Contract liabilities, recorded as deferred revenue within the accrued expenses line in the 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.
The balance of deferred revenue related to contract liabilities as of June 30, 2020 and December 31, 2019 was $16.0 million and $12.5 million, respectively. The contract liabilities impact to revenue for the three-month periods ended June 30, 2020, and 2019 was a decrease of $4.1 million and an increase of $0.6 million, respectively. The impact to revenue for the six-month periods ended June 30, 2020, and 2019 was a decrease of $3.5 million and an increase $1.1 million.
|
Goodwill |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
The Company’s reporting units for goodwill are its operating segments, which are also its reportable segments.
The following table presents goodwill allocated to the Company’s reportable segments for the periods ended June 30, 2020 and December 31, 2019 (U.S. dollars in thousands):
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Debt |
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Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt |
Credit Agreement
On April 18, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”) with several financial institutions as lenders and Bank of America, N.A., as administrative agent. The Credit Agreement provides for a $400 million term loan facility and a $350 million revolving credit facility, each with a term of five years. Both facilities bear interest at the London Interbank Offered Rate (“LIBOR”), plus a margin based on the consolidated leverage ratio. The term loan facility amortizes 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 Credit Agreement, with the remainder payable at final maturity. The 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. As of June 30, 2020, the Company was in compliance with all covenants under the Credit Agreement.
The following table summarizes the Company’s debt facilities as of June 30, 2020 and December 31, 2019:
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
The Company has operating and finance leases for regional offices, manufacturing facilities, retail centers, distribution centers and certain equipment. The Company’s leases have remaining lease terms of 1 year to 24 years, some of which include options to extend the leases for up to 20 years, and some of which include options to terminate the leases within 1 year.
As of June 30, 2020, the weighted average remaining lease term and weighted average discount rate for operating leases was 6.1 years and 4.7%.
The components of lease expense were as follows (U.S. dollars in thousands):
Supplemental cash flow information related to leases was as follows (U.S. dollars in thousands):
Maturities of lease liabilities were as follows (U.S. dollars in thousands):
The Company has additional lease liabilities of $28.2 million which have not yet commenced as of June 30, 2020, and as such, have not been recognized on the consolidated balance sheets.
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Capital Stock |
6 Months Ended | ||
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Jun. 30, 2020 | |||
Capital Stock [Abstract] | |||
Capital Stock |
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 June 30, 2020 and 2019, stock options of 0.9 million and 1.1 million, respectively, and for the six-month periods ended June 30, 2020 and 2019, stock options of 1.0 million and 1.1 million, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.
Dividends
In and , the Company’s board of directors declared quarterly cash dividends of $0.375 per share. These quarterly cash dividends of $20.7 million and $19.4 million were paid on March 11, 2020 and June 10, 2020 to stockholders of record on February 28, 2020 and May 29, 2020. In , the Company’s board of directors declared a quarterly cash dividend of $0.375 per share to be paid on September 9, 2020 to stockholders of record on August 28, 2020.
Repurchase of common stock
During the three-month periods ended June 30, 2020 and 2019, the Company repurchased 1.7 million shares and zero, of its Class A common stock under its stock repurchase plan for $46.5 million and zero respectively. During the six-month periods ended June 30, 2020 and 2019, the Company repurchased 4.4 million shares and 14,000 shares of its Class A common stock under its stock repurchase plan for $107.4 million and $0.8 million, respectively. As of June 30, 2020, $362.8 million was available for repurchases under the Company’s stock repurchase plan.
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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 approximates fair values due to the short-term nature of these instruments. 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 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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Income Taxes |
6 Months Ended | ||
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Jun. 30, 2020 | |||
Income Taxes [Abstract] | |||
Income Taxes |
Provision for income taxes for the three- and six-month periods of 2020 was $17.8 million and $28.5 million, compared to $24.5 million and $47.3 million for the prior-year periods. The effective tax rates for the three- and six-month periods were 29.8% and 31.6% of pre-tax income compared to 34.6% and 34.6% in the prior-year periods.
The Company accounts for income taxes in accordance with ASC Topic 740 “Income Taxes.” 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 $20.3 million and $20.0 million as of June 30, 2020 and December 31, 2019, respectively.
The Company evaluates its indefinite reinvestment assertions with respect to foreign earnings for each quarter. For all foreign earnings, the Company accrues the applicable foreign income taxes. For the earnings that have been indefinitely reinvested, the Company does not accrue foreign withholding taxes. Undistributed earnings that the Company has indefinitely reinvested, for which no foreign withholding taxes have been provided, aggregate to $60.0 million as of December 31, 2019. If the amount designated as indefinitely reinvested as of December 31, 2019 was repatriated to the United States, the amount of incremental taxes would be approximately $6.0 million. The Company intends to utilize the indefinitely reinvested offshore earnings to fund foreign investments, specifically capital expenditures.
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 2019. With a few exceptions, the Company is no longer subject to state and local income tax examination by tax authorities for the years before 2016. 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 CAP for 2020 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 2012. However, statutes of limitations in certain countries may be as long as ten years. The Company is currently under examination in certain foreign jurisdictions; however, the outcomes of those reviews are not yet determinable. 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 limitations, it is reasonably possible that the Company’s gross unrecognized tax benefits, net of foreign currency adjustments, may decrease in the next 12 months by approximately $1.3 to $2.3 million.
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Segment Information |
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
The Company reports revenue from nine segments, consisting of its seven geographic Nu Skin segments—Mainland China, Americas/Pacific, South Korea, Southeast Asia, Japan, EMEA, and Hong Kong/Taiwan—and its Manufacturing and Grow Tech segments. The Other category includes miscellaneous corporate revenue and related adjustments. These segments reflect the way the chief operating decision maker evaluates the Company’s business performance and allocates resources. Reported revenue includes only the revenue generated by sales to external customers.
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 2 – Summary of Significant Accounting Policies. 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
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Commitments and Contingencies |
6 Months Ended | ||
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Jun. 30, 2020 | |||
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. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse 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.
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Restructuring |
6 Months Ended | ||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||
Restructuring [Abstract] | |||||||||||||||||||||||
Restructuring |
In the fourth quarter of 2018, the Company began a strategic plan to align its resources and capabilities to support its vision of being a world-leading business platform. This program primarily impacted the Company’s information technology infrastructure and organization and other departments within its corporate and Americas offices. As a result of the restructuring program, the Company recorded a non-cash charge of $48.6 million for impairment of information technology assets, including internally developed software for social sharing and digital initiatives, and $22.1 million of cash charges, including $20.1 million for employee severance and $2.0 million for other related cash charges with the restructuring. The restructuring charges were predominately recorded in the Corporate and Other category.
See the table below for detail of restructuring activity for the three months ended March 31, 2019 (U.S. dollars in thousands):
There was no restructuring activity for the three or six months ended June 30, 2020 and three months ended June 30, 2019.
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Summary of Significant Accounting Policies (Policies) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [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 (“US GAAP”) 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 US GAAP 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 June 30, 2020, and for the three- and six-month periods ended June 30, 2020 and 2019. 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, 2019 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, 2019. Additionally, based on the duration and severity of the novel coronavirus (“COVID-19”) pandemic, including but not limited to limitations of holding sales meetings, supply chain disruptions, reduced travel and closed walk-in locations, the Company remains uncertain of the ultimate impact COVID-19 could have on the business. To date, the pandemic has not increased the Company’s costs of or access to capital under the revolving credit facility, and at this time the Company cannot provide assurance it will not in the future. This uncertainty could have an impact in future periods on certain estimates used in the preparation of the second quarter financial results, including, but not limited to impairment of goodwill and other long-lived assets, income tax provision and recoverability of inventory.
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Accounting Pronouncements |
Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance modifies the measurement of expected credit losses of certain financial instruments. This ASU is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods and should be applied on a modified retrospective basis to all periods presented. This ASU was effective for the Company beginning on January 1, 2020. The adoption of the new standard did not have a material impact on the Company’s 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, and early adoption is permitted. This ASU was effective for the Company beginning on January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. This ASU was effective for the Company beginning on January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
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Inventory |
Inventory
Inventories consist of the following (U.S. dollars in thousands):
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Revenue Recognition |
Revenue Recognition
Contract Liabilities – Customer Loyalty Programs
Contract liabilities, recorded as deferred revenue within the accrued expenses line in the 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.
The balance of deferred revenue related to contract liabilities as of June 30, 2020 and December 31, 2019 was $16.0 million and $12.5 million, respectively. The contract liabilities impact to revenue for the three-month periods ended June 30, 2020, and 2019 was a decrease of $4.1 million and an increase of $0.6 million, respectively. The impact to revenue for the six-month periods ended June 30, 2020, and 2019 was a decrease of $3.5 million and an increase $1.1 million.
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Summary of Significant Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Inventories |
Inventories consist of the following (U.S. dollars in thousands):
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Goodwill (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
The following table presents goodwill allocated to the Company’s reportable segments for the periods ended June 30, 2020 and December 31, 2019 (U.S. dollars in thousands):
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Facilities |
The following table summarizes the Company’s debt facilities as of June 30, 2020 and December 31, 2019:
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense |
The components of lease expense were as follows (U.S. dollars in thousands):
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Supplemental Cash Flow Information Related to Leases |
Supplemental cash flow information related to leases was as follows (U.S. dollars in thousands):
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Maturities of Operating Lease Liabilities |
Maturities of lease liabilities were as follows (U.S. dollars in thousands):
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Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis |
The following tables present the fair value hierarchy for those assets 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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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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Restructuring (Tables) |
6 Months Ended | ||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||
Restructuring [Abstract] | |||||||||||||||||||||
Restructuring Activity |
See the table below for detail of restructuring activity for the three months ended March 31, 2019 (U.S. dollars in thousands):
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The Company (Details) |
6 Months Ended |
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Jun. 30, 2020
Segment
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The Company [Abstract] | |
Number of reportable segments | 9 |
Number of geographic segments | 7 |
Summary of Significant Accounting Policies, Inventory (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
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Inventories [Abstract] | ||
Raw materials | $ 92,460 | $ 87,942 |
Finished goods | 169,509 | 187,949 |
Total Inventory, net | $ 261,969 | $ 275,891 |
Summary of Significant Accounting Policies, Revenue Recognition (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
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Contract Liabilities - Customer Loyalty Programs [Abstract] | |||||
Contract liabilities for customer loyalty programs | $ 16.0 | $ 16.0 | $ 12.5 | ||
Contract liabilities impact to revenue | $ (4.1) | $ 0.6 | $ (3.5) | $ 1.1 |
Goodwill (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
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Goodwill [Abstract] | ||
Goodwill | $ 196,573 | $ 196,573 |
Nu Skin [Member] | Mainland China [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 32,179 | 32,179 |
Nu Skin [Member] | Americas/Pacific [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 9,449 | 9,449 |
Nu Skin [Member] | South Korea [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 29,261 | 29,261 |
Nu Skin [Member] | Southeast Asia [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 18,537 | 18,537 |
Nu Skin [Member] | Japan [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 16,019 | 16,019 |
Nu Skin [Member] | EMEA [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 2,875 | 2,875 |
Nu Skin [Member] | Hong Kong/Taiwan [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 6,634 | 6,634 |
Manufacturing [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 72,469 | 72,469 |
Grow Tech [Member] | ||
Goodwill [Abstract] | ||
Goodwill | $ 9,150 | $ 9,150 |
Debt, Debt Facilities (Details) - USD ($) $ in Thousands |
6 Months Ended | ||||||||
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Jun. 30, 2020 |
Dec. 31, 2019 |
Apr. 18, 2018 |
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Debt [Abstract] | |||||||||
Current portion of long-term debt | $ 95,000 | $ 27,500 | |||||||
Credit Agreement [Member] | |||||||||
Debt [Abstract] | |||||||||
Unamortized debt issuance costs | 2,600 | 3,000 | |||||||
Credit Agreement Term Loan Facility [Member] | |||||||||
Debt [Abstract] | |||||||||
Original principal amount | 400,000 | $ 400,000 | |||||||
Balance | [2] | $ 352,500 | [1] | 365,000 | |||||
Interest rate | Variable 30 day: 2.43% | ||||||||
Interest rate | 2.43% | ||||||||
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% | ||||||||
Term of loan | 5 years | ||||||||
Current portion of long-term debt | $ 30,000 | ||||||||
Credit Agreement Revolving Credit Facility [Member] | |||||||||
Debt [Abstract] | |||||||||
Balance | $ 65,000 | $ 0 | [2] | ||||||
Interest rate | Variable 30 day: 2.43% | ||||||||
Interest rate | 2.43% | ||||||||
Term of variable rate | 30 days | ||||||||
Repayment terms | Revolving line of credit expires April 18, 2023. | ||||||||
Term of loan | 5 years | ||||||||
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Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
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Income Taxes [Abstract] | |||||
Provision for income taxes | $ 17,804 | $ 24,527 | $ 28,465 | $ 47,330 | |
Effective tax rate | 29.80% | 34.60% | 31.60% | 34.60% | |
Net deferred tax assets | $ 20,300 | $ 20,300 | $ 20,000 | ||
Undistributed earnings of non-U.S. subsidiaries | 60,000 | ||||
Incremental taxes if undistributed earnings on non-U.S. subsidiaries were repatriated | $ 6,000 | ||||
Minimum [Member] | |||||
Income Taxes [Abstract] | |||||
Decrease in unrecognized tax benefits within the next 12 months that is reasonably possible | (1,300) | $ (1,300) | |||
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 | $ (2,300) | $ (2,300) |
Segment Information, Segment Contribution (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Segment Contribution [Abstract] | ||||
Operating income | $ 58,074 | $ 74,202 | $ 94,639 | $ 142,855 |
Other income (expense) | 1,581 | (3,326) | (4,593) | (6,174) |
Income before provision for income taxes | 59,655 | 70,876 | 90,046 | 136,681 |
Operating Segment [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 135,629 | 141,393 | 242,578 | 279,187 |
Operating Segment [Member] | Nu Skin [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 135,714 | 142,600 | 246,664 | 280,377 |
Operating Segment [Member] | Nu Skin [Member] | Mainland China [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 43,668 | 51,087 | 81,055 | 110,254 |
Operating Segment [Member] | Nu Skin [Member] | South Korea [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 24,090 | 25,979 | 48,189 | 51,647 |
Operating Segment [Member] | Nu Skin [Member] | Americas/Pacific [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 24,343 | 16,420 | 34,928 | 28,439 |
Operating Segment [Member] | Nu Skin [Member] | Southeast Asia [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 16,977 | 20,840 | 33,695 | 38,832 |
Operating Segment [Member] | Nu Skin [Member] | Japan [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 16,455 | 15,823 | 31,047 | 29,929 |
Operating Segment [Member] | Nu Skin [Member] | EMEA [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 3,342 | 3,234 | 3,973 | 4,585 |
Operating Segment [Member] | Nu Skin [Member] | Hong Kong/Taiwan [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 6,839 | 9,217 | 13,777 | 16,691 |
Operating Segment [Member] | Manufacturing [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 5,402 | 3,375 | 8,251 | 7,021 |
Operating Segment [Member] | Grow Tech [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | (5,487) | (4,582) | (12,337) | (8,211) |
Corporate and Other [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | $ (77,555) | $ (67,191) | $ (147,939) | $ (136,332) |
Segment Information, Depreciation and Amortization and Capital Expenditures (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | $ 18,264 | $ 19,052 | $ 37,359 | $ 38,659 |
Capital expenditures | 9,305 | 15,449 | 28,692 | 29,214 |
Operating Segments [Member] | Nu Skin [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 5,867 | 6,701 | 11,449 | 14,036 |
Capital expenditures | 3,125 | 3,840 | 7,670 | 6,607 |
Operating Segments [Member] | Nu Skin [Member] | Mainland China [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 2,558 | 2,909 | 4,982 | 6,025 |
Capital expenditures | 716 | 1,033 | 3,577 | 2,714 |
Operating Segments [Member] | Nu Skin [Member] | South Korea [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 918 | 1,358 | 1,975 | 2,882 |
Capital expenditures | 195 | 30 | 364 | 79 |
Operating Segments [Member] | Nu Skin [Member] | Americas/Pacific [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 253 | 206 | 498 | 420 |
Capital expenditures | 72 | 473 | 766 | 747 |
Operating Segments [Member] | Nu Skin [Member] | Southeast Asia [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 444 | 462 | 931 | 939 |
Capital expenditures | 6 | 225 | 639 | 319 |
Operating Segments [Member] | Nu Skin [Member] | Japan [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 834 | 957 | 1,306 | 2,005 |
Capital expenditures | 1,491 | 946 | 1,648 | 1,118 |
Operating Segments [Member] | Nu Skin [Member] | EMEA [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 242 | 272 | 500 | 712 |
Capital expenditures | 633 | 42 | 660 | 76 |
Operating Segments [Member] | Nu Skin [Member] | Hong Kong/Taiwan [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 618 | 537 | 1,257 | 1,053 |
Capital expenditures | 12 | 1,091 | 16 | 1,554 |
Operating Segments [Member] | Manufacturing [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 2,062 | 1,631 | 3,877 | 3,205 |
Capital expenditures | 603 | 1,579 | 11,108 | 3,181 |
Operating Segments [Member] | Grow Tech [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 1,248 | 945 | 2,473 | 1,820 |
Capital expenditures | 239 | 2,066 | 417 | 5,051 |
Corporate and Other [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 9,087 | 9,775 | 19,560 | 19,598 |
Capital expenditures | $ 5,338 | $ 7,964 | $ 9,497 | $ 14,375 |
Restructuring (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Restructuring [Abstract] | |||||
Non-cash impairment charges | $ 48,600 | ||||
Cash charges associated with restructuring | 22,100 | ||||
Employee severance | 20,100 | ||||
Other related restructuring charges | 2,000 | ||||
Restructuring Reserve [Roll Forward] | |||||
Beginning balance | $ 0 | $ 15,462 | $ 15,462 | ||
Amounts paid | (15,046) | ||||
Adjustments | (416) | ||||
Ending balance | $ 0 | ||||
Restructuring activity | $ 0 | $ 0 | $ 0 |
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