20. Segment Information

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

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

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

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

Revenue by Segment

	Year Ended December 31,
(U.S. dollars in thousands)	2015		2016		2017

Mainland China	$	565,527	$	610,414	$	716,991
South Korea		422,341		413,696		361,692
Americas		329,668		276,590		317,380
South Asia/Pacific		321,971		296,758		299,980
Japan		264,214		279,042		256,085
Hong Kong/Taiwan		206,140		183,979		166,696
EMEA		137,186		147,318		160,275
Total	$	2,247,047	$	2,207,797	$	2,279,099

Segment Contribution

	Year Ended December 31,
(U.S. dollars in thousands)	2015			2016			2017

Mainland China	$	73,422		$	135,174		$	211,625
South Korea		130,516			117,142			100,964
Americas		62,937			44,390			47,040
South Asia/Pacific		68,949			71,365			68,141
Japan		51,181			59,175			51,372
Hong Kong/Taiwan		40,718			35,978			27,958
EMEA		11,172			10,386			11,749
Total segment contribution		438,895			473,610			518,849
Corporate and other		(194,193	)		(242,506	)		(244,366	)
Operating income		244,702			231,104			274,483
Other income (expense)		(32,743	)		(18,265	)		(8,916	)
Income before provision for income taxes	$	211,959		$	212,839		$	265,567

Depreciation and Amortization

	Year Ended December 31,
(U.S. dollars in thousands)	2015		2016		2017

Mainland China	$	18,503	$	16,775	$	15,122
South Korea		5,882		6,787		6,499
Americas		2,545		2,617		1,608
South Asia/Pacific		2,022		2,388		2,372
Japan		3,434		3,782		3,554
Hong Kong/Taiwan		2,132		2,507		1,395
EMEA		1,498		1,387		985
Corporate and other		35,349		36,154		40,029
Total	$	71,365	$	72,397	$	71,564

Capital Expenditures

	Year Ended December 31,
(U.S. dollars in thousands)	2015		2016		2017

Mainland China	$	21,998	$	13,656	$	4,539
South Korea		9,983		556		469
Americas		400		1,095		744
South Asia/Pacific		2,959		2,282		1,809
Japan		1,903		1,288		994
Hong Kong/Taiwan		1,345		634		1,350
EMEA		1,430		1,224		1,168
Corporate and other		16,604		29,486		49,083
Total	$	56,622	$	50,221	$	60,156

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%. The table below also includes the Company's country of domicile (the U.S.). 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:

	Year Ended December 31,
(U.S. dollars in thousands)	2015		2016		2017

Mainland China	$	565,527	$	610,414	$	716,991
South Korea		422,341		413,696		361,692
Japan		264,214		279,042		256,085
United States		243,748		201,239		218,734
All others		751,217		703,406		725,597
Total	$	2,247,047	$	2,207,797	$	2,279,099

Revenue by Product Line

	Year Ended December 31,
(U.S. dollars in thousands)	2015		2016		2017

Nu Skin	$	1,363,539	$	1,308,135	$	1,456,386
Pharmanex		877,924		892,738		817,230
Other		5,584		6,924		5,483
Total	$	2,247,047	$	2,207,797	$	2,279,099

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 market are set forth below for the periods ended December 31, 2016 and 2017:

	Year Ended December 31,
(U.S. dollars in thousands)	2015		2016		2017

United States	$	271,058	$	283,868	$	302,884
Mainland China		110,839		97,867		97,046
South Korea		48,702		41,545		42,211
Japan		13,587		11,517		9,342
All others		10,351		9,935		13,104
Total	$	454,537	$	444,732	$	464,587