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Segment Information | 9 Months Ended
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Sep. 30, 2019
Segment Information [Abstract] |
Segment Information |
10. | Segment Information
The Company reports revenue from nine segments, consisting of its seven geographic Nu Skin segments—Mainland China, South Korea, Southeast Asia, Americas/Pacific, Japan, Hong Kong/Taiwan, and EMEA—and its Manufacturing and Grow Tech segments, which the Company decided to disclose separately beginning in the first quarter of 2019. Previously, these latter two segments were included in the Other category. 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. Segment information for the three- and nine-month periods ended September 30, 2018 has been recast to reflect the separate disclosure of the Manufacturing and Grow Tech segments, both of which were previously included in the Other category. 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 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.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(U.S. dollars in thousands) |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Nu Skin |  |  |  |  |  |  |  |  |  |  |  |
Mainland China |  | $ | 173,974 |  |  | $ | 226,645 |  |  | $ | 567,795 |  |  | $ | 669,432 |
Americas/Pacific |  |  | 83,635 |  |  |  | 93,580 |  |  |  | 262,932 |  |  |  | 289,859 |
South Korea |  |  | 79,435 |  |  |  | 89,963 |  |  |  | 248,020 |  |  |  | 270,517 |
Southeast Asia |  |  | 78,963 |  |  |  | 86,307 |  |  |  | 226,853 |  |  |  | 236,390 |
Japan |  |  | 67,197 |  |  |  | 63,649 |  |  |  | 194,557 |  |  |  | 190,986 |
Hong Kong/Taiwan |  |  | 40,449 |  |  |  | 44,949 |  |  |  | 124,719 |  |  |  | 138,147 |
EMEA |  |  | 35,742 |  |  |  | 42,819 |  |  |  | 120,960 |  |  |  | 131,810 |
Other |  |  | (62 | ) |  |  | 1,378 |  |  |  | (239 | ) |  |  | 2,643 |
Total Nu Skin |  |  | 559,333 |  |  |  | 649,290 |  |  |  | 1,745,597 |  |  |  | 1,929,784 |
Manufacturing (1) |  |  | 30,601 |  |  |  | 26,022 |  |  |  | 91,430 |  |  |  | 65,937 |
Grow Tech |  |  | — |  |  |  | — |  |  |  | 30 |  |  |  | — |
Total |  | $ | 589,934 |  |  | $ | 675,312 |  |  | $ | 1,837,057 |  |  | $ | 1,995,721 |
(1) | The Manufacturing segment had $7.1 million and $7.4 million of intersegment revenue for the three-months ended September 30, 2019 and 2018, respectively, and $19.5 million and $17.2 million, for the nine months ended September 30, 2019 and 2018, respectively. Intersegment revenue is eliminated in the consolidated financial statements, as well as the reported segment revenue in the table above.
Segment Contribution
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(U.S. dollars in thousands) |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Nu Skin |  |  |  |  |  |  |  |  |  |  |  |
Mainland China |  | $ | 48,619 |  |  | $ | 71,185 |  |  | $ | 158,873 |  |  | $ | 189,901 |
Americas/Pacific |  |  | 12,875 |  |  |  | 11,848 |  |  |  | 41,314 |  |  |  | 38,088 |
South Korea |  |  | 24,770 |  |  |  | 24,754 |  |  |  | 76,417 |  |  |  | 75,836 |
Southeast Asia |  |  | 22,063 |  |  |  | 21,204 |  |  |  | 60,895 |  |  |  | 58,245 |
Japan |  |  | 16,287 |  |  |  | 15,162 |  |  |  | 46,216 |  |  |  | 41,777 |
Hong Kong/Taiwan |  |  | 8,063 |  |  |  | 8,100 |  |  |  | 24,754 |  |  |  | 23,781 |
EMEA |  |  | 1,529 |  |  |  | 2,614 |  |  |  | 6,114 |  |  |  | 10,438 |
Nu Skin contribution |  |  | 134,206 |  |  |  | 154,867 |  |  |  | 414,583 |  |  |  | 438,066 |
Manufacturing |  |  | 4,577 |  |  |  | 2,045 |  |  |  | 11,598 |  |  |  | 4,039 |
Grow Tech |  |  | (5,822 | ) |  |  | (2,732 | ) |  |  | (14,033 | ) |  |  | (6,049 | )
Total segment contribution |  |  | 132,961 |  |  |  | 154,180 |  |  |  | 412,148 |  |  |  | 436,056 |
Corporate and other |  |  | (63,069 | ) |  |  | (73,505 | ) |  |  | (199,401 | ) |  |  | (213,627 | )
Operating income |  |  | 69,892 |  |  |  | 80,675 |  |  |  | 212,747 |  |  |  | 222,429 |
Other income (expense) |  |  | (4,979 | ) |  |  | (6,982 | ) |  |  | (11,153 | ) |  |  | (16,940 | )
Income before provision for income taxes |  | $ | 64,913 |  |  | $ | 73,693 |  |  | $ | 201,594 |  |  | $ | 205,489 |
Depreciation and Amortization
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(U.S. dollars in thousands) |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Nu Skin |  |  |  |  |  |  |  |  |  |  |  |
Mainland China |  | $ | 2,708 |  |  | $ | 3,132 |  |  | $ | 8,733 |  |  | $ | 10,063 |
Americas/Pacific |  |  | 213 |  |  |  | 229 |  |  |  | 633 |  |  |  | 722 |
South Korea |  |  | 1,115 |  |  |  | 1,421 |  |  |  | 3,997 |  |  |  | 4,664 |
Southeast Asia |  |  | 434 |  |  |  | 525 |  |  |  | 1,373 |  |  |  | 1,648 |
Japan |  |  | 938 |  |  |  | 873 |  |  |  | 2,943 |  |  |  | 2,688 |
Hong Kong/Taiwan |  |  | 547 |  |  |  | 279 |  |  |  | 1,600 |  |  |  | 923 |
EMEA |  |  | 268 |  |  |  | 238 |  |  |  | 980 |  |  |  | 589 |
Total Nu Skin |  |  | 6,223 |  |  |  | 6,697 |  |  |  | 20,259 |  |  |  | 21,297 |
Manufacturing |  |  | 1,711 |  |  |  | 2,950 |  |  |  | 4,916 |  |  |  | 8,596 |
Grow Tech |  |  | 1,244 |  |  |  | 652 |  |  |  | 3,064 |  |  |  | 1,098 |
Corporate and other |  |  | 10,127 |  |  |  | 12,392 |  |  |  | 29,725 |  |  |  | 31,842 |
Total |  | $ | 19,305 |  |  | $ | 22,691 |  |  | $ | 57,964 |  |  | $ | 62,833 |
Capital Expenditures
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(U.S. dollars in thousands) |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Nu Skin |  |  |  |  |  |  |  |  |  |  |  |
Mainland China |  | $ | 10,614 |  |  | $ | 2,117 |  |  | $ | 13,328 |  |  | $ | 5,015 |
Americas/Pacific |  |  | 337 |  |  |  | 223 |  |  |  | 1,084 |  |  |  | 652 |
South Korea |  |  | 972 |  |  |  | 135 |  |  |  | 1,051 |  |  |  | 179 |
Southeast Asia |  |  | 140 |  |  |  | 357 |  |  |  | 459 |  |  |  | 552 |
Japan |  |  | 267 |  |  |  | 125 |  |  |  | 1,385 |  |  |  | 508 |
Hong Kong/Taiwan |  |  | 99 |  |  |  | 31 |  |  |  | 1,653 |  |  |  | 629 |
EMEA |  |  | 16 |  |  |  | 348 |  |  |  | 92 |  |  |  | 425 |
Total Nu Skin |  |  | 12,445 |  |  |  | 3,336 |  |  |  | 19,052 |  |  |  | 7,960 |
Manufacturing |  |  | 1,100 |  |  |  | 1,100 |  |  |  | 4,281 |  |  |  | 2,568 |
Grow Tech |  |  | 2,577 |  |  |  | 3,127 |  |  |  | 7,628 |  |  |  | 11,449 |
Corporate and other |  |  | 7,448 |  |  |  | 6,301 |  |  |  | 21,823 |  |  |  | 20,316 |
Total |  | $ | 23,570 |  |  | $ | 13,864 |  |  | $ | 52,784 |  |  | $ | 42,293 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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