Segment Information

9 Months Ended

Sep. 30, 2019

We have four business segments (Asia, Europe, North America, and Latin America and Other) based primarily upon the geographic region where each segment operates, as well as the internal organization of our officers and their responsibilities. Each of the geographic segments operate under the Nature’s Sunshine Products and Synergy® WorldWide brands. The Latin America and Other segment includes our wholesale business in which we sell products to various locally-managed entities independent of the Company that we have granted distribution rights for the relevant market.

Historically, our operating segments were based on brand, customer base, geographical operations with three operating business segments under the Nature’s Sunshine Products brand (NSP Americas; NSP Russia, Central and Eastern Europe; and NSP China), and one operating business segment under the Synergy® WorldWide brand.

During the second quarter of 2019, we realigned into geographic focused operating business segments across brands to further align regional strategies and drive synergies in product, organizational and go-to-market strategies in local markets. Our internal reporting structure was reorganized to support the new reporting segments and the chief operating decision maker now reviews the operating results of the four segments utilizing a geographic focused format. The presentation of the comparative information has been recast to conform to the 2019 presentation.

Net sales for each segment have been reduced by intercompany sales as they are not included in the measure of segment profit or loss reviewed by the chief executive officer. We evaluate performance based on contribution margin by segment before consideration of certain inter-segment transfers and expenses.

Reportable business segment information is as follows (dollar amounts in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Net sales:
Asia	$	33,717	$	34,063	$	102,475	$	97,593
Europe	14,640		13,076		45,312		41,601
North America	34,161		35,578		105,304		109,201
Latin America and Other	6,006		6,111		17,429		19,041
Total net sales	88,524		88,828		270,520		267,436

Contribution margin (1):
Asia	16,236		16,250		48,638		45,891
Europe	4,865		4,035		14,692		13,744
North America	12,169		12,337		37,587		36,929
Latin America and Other	2,608		2,534		7,348		7,355
Total contribution margin	35,878		35,156		108,265		103,919

Selling, general and administrative expenses (2)	31,177		31,643		96,048		97,339
Operating income	4,701		3,513		12,217		6,580

Other loss, net	(1,243)		(353)		(985)		(1,420)
Income before provision for income taxes	$	3,458	$	3,160	$	11,232	$	5,160

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(1) Contribution margin consists of net sales less cost of sales and volume incentives expense.

(2) Service fees in China totaled $2.8 million and $7.3 million for the three and nine-month periods ended September 30, 2019, respectively, compared to $2.7 million and $6.7 million for the three and nine-month periods ended September 30, 2018. These service fees are included in selling, general and administrative expenses.

From an individual country perspective, the United States and South Korea comprise 10 percent or more of consolidated net sales for the three and nine-month periods ended September 30, 2019 and 2018, as follows (dollar amounts in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Net sales:
United States	$	31,579	$	33,182	$	97,734	$	101,322
South Korea	15,226		18,271		52,677		52,463
Other	41,719		37,375		120,109		113,651
	$	88,524	$	88,828	$	270,520	$	267,436

Net sales generated by each of our product lines is set forth below (dollar amounts in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Asia
General health	$	9,450	$	8,290	$	28,287	$	23,046
Immune	105		228		462		663
Cardiovascular	9,997		11,927		33,390		35,326
Digestive	6,309		6,192		18,417		17,886
Personal care	3,472		2,640		9,559		7,908
Weight management	4,384		4,786		12,360		12,764
	33,717		34,063		102,475		97,593
Europe
General health	$	5,232	$	4,857	$	16,352	$	15,785
Immune	1,176		827		3,539		2,603
Cardiovascular	2,433		2,666		8,050		8,529
Digestive	3,374		2,865		10,555		9,227
Personal care	1,905		1,308		5,065		3,519
Weight management	520		553		1,751		1,938
	14,640		13,076		45,312		41,601
North America
General health	$	14,823	$	15,405	$	45,505	$	47,231
Immune	3,731		3,721		11,289		12,026
Cardiovascular	4,780		4,998		14,791		14,635
Digestive	7,946		8,389		25,190		25,896
Personal care	1,617		1,496		4,563		4,340
Weight management	1,264		1,569		3,966		5,073
	34,161		35,578		105,304		109,201
Latin America and Other
General health	$	1,929	$	1,755	$	5,324	$	5,633
Immune	664		617		1,874		1,884
Cardiovascular	378		365		1,078		1,131
Digestive	2,499		2,805		7,680		8,688
Personal care	267		300		784		913
Weight management	269		269		689		792
	6,006		6,111		17,429		19,041
	$	88,524	$	88,828	$	270,520	$	267,436

From an individual country perspective, only the United States comprised 10 percent or more of consolidated property, plant and equipment as follows (dollar amounts in thousands):


	September 30, 2019		December 31, 2018
Property, plant and equipment:
United States	$	56,587	$	60,606
Other	4,465		3,455
Total property, plant and equipment, net	$	61,052	$	64,061

Total assets per segment is set forth below (dollar amounts in thousands):


	September 30, 2019		December 31, 2018
Assets:
Asia	$	70,673	$	59,983
Europe	17,147		16,414
North America	117,973		109,091
Latin America and Other	8,954		7,528
Total assets	$	214,747	$	193,016