☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2017
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________
|
NU SKIN ENTERPRISES, INC.
|
||||
(Exact name of registrant as specified in its charter)
|
||||
Delaware
|
87-0565309
|
|||
(State or other jurisdiction of incorporation or organization)
|
75 WEST CENTER STREET
PROVO, UTAH 84601
|
(IRS Employer Identification No.)
|
||
(Address of principal executive offices, including zip code)
|
||||
(801) 345-1000
|
||||
(Registrant's telephone number, including area code)
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Large accelerated filer
☑
|
Accelerated filer
☐
|
Non-accelerated filer
☐
(Do not check if a smaller reporting company)
|
Smaller reporting company
☐
|
Emerging growth company
☐
|
Page
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||||
Part I.
|
Financial Information
|
|||
Item 1.
|
||||
1
|
||||
2
|
||||
3
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||||
4
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||||
5
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||||
Item 2.
|
19
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|||
Item 3.
|
28
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|||
Item 4.
|
28
|
|||
Part II.
|
Other Information
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|||
Item 1.
|
28
|
|||
Item 1A.
|
29
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|||
Item 2.
|
30
|
|||
Item 3.
|
31
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|||
Item 4.
|
31
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|||
Item 5.
|
31
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|||
Item 6.
|
31
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|||
33
|
March 31,
|
December 31,
|
|||||||
2017
|
2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
335,578
|
$
|
357,246
|
||||
Current investments
|
11,759
|
10,880
|
||||||
Accounts receivable
|
28,838
|
31,199
|
||||||
Inventories, net
|
251,947
|
249,936
|
||||||
Prepaid expenses and other
|
77,717
|
65,076
|
||||||
705,839
|
714,337
|
|||||||
Property and equipment, net
|
450,607
|
444,732
|
||||||
Goodwill
|
114,954
|
114,954
|
||||||
Other intangible assets, net
|
61,678
|
63,553
|
||||||
Other assets
|
161,338
|
136,469
|
||||||
Total assets
|
$
|
1,494,416
|
$
|
1,474,045
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
42,076
|
$
|
41,261
|
||||
Accrued expenses
|
253,359
|
275,023
|
||||||
Current portion of long-term debt
|
99,482
|
82,727
|
||||||
394,917
|
399,011
|
|||||||
Long-term debt
|
329,001
|
334,165
|
||||||
Other liabilities
|
82,913
|
76,799
|
||||||
Total liabilities
|
806,831
|
809,975
|
||||||
Commitments and contingencies (Note 11)
|
||||||||
Stockholders' equity:
|
||||||||
Class A common stock – 500 million shares authorized, $.001 par value, 90.6 million shares issued
|
91
|
91
|
||||||
Additional paid-in capital
|
449,762
|
439,635
|
||||||
Treasury stock, at cost – 37.7 million and 38.0 million shares
|
(1,251,788
|
)
|
(1,250,123
|
)
|
||||
Accumulated other comprehensive loss
|
(74,771
|
)
|
(84,122
|
)
|
||||
Retained earnings
|
1,564,291
|
1,558,589
|
||||||
687,585
|
664,070
|
|||||||
Total liabilities and stockholders' equity
|
$
|
1,494,416
|
$
|
1,474,045
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Revenue
|
$
|
499,099
|
$
|
471,831
|
||||
Cost of sales
|
111,266
|
137,869
|
||||||
Gross profit
|
387,833
|
333,962
|
||||||
Operating expenses:
|
||||||||
Selling expenses
|
209,008
|
195,559
|
||||||
General and administrative expenses
|
132,563
|
130,254
|
||||||
Total operating expenses
|
341,571
|
325,813
|
||||||
Operating income
|
46,262
|
8,149
|
||||||
Other income (expense), net
|
(4,567
|
)
|
(2,863
|
)
|
||||
Income before provision for income taxes
|
41,695
|
5,286
|
||||||
Provision for income taxes
|
14,206
|
1,970
|
||||||
Net income
|
$
|
27,489
|
$
|
3,316
|
||||
Net income per share (Note 2):
|
||||||||
Basic
|
$
|
0.52
|
$
|
0.06
|
||||
Diluted
|
$
|
0.51
|
$
|
0.06
|
||||
Weighted-average common shares outstanding (000s):
|
||||||||
Basic
|
52,678
|
55,955
|
||||||
Diluted
|
54,057
|
56,411
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Net income
|
$
|
27,489
|
$
|
3,316
|
||||
Other comprehensive income, net of tax:
|
||||||||
Foreign currency translation adjustment, net of taxes of $(222) and $(2,451), respectively
|
9,695
|
5,589
|
||||||
Net unrealized gains (losses) on foreign currency cash flow hedges, net of taxes of $213 and $931, respectively
|
(387
|
)
|
(1,690
|
)
|
||||
Reclassification adjustment for realized losses (gains) in current earnings, net of taxes of $(24) and $(66), respectively
|
43
|
120
|
||||||
9,351
|
4,019
|
|||||||
Comprehensive income
|
$
|
36,840
|
$
|
7,335
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2017
|
2016
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
27,489
|
$
|
3,316
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
17,625
|
16,945
|
||||||
Equity method earnings
|
(104
|
)
|
—
|
|||||
Japan customs expense
|
—
|
31,355
|
||||||
Foreign currency losses
|
791
|
2,411
|
||||||
Stock-based compensation
|
3,929
|
2,447
|
||||||
Deferred taxes
|
4,522
|
3,668
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
3,269
|
4,254
|
||||||
Inventories, net
|
2,340
|
(6,906
|
)
|
|||||
Prepaid expenses and other
|
(12,088
|
)
|
(68,479
|
)
|
||||
Other assets
|
(2,023
|
)
|
2,361
|
|||||
Accounts payable
|
(125
|
)
|
4,607
|
|||||
Accrued expenses
|
(26,282
|
)
|
5,128
|
|||||
Other liabilities
|
1,984
|
(3,823
|
)
|
|||||
Net cash provided by (used in) operating activities
|
21,327
|
(2,716
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
(15,928
|
)
|
(10,942
|
)
|
||||
Proceeds on investment sales
|
4,188
|
3,902
|
||||||
Purchases of investments
|
(4,716
|
)
|
(4,538
|
)
|
||||
Acquisitions
|
—
|
(3,300
|
)
|
|||||
Investment in equity investee
|
(12,600
|
)
|
—
|
|||||
Net cash used in investing activities
|
(29,056
|
)
|
(14,878
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Exercise of employee stock options and taxes paid related to the net shares settlement of stock awards
|
164
|
2,271
|
||||||
Payments on long-term debt
|
(17,830
|
)
|
(15,308
|
)
|
||||
Payment of cash dividends
|
(18,987
|
)
|
(19,840
|
)
|
||||
Income tax benefit of equity awards
|
—
|
3,402
|
||||||
Proceeds from long-term debt
|
25,000
|
23,721
|
||||||
Repurchases of shares of common stock
|
(6,816
|
)
|
(20,006
|
)
|
||||
Net cash used in financing activities
|
(18,469
|
)
|
(25,760
|
)
|
||||
Effect of exchange rate changes on cash
|
4,530
|
4,087
|
||||||
Net decrease in cash and cash equivalents
|
(21,668
|
)
|
(39,267
|
)
|
||||
Cash and cash equivalents, beginning of period
|
357,246
|
289,354
|
||||||
Cash and cash equivalents, end of period
|
$
|
335,578
|
$
|
250,087
|
Amount of Gain (Loss) Recognized
in Other Comprehensive Loss
|
||||
Three Months Ended
|
||||
March 31,
|
||||
Derivatives designated as hedging instruments:
|
2017
|
2016
|
||
Foreign currency forward contracts related to intercompany
license fee, product sales, and selling expense hedges
|
$ (387)
|
$ (1,690)
|
Derivatives designated
as hedging instruments:
|
Location of
Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
|
Amount of Gain (Loss) Reclassified from Accumulated
Other Comprehensive Loss into Income
|
|||||
Three Months Ended
|
|||||||
March 31,
|
|||||||
2017
|
2016
|
||||||
Foreign currency forward contracts related to intercompany license
fees and product
sales hedges
|
Revenue
|
$ (25)
|
$ (78)
|
||||
Foreign currency forward contracts related to intercompany selling
expense hedges
|
Selling expenses
|
$ (41)
|
$ (107)
|
Three Months Ended
March 31,
|
||||||||
(U.S. dollars in thousands)
|
2017
|
2016
|
||||||
Mainland China
|
$
|
150,004
|
$
|
118,655
|
||||
South Korea
|
82,471
|
86,118
|
||||||
South Asia/Pacific
|
69,798
|
63,578
|
||||||
Americas
|
65,658
|
65,748
|
||||||
Japan
|
61,156
|
65,091
|
||||||
Hong Kong/Taiwan
|
35,948
|
40,056
|
||||||
EMEA
|
34,064
|
32,585
|
||||||
Total
|
$
|
499,099
|
$
|
471,831
|
Three Months Ended
March 31,
|
||||||||
(U.S. dollars in thousands)
|
2017
|
2016
|
||||||
Mainland China
|
$
|
35,427
|
$
|
18,301
|
||||
South Korea
|
24,512
|
24,057
|
||||||
South Asia/Pacific
|
13,980
|
12,453
|
||||||
Americas
|
10,096
|
10,472
|
||||||
Japan
|
12,426
|
12,047
|
||||||
Hong Kong/Taiwan
|
5,083
|
8,358
|
||||||
EMEA
|
1,791
|
347
|
||||||
Total segment contribution
|
103,315
|
86,035
|
||||||
Corporate and other
|
(57,053
|
)
|
(77,886
|
)
|
||||
Operating income
|
46,262
|
8,149
|
||||||
Other income (expense)
|
(4,567
|
)
|
(2,863
|
)
|
||||
Income before provision for income taxes
|
$
|
41,695
|
$
|
5,286
|
Three Months Ended
March 31,
|
||||||||
(U.S. dollars in thousands)
|
2017
|
2016
|
||||||
Mainland China
|
$
|
3,971
|
$
|
4,027
|
||||
South Korea
|
1,632
|
1,641
|
||||||
South Asia/Pacific
|
563
|
563
|
||||||
Americas
|
530
|
659
|
||||||
Japan
|
880
|
893
|
||||||
Hong Kong/Taiwan
|
302
|
564
|
||||||
EMEA
|
272
|
304
|
||||||
Corporate and other
|
9,475
|
8,294
|
||||||
Total
|
$
|
17,625
|
$
|
16,945
|
Three Months Ended
March 31,
|
||||||||
(U.S. dollars in thousands)
|
2017
|
2016
|
||||||
Mainland China
|
$
|
903
|
$
|
4,900
|
||||
South Korea
|
448
|
270
|
||||||
South Asia/Pacific
|
183
|
277
|
||||||
Americas
|
251
|
278
|
||||||
Japan
|
76
|
739
|
||||||
Hong Kong/Taiwan
|
606
|
228
|
||||||
EMEA
|
193
|
465
|
||||||
Corporate and other
|
13,268
|
3,785
|
||||||
Total
|
$
|
15,928
|
$
|
10,942
|
Three Months Ended
March 31,
|
||||||||
(U.S. dollars in thousands)
|
2017
|
2016
|
||||||
Nu Skin
|
$
|
301,873
|
$
|
289,989
|
||||
Pharmanex
|
196,103
|
180,714
|
||||||
Other
|
1,123
|
1,128
|
||||||
Total
|
$
|
499,099
|
$
|
471,831
|
(U.S. dollars in thousands)
|
March 31,
2017
|
December 31,
2016
|
||||||
United States
|
$
|
289,228
|
$
|
283,868
|
||||
Mainland China
|
95,458
|
97,867
|
||||||
South Korea
|
44,280
|
41,545
|
||||||
Japan
|
11,250
|
11,517
|
||||||
All others
|
10,391
|
9,935
|
||||||
Total
|
$
|
450,607
|
$
|
444,732
|
March 31,
2017
|
December 31,
2016
(1)
|
|||||||
Mainland China
|
$
|
32,179
|
$
|
32,179
|
||||
South Korea
|
29,261
|
29,261
|
||||||
South Asia/Pacific
|
18,537
|
18,537
|
||||||
Americas
|
9,449
|
9,449
|
||||||
Japan
|
16,019
|
16,019
|
||||||
Hong Kong/Taiwan
|
6,634
|
6,634
|
||||||
EMEA
|
2,875
|
2,875
|
||||||
Total
|
$
|
114,954
|
$
|
114,954
|
March 31,
2017
|
December 31,
2016
|
|||||||
Raw materials
|
$
|
104,177
|
$
|
108,276
|
||||
Finished goods
|
147,770
|
141,660
|
||||||
$
|
251,947
|
$
|
249,936
|
March 31,
2017
|
||||
Principal
|
$
|
210,000
|
||
Unamortized debt discount (conversion option)
|
(9,003
|
)
|
||
Total long-term debt, net
|
200,997
|
|||
Unamortized debt discount (issuance costs)
|
(5,152
|
)
|
||
Net carrying amount
|
$
|
195,845
|
Facility or
Arrangement
|
Original
Principal Amount
|
Balance as of
March 31,
2017
(1)(2)
|
Balance as of
December 31, 2016
|
Interest Rate
|
Repayment terms
|
|||||
Credit Agreement term loan facility:
|
||||||||||
U.S. dollar
denominated:
|
$127.5 million
|
$105.2 million
|
$108.4 million
|
Variable 30 day: 3.73%
|
One half of the principal amount payable in increasing quarterly installments over a five-year period beginning on December 31, 2014, with the remainder payable at the end of the five-year term.
|
|||||
Japanese yen
denominated:
|
6.6 billion yen
|
5.4 billion yen ($48.8 million as of March 31, 2017)
|
5.6 billion yen ($47.9 million as of December 31, 2016)
|
Variable 30 day: 2.76%
|
One half of the principal amount payable in increasing quarterly installments over a five-year period beginning on December 31, 2014, with the remainder payable at the end of the five-year term.
|
|||||
Credit Agreement revolving credit facility:
|
||||||||||
$72.5 million
|
$47.5 million
|
Variable 30 day: 3.73%
|
Revolving line of credit expires October 2019.
|
|||||||
Korea subsidiary loan:
|
$20.0 million
|
—
|
$10.0 million
|
1.12%
|
Loan paid in full as of March 2017.
|
|||||
Japan subsidiary loan:
|
2.0 billion yen
|
1.0 billion yen ($9.0 million as of March 31, 2017)
|
1.3 billion yen ($11.4 million as of December 31, 2016)
|
0.66%
|
Payable in semi-annual installments over three years that began on January 31, 2016.
|
|||||
Convertible note:
|
$210.0 million
|
$210.0 million
|
$210.0 million
|
4.75%
|
Principal amount payable on June 15, 2020.
|
(1) |
As of March 31, 2017, the current portion of the Company's debt (i.e. becoming due in the next 12 months) included $14.3 million of the balance of its U.S. dollar denominated debt under the Credit Agreement facility, $6.7 million of the balance of its Japanese yen-denominated debt under the Credit Agreement facility and $6.0 million of the Japan subsidiary loan. The Company has classified the $72.5 million borrowed under the revolving line of credit as short term because it is the Company's intention to use the line of credit to borrow and pay back funds over short periods of time.
|
(2) |
The carrying value of the debt reflects the amounts stated in the above table less a debt discount of $11.9 million and debt issuance costs of $5.2 million (consisting of $14.2 million related to the Convertible Note and $2.9 million related to the credit agreement), which is not reflected in this table.
|
Fair Value at March 31, 2017
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Financial assets (liabilities):
|
||||||||||||||||
Cash equivalents and current investments
|
$
|
37,947
|
$
|
—
|
$
|
—
|
$
|
37,947
|
||||||||
Other long-term assets
|
3,557
|
—
|
—
|
3,557
|
||||||||||||
Forward contracts
|
—
|
339
|
—
|
339
|
||||||||||||
Life insurance contracts
|
—
|
—
|
34,024
|
34,024
|
||||||||||||
Total
|
$
|
41,504
|
$
|
339
|
$
|
34,024
|
$
|
75,867
|
Fair Value at December 31, 2016
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Financial assets (liabilities):
|
||||||||||||||||
Cash equivalents and current investments
|
$
|
50,307
|
$
|
—
|
$
|
—
|
$
|
50,307
|
||||||||
Other long-term assets
|
2,782
|
—
|
—
|
2,782
|
||||||||||||
Forward contracts
|
—
|
1,371
|
—
|
1,371
|
||||||||||||
Life insurance contracts
|
—
|
—
|
32,286
|
32,286
|
||||||||||||
Total
|
$
|
53,089
|
$
|
1,371
|
$
|
32,286
|
$
|
86,746
|
Life Insurance Contracts
|
||||
Beginning balance at January 1, 2017
|
$
|
32,286
|
||
Actual return on plan assets:
|
||||
Relating to assets still held at the reporting date
|
1,535
|
|||
Purchases and issuances
|
314
|
|||
Sales and settlements
|
(111
|
)
|
||
Transfers into Level 3
|
—
|
|||
Ending balance at March 31, 2017
|
$
|
34,024
|
Three Months Ended
March 31,
|
||||||||||||
2017
|
2016
|
Change
|
||||||||||
Mainland China
|
$
|
150,004
|
$
|
118,655
|
26%
|
|
||||||
South Korea
|
82,471
|
86,118
|
(4%)
|
|
||||||||
South Asia/Pacific
|
69,798
|
63,578
|
10%
|
|
||||||||
Americas
|
65,658
|
65,748
|
—
|
|||||||||
Japan
|
61,156
|
65,091
|
(6%)
|
|
||||||||
Hong Kong/Taiwan
|
35,948
|
40,056
|
(10%)
|
|
||||||||
EMEA
|
34,064
|
32,585
|
5%
|
|
||||||||
Total
|
$
|
499,099
|
$
|
471,831
|
6%
|
|
Three Months Ended
March 31,
|
||||||||||||
2017
|
2016
|
Change
|
||||||||||
Mainland China
|
$
|
35,427
|
$
|
18,301
|
94%
|
|
||||||
South Korea
|
24,512
|
24,057
|
2%
|
|
||||||||
South Asia/Pacific
|
13,980
|
12,453
|
12%
|
|
||||||||
Americas
|
10,096
|
10,472
|
(4%)
|
|
||||||||
Japan
|
12,426
|
12,047
|
3%
|
|
||||||||
Hong Kong/Taiwan
|
5,083
|
8,358
|
(39%)
|
|
||||||||
EMEA
|
1,791
|
347
|
416%
|
|
As of March 31, 2017
|
As of March 31, 2016
|
|||||||||||||||
Region:
|
Customers
|
Sales Leaders
|
Customers
|
Sales Leaders
|
||||||||||||
Mainland China
|
176,000
|
19,100
|
142,000
|
16,900
|
||||||||||||
South Korea
|
189,000
|
8,000
|
208,000
|
8,800
|
||||||||||||
South Asia/Pacific
|
116,000
|
6,900
|
110,000
|
6,800
|
||||||||||||
Americas
|
172,000
|
6,200
|
164,000
|
6,900
|
||||||||||||
Japan
|
132,000
|
6,400
|
145,000
|
7,000
|
||||||||||||
Hong Kong/Taiwan
|
70,000
|
3,900
|
77,000
|
4,800
|
||||||||||||
EMEA
|
125,000
|
4,100
|
112,000
|
3,800
|
||||||||||||
Total
|
980,000
|
54,600
|
958,000
|
55,000
|
• |
purchases and expenditures for computer systems and equipment, software, and application development.
|
Quarter Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Revenue
|
$
|
499,099
|
$
|
471,831
|
||||
Gross profit
|
$
|
387,833
|
$
|
333,962
|
||||
Japan customs expense
|
—
|
31,355
|
||||||
Gross profit, excluding Japan customs expense
|
$
|
387,833
|
$
|
365,317
|
||||
Gross profit as a % of revenue
|
77.7
|
%
|
70.8
|
%
|
||||
Gross profit, excluding Japan customs expense, as a % of revenue
|
77.7
|
%
|
77.4
|
%
|
Quarter Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Net income
|
$
|
27,489
|
$
|
3,316
|
||||
Japan customs expense
|
—
|
31,355
|
||||||
Tax effect of Japan customs expense
|
—
|
(11,257
|
)
|
|||||
Net income, excluding Japan customs expense
|
$
|
27,489
|
$
|
23,414
|
||||
Diluted earnings per share
|
$
|
0.51
|
$
|
0.06
|
||||
Diluted earnings per share, excluding Japan customs expense
|
$
|
0.51
|
$
|
0.42
|
||||
Diluted weighted-average common shares outstanding (000s) |
54,057
|
56,411
|
• |
any adverse publicity regarding us, our products, our distribution channel, or our competitors;
|
• |
lack of interest in, dissatisfaction with, or the technical failure of, existing or new products;
|
• |
lack of compelling products or income opportunities, including through our sales compensation plans;
|
• |
any negative public perception of our products and their ingredients;
|
• |
any negative public perception of our sales force and direct selling businesses in general;
|
• |
our actions to enforce our policies and procedures;
|
• |
any regulatory actions or charges against us or others in our industry;
|
• |
general economic and business conditions;
|
• |
recruiting efforts of our competitors; and
|
• |
potential saturation or maturity levels in a given country or market which could negatively impact our ability to attract and retain our sales force in such market.
|
(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)
|
||||||||||||
January 1 – 31, 2017
|
—
|
—
|
$
|
199.7
|
||||||||||||
February 1 – 28, 2017
|
—
|
—
|
$
|
199.7
|
||||||||||||
March 1 – 31, 2017
|
136,917
|
$
|
49.76
|
136,917
|
$
|
192.9
|
||||||||||
Total
|
136,917
|
$
|
49.76
|
136,917
|
(1) |
In October 2015, we announced that our board of directors approved a stock repurchase plan. Under this plan, our board of directors authorized the repurchase of up to $500.0 million of our outstanding Class A common stock on the open market or in privately negotiated transactions.
|
3.1 |
Fourth Amended and Restated Bylaws of Nu Skin Enterprises, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed March 10, 2017).
|
10.1 |
Employment Letter Agreement with Mark H. Lawrence (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed March 9, 2017).
|
10.2 |
Leave of Absence Agreement with M. Truman Hunt.
|
31.1 |
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.
|
31.2 |
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.
|
32.1 |
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.
|
32.2 |
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 |
XBRL Instance Document
|
101.SCH |
XBRL Taxonomy Extension Schema Document
|
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB |
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document
|
By:
|
/s/ Mark H. Lawrence
|
|
|
|
Mark H. Lawrence
|
|
|
|
Chief Financial Officer
|
|
|
(Duly Authorized Officer and Principal Financial and Accounting Officer) |
a.
|
Health Insurance
. To the extent allowable under Company's group medical and dental plans, Company shall continue to provide coverage under these plans to Employee during the Special Leave. Employee shall remain liable to pay the employee portion of the insurance costs as established from time to time by Company for its employees. In lieu of coverage under Company's group medical and dental plans, Employee may elect to secure his own private insurance during the Special Leave. In such event, Company shall reimburse Employee for his documented out-of-pocket (and un-reimbursed) costs to acquire such insurance up to an amount equal to the amount Company would have paid (net of Employee's contribution) under Company's group plans to provide medical and/or dental insurance coverage to Employee.
|
b.
|
Product Allotment
. During the Special Leave, Employee may receive (i) Company product from regular inventory having a cost of goods value of up to $6,000 per year for personal use by Employee and his immediate family members; and (ii) an unlimited amount of Company product from Company's employee store for personal use by Employee and his immediate family members. Employee may also use the product for personal gifts in accordance with Company's policies.
|
c.
|
Equity
. With respect to the equity awards that have been granted to Employee under Company's equity incentive plans and the applicable award agreements, except as provided in paragraph d. below, (i) notwithstanding anything in this Agreement to the contrary, for purposes of Employee's equity awards, Employee will be deemed to have voluntarily terminated his employment in connection with this Special Leave and Employee's "Continuous Service" shall be deemed terminated immediately prior to the commencement of this Special Leave, (ii) all unvested equity awards shall immediately terminate upon such termination of Employee's "Continuous Service," and (iii) all vested equity awards shall terminate in accordance with the terms of the individual equity awards with respect to the termination of awards upon termination of "Continuous Service" (e.g., if an award provides that vested options shall terminate 90 days after termination of "Continuous Service", the vested options for such award would terminate 90 days following the last day of "Continuous Service").
|
d.
|
2016 Performance Equity Award
. With respect to the performance stock option granted to Employee on March 2, 2016, (i) the third tranche of options which are scheduled to vest based on Company's earnings per share in 2018 shall terminate in full upon the commencement of the Special Leave; (ii) the Performance Stock Option Agreement applicable to such grant is hereby amended to provide that the second tranche of options scheduled to vest based on Company's earnings per share in 2017 shall remain outstanding, subject to the terms of the Performance Stock Option Agreement, and shall vest in accordance with the vesting schedule for such tranche of options set forth in the Performance Stock Option Agreement and the earnings per share certified by the Executive Compensation Committee; provided, however, the amount of options that may vest shall be reduced by 50% to reflect that Employee only provided service for 50% of the performance period; (iii) and any options that do not vest in accordance with paragraph d.(ii) shall immediately terminate upon certification by the Executive Compensation Committee of the earnings per share for 2017; (iv) the options that vested in the first tranche based on 2016 performance shall terminate in accordance with the original terms of the Performance Stock Option Agreement with respect to the termination of awards upon termination of "Continuous Employment" (i.e., three years from the commencement of the Leave of Absence); and (v) any options in the second tranche that vest pursuant to paragraph d.(ii) above, shall terminate on May 31, 2018.
|
e.
|
Deferred Compensation Plan
. Employee shall be considered to remain in the employment of the Company during the Special Leave to the extent permitted under applicable law with respect to the Company's deferred compensation plan; provided, however, that Company shall not provide any contributions to the Deferred Compensation other than those contributions tied specifically to employment during the first six months of 2017.
|
f.
|
Life Insurance
. During the Special Leave, Company shall continue to pay the premiums for $750,000 in term life insurance coverage for Employee.
|
g.
|
Health Savings Account
. During the Special Leave, Company shall contribute $1,200 per year into Employee's health savings account to the extent Employee remains eligible for such contribution.
|
a.
|
Non-Compete
. In consideration for the compensation payable pursuant to this Agreement, Employee agrees that, during this Special Leave, Employee shall not, directly or indirectly, in any market where Company or subsidiaries engage in business: (i) engage in any Competitive Business; (ii) undertake to plan or organize any Competitive Entity; (iii) become associated or connected in any way with, participate in, be employed by, render services to, or consult with, any Competing Entity (nor shall the Employee discuss the possibility of employment or other relationship with any Competing Entity); or (iv) own any direct or indirect interest in any other Competing Entity; provided, however, this limitation shall not be interpreted as prohibiting Employee from investing in a Competing Entity that is a public company so long as such investment does not exceed 1% of the outstanding securities of such public company and Employee discloses in writing to the Company (a) the name of the public company and the number of shares which he owns, and (b) any material change in the Employee's ownership. This Section 3.a shall not restrict the right of the Employee to practice law in violation of any applicable rules of professional conduct. For purposes of this Section 3, "Competitive Business" shall mean the (i) multi-level marketing channel through which products and services are marketed directly to consumers through a sales force of independent contractors (including, without limitation, through person to person contact, via the telephone, video or through the Internet) who receive rewards or commissions based upon a compensation plan which contemplates a genealogical sales force of multiple levels, with such commissions paid for by (A) sales of products and services by such contractor, and/or (B) sales of products and services by other independent contractors in such contractor's genealogical downline, and (ii) a home-based business opportunity focused on selling products directly to the consumers. For purposes of his Section 3, "Competing Entity" shall mean any entity or person that is engaged, directly or indirectly, in a Competitive Business.
|
b.
|
Employee shall not in any way, directly or indirectly, at any time during this Special Leave or within two years following termination of this Special Leave: (a) recruit, solicit or sponsor any customer, or distributor or other member of Company's sales force, to terminate their relationship with the Company or to form a relationship with, promote, sell or purchase the products or services of, participate as a salesperson of, or otherwise associate with, a Competing Entity; (b) recruit or solicit any distributor or other member of Company's sales force, employee, vendor, consultant or other person or entity in the employment or service of Company or any of its respective subsidiaries or affiliates at the time of such solicitation, in any case to (i) terminate such employment or service, and/or (ii) accept employment, or enter into any consulting or other service arrangement, with any person or entity other than Company or any of its respective subsidiaries or affiliates; or (c) assist any other person in any attempt to do any of the foregoing.
|
a.
|
Title VII of the Civil Rights Acts of 1964 and 1991, as amended, which prohibit discrimination on the basis of race, color, sex, religion, or national origin;
|
b.
|
Section 1981 of the Civil Rights Act of 1866, which prohibits discrimination on the basis of race;
|
c.
|
The Employee Retirement Income Security Act as of the effective date of this Agreement;
|
d.
|
Any state laws against discrimination; or
|
e.
|
Any other federal, state, or local statute or common law relating to employment.
|
(i)
|
Employee should consult with an attorney prior to executing this Agreement;
|
(ii)
|
Employee has at least 21 days within which to consider this Agreement, although Employee may accept the terms of this Agreement at any time within those 21 days;
|
(iii)
|
Employee has at least seven days following the execution of this Agreement by the parties to revoke this Agreement; and
|
(iv)
|
This Agreement will not be effective until the revocation period has expired.
|
NU SKIN ENTERPRISES, INC.
|
|||
/s/ Ritch N. Wood
|
4/24/17
|
||
Ritch Wood
|
Date
|
||
Chief Executive Officer
|
EMPLOYEE
|
|||
/s/ Truman Hunt
|
4/24/17
|
||
Truman Hunt
|
Date
|