☑ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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)
|
Title of each class
|
Name of exchange on which registered
|
|
Class A Common Stock, $.001 par value
|
New York Stock Exchange
|
Large accelerated filer
|
☑ |
Accelerated filer
|
☐ |
Non-accelerated filer
|
☐ |
Smaller Reporting Company
|
☐ |
Emerging growth company
|
☐ |
PART I
|
-1-
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ITEM 1.
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-1-
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-2-
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|||
-5-
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|||
-10-
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|||
-10-
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|||
-19-
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|||
-19-
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|||
-19-
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|||
-20-
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|||
ITEM 1A.
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-21-
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ITEM 1B.
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-47-
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ITEM 2.
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-47-
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ITEM 3.
|
-48-
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ITEM 4.
|
-48-
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PART II
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-48-
|
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ITEM 5.
|
-48-
|
||
ITEM 6.
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-51-
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ITEM 7.
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-52-
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ITEM 7A.
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-74-
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ITEM 8.
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-75-
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ITEM 9.
|
-120-
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ITEM 9A.
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-120-
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||
ITEM 9B.
|
-121-
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||
PART III
|
-121-
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ITEM 10.
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-121-
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ITEM 11.
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-121-
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ITEM 12.
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-121-
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ITEM 13.
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-121-
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ITEM 14.
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-121-
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PART IV
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-121-
|
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ITEM 15.
|
-121-
|
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ITEM 16.
|
-125-
|
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-126-
|
Year Ended December 31,
|
||||||||||||||||||||||||
Product Category
|
2018
|
2017
|
2016
|
|||||||||||||||||||||
Nu Skin
|
$
|
1,659.7
|
62.0
|
%
|
$
|
1,456.4
|
63.9
|
%
|
$
|
1,308.2
|
59.3
|
%
|
||||||||||||
Pharmanex
|
921.3
|
34.4
|
%
|
817.2
|
35.9
|
%
|
892.7
|
40.4
|
%
|
|||||||||||||||
Other
(2)
|
98.0
|
3.6
|
%
|
5.5
|
0.2
|
%
|
6.9
|
0.3
|
%
|
|||||||||||||||
$
|
2,679.0
|
100.0
|
%
|
$
|
2,279.1
|
100.0
|
%
|
$
|
2,207.8
|
100.0
|
%
|
(1) |
In 2018, 88% of our sales were transacted in foreign currencies that were then converted to U.S. dollars for financial reporting purposes at weighted-average exchange rates.
Foreign-currency fluctuations positively impacted reported revenue by less than 1% in both 2018 compared to 2017 and 2017 compared to 2016.
|
(2) |
Other includes the external revenue from the manufacturing entities acquired in the first quarter of 2018 along with a limited number of other products and services, including household
products and technology services.
|
|
• |
Global consumer research to identify needs and insights and refine product concepts;
|
|
• |
Internal research, product development and quality testing;
|
|
• |
Joint research projects, collaborations and clinical studies;
|
|
• |
Identification and assessment of technologies for potential licensing arrangements; and
|
|
• |
Acquisition of technologies.
|
|
• |
our sales force can personally educate consumers about our products, which we believe is more effective for differentiating our products than using traditional mass-media advertising;
|
|
• |
our distribution channel allows for product demonstrations and trial by potential consumers;
|
|
• |
our distribution channel allows our sales force to provide personal testimonials of product efficacy; and
|
|
• |
as compared to other distribution methods, our sales force has the opportunity to provide consumers higher levels of service and encourage repeat purchases.
|
As of December 31, 2018
|
As of December 31, 2017
|
As of December 31, 2016
|
||||||||||||||||||||||
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
|||||||||||||||||||
Mainland China
|
304,000
|
33,100
|
193,000
|
40,600
|
175,000
|
22,000
|
||||||||||||||||||
Americas/Pacific
|
249,000
|
8,300
|
244,000
|
8,900
|
184,000
|
7,300
|
||||||||||||||||||
South Korea
|
182,000
|
7,600
|
173,000
|
8,400
|
192,000
|
9,600
|
||||||||||||||||||
Southeast Asia
|
153,000
|
8,900
|
122,000
|
8,000
|
98,000
|
7,000
|
||||||||||||||||||
Japan
|
130,000
|
5,900
|
132,000
|
6,600
|
137,000
|
6,700
|
||||||||||||||||||
Hong Kong/Taiwan
|
77,000
|
4,800
|
71,000
|
4,700
|
73,000
|
4,600
|
||||||||||||||||||
EMEA
|
149,000
|
4,800
|
135,000
|
4,700
|
129,000
|
4,400
|
||||||||||||||||||
Total
|
1,244,000
|
73,400
|
1,070,000
|
81,900
|
988,000
|
61,600
|
(1) |
Our Velocity sales compensation program enhancements have adjusted the requirements for qualifying and maintaining “Sales Leader” status, which could impact the number of independent
distributors under our global compensation program who achieve such requirements. For example, the level of sales volume necessary to achieve initial qualification has been increased in some markets, and the enhanced program also provides
some flexibility to remain a Sales Leader with lower sales volume for a short time. As of the end of 2017, we had launched Velocity only in the Pacific region within our Americas/Pacific segment, and as of the end of 2018, we had launched
it in our South Korea, Americas/Pacific and Japan segments; Taiwan; and most of the markets in our Southeast Asia segment. Mainland China operates under a different business model and is not impacted by these changes.
|
|
• |
“Distributor-Direct Consumers”—Individuals who purchase products directly from an independent distributor at a price established by the distributor.
|
|
• |
“Company-Direct Consumers”—Individuals who purchase products directly from the company. These consumers are typically referred by a distributor and may purchase at a discount. These
individuals do not have the right to build a Nu Skin business by reselling product or by recruiting others.
|
|
• |
“Basic Distributors”—Distributors who purchase products for personal or family use or for resale to other consumers. These individuals
are not eligible to receive compensation on a multi-
level
basis unless they elect to qualify as a Sales Leader under our global sales compensation plan. We consider these
individuals to be part of our consumer group, as we believe a significant majority of these distributors are purchasing products for personal use and not actively recruiting others, and their purchasing levels are similar to our
“Company-Direct Consumers.”
|
|
• |
“Sales Leaders and Qualifiers”—Distributors who have qualified or are trying to qualify as a Sales Leader. These distributors have elected to pursue the business opportunity as a Sales
Leader and are actively recruiting consumers and distributors and building a sales network under our global sales compensation plan and constitute our sales network.
|
|
• |
by reselling products purchased from the company to consumers
; and
|
|
• |
through
sales compensation
earned on the sale of products under our global
sales compensation plan.
|
Year Ended December 31,
|
||||||||||||||||||||||||
(U.S. dollars in millions)
|
2018
|
2017
|
2016
|
|||||||||||||||||||||
Mainland China
|
$
|
886.5
|
33
|
%
|
$
|
717.0
|
32
|
%
|
$
|
610.4
|
28
|
%
|
||||||||||||
Americas/Pacific
|
385.0
|
14
|
342.4
|
15
|
298.8
|
13
|
||||||||||||||||||
South Korea
|
373.4
|
14
|
361.7
|
16
|
413.7
|
19
|
||||||||||||||||||
Southeast Asia
|
316.9
|
12
|
268.6
|
12
|
271.9
|
12
|
||||||||||||||||||
Japan
|
254.9
|
10
|
256.1
|
11
|
279.0
|
13
|
||||||||||||||||||
Hong Kong/Taiwan
|
185.9
|
7
|
166.7
|
7
|
184.0
|
8
|
||||||||||||||||||
EMEA
|
182.4
|
7
|
160.3
|
7
|
147.3
|
7
|
||||||||||||||||||
Other
|
94.0
|
3
|
6.3
|
—
|
2.7
|
—
|
||||||||||||||||||
Total
|
$
|
2,679.0
|
100
|
%
|
$
|
2,279.1
|
100
|
%
|
$
|
2,207.8
|
100
|
%
|
|
• |
impose requirements related to order cancellations, product returns, inventory buy-backs and cooling-off periods for our sales force and consumers;
|
|
• |
require us, or our
sales
force, to register with government agencies;
|
|
• |
impose limits on the amount of sales compensation we can pay;
|
|
• |
impose
reporting
requirements; and
|
|
• |
require that our sales force is compensated for sales of products and not for recruiting others.
|
Name
|
Age
|
Position
|
||
Steven J. Lund
|
65
|
Executive Chairman of the Board
|
||
Ritch N. Wood
|
53
|
Chief Executive Officer
|
||
Ryan S. Napierski
|
45
|
President
|
||
Mark H. Lawrence
|
49
|
Executive Vice President and Chief Financial Officer
|
||
Joseph Y. Chang
|
66
|
Executive Vice President of Product Development and Chief Scientific Officer
|
||
D. Matthew Dorny
|
54
|
Executive Vice President, General Counsel and Secretary
|
|
• |
suspicions about the legality and ethics of network marketing;
|
|
• |
continued media or regulatory scrutiny regarding our business and our business model in Mainland China;
|
|
• |
the safety or effectiveness of ingredients in our or our competitors' products;
|
|
• |
inquiries, investigations, fines, legal actions, or mandatory or voluntary product recalls involving us, our competitors
,
our
business models or our respective products;
|
|
• |
the actions of our current or former sales force and employees, including any allegations that our sales force or employees have overstated or made false product claims or earnings
representations, or engaged in unethical or illegal activity;
|
|
• |
misperceptions about the types and magnitude of economic benefits offered at different levels of sales engagement in our business; and
|
|
• |
public, governmental or media perceptions of the direct selling
,
nutritional supplement or personal care industries generally.
|
|
• |
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 and other incentive trips and offerings;
|
|
• |
negative sales force reaction to changes in 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, including employment levels;
|
|
• |
recruiting efforts of our competitors; and
|
|
• |
potential saturation or maturity levels in a given market, which could negatively impact our ability to attract and retain our sales force in such market.
|
|
• |
impose requirements related to sign-up, order cancellations, product returns, inventory buy-backs and cooling-off periods for
our
sales force
and consumers;
|
|
• |
require us, or our
sales force
, to register with government agencies;
|
|
• |
impose limits on the amount of sales compensation we can pay;
|
|
• |
impose reporting requirements; and
|
|
• |
require that our sales force is compensated primarily for selling products and not for recruiting others.
|
|
• |
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 an international market;
|
|
• |
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.
|
|
• |
difficulties in assimilating acquired operations or products, including the loss of key employees from acquired businesses and disruption to our direct selling channel;
|
|
• |
diversion of management’s attention from our core business;
|
|
• |
increased fixed costs;
|
|
• |
adverse effects on existing business relationships with our suppliers,
sales force
or consumers; and
|
|
• |
risks associated with entering markets in which we have limited or no prior experience.
|
|
• |
fluctuations in our operating results;
|
|
• |
government investigations of our business;
|
|
• |
trends or adverse publicity related to our business, products, industry or competitors;
|
|
• |
the sale of shares of Class A common stock by significant stockholders;
|
|
• |
demand, and general trends in the market, for our products;
|
|
• |
acquisitions by us or our competitors;
|
|
• |
economic or currency exchange issues in markets in which we operate;
|
|
• |
changes in estimates of our operating performance or changes in recommendations by securities analysts;
|
|
• |
speculative trading, including short selling and options trading; and
|
|
• |
general economic, business, regulatory and political conditions.
|
(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)
|
||||||||||||
October 1 – 31, 2018
|
64,083
|
$
|
72.50
|
64,083
|
$
|
487.7
|
||||||||||
November 1 – 30, 2018
|
248,564
|
67.18
|
248,564
|
471.0
|
||||||||||||
December 1 – 31, 2018
|
—
|
—
|
—
|
471.0
|
||||||||||||
Total
|
312,647
|
68.27
|
312,647
|
(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.
|
Measured Period
|
Nu Skin
|
S&P 500 Index
|
S&P MidCap 400
Consumer Staples Index
|
Peer Group Index
|
||||
December 31, 2013
|
100.00
|
100.00
|
100.00
|
100.00
|
||||
December 31, 2014
|
32.45
|
113.69
|
135.21
|
79.34
|
||||
December 31, 2015
|
29.04
|
115.26
|
130.39
|
84.58
|
||||
December 31, 2016
|
37.87
|
129.05
|
147.44
|
76.45
|
||||
December 31, 2017
|
55.49
|
157.22
|
152.28
|
116.70
|
||||
December 31, 2018
|
50.87
|
150.33
|
141.39
|
128.02
|
Year Ended December 31,
|
||||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
(U.S. dollars in thousands, except per share data and cash dividends)
|
||||||||||||||||||||
Income Statement Data
:
|
||||||||||||||||||||
Revenue
|
$
|
2,679,008
|
$
|
2,279,099
|
$
|
2,207,797
|
$
|
2,247,047
|
$
|
2,569,495
|
||||||||||
Cost of sales
|
634,140
|
502,078
|
500,457
|
(1)
|
489,510
|
(2)
|
478,434
|
(2)
|
||||||||||||
Gross profit
|
2,044,868
|
1,777,021
|
1,707,340
|
1,757,537
|
2,091,061
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Selling expenses
|
1,071,020
|
938,024
|
922,083
|
951,372
|
1,116,572
|
|||||||||||||||
General and administrative expenses
|
662,302
|
564,514
|
554,153
|
561,463
|
622,301
|
|||||||||||||||
Restructuring and impairment expenses
(3)
|
70,686
|
—
|
—
|
—
|
—
|
|||||||||||||||
Total operating expenses
|
1,804,008
|
1,502,538
|
1,476,236
|
1,512,835
|
1,738,873
|
|||||||||||||||
Operating income
|
240,860
|
274,483
|
231,104
|
244,702
|
352,188
|
|||||||||||||||
Other income (expense), net
|
(21,194
|
)
|
(8,916
|
)
|
(18,265
|
)
|
(32,743
|
)
(4)
|
(53,681
|
)
(4)
|
||||||||||
Income before provision for income taxes
|
219,666
|
265,567
|
212,839
|
211,959
|
298,507
|
|||||||||||||||
Provision for income taxes
|
97,779
|
136,130
|
(5)
|
69,753
|
78,913
|
109,331
|
||||||||||||||
Net income
|
$
|
121,887
|
$
|
129,437
|
$
|
143,086
|
$
|
133,046
|
$
|
189,176
|
||||||||||
Net income per share:
|
||||||||||||||||||||
Basic
|
$
|
2.21
|
$
|
2.45
|
$
|
2.58
|
$
|
2.29
|
$
|
3.20
|
||||||||||
Diluted
|
$
|
2.16
|
$
|
2.36
|
$
|
2.55
|
$
|
2.25
|
$
|
3.11
|
||||||||||
Weighted-average common shares outstanding (000s):
|
||||||||||||||||||||
Basic
|
55,170
|
52,806
|
55,412
|
57,997
|
59,073
|
|||||||||||||||
Diluted
|
56,476
|
54,852
|
56,097
|
59,057
|
60,887
|
|||||||||||||||
Balance Sheet Data
(at end of period)
:
|
||||||||||||||||||||
Cash and cash equivalents and current investments
|
$
|
398,257
|
$
|
438,246
|
$
|
368,126
|
$
|
303,725
|
$
|
300,208
|
||||||||||
Working capital
|
359,582
|
330,419
|
315,326
|
298,795
|
416,338
|
|||||||||||||||
Total assets
|
1,694,446
|
1,589,872
|
1,474,045
|
1,505,843
|
1,614,434
|
|||||||||||||||
Current portion of long-term debt
|
69,455
|
77,840
|
82,727
|
67,849
|
82,770
|
|||||||||||||||
Long-term debt
|
361,008
|
310,790
|
334,165
|
181,745
|
164,567
|
|||||||||||||||
Stockholders’ equity
|
781,867
|
704,596
|
664,070
|
825,621
|
942,438
|
|||||||||||||||
Cash dividends declared per share
|
1.46
|
1.44
|
1.42
|
1.40
|
1.38
|
|||||||||||||||
Supplemental Operating Data
(at end of period)
:
|
||||||||||||||||||||
Approximate number of Customers
(6)
|
1,244,000
|
1,070,000
|
988,000
|
994,000
|
1,208,000
|
|||||||||||||||
Number of Sales Leaders
(7)
|
73,400
|
81,900
|
61,600
|
67,600
|
62,000
|
(1) |
Includes a non-cash Japan customs expense of $31.4 million.
|
(2) |
Includes write-downs of inventory of $37.9 million and $50.0 million in 2015 and 2014, respectively, resulting primarily from reduced sales expectations primarily in our Greater China
region.
|
(3) |
Consists of expenses incurred in connection with restructuring and exit activities.
|
(4) |
Includes $10.2 million and $46.3 million of foreign currency charges in 2015 and 2014, respectively, related to the devaluation of the Venezuela currency.
|
(5) |
Includes a negative non-cash net impact of $47.7 million from 2017 tax reform legislation in the United States.
|
(6) |
“Customers” are persons who purchased products directly from the company during the previous three months. Our Customer numbers do not include consumers who purchase products directly
from members of our sales force.
|
(7) |
“Sales Leaders” are independent distributors, and sales employees and independent marketers in Mainland China, who achieve certain qualification requirements.
|
|
• |
developing and marketing innovative, technologically and scientifically advanced products;
|
|
• |
providing compelling initiatives and strong support; and
|
|
• |
offering an attractive sales compensation structure.
|
Year Ended December 31,
|
||||||||||||||||||||||||
(U.S. dollars in millions)
|
2018
|
2017
|
2016
|
|||||||||||||||||||||
Mainland China
|
$
|
886.5
|
33
|
%
|
$
|
717.0
|
32
|
%
|
$
|
610.4
|
28
|
%
|
||||||||||||
Americas/Pacific
|
385.0
|
14
|
342.4
|
15
|
298.8
|
13
|
||||||||||||||||||
South Korea
|
373.4
|
14
|
361.7
|
16
|
413.7
|
19
|
||||||||||||||||||
Southeast Asia
|
316.9
|
12
|
268.6
|
12
|
271.9
|
12
|
||||||||||||||||||
Japan
|
254.9
|
10
|
256.1
|
11
|
279.0
|
13
|
||||||||||||||||||
Hong Kong/Taiwan
|
185.9
|
7
|
166.7
|
7
|
184.0
|
8
|
||||||||||||||||||
EMEA
|
182.4
|
7
|
160.3
|
7
|
147.3
|
7
|
||||||||||||||||||
Other
|
94.0
|
3
|
6.3
|
—
|
2.7
|
—
|
||||||||||||||||||
Total
|
$
|
2,679.0
|
100
|
%
|
$
|
2,279.1
|
100
|
%
|
$
|
2,207.8
|
100
|
%
|
|
• |
cost of products purchased from third-party vendors;
|
|
• |
costs of self-manufactured products;
|
|
• |
cost of adjustments to inventory carrying value;
|
|
• |
freight cost of shipping products to
our sales force
and import duties for the products; and
|
|
• |
royalties and related expenses for licensed technologies.
|
|
• |
wages and benefits;
|
|
• |
rents and utilities;
|
|
• |
depreciation and amortization;
|
|
• |
promotion and advertising;
|
|
• |
professional fees;
|
|
• |
travel;
|
|
• |
research and development; and
|
|
• |
other operating expenses.
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of sales
|
23.7
|
22.0
|
22.7
|
|||||||||
Gross profit
|
76.3
|
78.0
|
77.3
|
|||||||||
Operating expenses:
|
||||||||||||
Selling expenses
|
40.0
|
41.1
|
41.7
|
|||||||||
General and administrative expenses
|
24.7
|
24.8
|
25.1
|
|||||||||
Restructuring and impairment expenses
|
2.6
|
—
|
—
|
|||||||||
Total operating expenses
|
67.3
|
65.9
|
66.8
|
|||||||||
Operating income
|
9.0
|
12.1
|
10.5
|
|||||||||
Other income (expense), net
|
(0.8
|
)
|
(0.4
|
)
|
(0.8
|
)
|
||||||
Income before provision for income taxes
|
8.2
|
11.7
|
9.7
|
|||||||||
Provision for income taxes
|
3.7
|
6.0
|
3.2
|
|||||||||
Net income
|
4.5
|
%
|
5.7
|
%
|
6.5
|
%
|
Year Ended
December 31,
|
Constant | |||||||||||||||
Currency
|
||||||||||||||||
2018
|
2017
|
Change
|
Change
(1)
|
|||||||||||||
Mainland China
|
$
|
886,472
|
$
|
716,991
|
24
|
%
|
21
|
%
|
||||||||
Americas/Pacific
|
385,034
|
342,429
|
12
|
%
|
20
|
%
|
||||||||||
South Korea
|
373,357
|
361,692
|
3
|
%
|
1
|
%
|
||||||||||
Southeast Asia
|
316,890
|
268,631
|
18
|
%
|
18
|
%
|
||||||||||
Japan
|
254,939
|
256,085
|
—
|
(2
|
%)
|
|||||||||||
Hong Kong/ Taiwan
|
185,893
|
166,696
|
12
|
%
|
11
|
%
|
||||||||||
EMEA
|
182,394
|
160,275
|
14
|
%
|
10
|
%
|
||||||||||
Other
|
94,029
|
6,300
|
1,393
|
%
|
1,393
|
%
|
||||||||||
Total
|
$
|
2,679,008
|
$
|
2,279,099
|
18
|
%
|
17
|
%
|
|
(1) |
Constant-currency revenue change is a non-GAAP financial measure. See "Non-GAAP Financial Measures," below.
|
2018
|
2017
|
Change
|
||||||||||
Mainland China
|
$
|
253,598
|
$
|
211,625
|
20
|
%
|
||||||
Americas/Pacific
|
52,433
|
51,885
|
1
|
%
|
||||||||
South Korea
|
107,215
|
100,964
|
6
|
%
|
||||||||
Southeast Asia
|
78,598
|
63,296
|
24
|
%
|
||||||||
Japan
|
56,676
|
51,372
|
10
|
%
|
||||||||
Hong Kong/Taiwan
|
33,392
|
27,958
|
19
|
%
|
||||||||
EMEA
|
14,773
|
11,749
|
26
|
%
|
As of
December 31, 2018
|
As of
December 31, 2017
|
% Increase
(Decrease)
|
||||||||||||||||||||||
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
|||||||||||||||||||
Mainland China
|
304,000
|
33,100
|
193,000
|
40,600
|
58
|
%
|
(18
|
%)
|
||||||||||||||||
Americas/Pacific
|
249,000
|
8,300
|
244,000
|
8,900
|
2
|
%
|
(7
|
%)
|
||||||||||||||||
South Korea
|
182,000
|
7,600
|
173,000
|
8,400
|
5
|
%
|
(10
|
%)
|
||||||||||||||||
Southeast Asia
|
153,000
|
8,900
|
122,000
|
8,000
|
25
|
%
|
11
|
%
|
||||||||||||||||
Japan
|
130,000
|
5,900
|
132,000
|
6,600
|
(2
|
%)
|
(11
|
%)
|
||||||||||||||||
Hong Kong/Taiwan
|
77,000
|
4,800
|
71,000
|
4,700
|
8
|
%
|
2
|
%
|
||||||||||||||||
EMEA
|
149,000
|
4,800
|
135,000
|
4,700
|
10
|
%
|
2
|
%
|
||||||||||||||||
Total
|
1,244,000
|
73,400
|
1,070,000
|
81,900
|
16
|
%
|
(10
|
%)
|
Year Ended
December 31,
|
Constant
Currency
|
|||||||||||||||
2017
|
2016
|
Change
|
Change
(1)
|
|||||||||||||
Mainland China
|
$
|
716,991
|
$
|
610,414
|
17
|
%
|
19
|
%
|
||||||||
Americas/Pacific
|
342,429
|
298,774
|
15
|
%
|
15
|
%
|
||||||||||
South Korea
|
361,692
|
413,696
|
(13
|
%)
|
(15
|
%)
|
||||||||||
Southeast Asia
|
268,631
|
271,897
|
(1
|
%)
|
—
|
|||||||||||
Japan
|
256,085
|
279,042
|
(8
|
%)
|
(5
|
%)
|
||||||||||
Hong Kong/ Taiwan
|
166,696
|
183,979
|
(9
|
%)
|
(12
|
%)
|
||||||||||
EMEA
|
160,275
|
147,318
|
9
|
%
|
6
|
%
|
||||||||||
Other
|
6,300
|
2,677
|
135
|
%
|
135
|
%
|
||||||||||
Total
|
$
|
2,279,099
|
$
|
2,207,797
|
3
|
%
|
3
|
%
|
|
(1) |
Constant-currency revenue change is a non-GAAP financial measure. See "Non-GAAP Financial Measures," below.
|
2017
|
2016
|
Change
|
||||||||||
Mainland China
|
$
|
211,625
|
$
|
135,174
|
57
|
%
|
||||||
Americas/Pacific
|
51,885
|
47,803
|
9
|
%
|
||||||||
South Korea
|
100,964
|
117,142
|
(14
|
%)
|
||||||||
Southeast Asia
|
63,296
|
67,952
|
(7
|
%)
|
||||||||
Japan
|
51,372
|
59,175
|
(13
|
%)
|
||||||||
Hong Kong/Taiwan
|
27,958
|
35,978
|
(22
|
%)
|
||||||||
EMEA
|
11,749
|
10,386
|
13
|
%
|
As of
December 31, 2017
|
As of
December 31, 2016
|
% Increase
(Decrease)
|
||||||||||||||||||||||
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
|||||||||||||||||||
Mainland China
|
193,000
|
40,600
|
175,000
|
22,000
|
10
|
%
|
85
|
%
|
||||||||||||||||
Americas/Pacific
|
244,000
|
8,900
|
184,000
|
7,300
|
33
|
%
|
22
|
%
|
||||||||||||||||
South Korea
|
173,000
|
8,400
|
192,000
|
9,600
|
(10
|
%)
|
(13
|
%)
|
||||||||||||||||
Southeast Asia
|
122,000
|
8,000
|
98,000
|
7,000
|
24
|
%
|
14
|
%
|
||||||||||||||||
Japan
|
132,000
|
6,600
|
137,000
|
6,700
|
(4
|
%)
|
(1
|
%)
|
||||||||||||||||
Hong Kong/Taiwan
|
71,000
|
4,700
|
73,000
|
4,600
|
(3
|
%)
|
2
|
%
|
||||||||||||||||
EMEA
|
135,000
|
4,700
|
129,000
|
4,400
|
5
|
%
|
7
|
%
|
||||||||||||||||
Total
|
1,070,000
|
81,900
|
988,000
|
61,600
|
8
|
%
|
33
|
%
|
|
• |
the expansion and upgrade of facilities in our various markets; and
|
|
• |
purchases and expenditures for computer systems and equipment, software, application development and the migration of legacy systems to cloud-based systems.
|
Total
|
2019
|
2020-2021
|
2022-2023
|
Thereafter
|
||||||||||||||||
Long-term debt obligations
(1)
|
$
|
385,000
|
$
|
20,000
|
$
|
57,500
|
$
|
307,500
|
$ |
─
|
||||||||||
Interest payable
|
75,216
|
20,365
|
34,490
|
20,361
|
─
|
|||||||||||||||
Operating lease obligations
|
116,478
|
39,358
|
47,819
|
21,673
|
7,628
|
|||||||||||||||
Financing obligations
|
4,943
|
726
|
1,505
|
1,564
|
1,148
|
|||||||||||||||
Purchase obligations
|
160,480
|
126,043
|
24,864
|
5,216
|
4,357
|
|||||||||||||||
Other long-term liabilities reflected on the balance sheet
(2)
|
111,916
|
8,551
|
13,575
|
13,430
|
76,360
|
|||||||||||||||
Total
|
$
|
854,033
|
$
|
215,043
|
$
|
179,753
|
$
|
369,744
|
$ |
89,493
|
|
(1) |
The carrying value of the debt reflects the amounts stated in the above table less a debt discount of $4 million.
|
|
(2) |
The timing of the commitments in Other long-term liabilities reflected on the balance sheet is uncertain and represents management’s best estimate.
|
As of December 31, 2018
|
As of December 31, 2017
|
As of December 31, 2016
|
||||||||||||||||||||||
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
Customers
|
Sales
Leaders
|
|||||||||||||||||||
Mainland China
|
304,000
|
33,100
|
193,000
|
40,600
|
175,000
|
22,000
|
||||||||||||||||||
Americas/Pacific
|
249,000
|
8,300
|
244,000
|
8,900
|
184,000
|
7,300
|
||||||||||||||||||
South Korea
|
182,000
|
7,600
|
173,000
|
8,400
|
192,000
|
9,600
|
||||||||||||||||||
Southeast Asia
|
153,000
|
8,900
|
122,000
|
8,000
|
98,000
|
7,000
|
||||||||||||||||||
Japan
|
130,000
|
5,900
|
132,000
|
6,600
|
137,000
|
6,700
|
||||||||||||||||||
Hong Kong/Taiwan
|
77,000
|
4,800
|
71,000
|
4,700
|
73,000
|
4,600
|
||||||||||||||||||
EMEA
|
149,000
|
4,800
|
135,000
|
4,700
|
129,000
|
4,400
|
||||||||||||||||||
Total
|
1,244,000
|
73,400
|
1,070,000
|
81,900
|
988,000
|
61,600
|
2018
|
2017
|
|||||||||||||||||||||||||||||||
4
th
Quarter
|
3
rd
Quarter
|
2
nd
Quarter
|
1
st
Quarter
|
4
th
Quarter
|
3
rd
Quarter
|
2
nd
Quarter
|
1
st
Quarter
|
|||||||||||||||||||||||||
Revenue
|
$
|
683.3
|
$
|
675.3
|
$
|
704.2
|
$
|
616.2
|
$
|
666.2
|
$
|
563.7
|
$
|
550.1
|
$
|
499.1
|
||||||||||||||||
Gross profit
|
521.4
|
517.9
|
535.6
|
469.9
|
517.7
|
442.9
|
428.6
|
387.8
|
||||||||||||||||||||||||
Operating income
|
18.4
|
80.7
|
82.8
|
59.0
|
99.1
|
64.4
|
64.7
|
46.3
|
||||||||||||||||||||||||
Net income
|
(17.8
|
)
|
53.1
|
51.0
|
35.5
|
18.2
|
41.7
|
42.0
|
27.5
|
|||||||||||||||||||||||
Net income per share:
|
||||||||||||||||||||||||||||||||
Basic
|
(0.32
|
)
|
0.99
|
0.92
|
0.66
|
0.35
|
0.79
|
0.79
|
0.52
|
|||||||||||||||||||||||
Diluted
|
(0.32
|
)
|
0.94
|
0.90
|
0.64
|
0.33
|
0.76
|
0.77
|
0.51
|
2018
|
2017
|
|||||||||||||||||||||||||||||||
4
th
Quarter
|
3
rd
Quarter
|
2
nd
Quarter
|
1
st
Quarter
|
4
th
Quarter
|
3
rd
Quarter
|
2
nd
Quarter
|
1
st
Quarter
|
|||||||||||||||||||||||||
Argentina
|
37.1
|
31.1
|
23.0
|
19.7
|
17.6
|
17.3
|
15.8
|
15.6
|
||||||||||||||||||||||||
Australia
|
1.4
|
1.4
|
1.3
|
1.3
|
1.3
|
1.3
|
1.3
|
1.3
|
||||||||||||||||||||||||
Canada
|
1.3
|
1.3
|
1.3
|
1.3
|
1.3
|
1.3
|
1.3
|
1.3
|
||||||||||||||||||||||||
Eurozone countries
|
0.9
|
0.9
|
0.8
|
0.8
|
0.8
|
0.9
|
0.9
|
0.9
|
||||||||||||||||||||||||
Hong Kong
|
7.8
|
7.8
|
7.8
|
7.8
|
7.8
|
7.8
|
7.8
|
7.8
|
||||||||||||||||||||||||
Indonesia
|
14,763
|
14,620
|
13,961
|
13,577
|
13,535
|
13,331
|
13,311
|
13,342
|
||||||||||||||||||||||||
Japan
|
112.8
|
111.5
|
109.2
|
108.2
|
112.9
|
111.0
|
111.1
|
113.6
|
||||||||||||||||||||||||
Mainland China
|
6.9
|
6.8
|
6.4
|
6.4
|
6.6
|
6.7
|
6.9
|
6.9
|
||||||||||||||||||||||||
Malaysia
|
4.2
|
4.1
|
4.0
|
3.9
|
4.2
|
4.3
|
4.3
|
4.4
|
||||||||||||||||||||||||
Philippines
|
53.2
|
53.5
|
52.5
|
51.6
|
50.8
|
50.9
|
49.9
|
50.0
|
||||||||||||||||||||||||
Singapore
|
1.4
|
1.4
|
1.3
|
1.3
|
1.4
|
1.4
|
1.4
|
1.4
|
||||||||||||||||||||||||
South Korea
|
1,128.3
|
1121.1
|
1080.4
|
1072.7
|
1,104.3
|
1,132.7
|
1,130.6
|
1,151.2
|
||||||||||||||||||||||||
Taiwan
|
30.8
|
30.7
|
29.7
|
29.3
|
30.1
|
30.3
|
30.3
|
31.0
|
||||||||||||||||||||||||
Thailand
|
32.8
|
33.0
|
32.0
|
31.6
|
32.9
|
33.3
|
34.3
|
35.1
|
||||||||||||||||||||||||
Vietnam
|
23,318
|
23,237
|
22,808
|
22,740
|
22,714
|
22,729
|
22,709
|
22,715
|
1.
|
Financial Statements
. Set forth below is the index
to the Financial Statements included in this Item 8:
|
Page
|
|
76
|
|
77
|
|
78
|
|
79
|
|
80
|
|
81 | |
118 |
2.
|
Financial Statement Schedules
: Financial statement schedules have been omitted because they
are not required or are not applicable, or because the required information is shown in the financial statements or notes thereto.
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
386,911
|
$
|
426,399
|
||||
Current investments
|
11,346
|
11,847
|
||||||
Accounts receivable
|
53,282
|
33,196
|
||||||
Inventories, net
|
295,821
|
253,454
|
||||||
Prepaid expenses and other
|
51,877
|
52,893
|
||||||
799,237
|
777,789
|
|||||||
Property and equipment, net
|
464,535
|
464,587
|
||||||
Goodwill
|
196,573
|
114,954
|
||||||
Other intangible assets, net
|
89,989
|
67,647
|
||||||
Other assets
|
144,112
|
164,895
|
||||||
Total assets
|
$
|
1,694,446
|
$
|
1,589,872
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$
|
47,617
|
$
|
50,341
|
||||
Accrued expenses
|
322,583
|
319,189
|
||||||
Current portion of long-term debt
|
69,455
|
77,840
|
||||||
439,655
|
447,370
|
|||||||
Long-term debt
|
361,008
|
310,790
|
||||||
Other liabilities
|
111,916
|
127,116
|
||||||
Total liabilities
|
912,579
|
885,276
|
||||||
Commitments and contingencies (Notes 7 and 19)
|
||||||||
Stockholders’ equity
|
||||||||
Class A common stock – 500 million shares authorized,
$.001 par
value, 90.6 million shares issued
|
91
|
91
|
||||||
Additional paid-in capital
|
552,564
|
466,349
|
||||||
Treasury stock, at cost – 35.2 million and 37.9 million shares
|
(1,326,605
|
)
|
(1,304,694
|
)
|
||||
Accumulated other comprehensive loss
|
(79,934
|
)
|
(66,318
|
)
|
||||
Retained earnings
|
1,635,751
|
1,609,168
|
||||||
781,867
|
704,596
|
|||||||
Total liabilities and stockholders’ equity
|
$
|
1,694,446
|
$
|
1,589,872
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Revenue
|
$
|
2,679,008
|
$
|
2,279,099
|
$
|
2,207,797
|
||||||
Cost of sales
|
634,140
|
502,078
|
500,457
|
|||||||||
Gross profit
|
2,044,868
|
1,777,021
|
1,707,340
|
|||||||||
Operating expenses:
|
||||||||||||
Selling expenses
|
1,071,020
|
938,024
|
922,083
|
|||||||||
General and administrative expenses
|
662,302
|
564,514
|
554,153
|
|||||||||
Restructuring and impairment expenses
|
70,686
|
—
|
—
|
|||||||||
Total operating expenses
|
1,804,008
|
1,502,538
|
1,476,236
|
|||||||||
Operating income
|
240,860
|
274,483
|
231,104
|
|||||||||
Other income (expense), net (Note 20)
|
(21,194
|
)
|
(8,916
|
)
|
(18,265
|
)
|
||||||
Income before provision for income taxes
|
219,666
|
265,567
|
212,839
|
|||||||||
Provision for income taxes
|
97,779
|
136,130
|
69,753
|
|||||||||
Net income
|
$
|
121,887
|
$
|
129,437
|
$
|
143,086
|
||||||
Net income per share:
|
||||||||||||
Basic
|
$
|
2.21
|
$
|
2.45
|
$
|
2.58
|
||||||
Diluted
|
$
|
2.16
|
$
|
2.36
|
$
|
2.55
|
||||||
Weighted-average common shares outstanding (000s):
|
||||||||||||
Basic
|
55,170
|
52,806
|
55,412
|
|||||||||
Diluted
|
56,476
|
54,852
|
56,097
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Net income
|
$
|
121,887
|
$
|
129,437
|
$
|
143,086
|
||||||
Other comprehensive income:
|
||||||||||||
Foreign currency translation adjustment, net of taxes of $2,275, $(8,056), and $2,483 respectively
|
(13,474
|
)
|
18,264
|
(13,127
|
)
|
|||||||
Net unrealized gains/(losses) on foreign currency cash flow hedges, net of taxes of $18, $84 and $784, respectively
|
(160
|
)
|
(152
|
)
|
(1,423
|
)
|
||||||
Less: Reclassification adjustment for realized losses/(gains) in current earnings, net of taxes of $(2), $169, and $(935),
respectively
|
18
|
(308
|
)
|
1,697
|
||||||||
(13,616
|
)
|
17,804
|
(12,853
|
)
|
||||||||
Comprehensive income
|
$
|
108,271
|
$
|
147,241
|
$
|
130,233
|
Class A
Common
Stock
|
Additional
Paid-in
Capital
|
Treasury
Stock
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
|
Total
|
|||||||||||||||||||
Balance at January 1, 2016
|
$
|
91
|
$
|
419,921
|
$
|
(1,017,063
|
)
|
$
|
(71,269
|
)
|
$
|
1,493,941
|
$
|
825,621
|
||||||||||
Net income
|
—
|
—
|
—
|
—
|
143,086
|
143,086
|
||||||||||||||||||
Other comprehensive income, net of tax
|
—
|
—
|
—
|
(12,853
|
)
|
—
|
(12,853
|
)
|
||||||||||||||||
Repurchase of Class A common stock (Note 8)
|
—
|
—
|
(247,208
|
)
|
—
|
—
|
(247,208
|
)
|
||||||||||||||||
Exercise of employee stock options (1.1 million shares)/vesting
of
stock awards
|
—
|
159
|
14,148
|
—
|
—
|
14,307
|
||||||||||||||||||
Excess tax benefit from equity awards
|
—
|
3,840
|
—
|
—
|
—
|
3,840
|
||||||||||||||||||
Stock-based compensation
|
—
|
8,890
|
—
|
—
|
—
|
8,890
|
||||||||||||||||||
Equity component of convertible note issuance (net)
|
—
|
6,825
|
—
|
—
|
—
|
6,825
|
||||||||||||||||||
Cash dividends
|
—
|
—
|
—
|
—
|
(78,438
|
)
|
(78,438
|
)
|
||||||||||||||||
Balance at December 31, 2016
|
91
|
439,635
|
(1,250,123
|
)
|
(84,122
|
)
|
1,558,589
|
664,070
|
||||||||||||||||
Cumulative effect adjustment from adoption of ASU 2016-09
|
—
|
2,800
|
—
|
—
|
(2,800
|
)
|
—
|
|||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
129,437
|
129,437
|
||||||||||||||||||
Other comprehensive income, net of tax
|
—
|
—
|
—
|
17,804
|
—
|
17,804
|
||||||||||||||||||
Repurchase of Class A common stock (Note 8)
|
—
|
—
|
(71,731
|
)
|
—
|
—
|
(71,731
|
)
|
||||||||||||||||
Exercise of employee stock options (1.2 million shares)/vesting of stock awards
|
—
|
9,479
|
14,964
|
—
|
—
|
24,443
|
||||||||||||||||||
Stock-based compensation
|
—
|
19,314
|
—
|
—
|
—
|
19,314
|
||||||||||||||||||
Acquisition of noncontrolling interests
|
—
|
(11,067
|
)
|
—
|
—
|
—
|
(11,067
|
)
|
||||||||||||||||
Acquisition of equity method investment (0.2 million shares)
|
—
|
6,188
|
2,196
|
—
|
—
|
8,384
|
||||||||||||||||||
Cash dividends
|
—
|
—
|
—
|
—
|
(76,058
|
)
|
(76,058
|
)
|
||||||||||||||||
Balance at December 31, 2017
|
$
|
91
|
$
|
466,349
|
$
|
(1,304,694
|
)
|
$
|
(66,318
|
)
|
$
|
1,609,168
|
$
|
704,596
|
||||||||||
Cumulative effect adjustment from adoption of ASC 606
|
—
|
—
|
—
|
—
|
(13,042
|
)
|
(13,042
|
)
|
||||||||||||||||
Cumulative effect adjustment from adoption of ASU 2018-02
|
—
|
—
|
—
|
—
|
(1,681
|
)
|
(1,681
|
)
|
||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
121,887
|
121,887
|
||||||||||||||||||
Other comprehensive income, net of tax
|
—
|
—
|
—
|
(13,616
|
)
|
—
|
(13,616
|
)
|
||||||||||||||||
Repurchase of Class A common stock (Note 8)
|
—
|
—
|
(69,565
|
)
|
—
|
—
|
(69,565
|
)
|
||||||||||||||||
Exercise of employee stock options (0.5 million shares)/vesting of stock awards
|
—
|
2,804
|
7,973
|
—
|
—
|
10,777
|
||||||||||||||||||
Stock-based compensation
|
—
|
26,609
|
—
|
—
|
—
|
26,609
|
||||||||||||||||||
Business Acquisitions (1.5 million shares)
|
—
|
80,064
|
19,794
|
—
|
—
|
99,858
|
||||||||||||||||||
Equity component of convertible note settlement (net)
|
—
|
(23,262
|
)
|
19,887
|
—
|
—
|
(3,375
|
)
|
||||||||||||||||
Cash dividends
|
—
|
—
|
—
|
—
|
(80,581
|
)
|
(80,581
|
)
|
||||||||||||||||
Balance at December 31, 2018
|
$
|
91
|
$
|
552,564
|
$
|
(1,326,605
|
)
|
$
|
(79,934
|
)
|
$
|
1,635,751
|
$
|
781,867
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$
|
121,887
|
$
|
129,437
|
$
|
143,086
|
||||||
Adjustments to reconcile net income to net cash provided
by
operating activities:
|
||||||||||||
Depreciation and amortization
|
83,003
|
71,564
|
72,397
|
|||||||||
Impairment of fixed assets
|
48,551
|
─
|
─
|
|||||||||
Equity method earnings
|
(456
|
)
|
(1,048
|
)
|
─
|
|||||||
Gain on step acquisition
|
(13,644
|
)
|
─
|
─
|
||||||||
Loss on extinguishment of debt
|
7,220
|
|||||||||||
Japan customs expense
|
─
|
─
|
31,355
|
|||||||||
Foreign currency (gains)/losses
|
16,381
|
(3,014
|
)
|
8,863
|
||||||||
Stock-based compensation
|
26,609
|
19,314
|
8,890
|
|||||||||
Deferred taxes
|
(14,929
|
)
|
39,213
|
(17,652
|
)
|
|||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
(10,453
|
)
|
(103
|
)
|
3,357
|
|||||||
Inventories, net
|
(33,371
|
)
|
7,537
|
9,801
|
||||||||
Prepaid expenses and other
|
(1,536
|
)
|
14,250
|
37,789
|
||||||||
Other assets
|
887
|
(11,658
|
)
|
(3,969
|
)
|
|||||||
Accounts payable
|
(9,164
|
)
|
6,834
|
13,443
|
||||||||
Accrued expenses
|
(7,433
|
)
|
22,490
|
(33,624
|
)
|
|||||||
Other liabilities
|
(10,814
|
)
|
7,739
|
1,527
|
||||||||
Net cash provided by (used in) operating activities
|
202,738
|
302,555
|
275,263
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Purchases of property and equipment
|
(70,371
|
)
|
(60,156
|
)
|
(50,221
|
)
|
||||||
Proceeds on investment sales
|
11,536
|
11,269
|
18,132
|
|||||||||
Purchases of investments
|
(11,420
|
)
|
(11,332
|
)
|
(17,080
|
)
|
||||||
Acquisitions and investments in equity investees
|
(38,506
|
)
|
(31,745
|
)
|
(8,692
|
)
|
||||||
Net cash used in investing activities
|
(108,761
|
)
|
(91 964
|
)
|
(57,861
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Payment of cash dividends
|
(80,581
|
)
|
(76,058
|
)
|
(78,438
|
)
|
||||||
Repurchase of shares of common stock
|
(69,565
|
)
|
(71,731
|
)
|
(247,208
|
)
|
||||||
Exercise of employee stock options and taxes paid related to the net shares settlement of stock awards
|
10,777
|
24,443
|
14,307
|
|||||||||
Income tax benefit of equity awards
|
─
|
─
|
5,651
|
|||||||||
Payments on long-term debt
|
(552,500
|
)
|
(103,226
|
)
|
(56,151
|
)
|
||||||
Payment of debt issuance costs
|
(7,243
|
)
|
─
|
(6,596
|
)
|
|||||||
Proceeds from long-term debt
|
582,398
|
67,000
|
233,721
|
|||||||||
Net cash used in financing activities
|
(116,714
|
)
|
(159,572
|
)
|
(134,714
|
)
|
||||||
Effect of exchange rate changes on cash
|
(16,751
|
)
|
18,134
|
(14,796
|
)
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
(39,488
|
)
|
69,153
|
67,892
|
||||||||
Cash and cash equivalents, beginning of period
|
426,399
|
357,246
|
289,354
|
|||||||||
Cash and cash equivalents, end of period
|
$
|
386,911
|
$
|
426,399
|
$
|
357,246
|
2.
|
Summary of Significant Accounting Policies
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
Raw materials
|
$
|
91,610
|
$
|
87,683
|
||||
Finished goods
|
204,211
|
165,771
|
||||||
$
|
295,821
|
$
|
253,454
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
2018
|
2017
|
2016
|
||||||||||
Beginning balance
|
$
|
8,081
|
$
|
7,995
|
$
|
20,744
|
||||||
Additions
|
23,940
|
16,382
|
24,906
|
|||||||||
Write-offs
|
(17,872
|
)
|
(16,296
|
)
|
(37,655
|
)
|
||||||
Ending balance
|
$
|
14,149
|
$
|
8,081
|
$
|
7,995
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
Deferred charges
|
$
|
6,703
|
$
|
4,256
|
||||
Prepaid inventory and import costs
|
2,808
|
9,397
|
||||||
Prepaid rent, insurance and other occupancy costs
|
8,799
|
14,558
|
||||||
Prepaid promotion and event cost
|
6,013
|
3,581
|
||||||
Prepaid other taxes
|
6,268
|
5,559
|
||||||
Forward contracts
|
─
|
158
|
||||||
Prepaid software license
|
4,006
|
255
|
||||||
Deposits
|
1,470
|
1,147
|
||||||
Other
|
15,810
|
13,982
|
||||||
$
|
51,877
|
$
|
52,893
|
Buildings
|
39 years
|
Furniture and fixtures
|
5 - 7 years
|
Computers and equipment
|
3 - 5 years
|
Leasehold improvements
|
Shorter of estimated useful life or lease term
|
Scanners
|
3 years
|
Vehicles
|
3 - 5 years
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
Deferred taxes
|
$
|
37,332
|
$
|
33,785
|
||||
Deposits for noncancelable operating leases
|
41,986
|
43,375
|
||||||
Cash surrender value for life insurance policies
|
35,590
|
37,737
|
||||||
Other
|
29,204
|
49,998
|
||||||
$
|
144,112
|
$
|
164,895
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
Accrued sales force commissions and other payments
|
$
|
128,022
|
$
|
151,549
|
||||
Accrued income taxes
|
6,674
|
13,075
|
||||||
Accrued other taxes
|
38,693
|
44,580
|
||||||
Accrued payroll and other employee expenses
|
68,155
|
38,167
|
||||||
Accrued payable to vendors
|
34,539
|
29,874
|
||||||
Accrued royalties
|
3,899
|
2,623
|
||||||
Sales return reserve
|
3,577
|
4,523
|
||||||
Deferred revenue
|
20,104
|
12,669
|
||||||
Other
|
18,920
|
22,129
|
||||||
$
|
322,583
|
$
|
319,189
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
Deferred tax liabilities
|
$
|
18,236
|
$
|
36,718
|
||||
Reserve for other tax liabilities
|
14,382
|
7,163
|
||||||
Liability for deferred compensation plan
|
36,398
|
43,248
|
||||||
Pension plan benefits reserve
|
3,023
|
6,359
|
||||||
Build to suit – financing obligation
|
9,332
|
10,290
|
||||||
Deferred rent and deferred tenant incentives
|
5,665
|
6,389
|
||||||
Asset retirement obligation
|
6,444
|
6,578
|
||||||
Other
|
18,436
|
10,371
|
||||||
$
|
111,916
|
$
|
127,116
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
2018
|
2017
|
2016
|
||||||||||
Gross balance at January 1
|
$
|
5,514
|
$
|
5,290
|
$
|
7,772
|
||||||
Increases related to prior year tax positions
|
5,161
|
─
|
185
|
|||||||||
Decreases related to prior year tax positions
|
─
|
(277
|
)
|
─
|
||||||||
Increases related to current year tax positions
|
3,704
|
669
|
918
|
|||||||||
Settlements
|
(956
|
)
|
(159
|
)
|
(3,369
|
)
|
||||||
Decreases due to lapse of statutes of limitations
|
(1,483
|
)
|
(187
|
)
|
(252
|
)
|
||||||
Currency adjustments
|
(484
|
)
|
178
|
36
|
||||||||
Gross balance at December 31
|
$
|
11,456
|
$
|
5,514
|
$
|
5,290
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
|
• |
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.
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
3. |
Property and Equipment
|
December 31,
|
||||||||
2018
|
2017
|
|||||||
Land
|
$
|
35,709
|
$
|
33,667
|
||||
Buildings
|
295,748
|
274,632
|
||||||
Construction in progress
(1)
|
18,153
|
53,125
|
||||||
Furniture and fixtures
|
118,149
|
95,378
|
||||||
Computers and equipment
|
160,873
|
156,994
|
||||||
Leasehold improvements
|
147,604
|
123,479
|
||||||
Scanners
|
8,986
|
11,212
|
||||||
Vehicles
|
2,312
|
2,339
|
||||||
787,534
|
750,826
|
|||||||
Less: accumulated depreciation
|
(322,999
|
)
|
(286,239
|
)
|
||||
$
|
464,535
|
$
|
464,587
|
(1) |
Construction in progress includes $8.7 million and $43.4 million as of December 31, 2018 and 2017, respectively, of eligible capitalized internal-use software development costs which
will be reclassified to computers and equipment when placed into service.
|
4.
|
Goodwill
|
December 31,
2018
|
December 31,
2017
(2)
|
|||||||
Mainland China
|
$
|
32,179
|
$
|
32,179
|
||||
Americas/Pacific
|
9,449
|
9,449
|
||||||
South Korea
|
29,261
|
29,261
|
||||||
Southeast Asia
|
18,537
|
18,537
|
||||||
Japan
|
16,019
|
16,019
|
||||||
Hong Kong/Taiwan
|
6,634
|
6,634
|
||||||
EMEA
|
2,875
|
2,875
|
||||||
Other
(1)
|
81,619
|
─
|
||||||
Total
|
$
|
196,573
|
$
|
114,954
|
|
(1) |
The other category represents goodwill allocated to the companies acquired during 2018 (see Note 16 – Acquisitions)
|
(2)
|
Goodwill was recast to reflect current period presentation by geographic region at December 31, 2018.
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
5. |
Other Intangible Assets
|
Carrying Amount at
December 31,
|
||||||||
Indefinite life intangible assets:
|
2018
|
2017
|
||||||
Trademarks and trade names
|
$
|
24,599
|
$
|
24,599
|
||||
Other indefinite lived intangibles
|
3,763
|
3,763
|
||||||
$
|
28,362
|
$
|
28,362
|
December 31, 2018
|
December 31, 2017
|
||||||||||||||||
Finite life intangible assets:
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Weighted-average
Amortization
Period
|
||||||||||||
Scanner technology
|
$
|
46,482
|
$
|
42,690
|
$
|
46,482
|
$
|
39,657
|
18 years
|
||||||||
Developed technology
|
22,500
|
20,032
|
22,500
|
19,207
|
20 years
|
||||||||||||
Distributor network
|
11,598
|
11,598
|
11,598
|
11,598
|
15 years
|
||||||||||||
Trademarks
|
5,823
|
1,812
|
2,785
|
1,197
|
11 years
|
||||||||||||
Other
|
95,150
|
43,794
|
57,550
|
29,972
|
10 years
|
||||||||||||
$
|
181,553
|
$
|
119,926
|
$
|
140,915
|
$
|
101,631
|
14 years
|
Year Ending December 31,
|
|||||
2019
|
$
|
14,271
|
|||
2020
|
9,024
|
||||
2021
|
7,491
|
||||
2022
|
6,409
|
||||
2023
|
6,224
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
6.
|
Long-Term Debt
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Facility or
Arrangement
|
Original
Principal
Amount
|
Balance as of
December 31,
2017
|
Balance as of
December 31,
2018
(1)(2)
|
Interest
Rate
|
Repayment terms
|
|||||
October 2014 Credit Agreement term loan facility:
|
||||||||||
U.S. dollar
denominated:
|
$127.5 million
|
$94.8 million
|
─
|
Variable 30 day: 4.627%
|
Principal amount was paid in full during April 2018.
|
|||||
Japanese yen
denominated:
|
6.6 billion yen
|
4.9 billion yen ($43.5 million as of December 31, 2017)
|
─
|
Variable 30 day: 2.7595%
|
Principal amount was paid in full during April 2018.
|
|||||
October 2014 Credit Agreement revolving credit facility:
|
$47.5 million
|
─
|
Variable 30 day: 4.594%
|
Principal amount was paid in full during April 2018 and credit line was closed.
|
||||||
April 2018 Credit Agreement term loan facility:
|
||||||||||
|
$400.0 million
|
─
|
$385.0 million
|
Variable 30 day: 4.77%
|
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.
|
|||||
April 2018 Credit Agreement revolving credit facility:
|
||||||||||
─
|
$49.5 million
|
Variable 30 day: 4.77%
|
Revolving line of credit expires April 18, 2023.
|
|||||||
Japan subsidiary loan:
|
2.0 billion yen
|
0.7 billion yen ($5.9 million as of December 31, 2017)
|
─
|
0.66%
|
Principal amount was paid in full during July 2018.
|
|||||
Convertible note
|
$210.0 million
|
$210.0 million
|
─
|
4.75%
|
Principal amount was paid in full during April 2018.
|
(1) |
As of December 31, 2018, the current portion of the Company’s debt (i.e. becoming due in the next 12 months) included $20.0 million of the balance of its U.S. dollar denominated debt
under the New Credit Agreement facility. The Company has classified the $49.5 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 issuance costs of $4.0 million, which is not reflected in this table.
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Year Ending December 31,
|
||||
2019
|
$
|
69,455
|
||
2020
|
27,500
|
|||
2021
|
30,000
|
|||
2022
|
37,500
|
|||
2023
|
270,000
|
|||
Thereafter
|
─
|
|||
Total
(1)
|
$
|
434,455
|
(1) |
The carrying value of the debt reflects the amounts stated in the above table less a debt discount of $4.0 million, which is not reflected in this table.
|
7.
|
Lease and Financing Obligations
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Year Ending December 31,
|
Operating
Leases
|
Financing
Obligations
|
||||||
2019
|
$
|
39,358
|
$
|
726
|
||||
2020
|
27,553
|
748
|
||||||
2021
|
20,266
|
757
|
||||||
2022
|
11,723
|
770
|
||||||
2023
|
9,950
|
794
|
||||||
Thereafter
|
7,628
|
1,148
|
||||||
Total minimum lease payments
|
$
|
116,478
|
$
|
4,943
|
8.
|
Capital Stock
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Basic weighted-average common shares outstanding
|
55,170
|
52,806
|
55,412
|
|||||||||
Effect of dilutive securities:
|
||||||||||||
Stock awards and options
|
1,061
|
1,110
|
683
|
|||||||||
Convertible note
|
245
|
936
|
2
|
|||||||||
Diluted weighted-average common shares outstanding
|
56,476
|
54,852
|
56,097
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
9. |
Stock–Based Compensation
|
December 31,
|
||||||||||||
Stock Options
:
|
2018
|
2017
|
2016
|
|||||||||
Weighted-average grant date fair value of grants
|
$
|
24.72
|
$
|
18.84
|
$
|
12.59
|
||||||
Risk-free interest rate
(1)
|
2.6
|
%
|
2.1
|
%
|
1.4
|
%
|
||||||
Dividend yield
(2)
|
2.6
|
%
|
2.5
|
%
|
2.3
|
%
|
||||||
Expected volatility
(3)
|
45.6
|
%
|
48.2
|
%
|
47.9
|
%
|
||||||
Expected life in months
(4)
|
|
66 months
|
|
68 months
|
|
68 months
|
|
(1) |
The risk-free interest rate is based upon the rate on a zero-coupon U.S. Treasury bill, for periods within the contractual life of the option, in effect at the time of the grant.
|
|
(2) |
The dividend yield is based on the average of historical stock prices and actual dividends paid.
|
|
(3) |
Expected volatility is based on the historical volatility of the Company’s stock price, over a period similar to the expected life of the option.
|
|
(4) |
The expected term of the option is based on the historical employee exercise behavior, the vesting terms of the respective option, and a contractual life of either seven or ten
years.
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Shares
(in thousands)
|
Weighted-
average
Exercise
Price
|
Weighted-
average
Remaining
Contractual
Term
(in years)
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||||||||||
Options activity – service based
|
||||||||||||||||
Outstanding at December 31, 2017
|
1,392.9
|
$
|
39.76
|
|||||||||||||
Granted
|
─
|
─
|
||||||||||||||
Exercised
|
(337.7
|
)
|
37.40
|
|||||||||||||
Forfeited/cancelled/expired
|
(8.8
|
)
|
39.45
|
|||||||||||||
Outstanding at December 31, 2018
|
1,046.4
|
40.53
|
3.53
|
24,330
|
||||||||||||
Exercisable at December 31, 2018
|
648.6
|
43.72
|
3.08
|
19,984
|
||||||||||||
Options activity – performance based
|
||||||||||||||||
Outstanding at December 31, 2017
|
2,301.5
|
$
|
62.89
|
|||||||||||||
Granted
|
920.1
|
71.19
|
||||||||||||||
Exercised
|
(151.9
|
)
|
36.91
|
|||||||||||||
Forfeited/cancelled/expired
|
(698.9
|
)
|
75.68
|
|||||||||||||
Outstanding at December 31, 2018
|
2,370.8
|
64.00
|
4.16
|
15,190
|
||||||||||||
Exercisable at December 31, 2018
|
416.2
|
37.88
|
3.95
|
9,762
|
||||||||||||
Options activity – all options
|
||||||||||||||||
Outstanding at December 31, 2017
|
3,694.4
|
$
|
54.17
|
|||||||||||||
Granted
|
920.1
|
71.19
|
||||||||||||||
Exercised
|
(489.6
|
)
|
37.25
|
|||||||||||||
Forfeited/cancelled/expired
|
(707.7
|
)
|
75.23
|
|||||||||||||
Outstanding at December 31, 2018
|
3,417.2
|
56.81
|
3.97
|
39,519
|
||||||||||||
Exercisable at December 31, 2018
|
1,064.8
|
41.44
|
3.42
|
23,746
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Cash proceeds from stock options exercised
|
$
|
13,908
|
$
|
26,980
|
$
|
15,707
|
||||||
Tax benefit realized for stock options exercised
|
3,217
|
6,457
|
3,840
|
|||||||||
Intrinsic value of stock options exercised
|
11,855
|
42,749
|
30,587
|
Number of
Shares
(in thousands)
|
Weighted-
average Grant
Date Fair
Value
|
|||||||
Nonvested at December 31, 2017
|
562.8
|
51.17
|
||||||
Granted
|
202.7
|
72.62
|
||||||
Vested
|
(233.9
|
)
|
56.00
|
|||||
Forfeited
|
(64.0
|
)
|
54.40
|
|||||
Nonvested at December 31, 2018
|
467.6
|
57.61
|
10. |
Fair Value
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Fair Value at December 31, 2018
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Financial assets (liabilities):
|
||||||||||||||||
Cash equivalents and current investments
|
$
|
35,260
|
$ |
─
|
$ |
─
|
$
|
35,260
|
||||||||
Other long-term assets
|
3,568
|
─
|
─
|
3,568
|
||||||||||||
Forward contracts
|
|
─
|
─
|
─
|
|
─
|
||||||||||
Life insurance contracts
|
|
─ |
─
|
35,590
|
35,590
|
|||||||||||
Total
|
$
|
38,828
|
$
|
─
|
$
|
35,590
|
$
|
74,418
|
Fair Value at December 31, 2017
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Financial assets (liabilities):
|
||||||||||||||||
Cash equivalents and current investments
|
$
|
36,531
|
$
|
─ |
$
|
─ |
$
|
36,531
|
||||||||
Other long-term assets
|
3,726
|
|
─
|
|
─
|
3,726
|
||||||||||
Forward contracts
|
|
─
|
158
|
|
─
|
158
|
||||||||||
Life insurance contracts
|
|
─
|
|
─ |
37,737
|
37,737
|
||||||||||
Total
|
$
|
40,257
|
$
|
158
|
$
|
37,737
|
$
|
78,152
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Life Insurance Contracts
|
2018
|
2017
|
||||||
Beginning balance at January 1
|
$
|
37,737
|
$
|
32,287
|
||||
Actual return on plan assets
|
(1,788
|
)
|
4,917
|
|||||
Purchases and issuances
|
|
─ |
895
|
|||||
Sales and settlements
|
(359
|
)
|
(362
|
)
|
||||
Transfers into Level 3
|
|
─ |
|
─
|
||||
Ending balance at December 31
|
$
|
35,590
|
$
|
37,737
|
11. |
Income Taxes
|
2018
|
2017
|
2016
|
||||||||||
U.S.
|
$
|
(67,087
|
)
|
$
|
1,135
|
$
|
(19,119
|
)
|
||||
Foreign
|
286,753
|
264,432
|
231,958
|
|||||||||
Total
|
$
|
219,666
|
$
|
265,567
|
$
|
212,839
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
2018
|
2017
|
2016
|
||||||||||
Current
|
||||||||||||
Federal
|
$
|
─ |
$
|
(14,358
|
)
|
$
|
─ | |||||
State
|
652
|
1,814
|
(718
|
)
|
||||||||
Foreign
|
116,303
|
104,688
|
70,652
|
|||||||||
116,955
|
92,144
|
69,934
|
||||||||||
Deferred
|
||||||||||||
Federal
|
(17,836
|
)
|
45,593
|
(27,171
|
)
|
|||||||
State
|
(1,974
|
)
|
(2,273
|
)
|
1,104
|
|||||||
Foreign
|
634
|
666
|
25,886
|
|||||||||
(19,176
|
)
|
43,986
|
(181
|
)
|
||||||||
Provision for income taxes
|
$
|
97,779
|
$
|
136,130
|
$
|
69,753
|
Year Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Deferred tax assets:
|
||||||||
Inventory differences
|
$
|
4,257
|
$
|
2,861
|
||||
Foreign tax credit and other foreign benefits
|
62,521
|
52,408
|
||||||
Stock-based compensation
|
7,893
|
6,327
|
||||||
Accrued expenses not deductible until paid
|
40,509
|
39,326
|
||||||
Foreign currency exchange
|
1,023
|
2,001
|
||||||
Net operating losses
|
4,522
|
5,230
|
||||||
Capitalized research and development
|
11,988
|
197
|
||||||
Interest expense limitation – 163(j)
|
847
|
|
─
|
|||||
R&D credit carryforward
|
807
|
|
─ | |||||
Other
|
339
|
211
|
||||||
Gross deferred tax assets
|
134,706
|
108,561
|
||||||
Deferred tax liabilities:
|
||||||||
Foreign currency exchange
|
124
|
874
|
||||||
Foreign withholding taxes
|
21,524
|
29,018
|
||||||
Intangibles step-up
|
5,763
|
6,568
|
||||||
Overhead allocation to inventory
|
2,857
|
3,977
|
||||||
Amortization of intangibles
|
15,812
|
11,475
|
||||||
Foreign outside basis in controlled foreign corporation
|
|
─ |
|
─ | ||||
Other
|
833
|
2,676
|
||||||
Gross deferred tax liabilities
|
46,913
|
54,588
|
||||||
Valuation allowance
|
(68,697
|
)
|
(56,906
|
)
|
||||
Deferred taxes, net
|
$
|
19,096
|
$
|
(2,933
|
)
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Balance at the beginning of period
|
$
|
56,906
|
$
|
9,137
|
$
|
49,271
|
||||||
Additions charged to cost and expenses
|
27,902
|
(1)
|
53,983
|
(4)
|
692
|
|||||||
Decreases
|
(16,215
|
)
(2)
|
(6,400
|
)
(5)
|
(40,442
|
)
(6)
|
||||||
Adjustments
|
104
|
(3)
|
186
|
(3)
|
(384
|
)
(3)
|
||||||
Balance at the end of the period
|
$
|
68,697
|
$
|
56,906
|
$
|
9,137
|
|
(1) |
Increase in valuation is due primarily to $27.2 million that was recorded on the foreign tax credit carryforward. The additional amount is due to research and development credits,
interest expense limitation (163(j)), and net operating losses in foreign markets.
|
|
(2) |
The decrease was due primarily to the utilization of foreign tax credits, the conversion of foreign tax credits to NOL’s at the filing of the US 2017 Income Tax return (note NOL’s were
absorbed in 2018 due to GILTI inclusion), utilization, and expiration of foreign NOL’s.
|
|
(3) |
Represents the net currency effects of translating valuation allowances at current rates of exchange.
|
|
(4) |
Increase in valuation is due primarily to the $52.0 million that was recorded on the foreign tax credit carryforward. The additional amount is due to net operating losses in foreign
markets
|
|
(5) |
Decrease is due primarily to the write-off of Brazil deferred tax assets, which had no impact to the income statement, as a valuation allowance had been previously recorded against the
asset.
|
|
(6) |
Decrease in valuation allowance due to lapse in statute of limitation of the net operating losses
carryforward and due to the write off of Venezuelan deferred tax assets, which had no impact to the income statement.
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Year Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Net noncurrent deferred tax assets
|
$
|
37,332
|
$
|
33,785
|
||||
Net noncurrent deferred tax liabilities
|
18,236
|
36,718
|
||||||
Deferred taxes, net
|
$
|
19,096
|
$
|
(2,933
|
)
|
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Income taxes at statutory rate
|
21.00
|
%
|
35.00
|
%
|
35.00
|
%
|
||||||
Indefinite reinvestment
|
(2.73
|
)
|
2.75
|
(1.98
|
)
|
|||||||
Excess tax benefit from equity award
|
(1.41
|
)
|
(2.38
|
)
|
|
─
|
||||||
Non-U.S. income taxed at different rates
|
7.37
|
|
─
|
|
─
|
|||||||
Foreign withholding taxes
|
7.68
|
|
─
|
|
─
|
|||||||
Change in reserve for uncertain tax positions
|
3.68
|
|
─
|
|
─
|
|||||||
Non-deductible expenses
|
|
─
|
0.17
|
0.11
|
||||||||
Controlled foreign corporation losses
|
|
─
|
(0.13
|
)
|
(2.63
|
)
|
||||||
Valuation allowance recognized foreign tax credit & others
|
5.54
|
19.59
|
|
─
|
||||||||
Write-off outside basis DTL
|
|
─ |
(2.89
|
)
|
|
─
|
||||||
Revaluation of deferred taxes
|
1.61
|
(1.28
|
)
|
|
─
|
|||||||
Section 987 implementation
|
|
─
|
|
─
|
2.69
|
|||||||
Other
|
1.77
|
0.43
|
(0.42
|
)
|
||||||||
44.51
|
%
|
51.26%
|
%
|
32.77
|
%
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
12. |
Employee Benefit Plan
|
13. |
Executive Deferred Compensation Plan
|
14. |
Derivative Financial Instruments
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Derivatives designated as hedging instruments:
|
Amount of Gain (Loss)
Recognized in Other
Comprehensive Loss
|
|||||||||||
Year Ended December 31,
|
||||||||||||
2018
|
2017
|
2016
|
||||||||||
Foreign currency forward contracts related to intercompany
license
fee, product sales, and selling expense hedges
|
$
|
(160
|
)
|
$
|
(152
|
)
|
$
|
(1,423
|
)
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
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
|
||||||||||||
Year Ended December 31,
|
||||||||||||||
2018
|
2017
|
2016
|
||||||||||||
Foreign currency forward contracts related to intercompany license fees and product sales hedges
|
Revenue
|
$
|
18
|
$
|
119
|
$
|
(1,088
|
)
|
||||||
Foreign currency forward contracts related to intercompany selling expense hedges
|
Selling expenses
|
$
|
─ |
$
|
358
|
$
|
(1,544
|
)
|
15. |
Supplemental Cash Flow Information
|
16. |
Acquisitions
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Innuvate
|
Treviso
|
L&W
Holdings
|
Total
|
|||||||||||||
Total cash consideration
|
$
|
17,587
|
$
|
14,648
|
$
|
—
|
$
|
32,235
|
||||||||
Shares issued in conjunction with acquisition
|
5,863
|
69,252
|
25,000
|
100,115
|
||||||||||||
Total consideration
|
$
|
23,450
|
$
|
83,900
|
$
|
25,000
|
132,350
|
|||||||||
Previously held equity interest in equity method Investments
(1)
|
8,748
|
30,281
|
—
|
39,029
|
||||||||||||
Total
|
$
|
32,198
|
$
|
114,181
|
$
|
25,000
|
$
|
171,379
|
(1) |
The acquisitions of Innuvate and Treviso are considered step acquisitions, and accordingly, the Company remeasured its pre-existing 27% equity interest in Innuvate and 35% of Treviso
immediately prior to completion of the acquisition to its estimated fair value of approximately $39.0 million. As a result of the remeasurement, the Company recorded a gain of approximately $13.6 million within other income (expense),
during the first quarter of 2018, representing the excess of the approximate $39.0 million estimated fair value of its pre-existing 27% equity interest in Innuvate and 35% equity interest of Treviso over its transaction date carrying
value of approximately $25.4 million.
|
Innuvate
|
Treviso
|
L&W Holdings
|
||||||||||||||
Life |
Amount
|
Life |
Amount
|
Life |
Amount
|
|||||||||||
Total current assets
|
$
|
6,219
|
$
|
19,659
|
$
|
7,353
|
||||||||||
Fixed assets
|
9,291
|
33,282
|
114
|
|||||||||||||
Customer list
|
9 years
|
5,100
|
9 years
|
16,500
|
7 years
|
6,500
|
||||||||||
Order backlog
|
5 months
|
200
|
10 months
|
4,700
|
4 months
|
900
|
||||||||||
Trademarks
|
7 years
|
900
|
6 years
|
1,300
|
5 years
|
600
|
||||||||||
Total current liabilities
|
(3,942
|
)
|
(3,740
|
)
|
(1,495
|
)
|
||||||||||
Other non-current liabilities
|
—
|
—
|
(1,731
|
)
|
||||||||||||
Total identifiable net assets acquired
|
17,768
|
71,701
|
12,241
|
|||||||||||||
Goodwill
|
17,230
|
42,480
|
12,759
|
|||||||||||||
Fair value of noncontrolling interest
|
(2,800
|
)
|
—
|
—
|
||||||||||||
Total consideration and value to be allocated to net assets
|
$
|
32,198
|
$
|
114,181
|
$
|
25,000
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
17. |
Restructuring and Severance Charges
|
December 31, 2018
|
||||
Restructuring, severance and impairment charges incurred
|
$
|
70,686
|
||
Non-cash impairment charges
|
(48,551
|
)
|
||
Amounts paid
|
(6,673
|
)
|
||
Adjustments
|
—
|
|||
Balance December 31, 2018
|
$
|
15,462
|
18. |
Segment Information
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Year ended December 31,
|
||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2016
|
|||||||||
Mainland China
|
$
|
886,472
|
$
|
716,991
|
$
|
610,414
|
||||||
Americas/Pacific
|
385,034
|
342,429
|
298,774
|
|||||||||
South Korea
|
373,357
|
361,692
|
413,696
|
|||||||||
Southeast Asia
|
316,890
|
268,631
|
271,897
|
|||||||||
Japan
|
254,939
|
256,085
|
279,042
|
|||||||||
Hong Kong/Taiwan
|
185,893
|
166,696
|
183,979
|
|||||||||
EMEA
|
182,394
|
160,275
|
147,318
|
|||||||||
Other
|
94,029
|
6,300
|
2,677
|
|||||||||
Total
|
$
|
2,679,008
|
$
|
2,279,099
|
$
|
2,207,797
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Year ended December 31,
|
||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2016
|
|||||||||
Mainland China
|
$
|
253,598
|
$
|
211,625
|
$
|
135,174
|
||||||
Americas/Pacific
|
52,433
|
51,885
|
47,803
|
|||||||||
South Korea
|
107,215
|
100,964
|
117,142
|
|||||||||
Southeast Asia
|
78,598
|
63,296
|
67,952
|
|||||||||
Japan
|
56,676
|
51,372
|
59,175
|
|||||||||
Hong Kong/Taiwan
|
33,392
|
27,958
|
35,978
|
|||||||||
EMEA
|
14,773
|
11,749
|
10,386
|
|||||||||
Total segment contribution
|
596,685
|
518,849
|
473,610
|
|||||||||
Corporate and other
|
(355,825
|
)
|
(244,366
|
)
|
(242,506
|
)
|
||||||
Operating income
|
240,860
|
274,483
|
231,104
|
|||||||||
Other income (expense)
|
(21,194
|
)
|
(8,916
|
)
|
(18,265
|
)
|
||||||
Income before provision for income taxes
|
$
|
219,666
|
$
|
265,567
|
$
|
212,839
|
Year ended December 31,
|
||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2016
|
|||||||||
Mainland China
|
$
|
13,036
|
$
|
15,122
|
$
|
16,775
|
||||||
Americas/Pacific
|
988
|
1,746
|
2,837
|
|||||||||
South Korea
|
6,266
|
6,499
|
6,787
|
|||||||||
Southeast Asia
|
2,123
|
2,234
|
2,168
|
|||||||||
Japan
|
3,604
|
3,554
|
3,782
|
|||||||||
Hong Kong/Taiwan
|
1,316
|
1,395
|
2,507
|
|||||||||
EMEA
|
847
|
985
|
1,387
|
|||||||||
Corporate and other
|
54,823
|
40,029
|
36,154
|
|||||||||
Total
|
$
|
83,003
|
$
|
71,564
|
$
|
72,397
|
Year ended December 31,
|
||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2016
|
|||||||||
Mainland China
|
$
|
11,658
|
$
|
4,539
|
$
|
13,656
|
||||||
Americas/Pacific
|
974
|
800
|
1,171
|
|||||||||
South Korea
|
285
|
469
|
556
|
|||||||||
Southeast Asia
|
1,120
|
1,753
|
2,206
|
|||||||||
Japan
|
788
|
994
|
1,288
|
|||||||||
Hong Kong/Taiwan
|
4,113
|
1,350
|
634
|
|||||||||
EMEA
|
734
|
1,168
|
1,224
|
|||||||||
Corporate and other
|
50,699
|
49,083
|
29,486
|
|||||||||
Total
|
$
|
70,371
|
$
|
60,156
|
$
|
50,221
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
Year ended December 31,
|
||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2016
|
|||||||||
Mainland China
|
$
|
886,472
|
$
|
716,991
|
$
|
610,414
|
||||||
South Korea
|
373,357
|
361,692
|
413,696
|
|||||||||
Japan
|
254,939
|
256,085
|
279,042
|
|||||||||
United States
|
311,436
|
218,734
|
201,239
|
|||||||||
All others
|
852,804
|
725,597
|
703,406
|
|||||||||
Total
|
$
|
2,679,008
|
$
|
2,279,099
|
$
|
2,207,797
|
Year ended December 31,
|
||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2016
|
|||||||||
Nu Skin
|
$
|
1,659,737
|
$
|
1,456,386
|
$
|
1,308,135
|
||||||
Pharmanex
|
921,328
|
817,230
|
892,738
|
|||||||||
Other
|
97,943
|
5,483
|
6,924
|
|||||||||
Total
|
$
|
2,679,008
|
$
|
2,279,099
|
$
|
2,207,797
|
Year ended December 31,
|
||||||||||||
(U.S. dollars in thousands)
|
2018
|
2017
|
2016
|
|||||||||
United States
|
$
|
317,516
|
$
|
302,884
|
$
|
283,868
|
||||||
Mainland China
|
89,447
|
97,046
|
97,867
|
|||||||||
South Korea
|
36,325
|
42,211
|
41,545
|
|||||||||
Japan
|
6,864
|
9,342
|
11,517
|
|||||||||
All others
|
14,383
|
13,104
|
9,935
|
|||||||||
Total
|
$
|
464,535
|
$
|
464,587
|
$
|
444,732
|
NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
|
19. |
Commitments and Contingencies
|
20. |
Other Income (Expense), Net
|
21. |
Cost of Sales
|
|
• |
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
|
• |
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that our receipts and expenditures are being made only in accordance with authorization of management and directors; and
|
|
• |
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial
statements.
|
1. |
Financial Statements
. See Index to Consolidated Financial Statements under Item 8 of Part II.
|
|
2. |
Financial Statement Schedules
. N/A
|
|
3. |
Exhibits
. References to the “Company” shall mean Nu Skin Enterprises, Inc. Unless otherwise noted, the SEC file number
for exhibits incorporated by reference is 001‑12421.
|
3.1
|
|
3.2
|
3.3
|
|
3.4
|
|
4.1
|
|
4.2
|
|
10.1
|
|
#10.2
|
|
#10.3
|
|
#10.4
|
|
#10.5
|
|
#10.6
|
|
#10.7
|
|
#10.8
|
#10.9
|
|
#10.10
|
|
#10.11
|
|
#10.12
|
|
#10.13
|
|
#10.14
|
|
#10.15
|
|
#10.16
|
|
*#10.17
|
|
*#10.18
|
|
#10.19
|
|
#10.20
|
|
*#10.21
|
#10.22
|
|
*#10.23
|
|
#10.24
|
|
#10.25
|
|
#10.26
|
|
#10.27
|
|
#10.28
|
|
#10.29
|
|
*21.1
|
|
*23.1
|
|
*31.1
|
|
*31.2
|
|
*32.1
|
|
*32.2
|
*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
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*101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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*
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Filed or furnished herewith.
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#
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Management contract or compensatory plan or arrangement.
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NU SKIN ENTERPRISES, INC.
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By:
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/s/ Ritch N. Wood
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Ritch N. Wood
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Chief Executive Officer
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Signatures
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Capacity in Which Signed
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/s/ Steven J. Lund
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Executive Chairman of the Board
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Steven J. Lund
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/s/ Ritch N. Wood
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Chief Executive Officer and Director
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Ritch N. Wood
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(Principal Executive Officer)
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/s/ Mark H. Lawrence
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Chief Financial Officer
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Mark H. Lawrence
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(Principal Financial Officer and Accounting Officer)
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/s/ Nevin N. Andersen
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Director
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Nevin N. Andersen
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/s/ Daniel W. Campbell
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Director
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Daniel W. Campbell
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/s/ Andrew D. Lipman
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Director
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Andrew D. Lipman
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/s/ Neil H. Offen
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Director
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Neil H. Offen
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/s/ Thomas R. Pisano
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Director
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Thomas R. Pisano
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/s/ Zheqing Shen
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Director
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Zheqing Shen
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/s/ Edwina D. Woodbury
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Director
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Edwina D. Woodbury
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Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other
form, of Participant’s personal data, as described in this Agreement and any other Restricted Stock Unit grant materials by and among, as applicable, the Employer, the Company and Subsidiaries for the exclusive purpose of implementing,
administering and managing Participant’s participation in the Plan.
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Peserta dengan ini secara eksplisit dan tanpa sebarang keraguan mengizinkan pengumpulan, penggunaan dan pemindahan,
dalam bentuk elektronik atau lain-lain, data peribadi Peserta seperti yang diterangkan dalam Perjanjian dan bahan-bahan geran Unit Saham Terbatas yang lain oleh dan di antara, seperti yang berkenaan, Majikan, Syarikat dan Anak-anak
Syarikat untuk tujuan yang eksklusif bagi melaksanakan, mentadbir dan menguruskan penyertaan Peserta di dalam Pelan.
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Participant understands that the Employer, the Company and Subsidiaries may hold certain personal information about
Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held
in the Company, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and
managing the Plan (“Data”). The Data is supplied by the Employer and also by me through information collected in connection with the Agreement and the Plan.
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Peserta memahami bahawa Majikan, Syarikat and Anak-anak Syarikat mungkin memegang maklumat peribadi tertentu tentang
Peserta, termasuk, tetapi tidak terhad kepada, nama Peserta, alamat rumah dan nombor telefon, tarikh lahir, nombor insurans sosial atau nombor pengenalan lain, gaji, kewarganegaraan, jawatan, apa-apa Syer atau jawatan pengarah yang
dipegang dalam Syarikat, butir-butir semua Unit Saham Terbatas, atau apa-apa hak lain atas Syer yang dianugerahkan, dibatalkan, dilaksanakan, terletak hak, tidak diletak hak ataupun yang belum dijelaskan bagi faedah Peserta, untuk
tujuan eksklusif bagi melaksanakan, mentadbir dan menguruskan Pelan tersebut ("Data"). Data tersebut dibekalkan oleh Majikan dan juga oleh saya berkenaan dengan Perjanjian dan Pelan.
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Participant understands that Data will be transferred to Morgan Stanley, or such other stock plan service provider
as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Participant understands that the recipients of the Data may be located in the United
States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United
States, he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative at +60-03-2170-7700. Participant authorizes the Company, Morgan
Stanley and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other
form, for the purposes of implementing, administering and managing Participant’s participation in the Plan, including any transfer of such Data as may be required to a broker, escrow agent or other third party with whom the Shares
received upon vesting of Restricted Stock Units may be deposited. Participant understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. Participant
understands that if he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or
withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary
basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of
refusing or withdrawing Participant’s consent is that the Company may not be able to grant Participant Restricted Stock Units or other equity awards or administer or maintain such awards. Therefore, Participant understands that
refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of his or her refusal to consent or withdrawal of consent, Participant understands that he
or she may contact his or her local human resources representative
.
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Peserta memahami bahawa Data ini akan dipindahkan kepada Morgan Stanley, atau mana-mana pembekal perkhidmatan pelan
saham lain sebagaimana yang dipilih oleh Syarikat pada masa depan, yang membantu Syarikat dengan pelaksanaan, pentadbiran dan pengurusan Pelan. Peserta memahami bahawa penerima-penerima Data mungkin berada di Amerika Syarikat atau
mana-mana tempat lain, dan bahawa negara penerima-penerima (contohnya, Amerika Syarikat) mungkin mempunyai undang-undang privasi data dan perlindungan yang berbeza daripada negara Peserta. Peserta memahami bahawa sekiranya Peserta
menetap di luar Amerika Syarikat, Peserta boleh meminta satu senarai yang mengandungi nama-nama dan alamat-alamat penerima-penerima Data yang berpotensi dengan menghubungi wakil sumber manusia tempatan peserta di +60-03-2170-7700.
Peserta memberi kuasa kepada Syarikat, Morgan Stanley dan mana-mana penerima-penerima kemungkinan lain yang mungkin akan membantu Syarikat (pada masa sekarang atau pada masa depan) dengan melaksanakan, mentadbir dan menguruskan Pelan
untuk menerima, memiliki, menggunakan, mengekalkan dan memindahkan Data, dalam bentuk elektronik atau lain-lain, bagi tujuan-tujuan untuk melaksanakan, mentadbir dan menguruskan penyertaan Peserta di dalam Pelan, termasuk segala
pemindahan Data tersebut sebagaimana yang dikehendaki kepada broker, egen eskrow atau pihak ketiga dengan siapa Saham diterima semasa peletakhakan Unit Saham Terbatas mungkin didepositkan. Peserta memahami bahawa Data hanya akan
disimpan selagi ia adalah diperlukan untuk melaksanakan, mentadbir, dan menguruskan penyertaan peserta dalam Pelan. Peserta memahami bahawa sekiranya peserta menetap di luar Amerika Syarikat, peserta boleh, pada bila-bila masa, melihat
Data, meminta maklumat tambahan mengenai penyimpanan dan pemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakan ke atas Data atau menolak atau menarik balik persetujuan dalam ini, dalam mana-mana kes, tanpa kos, dengan
menghubungi secara bertulis wakil sumber manusia tempatan. Selanjutnya, Peserta memahami bahawa peserta memberikan persetujuan di sini secara sukarela semata-mata. Sekiranya Peserta tidak bersetuju, atau sekiranya Peserta kemudian
membatalkan persetujuannya, status pekerjaan atau perkhidmatan dan kerjaya Peserta dengan Majikan tidak akan terjejas; satu-satunya akibat buruk sekiranya Peserta tidak bersetuju atau menarik balik persetujuan Peserta adalah bahawa
Syarikat tidak akan dapat memberikan Unit Saham Terbatas atau anugerah ekuiti lain atau mentadbir atau mengekalkan anugerah-anugerah tersebut kepada Peserta. Oleh itu, Peserta memahami bahawa keengganan atau penarikan balik persetujuan
peserta boleh menjejaskan keupayaan Peserta untuk mengambil bahagian dalam Pelan. Untuk maklumat lebih lanjut mengenai akibat-akibat keengganan Peserta untuk memberikan keizinan atau penarikan balik keizinan, Peserta memahami bahawa
Peserta boleh menghubungi wakil sumber manusia tempatan.
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Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other
form, of Participant’s personal data, as described in this Agreement and any other Performance Stock Option grant materials by and among, as applicable, the Employer, the Company and Subsidiaries for the exclusive purpose of implementing,
administering and managing Participant’s participation in the Plan.
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Peserta dengan ini secara eksplisit dan tanpa sebarang keraguan mengizinkan pengumpulan, penggunaan dan pemindahan, dalam bentuk elektronik atau lain-lain,
data peribadi Peserta seperti yang diterangkan dalam Perjanjian dan apa-apa bahan Opsyen yang lain oleh dan di antara, seperti yang berkenaan, Majikan, Syarikat dan Anak-anak Syarikat untuk tujuan yang eksklusif bagi melaksanakan,
mentadbir dan menguruskan penyertaan Peserta di dalam Pelan.
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Participant understands that the Employer, the Company and Subsidiaries may hold certain personal information about
Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in
the Company, details of all Performance Stock Options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and
managing the Plan (“Data”). The Data is supplied by the Employer and also by me through information collected in connection with the Agreement and the Plan.
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Peserta memahami bahawa Majikan, Syarikat and Anak-anak Syarikat mungkin memegang maklumat peribadi tertentu tentang Peserta, termasuk, tetapi tidak terhad
kepada, nama Peserta, alamat rumah dan nombor telefon, tarikh lahir, nombor insurans sosial atau nombor pengenalan lain, gaji, kewarganegaraan, jawatan, apa-apa Syer atau jawatan pengarah yang dipegang dalam Syarikat, butir-butir semua
Opsyen, atau apa-apa hak lain atas Syer yang dianugerahkan, dibatalkan, dilaksanakan, terletak hak, tidak diletak hak ataupun yang belum dijelaskan bagi faedah Peserta, untuk tujuan eksklusif bagi melaksanakan, mentadbir dan menguruskan
Pelan tersebut ("Data"). Data tersebut dibekalkan oleh Majikan dan juga oleh saya berkenaan dengan Perjanjian dan Pelan.
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Participant understands that Data will be transferred to Morgan Stanley, or such other stock plan service provider as
may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. Participant understands that the recipients of the Data may be located in the United States
or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than Participant’s country. Participant understands that if he or she resides outside the United States, he or
she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative at +60-03-2170-7700. Participant authorizes the Company, Morgan Stanley and any
other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the
purposes of implementing, administering and managing Participant’s participation in the Plan, including any transfer of such Data as may be required to a broker, escrow agent or other third party with whom the Shares received upon
exercise of Performance Stock Options may be deposited. Participant understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. Participant understands that if
he or she resides outside the United States, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents
herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. If Participant does
not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing
Participant’s consent is that the Company may not be able to grant Participant Performance Stock Options or other equity awards or administer or maintain such awards. Therefore, Participant understands that refusing or withdrawing his or
her consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of his or her refusal to consent or withdrawal of consent, Participant understands that he or she may contact his or her
local human resources representative.
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Peserta memahami bahawa Data ini akan dipindahkan kepada Morgan Stanley, atau mana-mana pembekal perkhidmatan pelan saham lain sebagaimana yang dipilih oleh
Syarikat pada masa depan, yang membantu Syarikat dengan pelaksanaan, pentadbiran dan pengurusan Pelan. Peserta memahami bahawa penerima-penerima Data mungkin berada di Amerika Syarikat atau mana-mana tempat lain, dan bahawa negara
penerima-penerima (contohnya, Amerika Syarikat) mungkin mempunyai undang-undang privasi data dan perlindungan yang berbeza daripada negara Peserta. Peserta memahami bahawa sekiranya Peserta menetap di luar Amerika Syarikat, Peserta boleh
meminta satu senarai yang mengandungi nama-nama dan alamat-alamat penerima-penerima Data yang berpotensi dengan menghubungi wakil sumber manusia tempatan peserta di +60-03-2170-7700. Peserta memberi kuasa kepada Syarikat, Morgan Stanley
dan mana-mana penerima-penerima kemungkinan lain yang mungkin akan membantu Syarikat (pada masa sekarang atau pada masa depan) dengan melaksanakan, mentadbir dan menguruskan Pelan untuk menerima, memiliki, menggunakan, mengekalkan dan
memindahkan Data, dalam bentuk elektronik atau lain-lain, bagi tujuan melaksanakan, mentadbir dan menguruskan penyertaan Peserta di dalam Pelan, termasuk segala pemindahan Data tersebut sebagaimana yang dikehendaki kepada broker, egen
eskrow atau pihak ketiga dengan siapa Saham diterima semasa peletakhakan Opsyen mungkin didepositkan. Peserta memahami bahawa Data hanya akan disimpan selagi ia adalah diperlukan untuk melaksanakan, mentadbir, dan menguruskan penyertaan
peserta dalam Pelan. Peserta memahami bahawa sekiranya peserta menetap di luar Amerika Syarikat, peserta boleh, pada bila-bila masa, melihat Data, meminta maklumat tambahan mengenai penyimpanan dan pemprosesan Data, meminta bahawa
pindaan-pindaan dilaksanakan ke atas Data atau menolak atau menarik balik persetujuan dalam ini, dalam mana-mana kes, tanpa kos, dengan menghubungi secara bertulis wakil sumber manusia tempatan. Selanjutnya, Peserta memahami bahawa
peserta memberikan persetujuan di sini secara sukarela semata-mata. Sekiranya Peserta tidak bersetuju, atau sekiranya Peserta kemudian membatalkan persetujuannya, status pekerjaan atau perkhidmatan dan kerjaya Peserta dengan Majikan tidak
akan terjejas; satu-satunya akibat buruk sekiranya Peserta tidak bersetuju atau menarik balik persetujuan Peserta adalah bahawa Syarikat tidak akan dapat memberikan Opsyen atau anugerah ekuiti lain atau mentadbir atau mengekalkan
anugerah-anugerah tersebut kepada Peserta. Oleh itu, Peserta memahami bahawa keengganan atau penarikan balik persetujuan peserta boleh menjejaskan keupayaan Peserta untuk mengambil bahagian dalam Pelan. Untuk maklumat lebih lanjut
mengenai akibat-akibat keengganan Peserta untuk memberikan keizinan atau penarikan balik keizinan, Peserta memahami bahawa Peserta boleh menghubungi wakil sumber manusia tempatan.
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(a) |
an act of fraud or intentional misrepresentation related to Participant’s services;
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(b) |
disclosure or use of confidential information in a manner detrimental to the Company;
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(c) |
competing with the Company; or
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(d) |
any other willful misconduct by Participant that is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company.
The Committee, in its sole discretion, may waive at any time in writing this forfeiture provision and release Participant from liability hereunder.
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(a) |
Acknowledges receipt of the Plan and represents that Participant is familiar with the provisions of the Plan, and that Participant enters into this Agreement subject to all of the
provisions of the Plan;
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(b) |
Recognizes that the Committee has been granted complete authority to administer the Plan in its sole discretion, and agrees to accept all decisions related to the Plan and all
interpretations of the Plan made by the Committee as final and conclusive upon Participant and upon all persons at any time claiming any interest through Participant in the Restricted Stock Units or the Shares subject to this
Agreement; and
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(c) |
Acknowledges and understands that the establishment of the Plan and the existence of this Agreement are not sufficient, in and of themselves, to exempt Participant from the
requirements of Section 16(b) of the Exchange Act and any rules or regulations promulgated thereunder, and that Participant (to the extent Section 16(b) applies to Participant) shall not be exempt from such requirements pursuant to
Rule 16b-3 unless and until Participant shall comply with all applicable requirements of Rule 16b-3, including without limitation, the possible requirement that Participant must not sell or otherwise dispose of any Shares acquired
pursuant to Restricted Stock Units unless and until a period of at least six months shall have elapsed between the date upon which such Restricted Stock Units were granted to Participant and the date upon which Participant desires to
sell or otherwise dispose of such Shares.
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(a) |
the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent
permitted by the Plan;
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(b) |
the grant of Restricted Stock Units is exceptional, voluntary and occasional and does not create any contractual or other right to receive future awards of Restricted Stock Units, or
benefits in lieu of Restricted Stock Units even if Restricted Stock Units have been awarded in the past;
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(c) |
nothing in this Agreement or in the Plan shall confer upon Participant any right to continue in the service of the Company as a member of the Board of Directors of the Company or in
any other capacity;
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(d) |
all decisions with respect to future grants of Restricted Stock Units or other grants, if any, will be at the sole discretion of the Company;
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(e) |
Participant’s participation in the Plan is voluntary;
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(f) |
the future value of the underlying Shares is unknown, indeterminable and cannot be predicted;
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(g) |
in the event of the termination of Participant’s Continuous Service, and unless otherwise expressly provided in this Agreement or determined by the Company, Participant’s right to
vest in the Restricted Stock Units under the Plan, if any, will terminate as of the date Participant’s Continuous Service terminated, as determined by the Committee in its sole discretion; and
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(h) |
neither the Company, nor any Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between
Participant’s local currency and the United States Dollar that may affect the value of Restricted Stock Units or of any amounts due to Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of
any Shares acquired upon settlement.
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(i) |
[Reserved].
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(a) |
an act of fraud or intentional misrepresentation related to Participant’s services;
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(b) |
disclosure or use of confidential information in a manner detrimental to the Company;
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(c) |
competing with the Company; or
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(d) |
any other willful misconduct by Participant that is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company.
The Committee, in its sole discretion, may waive at any time in writing this forfeiture provision and release Participant from liability hereunder.
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(a) |
Acknowledges receipt of the Plan and represents that Participant is familiar with the provisions of the Plan, and that Participant enters into this Agreement subject to all of the
provisions of the Plan;
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(b) |
Recognizes that the Committee has been granted complete authority to administer the Plan in its sole discretion, and agrees to accept all decisions related to the Plan and all
interpretations of the Plan made by the Committee as final and conclusive upon Participant and upon all persons at any time claiming any interest through Participant in the Restricted Stock Units or the Shares subject to this
Agreement; and
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(c) |
Acknowledges and understands that the establishment of the Plan and the existence of this Agreement are not sufficient, in and of themselves, to exempt Participant from the
requirements of Section 16(b) of the Exchange Act and any rules or regulations promulgated thereunder, and that Participant (to the extent Section 16(b) applies to Participant) shall not be exempt from such requirements pursuant to
Rule 16b-3 unless and until Participant shall comply with all applicable requirements of Rule 16b-3, including without limitation, the possible requirement that Participant must not sell or otherwise dispose of any Shares acquired
pursuant to Restricted Stock Units unless and until a period of at least six months shall have elapsed between the date upon which such Restricted Stock Units were granted to Participant and the date upon which Participant desires to
sell or otherwise dispose of such Shares.
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(a) |
the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent
permitted by the Plan;
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(b) |
the grant of Restricted Stock Units is exceptional, voluntary and occasional and does not create any contractual or other right to receive future awards of Restricted Stock Units, or
benefits in lieu of Restricted Stock Units even if Restricted Stock Units have been awarded in the past;
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(c) |
nothing in this Agreement or in the Plan shall confer upon Participant any right to continue in the service of the Company as a member of the Board of Directors of the Company or in
any other capacity;
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(d) |
all decisions with respect to future grants of Restricted Stock Units or other grants, if any, will be at the sole discretion of the Company;
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(e) |
Participant’s participation in the Plan is voluntary;
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(f) |
the future value of the underlying Shares is unknown, indeterminable and cannot be predicted;
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(g) |
in the event of the termination of Participant’s Continuous Service, and unless otherwise expressly provided in this Agreement or determined by the Company, Participant’s right to
vest in the Restricted Stock Units under the Plan, if any, will terminate as of the date Participant’s Continuous Service terminated, as determined by the Committee in its sole discretion;
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(h) |
neither the Company, nor any Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar
that may affect the value of Restricted Stock Units or of any amounts due to Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement; and
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(i) |
if Participant is providing services outside the United States, the following additional provisions shall apply:
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(1) |
Restricted Stock Units and the Shares subject to Restricted Stock Units, and the income and value of same, are not part of normal or expected compensation for any purpose, including,
but not limited to, calculation of any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
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(2) |
Restricted Stock Units and the Shares subject to Restricted Stock Units, and the income and value of same, are not intended to replace any pension rights or compensation;
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(3) |
Restricted Stock Units are an extraordinary item that does not constitute compensation of any kind for service of any kind rendered to the Company;
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(4) |
no claim or entitlement to compensation or damages shall arise from forfeiture of Restricted Stock Units resulting from termination of Participant’s Continuous Service (for any
reason whatsoever, whether or not later found to be invalid), and in consideration of the grant of Restricted Stock Units to which Participant is otherwise not entitled, Participant irrevocably agrees never to institute any claim
against the Company or
any of its Subsidiaries, waives his or her ability, if any, to bring any such claim, and releases the Company and its Subsidiaries
from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan,
Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim; and
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(5) |
neither the Company nor any of its Subsidiaries shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may
affect the value of Restricted Stock Units or of any amounts due to Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement.
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Date:
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February 14, 2019
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/s/ Ritch N. Wood
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Ritch N. Wood
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Chief Executive Officer
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Date:
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February 14, 2019
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/s/ Mark H. Lawrence
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Mark H. Lawrence
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Chief Financial Officer
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Date:
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February 14, 2019
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/s/ Ritch N. Wood
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Ritch N. Wood
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Chief Executive Officer
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Date:
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February 14, 2019
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/s/ Mark H. Lawrence
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Mark H. Lawrence
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Chief Financial Officer
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