8-K
Nu Skin Enterprises, Inc. (NUS)
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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| November 4, 2020 | ||
|---|---|---|
| Date of Report (Date of earliest event reported) | ||
| NU SKIN ENTERPRISES, INC. | ||
| (Exact name of registrant as specified in its charter) | ||
| Delaware | 001-12421 | 87-0565309 |
| --- | --- | --- |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
| 75 West Center Street<br><br> <br>Provo, Utah 84601 | ||
| --- | ||
| (Address of principal executive offices and zip code) | ||
| (801) 345-1000 | ||
| (Registrant's telephone number, including area code) | ||
| N/A | ||
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Class A Common Stock, $.001 par value | NUS | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
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On November 4, 2020, Nu Skin Enterprises, Inc. (the “Company”) issued a press release announcing its financial results for the three- and nine-month periods ended September 30, 2020, and certain other information. A copy of the press release is attached as Exhibit 99.1 to this report.
The information furnished pursuant to this Item 2.02 and the exhibit hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.
The press release furnished herewith in Exhibit 99.1 contains non-GAAP financial measures. Management believes non-GAAP financial measures assist management and investors in evaluating and comparing period-to-period results and projections in a more meaningful and consistent manner.
| Item 9.01 | Financial Statements and Exhibits. |
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(d) Exhibits.
| 99.1 | Nu Skin Enterprises’ press release dated November 4, 2020, regarding financial results for the three- and nine-month periods ended September 30, 2020. |
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| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NU SKIN ENTERPRISES, INC. | |
|---|---|
| (Registrant) | |
| /s/ Mark H. Lawrence | |
| Mark H. Lawrence | |
| Chief Financial Officer | |
| Date: November 4, 2020 |
Exhibit 99.1
FOR IMMEDIATE RELEASE
NU SKIN ENTERPRISES REPORTS THIRD-QUARTER 2020 RESULTS
AND RAISES ANNUAL GUIDANCE
PROVO, Utah — Nov. 4, 2020 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced third-quarter results of 19 percent revenue growth and 37 percent earnings per share growth and raised its guidance for 2020.
Executive Summary
Q3 2020 vs. Prior-Year Quarter
| Revenue: | $703.3 million; +19%<br><br> <br>• Less than (1%) fx impact |
|---|---|
| Earnings Per Share (EPS): | $1.08; +37% |
| Sales Leaders: | 68,516; +12% |
| Customers: | 1,539,511; +28% |
“We continued to build momentum with accelerated results in the third quarter, as we generated revenue and earnings per share well above expectations,” said Ritch Wood, chief executive officer. “As we executed on our long-term strategy, we drove double-digit growth in both customers and sales leaders with revenue improvements in all but one reporting segment. We delivered strong double-digit growth in the Americas, Pacific and EMEA regions, with modest growth throughout most of Asia. Mainland China continues to stabilize with sequentially improving revenue, customers and sales leaders, and we remain on track for a return to year-over-year growth in China in the fourth quarter. Our manufacturing division contributed to our results with impressive 34 percent growth.
“We are outpacing our 2020 growth projections due to strong product demand and ongoing digital investments that empower our sales leaders and affiliates to build a socially enabled business. We are also benefitting from the current environment where more individuals are working from home and shopping online. Currently, approximately 90 percent of Nu Skin revenue is coming from digital transactions.”
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| Nu Skin Enterprises Reports Third-quarter 2020 Results, Raises Guidance | Page 2 |
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Q3 2020 Year-Over-Year Operating Results
| Revenue: | $703.3 million compared to $589.9 million<br><br> <br>• Less than (1%) fx impact |
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| Gross Margin: | 73.9% compared to 76.2%<br><br> <br>• Nu Skin business was<br> 76.3% compared to 78.6%<br><br> <br>• Impacted by increased<br> freight charges and geographic mix |
| Selling Expenses: | 39.9% compared to 39.3%<br><br> <br>• Nu Skin business was<br> 42.4% compared to 41.5% |
| G&A Expenses: | 23.5% compared to 25.1% |
| Operating Margin: | 10.6% compared to 11.8%<br><br> <br>• Impacted by lower gross<br> margin |
| Other Income / (Expense): | $0.5 million compared to ($5.0) million |
| Income Tax Rate: | 24.7% compared to 32.1%<br><br> <br>• Benefited by geographic<br> mix |
| EPS: | $1.08 compared to $0.79 |
Stockholder Value
| Dividend Payments: | $19.2 million |
|---|---|
| Stock Repurchases: | $20.0 million<br><br> <br>• $342.8 million remaining<br> in authorization |
Q4 and Full-Year 2020 Outlook
| Q4 2020 Revenue: | $720 to $750 million; +23 to 29%<br><br> <br>• Approximately +1% fx<br> impact |
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| Q4 2020 EPS: | $1.10 to $1.20; +53 to 67% |
| 2020 Revenue: | $2.55 to $2.58 billion; +6 to 7%<br><br> <br>• Approximately (1%) fx<br> impact |
| 2020 EPS: | $3.35 to $3.45; +8 to 11% |
“The growth in our core Nu Skin business is generating a great deal of energy ahead of our fourth-quarter ageLOC Boost and Nutricentials product introductions, and we continue to see increasing demand in our manufacturing segment. This gives us confidence that we will have a strong fourth quarter with momentum heading into 2021 when we fully launch these products and continue to extend our socially enabled business throughout our markets,” Wood concluded.
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| Nu Skin Enterprises Reports Third-quarter 2020 Results, Raises Guidance | Page 3 |
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Mark Lawrence, chief financial officer, added, “Given our third-quarter results above previous guidance and momentum in the business, we are raising our guidance for the remainder of the year. As we look ahead to the fourth quarter, we anticipate revenue of $720 to $750 million, which includes an approximate 1 percent favorable foreign currency impact, and earnings per share of $1.10 to $1.20. We are raising our 2020 revenue guidance to $2.55 to $2.58 billion, which reflects a negative foreign currency impact of approximately 1 percent, and we anticipate annual earnings per share of $3.35 to $3.45.”
Conference Call
The Nu Skin Enterprises management team will host a conference call with the investment community today at 5 p.m. (ET). Those wishing to access the webcast, as well as the financial information presented during the call, can visit the Investor Relations page on the company’s website at ir.nuskin.com. A replay of the webcast will be available at the same URL through Nov. 18, 2020.
About Nu Skin Enterprises, Inc.
Founded more than 35 years ago, Nu Skin Enterprises, Inc. (NSE) empowers innovative companies to change the world with sustainable solutions, opportunities, technologies and life-improving values. The company currently focuses its efforts around innovative consumer products, product manufacturing and controlled environment agriculture technology. The NSE family of companies includes Nu Skin, which develops and distributes a comprehensive line of premium-quality beauty and wellness solutions through a global network of sales leaders in Asia, the Americas, Europe, Africa and the Pacific; and Rhyz, our strategic investment arm that includes a collection of sustainable manufacturing and technology innovation companies. Nu Skin Enterprises is traded on the New York Stock Exchange under the symbol “NUS.” More information is available at nuskinenterprises.com.
Important Information Regarding Forward-Looking Statements: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent the company’s current expectations and beliefs. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws and include, but are not limited to, statements of management’s expectations regarding the company’s performance, growth, product launches, customers and sales leaders, strategies and initiatives; statements of management’s expectations regarding the future status of the COVID-19 pandemic globally and across the company’s markets, and government and public behavior in response to such status; projections regarding revenue, earnings per share, foreign currency fluctuations and other financial items; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as “believe,” “expect,” “continue,” “anticipate,” “project,” “outlook,” “guidance,” “plan,” “continue,” “will,” “would,” “could,” “may,” “might,” the negative of these words and other similar words.
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| Nu Skin Enterprises Reports Third-quarter 2020 Results, Raises Guidance | Page 4 |
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The forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed herein. These risks and uncertainties include, but are not limited to, the following:
| • | risk that epidemics, including the ongoing COVID-19 outbreak, and other crises could negatively impact our business; |
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| • | adverse publicity related to the company’s business, products, industry or any legal actions or complaints by the company’s sales force or others; |
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| • | risk that direct selling laws and regulations in any of the company’s markets, including the United States and Mainland China, may be modified, interpreted or<br> enforced in a manner that results in negative changes to the company’s business model or negatively impacts its revenue, sales force or business, including through the interruption of sales activities, loss of licenses, imposition of fines,<br> or any other adverse actions or events; |
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| • | any failure of current or planned initiatives or products to generate interest among the company’s sales force and customers and generate sponsoring and selling<br> activities on a sustained basis; |
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| • | political, legal, tax and regulatory uncertainties associated with operating in international markets, including Mainland China; |
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| • | uncertainty regarding meeting restrictions and other government scrutiny in Mainland China, as well as negative media and consumer sentiment in Mainland China<br> on our business operations and results; |
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| • | risk of foreign-currency fluctuations and the currency translation impact on the company’s business associated with these fluctuations; |
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| • | uncertainties regarding the future financial performance of the businesses the company has acquired; |
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| • | risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support planned initiatives or launch strategies, and<br> increased risk of inventory write-offs if the company over-forecasts demand for a product or changes its planned initiatives or launch strategies; |
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| • | regulatory risks associated with the company’s products, which could require the company to modify its claims or inhibit its ability to import or continue<br> selling a product in a market if the product is determined to be a medical device or if the company is unable to register the product in a timely manner under applicable regulatory requirements; |
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| • | unpredictable economic conditions and events globally, including trade policies and tariffs; |
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| • | uncertainties related to interpretation of, and forthcoming regulations under, the recently enacted U.S. tax reform legislation; the company’s future<br> tax-planning initiatives; any prospective or retrospective increases in duties on the company’s products imported into the company’s markets outside of the United States; and any adverse results of tax audits or unfavorable changes to tax<br> laws in the company’s various markets; and |
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| • | continued competitive pressures in the company’s markets. |
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The company’s financial performance and the forward-looking statements contained herein are further qualified by a detailed discussion of associated risks set forth in the documents filed by the company with the Securities and Exchange Commission. The forward-looking statements set forth the company’s beliefs as of the date that such information was first provided, and the company assumes no duty to update the forward-looking statements contained in this release to reflect any change except as required by law.
Non-GAAP Financial Measures: Constant-currency revenue change is a non-GAAP financial measure that removes the impact of fluctuations in foreign-currency exchange rates, thereby facilitating period-to-period comparisons of the company’s performance. It is calculated by translating the current period’s revenue at the same average exchange rates in effect during the applicable prior-year period and then comparing that amount to the prior-year period’s revenue. The company believes that constant-currency revenue change is useful to investors, lenders and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on the company’s revenue from period to period.
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| Nu Skin Enterprises Reports Third-quarter 2020 Results, Raises Guidance | Page 5 |
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The following table sets forth revenue for the three-month periods ended September 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):
| Three Months Ended<br><br> <br>September 30, | Constant-<br><br> <br>Currency | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | Change | Change | |||||||||
| Nu Skin | ||||||||||||
| Mainland China | $ | 169,068 | $ | 173,974 | (3 | )% | (4 | )% | ||||
| Americas/Pacific | 151,465 | 83,635 | 81 | % | 90 | % | ||||||
| South Korea | 83,460 | 79,435 | 5 | % | 5 | % | ||||||
| Southeast Asia | 84,102 | 78,963 | 7 | % | 8 | % | ||||||
| Japan | 70,958 | 67,197 | 6 | % | 4 | % | ||||||
| EMEA | 61,411 | 35,742 | 72 | % | 67 | % | ||||||
| Hong Kong/Taiwan | 42,265 | 40,449 | 4 | % | — | |||||||
| Other | (314 | ) | (62 | ) | (406 | )% | (403 | )% | ||||
| Total Nu Skin | 662,415 | 559,333 | 18 | % | 19 | % | ||||||
| Manufacturing | 40,910 | 30,601 | 34 | % | 34 | % | ||||||
| Grow Tech | 22 | — | 100 | % | 100 | % | ||||||
| Total | $ | 703,347 | $ | 589,934 | 19 | % | 19 | % |
The following table sets forth revenue for the nine-month periods ended September 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):
| Nine Months Ended<br><br> <br>September 30, | Constant-<br><br> <br>Currency | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | Change | Change | ||||||||
| Nu Skin | |||||||||||
| Mainland China | $ | 453,096 | $ | 567,795 | (20 | )% | (19 | )% | |||
| Americas/Pacific | 353,957 | 262,932 | 35 | % | 43 | % | |||||
| South Korea | 236,094 | 248,020 | (5 | )% | (2 | )% | |||||
| Southeast Asia | 220,517 | 226,853 | (3 | )% | (1 | )% | |||||
| Japan | 200,549 | 194,557 | 3 | % | 2 | % | |||||
| EMEA | 147,590 | 120,960 | 22 | % | 23 | % | |||||
| Hong Kong/Taiwan | 115,253 | 124,719 | (8 | )% | (10 | )% | |||||
| Other | 374 | (239 | ) | 256 | % | 256 | % | ||||
| Total Nu Skin | 1,727,430 | 1,745,597 | (1 | )% | 1 | % | |||||
| Manufacturing | 105,975 | 91,430 | 16 | % | 16 | % | |||||
| Grow Tech | 336 | 30 | 1,020 | % | 1,020 | % | |||||
| Total | $ | 1,833,741 | $ | 1,837,057 | — | 2 | % |
The Company’s Customers and Sales Leaders statistics by segment as of September 30, 2020 and 2019 are presented in the following table:
| As of<br><br> <br>September 30, 2020 | As of<br><br> <br>September 30, 2019 | % Increase (Decrease) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Customers | Sales<br><br> <br>Leaders | Customers | Sales<br><br> <br>Leaders | Customers | Sales<br><br> <br>Leaders | |||||||||
| Mainland China | 341,386 | 20,970 | 317,257 | 23,776 | 8 | % | (12 | )% | ||||||
| Americas/Pacific | 438,889 | 14,400 | 229,013 | 7,760 | 92 | % | 86 | % | ||||||
| South Korea | 164,256 | 7,973 | 169,589 | 7,363 | (3 | )% | 8 | % | ||||||
| Southeast Asia | 163,536 | 8,357 | 145,845 | 7,936 | 12 | % | 5 | % | ||||||
| Japan | 126,896 | 6,523 | 128,373 | 5,964 | (1 | )% | 9 | % | ||||||
| EMEA | 235,202 | 6,226 | 147,758 | 4,060 | 59 | % | 53 | % | ||||||
| Hong Kong/Taiwan | 69,346 | 4,067 | 68,862 | 4,231 | 1 | % | (4 | )% | ||||||
| Total | 1,539,511 | 68,516 | 1,206,697 | 61,090 | 28 | % | 12 | % | ||||||
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| Nu Skin Enterprises Reports Third-quarter 2020 Results, Raises Guidance | Page 6 |
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“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.
“Sales Leaders” are independent distributors, and sales employees and independent marketers in China, who achieve certain qualification requirements.
NU SKIN ENTERPRISES, INC.
Consolidated Statements of Income (Unaudited)
(U.S. dollars in thousands, except per share amounts)
| Three Months Ended<br><br> <br>September 30, | Nine Months Ended<br><br> <br>September 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||||||||
| Revenue | $ | 703,347 | $ | 589,934 | $ | 1,833,741 | $ | 1,837,057 | |||
| Cost of sales | 183,374 | 140,162 | 463,277 | 440,854 | |||||||
| Gross profit | 519,973 | 449,772 | 1,370,464 | 1,396,203 | |||||||
| Operating expenses: | |||||||||||
| Selling expenses | 280,695 | 231,937 | 735,365 | 727,473 | |||||||
| General and administrative expenses | 165,050 | 147,943 | 466,232 | 455,983 | |||||||
| Total operating expenses | 445,745 | 379,880 | 1,201,597 | 1,183,456 | |||||||
| Operating income | 74,228 | 69,892 | 168,867 | 212,747 | |||||||
| Other income (expense), net | 525 | (4,979 | ) | (4,068 | ) | (11,153 | ) | ||||
| Income before provision for income taxes | 74,753 | 64,913 | 164,799 | 201,594 | |||||||
| Provision for income taxes | 18,446 | 20,823 | 46,911 | 68,153 | |||||||
| Net income | $ | 56,307 | $ | 44,090 | $ | 117,888 | $ | 133,441 | |||
| Net income per share: | |||||||||||
| Basic | $ | 1.10 | $ | 0.79 | $ | 2.24 | $ | 2.40 | |||
| Diluted | $ | 1.08 | $ | 0.79 | $ | 2.23 | $ | 2.39 | |||
| Weighted-average common shares outstanding (000s): | |||||||||||
| Basic | 51,308 | 55,548 | 52,741 | 55,507 | |||||||
| Diluted | 52,243 | 55,788 | 52,906 | 55,950 | |||||||
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| Nu Skin Enterprises Reports Third-quarter 2020 Results, Raises Guidance | Page 7 |
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NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(U.S. dollars in thousands)
| September 30,<br><br> <br>2020 | December 31,<br><br> <br>2019 | |||||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 366,710 | $ | 335,630 | ||
| Current investments | 11,301 | 8,413 | ||||
| Accounts receivable, net | 60,016 | 50,378 | ||||
| Inventories, net | 270,319 | 275,891 | ||||
| Prepaid expenses and other | 63,916 | 69,854 | ||||
| Total current assets | 772,262 | 740,166 | ||||
| Property and equipment, net | 456,083 | 453,604 | ||||
| Right-of-use assets | 165,749 | 144,326 | ||||
| Goodwill | 196,573 | 196,573 | ||||
| Other intangible assets, net | 74,391 | 80,321 | ||||
| Other assets | 151,653 | 154,016 | ||||
| Total assets | $ | 1,816,711 | $ | 1,769,006 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 55,298 | $ | 38,979 | ||
| Accrued expenses | 381,052 | 290,281 | ||||
| Current portion of long-term debt | 30,000 | 27,500 | ||||
| Total current liabilities | 466,350 | 356,760 | ||||
| Operating lease liabilities | 121,439 | 105,701 | ||||
| Long-term debt | 312,664 | 334,461 | ||||
| Other liabilities | 88,785 | 96,795 | ||||
| Total liabilities | 989,238 | 893,717 | ||||
| Stockholders’ equity: | ||||||
| Class A common stock | 91 | 91 | ||||
| Additional paid-in capital | 570,491 | 557,544 | ||||
| Treasury stock, at cost | (1,446,374 | ) | (1,324,826 | ) | ||
| Accumulated other comprehensive loss | (83,108 | ) | (85,292 | ) | ||
| Retained earnings | 1,786,373 | 1,727,772 | ||||
| Total stockholders’ equity | 827,473 | 875,289 | ||||
| Total liabilities and stockholders’ equity | $ | 1,816,711 | $ | 1,769,006 |
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CONTACTS:
Media: media@nuskin.com, (801) 345-6397
Investors: investorrelations@nuskin.com, (801) 345-3577