Nu Skin 2010 Annual Report - Direct Selling News

2000 to February 2006. Dr. Chang served as Vice President of Clinical
Studies and Pharmacology of Pharmanex from 1997 until April
2000. Dr. Chang has nearly 20 years of pharmaceutical experience.
He received a B.S. degree from Portsmouth University and a Ph.D.
degree from the University of London.
Daniel Chard has served as President of Global Sales and
Operations since May 2009. Prior to serving in this position, Mr.
Chard served as Executive Vice President of Distributor Success
from February 2006 to May 2009 and President of Nu Skin Europe
from April 2004 to February 2006. Mr. Chard also served as Vice
President of Marketing and Product Management of Big Planet, our
technology products and services division, from May 2003 to April
2004 and as Senior Director of Marketing and Product Development
at Pharmanex. Prior to joining us in 1998, Mr. Chard worked in a
variety of strategic marketing positions in the consumer products industry.
Mr. Chard holds a B.A. degree in Economics from Brigham
Young University and an M.B.A. from the University of Minnesota.
Scott Schwerdt has served as President, Americas, Europe and
South Pacific since February 2006. Mr. Schwerdt served as Regional
Vice President of North America and President of Nu Skin Enterprises
United States, Inc. from May 2004 to February 2006. Mr. Schwerdt
previously served as the General Manager of our U.S. operations from
May 2001 to May 2004. Mr. Schwerdt joined our company in 1988 and
has held various positions, including Vice President of North America/
South Pacific Operations and Vice President of Europe. Mr. Schwerdt
received a B.A. degree in International Relations from Brigham Young
University.
Matthew Dorny has served as our General Counsel and Secretary
since January 2003. Mr. Dorny previously served as Assistant General
Counsel from May 1998 to January 2003. Prior to joining us, Mr. Dorny
was a securities and business attorney in private practice in Salt Lake
City, Utah. Mr. Dorny received B.A., M.B.A. and J.D. degrees from the
University of Utah.
ITEM 1A. RISK FACTORS
We face a number of substantial risks. Our business, financial condition
or results of operations could be harmed by any of these risks. The trading
price of our common stock could decline due to any of these risks, and
they should be considered in connection with the other information contained
in this Annual Report on Form 10-K. These risk factors should be
read together with the other items in this Annual Report on Form 10-K,
including “Item 1. Business” and “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operation.”
Difficult economic conditions could harm our business.
Global economic conditions continue to be challenging.
Although the economy appears to be recovering in some countries,
it is not possible for us to predict the extent and timing of any improvement
in global economic conditions. Even with continued
growth in many of our markets during this period, the economic
downturn could adversely impact our business in the future by causing
a decline in demand for our products, particularly if the economic
conditions are prolonged or worsen. In addition, such economic conditions
may adversely impact access to capital for us and our suppliers,
may decrease our distributors’ ability to obtain or maintain credit
cards, and may otherwise adversely impact our operations and overall
financial condition.
Currency exchange rate fluctuations could impact our financial results.
In 2010, approximately 86% of our sales occurred in markets outside
of the United States in each market’s respective local currency.
We purchase inventory primarily in the United States in U.S. dollars.
In preparing our financial statements, we translate revenue and expenses
in our markets outside the United States from their local currencies
into U.S. dollars using weighted average exchange rates. If the
U.S. dollar strengthens relative to local currencies, particularly the
Japanese yen which accounted for approximately 31% of our 2010
revenue, our reported revenue, gross profit and net income will likely
be reduced. Foreign currency fluctuations, particularly with respect
to the Japanese yen given the amount of yen denominated debt on
our balance sheet, can also result in losses and gains resulting from
translation of foreign currency denominated balances on our balance
sheet. Given the complex global political and economic dynamics
that affect exchange rate fluctuations, it is difficult to predict future
fluctuations and the effect these fluctuations may have upon future
reported results or our overall financial condition.
Because our Japanese operations account for a significant part
of our business, continued weakness in our business operations in
Japan could harm our business.
Approximately 31% of our 2010 revenue was generated in Japan.
We have experienced local currency revenue declines in Japan over
the last several years and continue to face challenges in this market.
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