Nu Skin 2010 Annual Report - Direct Selling News

employees in Mainland China who had been purchasing products in
2008 from Hong Kong that were not available in Mainland China such
as our Galvanic Spa System II. Executive distributors in Hong Kong
were up 15% and the active distributors in Hong Kong were down 4%
compared to 2008.
Americas. The following table sets forth revenue for the Americas
region and its principal markets (U.S. dollars in millions):
2008 2009 Change
United States . . . . . . $ 192.1 $ 218.6 14%
Canada . . . . . . . . . . . . 16.2 23.5 45%
Latin America . . . . . 15.6 18.8 21%
Americas total . . . . $ 223.9 $ 260.9 17%
In 2009, we continued to experience strong growth in the United
States, driven particularly by our highly demonstrable personal
care products, including our Galvanic Spa System II with ageLOC
Galvanic Spa Gels and our new ageLOC Transformation skin care
system and ageLOC Edition Galvanic Spa System II. Revenue in
2009 was positively impacted by approximately $11.0 million as a result
of product sales and convention fee revenue from foreign distributors
attending our biannual global convention in Los Angeles.
Active distributors in the United States decreased 3% and executive
distributors increased 12% compared to the prior-year period.
Revenue increased by 45% in Canada and by 21% in Latin America
in 2009 compared to 2008, respectively. Revenue continued to be
driven primarily by the success of our Galvanic Spa System II and
ageLOC Galvanic Spa Gels in these markets. Our growth in Latin
America is also attributed to our expansion into Colombia during the
second quarter of 2009.
South Asia/Pacific. The following table sets forth revenue
for the South Asia/Pacific region and its principal markets (U.S. dollars
in millions):
2008 2009 Change
Singapore/Malaysia/
Brunei . . . . . . . . . . . . . $ 43.8 $ 49.2 12%
Thailand . . . . . . . . . . . . . 34.6 38.8 12%
Australia/New Zealand 13.3 14.2 7%
Indonesia . . . . . . . . . . . . 8.9 10.7 20%
Philippines . . . . . . . . . . . 7.0 7.2 3%
South Asia/Pacific total $ 107.6 $ 120.1 12%
Foreign currency exchange rate fluctuations negatively impacted
revenue in South Asia/Pacific by 5% in 2009 compared to the same
prior-year period. All of the markets in this region experienced growth.
The growth was driven largely by continued strong sales of our TRA
family of weight loss products and our Galvanic Spa System II, as well
as successful distributor leadership initiatives. We also successfully launched
enhancements to our sales compensation plan in these markets, which
we believe helped contribute to increased distributor productivity.
Executive distributors in the region increased 16% while active distributors
increased 9% compared to the prior year.
Europe. The following table sets forth revenue for our Europe
region (U.S. dollars in millions):
2008 2009 Change
Europe . . . . . . . . . . . . . $ 111.6 $ 133.6 20%
Foreign currency exchange rate fluctuations negatively impacted
revenue in Europe by 6% in 2009 compared to the prior year. On a local
currency basis, revenue in Europe grew by 26% in 2009 compared to
2008. The strong growth in Europe was driven by strong sales force
leadership and sustained interest in our Galvanic Spa System II and our
products supported by the Pharmanex BioPhotonic Scanner, particularly
in Eastern Europe where we had recently expanded our business,
as well as growth in Russia and South Africa. We also began initial marketing
activities in Turkey during the second quarter of 2009. Our active
and executive distributor counts in our Europe region increased by 12%
and 16%, respectively, in 2009 compared to 2008.
GROSS PROFIT
Gross profit as a percentage of revenue in 2009 remained level
with 2008 at 81.7%..
SELLING EXPENSES
Selling expenses decreased as a percentage of revenue to 42.0% in
2009 from 42.7% in 2008. The decrease as a percentage of revenue was
due primarily to modifications to our compensation plan to improve the
alignment of our compensation plan incentives around more productive
distributor activity.
For both 2008 and 2009, the costs of certain incentive trips and
other rewards earned by distributors, previously recorded as general and
administrative expenses, have been reclassified as selling expenses.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased as a percentage
of revenue to 27.8% in 2009 from 28.9% in 2008, primarily as a
result of increased revenue and our transformation to better leverage
our overhead costs as we grow our revenue. General and administrative
expenses were also positively impacted by our transformation
efforts to reduce our overhead and general and administration expenses
in Japan.
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