Nu Skin 2010 Annual Report - Direct Selling News

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NU SKIN ENTERPRISES, INC. Notes to Consolidated Financial Statements these two affiliated entities for approximately $33.0 million. Approximately $16.0 million was paid in cash and the remaining $17.0 million (see related party payable on the consolidated balance sheet) was paid in January 2011. 4. PROPERTY AND EQUIPMENT Property and equipment are comprised of the following (U.S. dollars in thousands): December 31, 2009 2010 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 16,480 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 41,496 Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,261 46,799 Computers and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,481 87,653 Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,780 56,393 Scanners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,784 9,469 Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,943 2,222 235,249 260,512 Less: accumulated depreciation . (155,893) (126,790) $ 79,356 $ 133,722 Depreciation of property and equipment totaled $24.4 million, $21.8 million and $22.7 million for the years ended December 31, 2008, 2009 and 2010. 5. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill and other intangible assets consist of the following (U.S. dollars in thousands): Carrying Amount at December 31, Goodwill and indefinite life intangible assets: 2009 2010 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 112,446 $ 112,446 Trademarks and trade names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,599 24,599 $ 137,045 $ 137,045 December 31, 2009 December 31, 2010 Finite life intangible assets: Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Weighted-average Amortization Period Scanner technology . . . . . . . . $ 46,482 $ 15,390 $ 46,482 $ 18,423 18 years Developed technology . . . . . 22,500 12,612 22,500 13,436 20 years Distributor network . . . . . . . . . 11,598 8,085 11,598 8,587 15 years Trademarks . . . . . . . . . . . . . . . . . 13,316 8,837 13,323 9,524 15 years Other . . . . . . . . . . . . . . . . . . . . . . . 29,755 21,358 32,989 23,251 5 years $ 123,651 $ 66,282 $ 126,892 $ 73,221 15 years 60
NU SKIN ENTERPRISES, INC. Notes to Consolidated Financial Statements Amortization of finite-life intangible assets totaled $6.0 million, $6.8 million and $6.9 million for the years ended December 31, 2008, 2009 and 2010, respectively. Annual estimated amortization expense is expected to approximate $6.0 million for each of the five succeeding fiscal years. All of the Company’s goodwill is based in the U.S. Goodwill and indefinite life intangible assets are not amortized, rather they are subject to annual impairment tests. Annual impairment tests were completed resulting in no impairment charges for any of the periods shown. Finite life intangibles are amortized over their useful lives unless circumstances occur that cause the Company to revise such lives or review such assets for impairment. 6. OTHER ASSETS Other assets consist of the following (U.S. dollars in thousands): December 31, 2009 2010 Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49,030 $ 45,027 Deposits for noncancelable operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,713 14,261 Deposit for customs assessment (Note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,476 65,255 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,517 20,717 $ 136,736 $ 145,260 7. ACCRUED EXPENSES Accrued expenses consist of the following (U.S. dollars in thousands): December 31, 2009 2010 Accrued commissions and other payments to distributors . . . . . . . . . . . . . . . . . . . . . $ 50,332 $ 66,335 Other taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,596 15,948 Accrued payroll and payroll taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,790 13,063 Accrued payable to vendors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,438 9,744 Accrued severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,537 112 Other accrued employee expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,800 19,704 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,027 21,202 $ 124,520 $ 146,108 61
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NU SKIN ANNUAL REPORT 2010 ELEVATE
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35,676 32,939 30,588 30,002 2007 20
Page 6 and 7:
BUILDING FOR THE FUTURE In 2011, we
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$163M AGELOC GALVANIC SPA AND GELS
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8 8
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5 INCREASING OPERATIONAL EFFICIENCI
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* GAAP RECONCILATION TABLE 2007 200
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Can we sustain growth? Yes we can.
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UNITED STATES SECURITIES AND EXCHAN
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TABLE OF CONTENTS PART I 1 ITEM 1 B
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PART I ITEM 1. BUSINESS OVERVIEW We
Page 25 and 26:
The following table summarizes our
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Other. We also offer a limited numb
Page 29 and 30:
introduction of additional ageLOC a
Page 31 and 32: ness model utilizing sales employee
Page 33 and 34: in a manner to attract the general
Page 35 and 36: take longer than we anticipated. Pl
Page 37 and 38: chases, management services and con
Page 39 and 40: These declines could continue or in
Page 41 and 42: ous markets, including Japan, South
Page 43 and 44: creased scrutiny by the government.
Page 45 and 46: pact the cost associated with manuf
Page 47 and 48: on a sustained basis. Factors that
Page 49 and 50: negotiated contracts with shipping
Page 51 and 52: System failures could harm our busi
Page 53 and 54: consumption taxes based on an audit
Page 55 and 56: STOCK PERFORMANCE GRAPH Set forth b
Page 57 and 58: ITEM 7. MANAGEMENT’S DISCUSSION A
Page 59 and 60: estrictions on the importation of f
Page 61 and 62: RESULTS OF OPERATIONS The following
Page 63 and 64: South Asia/Pacific. The following t
Page 65 and 66: employees in Mainland China who had
Page 67 and 68: We currently have debt pursuant to
Page 69 and 70: the legal form of the transaction.
Page 71 and 72: closures related to vendor’s mult
Page 73 and 74: NU SKIN ENTERPRISES, INC. Consolida
Page 75 and 76: NU SKIN ENTERPRISES, INC. Consolida
Page 77 and 78: NU SKIN ENTERPRISES, INC. Notes to
Page 81: NU SKIN ENTERPRISES, INC. Notes to
Page 99 and 100: Report of Independent Registered Pu
Page 101 and 102: PART III The information required b
Page 103 and 104: corporated by reference to Exhibit
Page 105 and 106: *10.56 Form of 2010 Plan Director S
Page 107 and 108: BOARD OF DIRECTORS Blake M. Roney E
Page 109: 18 NU SKIN ENTERPRISES, INC. 75 WES
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Nu Skin 2010 Annual Report - Direct Selling News

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