Nu Skin 2010 Annual Report - Direct Selling News

NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements
The provision for current and deferred taxes for the years ended December 31, 2008, 2009 and 2010 consists of the following (U.S. dollars
in thousands):
2008 2009 2010
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,524 $ 9,409 $ 45,761
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,620 1,690 3,825
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,408 27,784 27,450
35,552 38,883 77,036
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713 14,266 (2,558)
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (345) 937 212
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (614) (2,807) (3,128)
(246) 12,396 (5,474)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,306 $ 51,279 $ 71,562
The Company’s foreign taxes paid are high relative to foreign operating income and the Company’s U.S. taxes paid are low relative to
U.S. operating income due largely to the flow of funds among the Company’s Subsidiaries around the world. As payments for services, management
fees, license arrangements and royalties are made from the Company’s foreign affiliates to its U.S. corporate headquarters, these
payments often incur withholding and other forms of tax that are generally creditable for U.S. tax purposes. Therefore, these payments lead
to increased foreign effective tax rates and lower U.S. effective tax rates. Variations (or shifts) occur in the Company’s foreign and U.S. effective
tax rates from year to year depending on several factors. These factors include the impact of global transfer prices, the timing and level of
remittances from foreign affiliates, profits and losses in various markets, in the valuation of deferred tax assets or liabilities, or changes in tax
laws, regulations, accounting principles, or interpretations thereof.
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