Please note: This press release, particularly the “Outlook” section, contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represent the company’s current expectations and beliefs, including, among other things: (i) management’s positive outlook for the company; (ii) management’s expectations regarding the company’s initiatives, strategies, development and launch of new products, and other innovation efforts; and (iii) management’s projections regarding revenue, earnings per share, and the impact of foreign currency fluctuations set forth in the “Outlook” section. 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: (a) challenging economic conditions globally; (b) the risks of foreign currency fluctuations and the currency translation impact on our business associated with these fluctuations; (c) uncertainty regarding the impact on our business of increased regulatory scrutiny of the direct selling industry in Japan and our efforts to increase distributor compliance efforts in this market;

 

 

 

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Nu Skin Enterprises, Inc.

Nov.  2, 2010

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(d) an increase in complaints and general inquiries to consumer protection agencies in Japan regarding the activities of some distributors and the associated risks to the company’s business if such increase results in further regulatory scrutiny; (e) regulatory risks associated with the company’s tools and products, which could inhibit the company’s ability to market a tool or product in a market if it is determined to be a medical device in any market, if distributors make unauthorized claims that would cause such products to be classified as drugs, or if the company is unable to obtain necessary product registrations in a timely manner;  (f) continued regulatory scrutiny and investigations in Mainland China, which have from time to time in the past, and could in the future, negatively impact the company’s business, including the interruption of sales activities in stores, loss of licenses, and the imposition of fines; (g) any failure of current or planned initiatives or products to generate interest among distributors and customers and generate sponsoring and selling activities on a sustained basis; (h) any failure of the implementation of business transformation initiatives to reduce overhead and drive growth, and any negative impact of such initiatives on the company’s ability to effectively manage its operations; (i) adverse publicity related to the company’s business, products, industry or any legal actions or complaints by distributors or others; (j) any prospective or retrospective increases in duties on our products imported into our markets outside of the United States and any adverse results of tax audits or unfavorable changes to tax laws in our various markets; and (k) continued competitive pressures in the company’s markets. 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 of this release, 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.

 

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Nov. 2, 2010

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NU SKIN ENTERPRISES, INC.
Consolidated Statements of Income (Unaudited)
For the Third Quarters Ended September 30, 2010 and 2009
(in thousands, except per share amounts)
		2010				2009
Revenue:
North Asia		$	170,537			$	152,427
Americas			63,721				61,312
Greater China			63,337				54,415
South Asia/Pacific			50,247				32,329
Europe			35,711				33,759
Total revenue			383,553				334,242
Cost of sales			68,755				62,108
Gross profit			314,798				272,134
Operating expenses:
Selling expenses			162,402				140,585
General and administrative expenses			99,501				89,794
Restructuring charges		─					812
Total operating expenses			261,903				231,191
Operating income			52,895				40,943
Other income (expense), net			(674	)			(2,833	)
Income before provision for income taxes			52,221				38,110
Provision for income taxes			16,932				12,539
Net income		$	35,289			$	25,571
Net income per share:
Basic		$	0.57			$	0.41
Diluted		$	0.55			$	0.40
Weighted average common shares outstanding:
Basic			61,971				62,912
Diluted			64,065				63,885

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Nov. 2, 2010

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NU SKIN ENTERPRISES, INC.
Consolidated Statements of Income (Unaudited)
For the Nine-Month Periods Ended September 30, 2010 and 2009
(in thousands, except per share amounts)
		2010				2009
Revenue:
North Asia		$	505,503			$	438,957
Americas			188,564				181,968
Greater China			201,664				154,638
South Asia/Pacific			131,529				84,836
Europe			108,779				92,606
Total revenue			1,136,039				953,005
Cost of sales			201,525				176,551
Gross profit			934,514				776,454
Operating expenses:
Selling expenses			477,403				402,326
General and administrative expenses			298,938				266,824
Restructuring charges		─					11,759
Total operating expenses			776,341				680,909
Operating income			158,173				95,545
Other income (expense), net			(7,347	)			(3,187	)
Income before provision for income taxes			150,826				92,358
Provision for income taxes			52,105				32,832
Net income		$	98,721			$	59,526
Net income per share:
Basic		$	1.58			$	0.94
Diluted		$	1.53			$	0.93
Weighted average common shares outstanding:
Basic			62,443				63,108
Diluted			64,584				63,803

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Nov. 2, 2010

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NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands)
		September 30, 2010				December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents		$	197,627			$	158,045
Accounts receivable			29,132				22,513
Inventories, net			118,283				105,661
Prepaid expenses and other			58,374				51,724
			403,416				337,943
Property and equipment, net			95,416				79,356
Goodwill			112,446				112,446
Other intangible assets, net			79,311				81,968
Other assets			129,121				136,736
Total assets		$	819,710			$	748,449
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	28,763			$	25,292
Accrued expenses			146,934				124,520
Current portion of long-term debt			38,116				35,400
			213,813				185,212
Long-term debt			107,300				121,119
Other liabilities			67,450				66,431
Total liabilities			388,563				372,762
Stockholders’ equity:
Class A common stock			91				91
Additional paid-in capital			250,912				232,219
Treasury stock, at cost			(474,123	)			(433,567	)
Retained earnings			720,387				645,078
Accumulated other comprehensive loss			(66,120	)			(68,134	)
			431,147				375,687
Total liabilities and stockholders’ equity		$	819,710			$	748,449

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Nov.  2, 2010

Page 9

 

NU SKIN ENTERPRISES, INC. Distributor/Preferred Customer Growth by Market
		As of September 30, 2010				As of September 30, 2009				% Increase (Decrease)
		Active*		Executive		Active*		Executive		Active*		Executive
North Asia		322,000		14,173		318,000		13,705		1.3%		3.4%
Americas		164,000		5,540		170,000		5,442		(3.5%)		1.8%
Greater China		118,000		7,781		105,000		6,705		12.4%		16.0%
South Asia/Pacific		80,000		3,776		71,000		2,791		12.7%		35.3%
Europe		99,000		3,535		90,000		3,184		10.0%		11.0%
Total		783,000		34,805		754,000		31,827		3.8%		9.4%

 

 

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*	Active distributors include preferred customers and distributors purchasing products directly from the company during the quarter.

 

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