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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 6, 1998
NU SKIN ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 001-12421 87-0565309
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
75 West Center Street, Provo, Utah 84601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 345-6100
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(Former name or former address, if changed since last report.)
The Index to Exhibits appears on page 4.
Page 1 of 8
Item 5. Other Events
(i) On October 6, 1998, The Registrant announced that it had signed
an agreement with Generation Health Holdings, Inc. pursuant to
which the Registrant will purchase privately-held Generation
Health Holdings, the parent company of Pharmanex, Inc. The
transaction is subject to certain conditions, including the
approval of the stockholders of Generation Health Holdings, Inc.
Reference is made to the press release issued to the public by
the Registrant on October 6, 1998, the text of which is attached
hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release of Nu Skin Enterprises, Inc. dated October 6,
1998.
Page 2 of 8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on the day indicated.
NU SKIN ENTERPRISES, INC.
(Registrant)
By: /s/ M. Truman Hunt
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M. Truman Hunt
Vice President of Legal Affairs
and Investor Relations
Dated: October 6, 1998
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INDEX TO EXHIBITS
Exhibit Description Page
- ------- ----------- ------
99.1 Text of press release of Nu Skin Enterprises, Inc. 5
dated October 6, 1998
Page 4 of 8
EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
CONTACTS:
Nu Skin Enterprises Financial Relations Board
Charles Allen (investors) Lynne Farris (general info)
(801) 345-6110 Jordan Goldstein (investors)
Larry Macfarlane (media) (415) 986-1591
(801) 345-2102
NU SKIN ENTERPRISES ANNOUNCES PLANS TO ACQUIRE PHARMANEX, INC.
Acquisition Combines One of the Largest Direct Selling Companies
with Innovative Developer of Natural Health Supplements
PROVO, Utah -- Oct. 6, 1998 -- Nu Skin Enterprises, Inc. (NYSE: NUS) and
Generation Health Holdings, Inc. today announced that they have signed an
agreement by which Nu Skin Enterprises will purchase privately-held Generation
Health Holdings, the parent company of Pharmanex, Inc., a leading research and
development company of natural health supplements.
The purchase price is approximately 4.1 million shares of Nu Skin Class A
common stock. Nu Skin will also assume or repay approximately $30 million in
liabilities. The final purchase price may include up to approximately $33
million in additional consideration depending upon the performance of the
capital markets and Nu Skin's stock during the year following closing. The
transaction is also subject to certain conditions, including the approval of the
stockholders of Generation Health Holdings, Inc., and is expected to be
completed by the end of October 1998.
"We believe this transaction combines the most innovative natural health
supplement developer with the most potent distribution channel for these
products," stated Steven J. Lund, president and chief executive officer of Nu
Skin Enterprises. "The acquisition of Pharmanex reflects our commitment to
product innovation and differentiation and moves us closer to becoming the
world's leader in both natural health and direct selling. We are attracted to
Pharmanex because it 1) has a proven ability to develop new, proprietary natural
health supplements, 2) has an outstanding line of existing health products, 3)
has the ability to substantiate product efficacy through unique avenues of
clinical testing and 4) will form the basis for a new business opportunity we
plan to introduce soon to our distributor force. In addition, Pharmanex's
-more-
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Nu Skin Enterprises
Oct. 6, 1998
Page 2
current product line and its research and development expertise in the natural
health supplement industry will complement our well-established general
nutrition, weight management and sports nutrition product lines. Pharmanex has
forged many important relationships in the scientific community, including
strategic relationships in China; they share our unremitting commitment to
quality and innovation; and they will help position us for further vertical
integration, particularly with regard to the cultivation, sourcing and
extraction of high quality, standardized ingredients."
Henry Burdick, chairman and chief executive officer of Pharmanex, said, "We
generated approximately $12 million in sales through mass market channels during
the first nine months of 1998. We see this acquisition as an opportunity to make
Pharmanex health supplements available to a much larger market. Nu Skin's global
reach and approximately 500,000 distributors not only will increase the
availability of Pharmanex products, but also will help educate consumers about
their benefits. We see direct selling as the optimal new channel of distribution
for our products." Mr. Burdick continued, "Pharmanex's principal stockholders,
including the Pritzker organization, Chase Venture Partners, and Fidelity
Ventures, are convinced there is significant synergy in the marriage of the two
companies."
Professor Carl Djerassi, chairman of Pharmanex's scientific advisory board,
said, "This merger totally supports and further strengthens Pharmanex's
commitment to bringing sophisticated scientific research and high quality
control to the dietary supplement industry. The strength of Nu Skin's marketing
and Pharmanex's science is a powerful combination to take this new company
forward."
Pharmanex's products are made from naturally occurring plant-based
substances that have been proven effective through extensive scientific
research. Pharmanex currently sells 33 standardized botanicals and five
proprietary natural dietary supplements through retail outlets in the United
States. Pharmanex's proprietary dietary health supplements, some of which have
patent applications pending, include:
Cholestin(TM), made from Monascus purpureas Went (red yeast rice), is
a revolutionary health supplement shown to help maintain healthy
cholesterol levels in the body.
CordyMax Cs-4(TM), derived from the Tibetan Cordyceps sinensis
mushroom, promotes vitality and stamina, reduces fatigue, and promotes
healthy lung function.
BioGinkgo(TM) 27/7, made using a proprietary Ginkgo biloba leaf
extraction process, supports memory and concentration and promotes
peripheral circulation.
-more-
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Nu Skin Enterprises
Oct. 6, 1998
Page 3
TeGreen 97(TM), made from antioxidant-rich Green Tea, provides potent
anti-oxidant support in the presence of pollution, stress and toxins
without the negative effects of caffeine.
Bio St. John's Wort(TM), a proprietary combination of St. John's Wort
and CordyMax, promotes positive mental outlook and mood, reduces
fatigue and promotes healthy emotional balance.
Based in Simi Valley, Calif., Pharmanex maintains a raw material extraction
facility in Huzhou, China; a research and development center in Shanghai, China;
a clinical and pharmacology center at Beijing Medical University; and contract
cultivation areas in China and Chile. In addition, the company has collaboration
agreements with China's Institute of Materia Medica, Beijing Medical University,
Shanghai Medical University, Columbia University, the University of California
Los Angeles and Kansas University. "We believe that Pharmanex's extensive
contacts and familiarity with the Greater China region will enhance our future
opportunities for growth in the People's Republic of China and also in Taiwan,
where we have only begun to penetrate the large health supplementation market,"
Mr. Lund added.
The Pharmanex research team includes more than 40 M.D.- and Ph.D.-level
scientists, many with extensive pharmaceutical industry experience. Dr. Michael
Chang, chief scientific officer of Pharmanex, was formerly director of medicinal
chemistry at Rhone-Poulenc Rorer and associate director of medicinal chemistry
at Merck. "We have a tremendous team of researchers and physicians that have
been able to work with hundreds of nutrition and pharmaceutical industry experts
to advance phytotechnology research and development," Dr. Chang said. "We use
biochemical research to `fingerprint' the molecular compositions of the natural
substances present in our products, which allows us to achieve unparalleled
product reliability."
Mr. Lund commented, "By applying pharmaceutical-level standards to our
business, we are also committed to being the model natural healthcare products
company with respect to regulatory agencies."
Mr. Lund continued, "Current industry trends are moving nutrition products
into a mass-market, commodity-driven business with eroding margins. In contrast,
Pharmanex differentiates its premier products through scientific standardization
and a pharmaceutical-quality development process. By acquiring Pharmanex, Nu
Skin is also gaining the capacity to control herbal products on a vertically
integrated basis including the cultivation and extraction of raw materials that
result in safe, consistently high quality products with improved margins."
Nu Skin officials said they plan to combine the company's existing Interior
Design(R) Nutritionals
-more-
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Nu Skin Enterprises
Oct. 6, 1998
Page 4
(IDN) business with the Pharmanex business, creating a new corporate entity to
be named Pharmanex. William McGlashan Jr. will continue as president of
Pharmanex. As part of its divisional restructuring, Nu Skin also expects to
introduce a new distributor compensation plan to coincide with the launch of the
Pharmanex division.
Mr. Lund concluded, "The Pharmanex acquisition strengthens our commitment
and ability to provide new products and high-growth opportunities to our
distributors for many years to come. We believe the acquisition will be a solid
marriage that will bear the fruits of innovation and growth."
The Company
Nu Skin Enterprises, Inc. is a leading marketer of premium personal care
and nutrition products. One of the largest direct selling companies in the
world, Nu Skin Enterprises has operations in Asia, Europe and the Pacific, and
licenses the rights to distribute Nu Skin products to private affiliates in
North America. The company's products are currently sold in 26 countries. Nu
Skin Enterprises is traded on the New York Stock Exchange under the symbol
"NUS."
Nu Skin Enterprises news releases are available free of charge through the
Company News On-Call fax service. For a menu of Nu Skin Enterprises news or to
retrieve a specific release, call 1-800-758-5804, extension 119638.
Please note: This news release contains various forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934 which
represent Nu Skin Enterprises' expectations or beliefs concerning future events,
including, but not limited to, the proposed acquisition by Nu Skin Enterprises
of Generation Health Holdings, Inc. and its subsidiary, Pharmanex, Inc., and the
effect of such acquisition on the business, operations and prospects of each
company. Nu Skin Enterprises cautions that these statements involve risks and
uncertainties that could cause actual results and outcomes to differ materially
from those discussed or anticipated. The risks and uncertainties include, but
are not limited to: a failure to obtain required Generation Health Holdings,
Inc. stockholder and third-party consents; the inability of Nu Skin to
successfully integrate the business of Pharmanex and its products into Nu Skin's
operations and distribution channel without undue expense and management
resources; regulatory restrictions and actions in Nu Skin's markets which could
delay or hinder the ability of the company to market Pharmanex's products; and
the inability of Pharmanex to continue to develop innovative and marketable
dietary supplements in a timely manner and to maintain its strategic
relationships. In addition, a number of additional risk factors and
uncertainties are set forth in Nu Skin Enterprises' filings with the Securities
and Exchange Commission, including its most recent Form 10-K and Form 10-Q.
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