Annual report pursuant to Section 13 and 15(d)

SEGMENT INFORMATION

v3.20.1
SEGMENT INFORMATION
12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
SEGMENT INFORMATION SEGMENT INFORMATION
 
The Company sells products to a member network that operates in a seamless manner from market to market, except for the China market where it sells to some consumers through an e-commerce platform, and the Russia and Kazakhstan market where the Company’s engagement of a third-party service provider results in a different economic structure than its other markets. Otherwise, the Company believes that all of its other operating segments have similar economic characteristics and are similar in the nature of the products sold, the product acquisition process, the types of customers products are sold to, the methods used to distribute the products, and the nature of the regulatory environment. Therefore, the Company aggregates its other operating segments into a single reporting segment (the “Primary Reporting Segment”).

The Company reviews its net sales and operating income (loss) by operating segment, and reviews its assets and capital expenditures on a consolidated basis and not by operating segment. As such, net sales and operating income (loss) are presented by reportable segment and assets and capital expenditures by operating segment are not presented. Segment operating income (loss) is adjusted for certain direct costs and commission allocation.
 
The Company’s operating information by geographic area are as follows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
Net sales:
 
 
 
Primary Reporting Segment
$
73,693

 
$
183,298

China
2,941

 
7,744

Russia and Kazakhstan
980

 
868

Total net sales
$
77,614

 
$
191,910


Income (loss) from operations:
 
 
 
Primary Reporting Segment
$
9,339

 
$
45,851

China
(1,719
)
 
2,579

Russia and Kazakhstan
(115
)
 
(154
)
Total income (loss) from operations for reportable segments
7,505

 
48,276

Unallocated corporate expenses
(14,528
)
 
(14,544
)
Other income, net
1,426

 
789

Income (loss) before income taxes
$
(5,597
)
 
$
34,521



The Company’s net sales by geographic area are as follows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
Net sales from external customers:
 
 
 
United States
$
2,003

 
$
3,637

Canada
1,048

 
1,710

Peru
2,380

 
1,635

Hong Kong1
62,724

 
169,452

China
2,941

 
7,744

Taiwan
3,126

 
3,964

South Korea
368

 
493

Russia and Kazakhstan
980

 
868

Europe
1,370

 
1,644

Other foreign countries
674

 
763

Total net sales
$
77,614

 
$
191,910


_____________________________ 
1 Substantially all of our Hong Kong revenues are derived from the sale of products that are delivered to members in China. See “Item 1A. Risk Factors”.
 
The Company’s net sales by product and service are as follows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
Net sales by product and service:
 
 
 
Product sales
$
73,048

 
$
181,865

Freight and other
6,106

 
13,329

Less: sales returns
(1,540
)
 
(3,284
)
Total net sales
$
77,614

 
$
191,910


 
Due to system constraints, it is impracticable for the Company to separately disclose sales by product category for the years presented.

The Company’s long-lived assets by geographic area are as follows (in thousands):
 
December 31,
 
2019
 
2018
Long-lived assets:
 
 
 
United States
$
379

 
$
521

Hong Kong
135

 
145

China
57

 
61

Other foreign countries
164

 
207

Total long-lived assets
$
735

 
$
934