Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.7.0.1
Segment Information
 12 Months Ended
Dec. 31, 2016
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 Chinese market where it sells to consumers through an e-commerce retail platform. Outside of the China e-commerce retail platform, the Company believes that all of its other operating segments have similar economic characteristics, except for its operations located within the Commonwealth of Independent States (“CIS”). In making this determination, the Company believes that its operating segments 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. The Company’s engagement of a third-party service provider in the CIS market results in a different economic structure than its other markets.

However, there is no separate segment manager who is held accountable by the Company’s chief operating decision-makers, or anyone else, for operations, operating results and planning for the either Chinese or the CIS markets on a stand-alone basis, and neither market is material for the two years presented. As such, the Company believes that all operating segments should be aggregated into a single reportable segment for disclosure purposes.
 
The Company’s net sales by geographic area are as follows (in thousands):
 
Year Ended December 31,
 
2016
 
2015
 
2014
Net sales from external customers:
 
 
 
 
 
United States
$
4,100

 
$
3,246

 
$
1,438

Canada
1,809

 
2,746

 
1,374

Hong Kong
263,482

 
245,737

 
111,028

China
9,086

 
4,425

 
1,538

Taiwan
6,213

 
5,965

 
4,628

South Korea
691

 
1,129

 
1,009

Commonwealth of Independent States (Russia, Kazakhstan and Ukraine)1
858

 
1,139

 
3,113

Europe
1,234

 
382

 
373

Other foreign countries
255

 
91

 
89

Total net sales
$
287,728

 
$
264,860

 
$
124,590


1 The Company discontinued its Ukraine operations during the second quarter of 2015.
 
The Company’s net sales by product and service are as follows (in thousands):
 
Year Ended December 31,
 
2016
 
2015
 
2014
Net sales by product and service:
 
 
 
 
 
Product sales
$
269,731

 
$
253,041

 
$
118,843

Enrollment package revenue, freight and other
25,616

 
17,623

 
7,927

Less: sales returns
(7,619
)
 
(5,804
)
 
(2,180
)
Total net sales
$
287,728

 
$
264,860

 
$
124,590


 
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,
 
2016
 
2015
Long-lived assets:
 
 
 
United States
$
763

 
$
283

Hong Kong
140

 
204

China
199

 
252

Other foreign countries
286

 
155

Total long-lived assets
$
1,388

 
$
894