Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.8.0.1
Segment Information
 12 Months Ended
Dec. 31, 2017
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 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.

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 China market or the Russia and Kazakhstan market on a stand-alone basis, and neither market is material for the periods 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,
 
2017
 
2016
 
2015
Net sales from external customers:
 
 
 
 
 
United States
$
3,348

 
$
4,100

 
$
3,246

Canada
1,938

 
1,809

 
2,746

Peru
508

 
—

 
—

Hong Kong1
174,926

 
263,482

 
245,737

China
7,282

 
9,086

 
4,425

Taiwan
5,591

 
6,213

 
5,965

South Korea
466

 
691

 
1,129

Russia, Kazakhstan and Ukraine2
913

 
858

 
1,139

Europe
2,278

 
1,234

 
382

Other foreign countries
313

 
255

 
91

Total net sales
$
197,563

 
$
287,728

 
$
264,860


_____________________________ 
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”.
2 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,
 
2017
 
2016
 
2015
Net sales by product and service:
 
 
 
 
 
Product sales
$
187,591

 
$
269,731

 
$
253,041

Enrollment package revenue, freight and other
13,676

 
25,616

 
17,623

Less: sales returns
(3,704
)
 
(7,619
)
 
(5,804
)
Total net sales
$
197,563

 
$
287,728

 
$
264,860


 
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,
 
2017
 
2016
Long-lived assets:
 
 
 
United States
$
648

 
$
763

Hong Kong
78

 
140

China
112

 
199

Other foreign countries
311

 
286

Total long-lived assets
$
1,149

 
$
1,388