Natural Health Trends Corp. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

SEGMENT INFORMATION

SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2018

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.

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,
	2018		2017
Net sales from external customers:
United States	$	3,637	$	3,348
Canada	1,710		1,938
Peru	1,635		508
Hong Kong¹	169,452		174,926
China	7,744		7,282
Taiwan	3,964		5,591
South Korea	493		466
Russia and Kazakhstan	868		913
Europe	1,644		2,278
Other foreign countries	763		313
Total net sales	$	191,910	$	197,563

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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,
	2018			2017
Net sales by product and service:
Product sales	$	181,865		$	187,591
Freight and other	13,329			13,676
Less: sales returns	(3,284		)	(3,704		)
Total net sales	$	191,910		$	197,563

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,
	2018		2017
Long-lived assets:
United States	$	521	$	648
Hong Kong	145		78
China	61		112
Other foreign countries	207		311
Total long-lived assets	$	934	$	1,149