UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2020~~MARCH 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________

Commission File Number: 001-12421

	NU SKIN ENTERPRISES, INC.
	(Exact name of registrant as specified in its charter)

Delaware		87-0565309
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

	75 West Center Street Provo, Utah 84601
	(Address of principal executive offices, including zip code)

	(801) 345-1000
	(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, $.001 par value		NUS		New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~November~~May 1, ~~2020, 51,030,963~~2021, 50,042,337 shares of the registrant’s Class A common stock, $.001 par value per share, were outstanding.

Table of Contents

NU SKIN ENTERPRISES, INC.

QUARTERLY REPORT ON FORM 10-Q – ~~THIRD~~FIRST QUARTER ~~2020~~2021

TABLE OF CONTENTS

			Page
Part I.	Financial Information
	Item 1.	Financial Statements (Unaudited):	31
		Consolidated Balance Sheets	31
		Consolidated Statements of Income	42
		Consolidated Statements of Comprehensive Income	53
		Consolidated Statements of Stockholders’ Equity	64
		Consolidated Statements of Cash Flows	85
		Notes to Consolidated Financial Statements	96
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1916
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2723
	Item 4.	Controls and Procedures	2723

Part II.	Other Information
	Item 1.	Legal Proceedings	2824
	Item 1A.	Risk Factors	2824
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3024
	Item 3.	Defaults Upon Senior Securities	3124
	Item 4.	Mine Safety Disclosures	3124
	Item 5.	Other Information	3124
	Item 6.	Exhibits	3225

	Signature		3326

In this Quarterly Report on Form 10-Q, references to “dollars” and “$” are to United States (“U.S.”) dollars.

Nu Skin, Pharmanex, and ageLOC are our trademarks. The italicized product names used in this Quarterly Report on Form 10-Q are product names and also, in certain cases, our trademarks.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

	September 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	366,710		$	335,630		$	339,099		$	402,683
Current investments		11,301			8,413			23,615			21,216
Accounts receivable, net		60,016			50,378			60,625			63,370
Inventories, net		270,319			275,891			363,431			314,366
Prepaid expenses and other		63,916			69,854			114,118			101,563
Total current assets		772,262			740,166			900,888			903,198

Property and equipment, net		456,083			453,604			464,247			468,181
Right-of-use assets		165,749			144,326
Operating lease right-of-use assets								147,129			155,104
Goodwill		196,573			196,573			202,979			202,979
Other intangible assets, net		74,391			80,321			87,135			89,532
Other assets		151,653			154,016			147,721			138,082
Total assets	$	1,816,711		$	1,769,006		$	1,950,099		$	1,957,076

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	55,298		$	38,979		$	67,083		$	66,174
Accrued expenses		381,052			290,281			404,493			446,682
Current portion of long-term debt		30,000			27,500			90,000			30,000
Total current liabilities		466,350			356,760			561,576			542,856

Operating lease liabilities		121,439			105,701			108,237			112,275
Long-term debt		312,664			334,461			298,120			305,393
Other liabilities		88,785			96,795			110,692			102,281
Total liabilities		989,238			893,717			1,078,625			1,062,805

Commitments and contingencies (Note 11)
Commitments and contingencies (Note 5 and 11)								0			0

Stockholders’ equity:
Class A common stock – 500 million shares authorized, $0.001 par value, 90.6 million shares issued		91			91
Class A common stock – 500 million shares authorized, $0.001 par value, 90.6 million shares issued								91			91
Additional paid-in capital		570,491			557,544			579,204			579,801
Treasury stock, at cost – 39.5 million and 35.0 million shares		(1,446,374	)		(1,324,826	)
Treasury stock, at cost – 40.4 million and 39.7 million shares								(1,505,076	)		(1,461,593	)
Accumulated other comprehensive loss		(83,108	)		(85,292	)		(71,626	)		(64,768	)
Retained earnings		1,786,373			1,727,772			1,868,881			1,840,740
Total stockholders’ equity		827,473			875,289			871,474			894,271
Total liabilities and stockholders’ equity	$	1,816,711		$	1,769,006		$	1,950,099		$	1,957,076

The accompanying notes are an integral part of these consolidated financial statements.

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NU SKIN ENTERPRISES, INC.

Consolidated Statements of Income (Unaudited)

(U.S. dollars in thousands, except per share amounts)

	Three Months Ended March 31,
	2021		2020
Revenue	$	677,026	$	518,028
Cost of sales		170,566		125,793
Gross profit		506,460		392,235

Operating expenses:
Selling expenses		273,746		206,042
General and administrative expenses		169,801		149,628
Total operating expenses		443,547		355,670

Operating income		62,913		36,565
Other income (expense), net		1,582		(6,174	)

Income before provision for income taxes		64,495		30,391
Provision for income taxes		17,065		10,661

Net income	$	47,430	$	19,730

Net income per share (Note 6):
Basic	$	0.94	$	0.36
Diluted	$	0.91	$	0.36

Weighted-average common shares outstanding (000s):
Basic		50,706		55,059
Diluted		52,172		55,101

The accompanying notes are an integral part of these consolidated financial statements.

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NU SKIN ENTERPRISES, INC.

Consolidated Statements of Comprehensive Income (Unaudited)

(U.S. dollars in thousands)

	Three Months Ended March 31,
	2021			2020
Net income	$	47,430		$	19,730

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment, net of taxes of $(2) and $(3) for the three months ended March 31, 2021 and 2020, respectively		(9,919	)		(14,997	)
Net unrealized gains/(losses) on cash flow hedges, net of taxes of $(839), and 0 for the for the three months ended March 31, 2021 and 2020, respectively		3,040			0
Less: Reclassification adjustment for realized losses/(gains) in current earnings, net of taxes of $(6) and 0 for the three months ended March 31, 2021 and 2020, respectively		21			0
		(6,858	)		(14,997	)
Comprehensive income	$	40,572		$	4,733

The accompanying notes are an integral part of these consolidated financial statements.

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NU SKIN ENTERPRISES, INC.

Consolidated Statements of ~~Income~~Stockholders’ Equity (Unaudited)

(U.S. dollars in ~~thousands, except per share amounts)~~thousands)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020 2019 2020 2019
Revenue $ 703,347 $ 589,934 $ 1,833,741 $ 1,837,057
Cost of sales 183,374 140,162 463,277 440,854
Gross profit 519,973 449,772 1,370,464 1,396,203

Operating expenses:
Selling expenses 280,695 231,937 735,365 727,473
General and administrative expenses 165,050 147,943 466,232 455,983
Total operating expenses 445,745 379,880 1,201,597 1,183,456

Operating income 74,228 69,892 168,867 212,747
Other income (expense), net 525 (4,979 ) (4,068 ) (11,153 )

Income before provision for income taxes 74,753 64,913 164,799 201,594
Provision for income taxes 18,446 20,823 46,911 68,153

Net income $ 56,307 $ 44,090 $ 117,888 $ 133,441

Net income per share (Note 6):
Basic $ 1.10 $ 0.79 $ 2.24 $ 2.40
Diluted $ 1.08 $ 0.79 $ 2.23 $ 2.39

Weighted-average common shares outstanding (000s):
Basic 51,308 55,548 52,741 55,507
Diluted 52,243 55,788 52,906 55,950

	For the Three Months Ended March 31, 2021
	Class A Common Stock		Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at January 1, 2021	$	91	$	579,801		$	(1,461,593	)	$	(64,768	)	$	1,840,740		$	894,271

Net income		0		0			0			0			47,430			47,430
Other comprehensive loss, net of tax		0		0			0			(6,858	)		0			(6,858	)
Repurchase of Class A common stock (Note 6)		0		0			(50,406	)		0			0			(50,406	)
Exercise of employee stock options (0.3 million shares)/vesting of stock awards		0		(7,400	)		6,923			0			0			(477	)
Stock-based compensation		0		6,803			0			0			0			6,803
Cash dividends		0		0			0			0			(19,289	)		(19,289	)
Balance at March 31, 2021	$	91	$	579,204		$	(1,505,076	)	$	(71,626	)	$	1,868,881		$	871,474

	For the Three Months Ended March 31, 2020
	Class A Common Stock		Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at January 1, 2020	$	91	$	557,544		$	(1,324,826	)	$	(85,292	)	$	1,727,772		$	875,289

Net income		0		0			0			0			19,730			19,730
Other comprehensive income, net of tax		0		0			0			(14,997	)		0			(14,997	)
Repurchase of Class A common stock (Note 6)		0		0			(60,886	)		0			0			(60,886	)
Exercise of employee stock options (0.1 million shares)/vesting of stock awards		0		(3,083	)		1,676			0			0			(1,407	)
Stock-based compensation		0		3,455			0			0			0			3,455
Cash dividends		0		0			0			0			(20,686	)		(20,686	)
Balance at March 31, 2020	$	91	$	557,916		$	(1,384,036	)	$	(100,289	)	$	1,726,816		$	800,498

The accompanying notes are an integral part of these consolidated financial statements.

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NU SKIN ENTERPRISES, INC.

Consolidated Statements of ~~Comprehensive Income~~Cash Flows (Unaudited)

(U.S. dollars in thousands)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020 2019 2020 2019
Net income $ 56,307 $ 44,090 $ 117,888 $ 133,441

Other comprehensive income, net of tax:
Foreign currency translation adjustment, net of taxes of $(8) and $(31) for the three months ended September 30, 2020 and 2019, respectively, and $(3) and $186 for the nine months ended September 30, 2020 and 2019, respectively 10,022 (13,685 ) 1,873 (15,027 )
Net unrealized gains/(losses) on cash flow hedge, net of tax benefit of $(83) and 0 for the three months ended September 30, 2020 and 2019, respectively and $(83) and 0 for the nine months ended September 30, 2020 and 2019, respectively 305 0 305 0
Reclassification adjustment for realized losses/(gains) in current earnings on cash flow hedge, net of taxes of $(2) and 0 for the three months ended September 30, 2020 and 2019, respectively and $(2) and 0 for the nine months ended September 30, 2020 and 2019, respectively 6 0 6 0
10,333 (13,685 ) 2,184 (15,027 )
Comprehensive income $ 66,640 $ 30,405 $ 120,072 $ 118,414

	Three Months Ended March 31,
	2021			2020
Cash flows from operating activities:
Net income	$	47,430		$	19,730
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		18,344			19,095
Non-cash lease expense		13,298			10,869
Stock-based compensation		6,803			3,455
Foreign currency losses		970			3,177
Loss on disposal of assets		506			2,286
Deferred taxes		3,363			963
Changes in operating assets and liabilities:
Accounts receivable		436			5,081
Inventories, net		(53,776	)		10,764
Prepaid expenses and other		(19,241	)		965
Other assets		(2,786	)		(24,905	)
Accounts payable		1,869			1,491
Accrued expenses		(36,779	)		12,889
Other liabilities		707			3,167
Net cash (used in) /provided by operating activities		(18,856	)		69,027

Cash flows from investing activities:
Purchases of property and equipment		(19,373	)		(19,387	)
Proceeds on investment sales		7,550			4,234
Purchases of investments		(6,973	)		(4,031	)
Net cash used in investing activities		(18,796	)		(19,184	)

Cash flows from financing activities:
Exercise of employee stock options and taxes paid related to the net shares settlement of stock awards		(477	)		(1,407	)
Payment of cash dividends		(19,289	)		(20,686	)
Repurchases of shares of common stock		(50,406	)		(60,886	)
Finance lease principal payments		(483	)		0
Payments of debt		(17,500	)		(5,000	)
Proceeds from debt		70,000			65,000
Net cash used in financing activities		(18,155	)		(22,979	)

Effect of exchange rate changes on cash		(7,777	)		(9,916	)

Net increase (decrease) in cash and cash equivalents		(63,584	)		16,948

Cash and cash equivalents, beginning of period		402,683			335,630

Cash and cash equivalents, end of period	$	339,099		$	352,578

The accompanying notes are an integral part of these consolidated financial statements.

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NU SKIN ENTERPRISES, INC.

~~Consolidated Statements of~~ ~~Stockholders’ Equity (Unaudited)~~

~~(U.S. dollars in thousands)~~

For the Three Months Ended September 30, 2020

Class A
Common Stock

Additional
Paid-in Capital

Treasury
Stock

Accumulated Other
Comprehensive Loss

Retained
Earnings
Total
Balance at July 1, 2020 $ 91 $ 563,115 $ (1,427,064 ) $ (93,441 ) $ 1,749,311 $ 792,012

Net income 0 0 0 0 56,307 56,307
Other comprehensive loss, net of tax 0 0 0 10,333 0 10,333
Repurchase of Class A common stock (Note 6) 0 0 (19,994 ) 0 0 (19,994 )
Exercise of employee stock options (0 million shares)/vesting of stock awards 0 261 684 0 0 945
Stock-based compensation 0 7,115 0 0 0 7,115
Cash dividends 0 0 0 0 (19,245 ) (19,245 )
Balance at September 30, 2020 $ 91 $ 570,491 $ (1,446,374 ) $ (83,108 ) $ 1,786,373 $ 827,473

For the Three Months Ended September 30, 2019

Class A
Common Stock

Additional
Paid-in Capital

Treasury
Stock

Accumulated Other
Comprehensive Loss

Retained
Earnings
Total
Balance at July 1, 2019 $ 91 $ 556,294 $ (1,324,834 ) $ (81,276 ) $ 1,684,675 $ 834,950

Net income 0 0 0 0 44,090 44,090
Other comprehensive income, net of tax 0 0 0 (13,685 ) 0 (13,685 )
Repurchase of Class A common stock (Note 6) 0 0 0 0 0 0
Exercise of employee stock options (0 million shares)/vesting of stock awards 0 (26 ) 8 0 0 (18 )
Stock-based compensation 0 1,015 0 0 0 1,015
Cash dividends 0 0 0 0 (20,552 ) (20,552 )
Balance at September 30, 2019 $ 91 $ 557,283 $ (1,324,826 ) $ (94,961 ) $ 1,708,213 $ 845,800

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Table of Contents~~

~~NU SKIN ENTERPRISES, INC.~~

~~Consolidated Statements of Stockholders’ Equity (Unaudited)~~

~~(U.S. dollars in thousands)~~

For the Nine Months Ended September 30, 2020

Class A
Common Stock

Additional
Paid-in Capital

Treasury
Stock

Accumulated Other
Comprehensive Loss

Retained
Earnings
Total
Balance at January 1, 2020 $ 91 $ 557,544 $ (1,324,826 ) $ (85,292 ) $ 1,727,772 $ 875,289

Net income 0 0 0 0 117,888 117,888
Other comprehensive income, net of tax 0 0 0 2,184 0 2,184
Repurchase of Class A common stock (Note 6) 0 0 (127,361 ) 0 0 (127,361 )
Exercise of employee stock options (0.3 million shares)/vesting of stock awards 0 (2,492 ) 5,813 0 0 3,321
Stock-based compensation 0 15,439 0 0 0 15,439
Cash dividends 0 0 0 0 (59,287 ) (59,287 )
Balance at September 30, 2020 $ 91 $ 570,491 $ (1,446,374 ) $ (83,108 ) $ 1,786,373 $ 827,473

For the Nine Months Ended September 30, 2019

Class A
Common Stock

Additional
Paid-in Capital

Treasury
Stock

Accumulated Other
Comprehensive Loss

Retained
Earnings
Total
Balance at January 1, 2019 $ 91 $ 552,564 $ (1,326,605 ) $ (79,934 ) $ 1,635,751 $ 781,867

Cumulative effect adjustment from adoption of ASC 842 0 0 0 0 657 657
Net income 0 0 0 0 133,441 133,441
Other comprehensive income, net of tax 0 0 0 (15,027 ) 0 (15,027 )
Repurchase of Class A common stock (Note 6) 0 0 (825 ) 0 0 (825 )
Exercise of employee stock options (0.2 million shares)/vesting of stock awards 0 (4,930 ) 2,604 0 0 (2,326 )
Stock-based compensation 0 9,649 0 0 0 9,649
Cash dividends 0 0 0 0 (61,636 ) (61,636 )
Balance at September 30, 2019 $ 91 $ 557,283 $ (1,324,826 ) $ (94,961 ) $ 1,708,213 $ 845,800

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Table of Contents~~

~~NU SKIN ENTERPRISES, INC.~~

~~Consolidated Statements of~~ ~~Cash Flows (Unaudited)~~

~~(U.S. dollars in thousands)~~

Nine Months Ended
September 30,

2020 2019
Cash flows from operating activities:
Net income $ 117,888 $ 133,441
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 55,279 57,964
Non-cash lease expense 34,087 33,494
Stock-based compensation 15,439 9,649
Foreign currency losses 1,203 4,145
Loss on disposal of assets 2,516 0
Deferred taxes (7,931 ) 1,945
Changes in operating assets and liabilities:
Accounts receivable (9,273 ) (3,981 )
Inventories, net 4,882 6,775
Prepaid expenses and other 4,180 (21,097 )
Other assets (76,487 ) (27,101 )
Accounts payable 15,884 (6,609 )
Accrued expenses 99,438 (62,679 )
Other liabilities 27,343 2,082
Net cash provided by operating activities 284,448 128,028

Cash flows from investing activities:
Purchases of property and equipment (48,810 ) (52,784 )
Proceeds on investment sales 7,630 11,160
Purchases of investments (8,759 ) (8,432 )
Acquisitions and investments in equity investees 0 (8,073 )
Net cash used in investing activities (49,939 ) (58,129 )

Cash flows from financing activities:
Exercise of employee stock options and taxes paid related to the net shares settlement of stock awards 3,321 (2,326 )
Payment of cash dividends (59,287 ) (61,636 )
Repurchases of shares of common stock (127,361 ) (825 )
Payments of debt (135,000 ) (209,455 )
Proceeds from debt 115,000 145,000
Net cash used in financing activities (203,327 ) (129,242 )

Effect of exchange rate changes on cash (102 ) (7,534 )

Net increase (decrease) in cash and cash equivalents 31,080 (66,877 )

Cash and cash equivalents, beginning of period 335,630 386,911

Cash and cash equivalents, end of period $ 366,710 $ 320,034

~~The accompanying notes are an integral part of these consolidated financial statements.~~

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~~NU SKIN ENTERPRISES, INC.~~

Notes to Consolidated Financial Statements

1.	The Company

Nu Skin Enterprises, Inc. (the “Company”) is a holding company, with Nu Skin, a leading global direct selling company, being the primary operating unit. Nu Skin develops and distributes premium-quality, innovative personal care products and wellness products that are sold worldwide under the Nu Skin, Pharmanex and ageLOC brands and a small number of other products and services. The Company reports revenue from 9 segments, consisting of its 7 geographic Nu Skin segments—Mainland China; ~~South Korea; Southeast Asia, which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam;~~ Americas/Pacific, which includes Australia, Canada, Latin America, New Zealand and the United States; ~~Japan; Hong Kong/Taiwan, which also includes Macau; and~~South Korea; Europe, Middle East and Africa (“EMEA”), which includes ~~several~~ markets in Europe as well as Israel, Russia and South ~~Africa—~~Africa; Japan; Southeast Asia, which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam; and Hong Kong/Taiwan, which also includes Macau—its Manufacturing segment, which includes manufacturing and packaging ~~subsidiaries;~~subsidiaries it has acquired; and its Grow Tech segment, which focuses on developing controlled-environment agriculture technologies (the Company’s subsidiaries operating within each segment are collectively referred to as the “Subsidiaries”).

2.	Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. The unaudited consolidated financial statements include the accounts of the Company and its Subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial information as of ~~September 30, 2020,~~March 31, 2021, and for the ~~three- and nine-month~~three-month periods ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. The consolidated balance sheet as of December 31, ~~2019~~2020 has been prepared using information from the audited financial statements at that date. For further information, refer to the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~ 2020Additionally, based on the duration and severity of the novel coronavirus (“COVID-19”) pandemic, including but not limited to limitations of holding sales meetings, supply chain disruptions, reduced travel and closed walk-in locations, the Company remains uncertain of the ultimate impact COVID-19 could have on the business. To date, the pandemic has not increased the Company’s costs of or access to capital under the revolving credit facility, and at this time the Company cannot provide assurance it will not in the future. This uncertainty could have an impact in future periods on certain estimates used in the preparation of the third quarter financial results, including, but not limited to, impairment of goodwill and other long-lived assets, income tax provision and recoverability of inventory..

Accounting Pronouncements

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~. This guidance modifies the measurement of expected credit losses of certain financial instruments. This ASU is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods and should be applied on a modified retrospective basis to all periods presented. ~~This ASU was effective for the Company beginning on January 1, 2020.~~ ~~The adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.~~

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.~~ This guidance modifies, removes, and adds certain disclosure requirements on fair value measurements. This ASU is effective for annual periods beginning after December 15, 2019, including interim periods therein, and early adoption is permitted. ~~This ASU was effective for the Company beginning on January~~ 1,~~2020.~~ ~~The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.~~

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles-Goodwill and Other-Internal-Use Software~~ ~~(Topic 350):~~ ~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract~~. This new guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted. T~~his ASU was effective for the Company beginning on January~~ ~~1, 2020.~~ ~~The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.~~

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In March 2020, the FASB issued, ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. The guidance provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in ASU 2020-04 are elective and are effective upon issuance for all entities. The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

Inventory

Inventories consist of the following (U.S. dollars in thousands):

	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Raw materials	$	92,911	$	87,942	$	143,998	$	118,877
Finished goods		177,408		187,949		219,433		195,489
Total Inventory, net	$	270,319	$	275,891	$	363,431	$	314,366

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Revenue Recognition

Contract Liabilities – Customer Loyalty Programs

Contract liabilities, recorded as deferred revenue within the accrued expenses line in the consolidated balance sheets, include loyalty point program deferrals with certain customers which are accounted for as a reduction in the transaction price and are generally recognized as points are redeemed for additional products.

The balance of deferred revenue related to contract liabilities as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was $~~17.8~~19.8 million and $~~12.5~~18.2 million, respectively. The contract liabilities impact to revenue for the three-month periods ended ~~September 30,~~March 31, 2021, and 2020 ~~and 2019~~ was a decrease of ~~$1.8 million and 0, respectively. The impact to revenue for the nine-month periods ended September 30, 2020, and 2019 was a decrease of $5.3~~$1.6 million and an increase ~~$1.1 million.~~

~~Derivative instruments and hedging activities~~

~~FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users~~ of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.$0.6 million, respectively.

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Goodwill

The Company’s reporting units for goodwill are its operating segments, which are also its reportable segments.

The following table presents goodwill allocated to the Company’s reportable segments for the periods ended ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (U.S. dollars in thousands):

	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Nu Skin
Mainland China	$	32,179	$	32,179	$	32,179	$	32,179
Americas/Pacific		9,449		9,449		9,449		9,449
South Korea		29,261		29,261		29,261		29,261
EMEA						2,875		2,875
Japan						16,019		16,019
Southeast Asia		18,537		18,537		18,537		18,537
Japan		16,019		16,019
EMEA		2,875		2,875
Hong Kong/Taiwan		6,634		6,634		6,634		6,634
Manufacturing		72,469		72,469		78,875		78,875
Grow Tech		9,150		9,150		9,150		9,150
Total	$	196,573	$	196,573	$	202,979	$	202,979

Debt

Credit Agreement

On April 18, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”) with several financial institutions as lenders and Bank of America, N.A., as administrative agent. The Credit Agreement provides for a $~~400~~$400 million term loan facility and a $~~350~~$350 million revolving credit facility, each with a term of five ~~years~~.years. Both facilities bear interest at the London Interbank Offered Rate (“LIBOR”), plus a margin based on the consolidated leverage ratio. The term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 5.0% during the first and second years, 7.5% during the third and fourth years and 10.0% during the fifth year after the closing date of the Credit Agreement, with the remainder payable at final maturity. The Credit Agreement requires the Company to maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. As of ~~September~~ ~~30, 2020,~~March 31, 2021, the Company was in compliance with all covenants under the Credit Agreement.

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The following table summarizes the Company’s debt facilities as of ~~September~~ ~~30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:

Facility or Arrangement
Original
Principal Amount

Balance as of
September 30, 2020⁽¹⁾⁽²⁾

Balance as of
December 31, 2019⁽²⁾
Interest Rate Repayment Terms
Credit Agreement term loan facility $ 400.0 million $
345.0 million

$ 365.0 million
Variable 30 day: 2.40%

35% of the principal amount is payable in increasing quarterly installments over a five-year period that began on June 30, 2018, with the remainder payable at the end of the five-year term.

Credit Agreement revolving credit facility $ 0 $ 0
Variable 30 day: 0
Revolving line of credit expires April 18, 2023.

Facility or Arrangement

Original

Principal Amount

Balance as of

March 31, 2021⁽¹⁾⁽²⁾

Balance as of

December 31, 2020⁽¹⁾⁽²⁾

Interest Rate

Repayment Terms

Credit Agreement term loan facility

400.0 million

330.0 million

337.5 million

Variable 30 day: 1.86%

35% of the principal amount is payable in increasing quarterly installments over a five-year period that began on June 30, 2018, with the remainder payable at the end of the five-year term.

Credit Agreement revolving credit facility

60.0 million

Variable 30 day: 1.86%

Revolving line of credit expires April 18, 2023.

(1)	As of ~~September~~ ~~30,~~March 31, 2021 and December 31, 2020, the current portion of the Company’s debt (i.e. becoming due in the next 12 months) included $~~30.0~~$30.0 million of the balance of its term loan under the Credit Agreement.

(2)

The carrying value of the debt reflects the amounts stated in the above table, less debt issuance costs of $~~2.3~~$1.9 million and $~~3.0~~2.1 million as of ~~September~~March 31, 2021 ~~30, 2020~~ and December 31, ~~2019,~~2020, respectively, related to the Credit Agreement, which are not reflected in this table.

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Leases

The Company has operating and finance leases for regional offices, manufacturing facilities, retail centers, distribution centers and certain equipment. The Company’s leases have remaining lease terms of 1 year to 24 years, some of which include options to extend the leases for up to 20 years, and some of which include options to terminate the leases within 1 year.

As of ~~September~~ ~~30, 2020,~~March 31, 2021, the weighted average remaining lease term was 6.6 and 4.5 years for operating and finance leases, respectively. As of March 31, 2021, the weighted average discount rate was 4.1% and 3.8% for operating and finance leases, ~~was~~ ~~6.3~~ ~~years and~~ ~~4.3%~~respectively.

The components of lease expense were as follows (U.S. dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2020			2019			2021			2020
Operating lease expense
Operating lease cost	$	13,038		$	12,399		$	39,043		$	37,677		$	12,815		$	13,136
Variable lease cost		678			732			2,062			2,889			1,368			974
Short-term lease cost		118			41			258			145			339			45
Sublease income		(1,075	)		(1,395	)		(3,264	)		(4,563	)		(1,984	)		(1,131	)
Finance lease expense
Amortization of right-of-use assets														611			0
Interest on lease liabilities														88			0
Total lease expense	$	12,759		$	11,777		$	38,099		$	36,148		$	13,237		$	13,024

Supplemental cash flow information related to leases was as follows (U.S. dollars in thousands):

	Nine Months Ended September 30,				Three Months Ended March 31,
	2020		2019		2021		2020
Operating cash outflow from operating leases	$	40,865	$	39,885	$	14,149	$	13,367
Right-of-use assets obtained in exchange for lease obligations	$	62,514	$	150,127
Operating cash outflow from finance leases					$	89	$	0
Financing cash outflow from finance leases					$	483	$	0
Right-of-use assets obtained in exchange for operating lease obligations					$	10,891	$	21,822
Right-of-use assets obtained in exchange for finance lease obligations					$	49	$	0

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Maturities of lease liabilities were as follows (U.S. dollars in thousands):

Year Ending December 31,	Operating Leases
2020	$	15,631
Year Ending December 31			Operating Leases		Finance Leases
2021		53,303	$	35,534	$	1,661
2022		36,529		34,437		2,226
2023		26,418		23,875		2,144
2024		21,389		18,976		2,033
2025				14,298		1,436
Thereafter		41,468		41,344		260
Total		194,738		168,464		9,760
Less: Finance charges		26,820		21,060		805
Total principal liability	$	167,918	$	147,404	$	8,955

~~During the third quarter of 2020, the Company recognized $31.3 million of right-of-use assets, primarily in connection with building and warehouse lease renewals.~~ The Company has additional lease liabilities of $~~1.2~~0.3 million which have not yet commenced as of ~~September~~March 31, 2021 ~~30, 2020,~~, and as such, have not been recognized on the consolidated balance sheets.

6.	Capital Stock

Net income per share

Net income per share is computed based on the weighted-average number of common shares outstanding during the periods presented. Additionally, diluted earnings per share data gives effect to all potentially dilutive common shares that were outstanding during the periods presented. For the three-month periods ended ~~September~~March 31, 2021 ~~30,~~and 2020, the only dilutive common shares outstanding relate to the Company’s outstanding stock awards and ~~2019,~~options. For the three-month periods ended March 31, 2021 and 2020, stock options of ~~0.2~~0.1 million and ~~1.3~~ ~~million, respectively, and for the~~ ~~nine-month periods ended~~ ~~September~~ ~~30, 2020 and 2019, stock options of~~ ~~0.6~~ ~~million and~~ ~~1.2~~1.0 million, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

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Dividends

In February 2021, ~~April~~ ~~and~~ ~~July 2020, the Company’s board of directors declared quarterly cash dividends of $0.375~~ ~~per share. These quarterly cash dividends of $20.7~~ ~~million~~,~~$19.4 million and $19.2 million~~ ~~were paid on~~ ~~March 11, 2020, June 10, 2020 and September 9, 2020~~ ~~to stockholders of record on~~ ~~February 28, 2020, May 29, 2020 and August 28, 2020~~. In ~~October 2020~~, the Company’s board of directors declared a quarterly cash dividend of ~~$0.375~~$0.38 per share. This quarterly cash dividend of $19.3 million was paid on March 10, 2021 to stockholders of record on February 26, 2021. In May 2021, the board of directors declared a quarterly cash dividend of $0.38 per share to be paid on ~~December~~June 9, ~~2020~~2021 to ~~stockholders~~shareholders of record on ~~November 27, 2020.~~May 28, 2021.

Repurchase of common stock

During the three-month periods ended ~~September~~March 31, 2021 ~~30,~~and 2020, ~~and 2019,~~ the Company repurchased ~~0.4~~1.0 million shares and 02.6 million shares of its Class A common stock under its stock repurchase ~~plan~~plans for $~~20.0~~ ~~million and~~ 0~~, respectively. During the~~ ~~nine-month periods ended~~ ~~September~~ ~~30, 2020 and 2019, the Company repurchased~~ ~~4.8~~ ~~million shares and~~ ~~14,000~~ ~~shares of its Class A common stock under its stock repurchase plan for $127.4~~50.4 million and $~~0.8~~60.9 million, respectively. As of ~~September~~March 31, 2021 ~~30, 2020,~~, $~~342.8~~275.4 million was available for repurchases under the Company’s stock repurchase plan.

7.	Fair Value

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximates fair values due to the short-term nature of these instruments. Fair value estimates are made at a specific point in time, based on relevant market information.

The FASB Codification defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. On a quarterly basis, the Company measures at fair value certain financial assets, including cash equivalents. Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

◾

Level 1 – quoted prices in active markets for identical assets or liabilities;

◾

Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

◾

Level 3 – unobservable inputs based on the Company’s own assumptions.

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Accounting standards permit companies, at their option, to measure certain financial instruments and other eligible items at fair value. The Company has elected not to apply the fair value option to existing eligible items beyond what is required by US GAAP.

The following tables present the fair value hierarchy for those assets measured at fair value on a recurring basis (U.S. dollars in thousands):

	Fair Value at September 30, 2020										Fair Value at March 31, 2021
	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3			Total
Financial assets (liabilities):
Cash equivalents and current investments	$	45,552	$	0		$	0	$	45,552		$	57,236	$	0		$	0		$	57,236
Other long-term assets		1,344		0			0		1,344
Derivative financial instruments asset		0		472			0		472			0		5,030			0			5,030
Life insurance contracts		0		0			41,328		41,328			0		0			46,606			46,606
Derivative financial instruments liability		0		(76	)		0		(76	)		0		(83	)		0			(83	)
Contingent consideration												0		0			(3,264	)		(3,264	)
Total	$	46,896	$	396		$	41,328	$	88,620		$	57,236	$	4,947		$	43,342		$	105,525

	Fair Value at December 31, 2019								Fair Value at December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2			Level 3			Total
Financial assets:
Financial assets (liabilities):
Cash equivalents and current investments	$	54,642	$	0	$	0	$	54,642	$	56,628	$	0		$	0		$	56,628
Other long-term assets		3,216		0		0		3,216
Derivative financial instruments asset										0		1,145			0			1,145
Life insurance contracts		0		0		41,707		41,707		0		0			45,453			45,453
Derivative financial instruments liability										0		(105	)		0			(105	)
Contingent consideration										0		0			(3,125	)		(3,125	)
Total	$	57,858	$	0	$	41,707	$	99,565	$	56,628	$	1,040		$	42,328		$	99,996

~~See Note 9 - Derivatives and Hedging Activities, for more information on derivative financial instruments.~~

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The following table provides a summary of changes in fair value of the Company’s Level 3 marketable securities (U.S. dollars in thousands):

Beginning balance at January 1, 2020	$	41,707
Beginning balance at January 1, 2021				$	45,453
Actual return on plan assets		(379	)		1,153
Purchase and issuances		0			7,016
Sales and settlements		0			(7,016	)
Transfers into Level 3		0			0
Ending balance at September 30, 2020	$	41,328
Ending balance at March 31, 2021				$	46,606

The following table provides a summary of changes in fair value of the Company’s Level 3 contingent consideration (U.S. dollars in thousands):

Beginning balance at January 1, 2021	$	(3,125	)
Changes in fair value of contingent consideration		(139	)
Ending balance at March 31, 2021	$	(3,264	)

Contingent consideration: Contingent consideration represents the obligations incurred in connection with acquisitions. The estimate of fair value of the contingent consideration obligations requires subjective assumptions to be made regarding the future business results, discount rates, discount periods and probabilities assigned to various potential business result scenarios and was determined using probability assessments with respect to the likelihood of reaching various targets or of achieving certain milestones. The fair value measurement is based on significant inputs unobservable in the market and thus represents a level 3 measurement. Changes in current expectations of progress could change the probability of achieving the targets within the measurement periods and result in an increase or decrease in the fair value of the contingent consideration obligation.

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8.	Income Taxes

Provision for income taxes for the ~~three- and~~ ~~nine-month periods~~first quarter of ~~2020~~2021 was $~~18.4~~ ~~million and $46.9~~$17.1 million, compared to $~~20.8~~ ~~million and $68.2~~$10.7 million for the prior-year ~~periods.~~period. The effective tax rates for the ~~three- and~~ ~~nine-month periods were~~ ~~24.7%~~ ~~and~~ ~~28.5%~~first quarter 2021 was 26.5% of pre-tax income compared to ~~32.1%~~ ~~and~~ ~~33.8%~~35.1% in the prior-year ~~periods.~~period.

The Company accounts for income taxes in accordance with ASC Topic 740 ~~“Income~~‘‘Income Taxes.”’’ These standards establish financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities during the current and preceding years. The Company takes an asset and liability approach for financial accounting and reporting of income taxes. The Company pays income taxes in many foreign jurisdictions based on the profits realized in those jurisdictions, which can be significantly impacted by terms of intercompany transactions between the Company and its foreign affiliates. Deferred tax assets and liabilities are created in this process. The Company has netted these deferred tax assets and deferred tax liabilities by jurisdiction. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be ultimately realized. The Company had net deferred tax assets of $~~27.1~~29.9 million and $~~20.0~~34.8 million as of ~~September~~March 31, 2021 ~~30, 2020~~ and December 31, ~~2019,~~2020, respectively.

The Company evaluates its indefinite reinvestment assertions with respect to foreign earnings for each quarter. For all foreign earnings, the Company accrues the applicable foreign income taxes. For the earnings that have been indefinitely reinvested, the Company does not accrue foreign withholding taxes. Undistributed earnings that the Company has indefinitely reinvested, for which no foreign withholding taxes have been provided, aggregate to $60.0 million as of December 31, ~~2019.~~2020. If the amount designated as indefinitely reinvested as of December 31, ~~2019~~2020 was repatriated to the United States, the amount of incremental taxes would be approximately $6.0 million. The Company intends to utilize the indefinitely reinvested offshore earnings to fund foreign investments, specifically capital expenditures.

The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. The Company is no longer subject to tax examinations from the IRS for all years for which tax returns have been filed before ~~2019.~~2020. With a few exceptions, the Company is no longer subject to state and local income tax examination by tax authorities for the years before 2016. In 2009, the Company entered into a voluntary program with the IRS called Compliance Assurance Process (“CAP”). The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. The Company has elected to participate in CAP for ~~2020~~2021 and may elect to continue participating in CAP for future tax years; the Company may withdraw from the program at any time. In major foreign jurisdictions, the Company is generally no longer subject to income tax examinations for years before ~~2012.~~2015. However, statutes of limitations in certain countries may be as long as ten years. The Company is currently under examination in certain foreign jurisdictions; however, the outcomes of those reviews are not yet determinable. The Company’s unrecognized tax benefits relate to multiple jurisdictions. Due to potential increases in unrecognized tax benefits from the multiple jurisdictions in which the Company operates, as well as the expiration of various statutes of limitations, it is reasonably possible that the Company’s gross unrecognized tax benefits, net of foreign currency adjustments, may decrease in the next 12 months by approximately $0.1 to ~~$1.0~~$1.1 million.

9.	Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

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Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. During ~~2020,~~2021, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

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For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense/income in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense/income as interest payments are made/received on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional ~~$76~~$83 thousand will be reclassified as an increase to interest expense.

As of ~~September 30,~~March 31, 2021 and December 31, 2020, the Company had 4 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a total notional amount of $200 million.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet:

		Fair Values of Derivative Instruments					Fair Values of Derivative Instruments
Derivatives in Cash flow Hedging Relationships:	Balance Sheet Location	September 30, 2020		December 31, 2019		Balance Sheet Location	March 31, 2021		December 31, 2020
Interest Rate Swap - Asset	Other Assets	$	472	$	0	Other Assets	$	5,030	$	1,145
Interest Rate Swap - Liability	Accrued Expenses	$	76	$	0	Accrued Expenses	$	83	$	105

Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income

The tables below present the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income.

	Amount of Gain or (Loss) Recognized in OCI on Derivative								Amount of Gain or (Loss) Recognized in OCI on Derivative
	Three Months Ended				Nine Months Ended				Three Months Ended
Derivatives in Cash flow	September 30,				September 30,				March 31,
Hedging Relationships:	2020		2019		2020		2019		2021		2020
Interest Rate Swaps	$	396	$	0	$	396	$	0	$	3,879	$	0

		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income									Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
		Three Months Ended				Nine Months Ended					Three Months Ended
Derivatives in Cash flow	Income Statement	September 30,				September 30,				Income Statement	March 31,
Hedging Relationships:	Location	2020		2019		2020		2019		Location	2021		2020
Interest Rate Swaps	Other Income	$	(8)	$	0	$	(8)	$	0	Other Income	$	(27)	$	0

10.	Segment Information

The Company reports revenue from 9 segments, consisting of its 7 geographic Nu Skin segments—Mainland China, Americas/Pacific, South Korea, Southeast Asia, Japan, EMEA, and Hong Kong/Taiwan—and its Manufacturing and Grow Tech segments. The Other category includes miscellaneous corporate revenue and related adjustments. These segments reflect the way the chief operating decision maker evaluates the Company’s business performance and allocates resources. Reported revenue includes only the revenue generated by sales to external customers.

Profitability by segment as determined under US GAAP is driven primarily by the Company’s transfer pricing policies. Segment contribution, which is the Company’s segment profitability metric presented in the table below, excludes certain intercompany charges, specifically royalties, license fees, transfer pricing, discrete charges and other miscellaneous items. These charges have been included in Corporate and other expenses. Corporate and other expenses also include costs related to the Company’s executive and administrative offices, information technology, research and development, and marketing and supply chain functions not recorded at the segment level.

In the first quarter of 2021, as a result of a change in the Company’s transfer pricing policies in the Americas/Pacific, the segment contribution calculation has been adjusted, the prior year Americas/Pacific and Corporate and other has been recast to conform with the new policy.

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The accounting policies of the segments are the same as those described in Note 2 – Summary of Significant Accounting Policies. The Company evaluates the performance of its segments based on revenue and segment contribution. Each segment records direct expenses related to its employees and its operations.

Summarized financial information for the Company’s reportable segments is shown in the following tables. Asset information is not reviewed or included with the Company’s internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.

Revenue by Segment

	Three Months Ended September 30,						Nine Months Ended September 30,					Three Months Ended March 31,
(U.S. dollars in thousands)	2020			2019			2020		2019			2021		2020
Nu Skin
Mainland China	$	169,068		$	173,974		$	453,096	$	567,795		$	149,593	$	137,696
Americas/Pacific		151,465			83,635			353,957		262,932			149,465		74,573
South Korea		83,460			79,435			236,094		248,020			81,131		75,719
EMEA													76,180		35,403
Japan													69,864		61,300
Southeast Asia		84,102			78,963			220,517		226,853			67,585		69,586
Japan		70,958			67,197			200,549		194,557
EMEA		61,411			35,742			147,590		120,960
Hong Kong/Taiwan		42,265			40,449			115,253		124,719			36,345		35,827
Other		(314	)		(62	)		374		(239	)		705		773
Total Nu Skin		662,415			559,333			1,727,430		1,745,597			630,868		490,877
Manufacturing ⁽¹⁾		40,910			30,601			105,975		91,430			45,985		27,147
Grow Tech		22			0			336		30			173		4
Total	$	703,347		$	589,934		$	1,833,741	$	1,837,057		$	677,026	$	518,028

(1)

The Manufacturing segment had $~~10.9~~17.4 million and $~~7.1~~6.4 million of intersegment revenue for the ~~three~~ ~~months~~three-month period ended ~~September 30,~~March 31, 2021 and 2020, ~~and~~ ~~2019, respectively, and $24.2~~ ~~million and $19.5~~ ~~million for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~and~~ ~~2019~~, respectively. Intersegment revenue is eliminated in the consolidated financial statements, as well as the reported segment revenue in the table ~~above.~~above.

Segment Contribution

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(U.S. dollars in thousands)	2020			2019			2020			2019			2021			2020
Nu Skin
Mainland China	$	54,522		$	48,619		$	135,577		$	158,873		$	39,439		$	37,387
Americas/Pacific		26,256			12,875			61,184			41,314			32,144			11,280
South Korea		25,232			24,770			73,421			76,417			26,525			24,099
EMEA														8,896			631
Japan														17,981			14,592
Southeast Asia		20,426			22,063			54,121			60,895			16,249			16,718
Japan		18,245			16,287			49,292			46,216
EMEA		7,111			1,529			11,084			6,114
Hong Kong/Taiwan		9,048			8,063			22,825			24,754			7,348			6,938
Nu Skin contribution		160,840			134,206			407,504			414,583			148,582			111,645
Manufacturing		6,749			4,577			15,000			11,598			5,826			2,849
Grow Tech		(5,322	)		(5,822	)		(17,659	)		(14,033	)		(6,091	)		(6,850	)
Total segment contribution		162,267			132,961			404,845			412,148			148,317			107,644
Corporate and other		(88,039	)		(63,069	)		(235,978	)		(199,401	)		(85,404	)		(71,079	)
Operating income		74,228			69,892			168,867			212,747			62,913			36,565
Other income (expense)		525			(4,979	)		(4,068	)		(11,153	)		1,582			(6,174	)
Income before provision for income taxes	$	74,753		$	64,913		$	164,799		$	201,594		$	64,495		$	30,391

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Depreciation and Amortization

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(U.S. dollars in thousands)	2020		2019		2020		2019		2021		2020
Nu Skin
Mainland China	$	2,649	$	2,708	$	7,631	$	8,733	$	3,339	$	2,424
Americas/Pacific		268		213		766		633		256		245
South Korea		756		1,115		2,731		3,997		990		1,057
EMEA										286		258
Japan										253		472
Southeast Asia		317		434		1,248		1,373		329		487
Japan		296		938		1,602		2,943
EMEA		231		268		731		980
Hong Kong/Taiwan		691		547		1,948		1,600		885		639
Total Nu Skin		5,208		6,223		16,657		20,259		6,338		5,582
Manufacturing		2,077		1,711		5,954		4,916		2,688		1,815
Grow Tech		1,302		1,244		3,775		3,064		1,339		1,225
Corporate and other		9,333		10,127		28,893		29,725		7,979		10,473
Total	$	17,920	$	19,305	$	55,279	$	57,964	$	18,344	$	19,095

Capital Expenditures

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(U.S. dollars in thousands)	2020		2019		2020		2019		2021		2020
Nu Skin
Mainland China	$	9,000	$	10,614	$	12,577	$	13,328	$	8,517	$	2,861
Americas/Pacific		125		337		891		1,084		278		694
South Korea		173		972		537		1,051		490		169
EMEA										172		27
Japan										91		157
Southeast Asia		1,254		140		1,893		459		399		633
Japan		1,484		267		3,132		1,385
EMEA		718		16		1,378		92
Hong Kong/Taiwan		7		99		23		1,653		0		4
Total Nu Skin		12,761		12,445		20,431		19,052		9,947		4,545
Manufacturing		2,113		1,100		13,221		4,281		3,338		10,505
Grow Tech		343		2,577		760		7,628		942		178
Corporate and other		4,901		7,448		14,398		21,823		5,146		4,159
Total	$	20,118	$	23,570	$	48,810	$	52,784	$	19,373	$	19,387

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11.	Commitments and Contingencies

The Company is subject to government regulations pertaining to product formulation, labeling and packaging, product claims and advertising, and the Company’s direct selling system. The Company is also subject to the jurisdiction of numerous foreign tax and customs authorities. Any assertions or determination that either the Company or the Company’s sales force is not in compliance with existing statutes, laws, rules or regulations could have a material adverse effect on the Company’s operations. In addition, in any country or jurisdiction, the adoption of new statutes, laws, rules or regulations or changes in the interpretation of existing statutes, laws, rules or regulations could have a material adverse effect on the Company and its operations. No assurance can be given that the Company’s compliance with applicable statutes, laws, rules and regulations will not be challenged by foreign authorities or that such challenges will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company and its Subsidiaries are defendants in litigation, investigations and other proceedings involving various matters. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

The Company is subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. The Company believes it has appropriately provided for income taxes for all years. Several factors drive the calculation of its tax reserves. Some of these factors include: (i) the expiration of various statutes of limitations; (ii) changes in tax law and regulations; (iii) issuance of tax rulings; and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to the Company’s reserves, which would impact its reported financial results.

12.	Acquisitions

In December 2020, the Company acquired 100% of the outstanding equity interest of Ingredient Innovations International Company (“3i”). The purchase price for 3i was $15.7 million, net of cash acquired of $2.1 million and $0.8 million to be paid within six months, all payable in cash. In addition, there is potential for an incremental $7.0 million in contingent consideration, which becomes payable if certain performance targets are reached in 2021 and 2022. The fair value of the contingent consideration recorded on the acquisition date is $3.1 million. The Company allocated the gross purchase price of $24.5 million to the assets acquired and liabilities assumed at estimated fair values. The estimated fair value of assets acquired included $14.4 million of intangible assets, $0.3 million of property and equipment, $2.1 million of cash, $0.8 million of accounts receivable and less than $0.3 million of inventory, and the acquisition also included approximately $0.3 million of current liabilities and resulted in a deferred tax liability of $3.1 million. The excess purchase price over the aggregate fair value of assets acquired less liabilities assumed of $6.4 million was recorded as goodwill. The intangible assets acquired were comprised of $3.7 million for Customer relationships, $10.0 million for technology and $0.7 million for other intangibles, all with an assigned estimated useful life of approximately 8 years. All the goodwill was assigned to our Manufacturing segment. The allocation of the fair value of assets acquired and liabilities assumed for the acquisition was finalized during the three months ended March 31, 2021.

13.	Subsequent Events

On April 19, 2021, the Company acquired 100% ownership in MyFavoriteThings, Inc. (“MyFavoriteThings”) making MyFavoriteThings a wholly owned subsidiary of the Company. MyFavoriteThings is a digital technology development company. Under the terms of the purchase agreement, the Company has agreed to pay $17.0 million in cash in exchange for 100% ownership in MyFavoriteThings, subject to adjustment for certain closing items. In addition, there is potential for an incremental $24.0 million in contingent consideration, which becomes payable if certain performance targets are reached in 2021, 2022 and 2023.

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~~12.~~

~~Restructuring~~

~~In the~~ ~~fourth~~ ~~quarter of~~ ~~2018~~, the Company began a strategic plan to align its resources and capabilities to support its vision of being a world-leading business platform. This program primarily impacted the Company’s information technology infrastructure and organization and other departments within its corporate and Americas offices. As a result of the restructuring program, the Company recorded a non-cash charge of $~~48.6~~ ~~million for impairment of information technology assets, including internally developed software for social sharing and digital initiatives, and $22.1~~ ~~million of cash charges, including $20.1~~ ~~million for employee severance and $2.0~~ ~~million for other related cash charges with the restructuring. The restructuring charges were predominately recorded in the Corporate and Other category.~~

~~See the table below for detail of restructuring activity for the three months ended March 31, 2019 (U.S. dollars in thousands):~~

Beginning balance at January 1, 2019 $ 15,462
Amounts paid (15,046 )
Adjustments (416 )
Ending balance at March 31, 2019 $ 0

~~There was 0 restructuring activity for the three or nine months ended September 30, 2020 and three months ended September 30, 2019.~~

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent our current expectations and beliefs. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws and include, but are not limited to, statements of management’s expectations regarding our performance, initiatives, strategies, product introductions and offerings, growth, opportunities and risks; statements of projections regarding future sales, expenses, operating results, taxes and duties, capital expenditures, sources and uses of cash, foreign-currency fluctuations or devaluations, repatriation of undistributed earnings, and other financial items; statements of management’s expectations and beliefs regarding our markets and global economic conditions; statements regarding the payment of future dividends and stock repurchases; statements regarding the outcome of litigation, audits, investigations or other regulatory actions; statements regarding government policies and regulations relating to our industry, including government policies and regulations in Mainland China; accounting estimates and assumptions; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as “believe,” “expect,” ~~"optimistic,"~~“optimistic,” “project,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “will,” “would,” “could,” “may,” “might,” the negative of these words and other similar words. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. We caution and advise readers that these statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein. For a summary of these risks, see the risk factors included in our Annual Report on Form 10-K for the ~~2019~~2020 fiscal year and in our subsequent quarterly and other reports, including this Quarterly Report.

The following Management’s Discussion and Analysis should be read in conjunction with our consolidated financial statements and related notes and Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the ~~2019~~2020 fiscal year, and our other reports filed with the Securities and Exchange Commission through the date of this Quarterly ~~Report.~~Report on Form 10-Q.

Overview

Revenue for the three-month period ended ~~September 30, 2020~~March 31, 2021 increased ~~19%~~31% to ~~$703.3~~$677.0 million, compared to ~~$589.9~~$518.0 million in the prior-year ~~period, and~~period. Our revenue ~~for~~in the ~~nine-month period ended September 30, 2020 and 2019 was $1.8 billion for both periods presented.~~first quarter of 2021 benefitted 6% from foreign-currency fluctuations. Sales Leaders increased ~~12%~~22% and Customers increased ~~28%~~34% on a year-over-year basis.

Our results benefited from our strategic shift to become a more digital business, as well as the current environment where consumers are spending more time online and working from home, and our sales leaders have been able to leverage the power of social sharing to achieve greater levels of productivity. ~~Digital sales accounted for approximately 90% of sales during~~If and when the ~~third quarter.~~COVID-19 pandemic subsides, there is uncertainty as to the impact on trends towards online shopping and how our business would be impacted by changes in those trends. Our ~~19%~~31% revenue growth was driven by solid growth in our Americas/Pacific ~~segment~~ and ~~our~~ EMEA ~~segment,~~segments, where our Brand Affiliates have more broadly adopted social ~~selling business~~commerce to share our products. The pandemic negatively impacted our Asia markets more heavily, as our sales force generally relies more on in-person meetings in those markets and the social sharing model ~~represents a larger portion~~is less mature. We are continuing the launch of ~~our business than our other segments. Third-quarter results also benefited from our continued technology enhancements and approximately $30 million of third-quarter preview sales as part of our~~the ageLOC Boost ~~product launch. A number~~and Nutricentials Bioadaptives, which generated more than $35 million of our segments were able to hold digital regional conventions, which helped grow our Sales Leaders for the third quarter. We remain optimistic about the remainder of 2020, as we remain focused on building Sales Leaders by leveraging our technology enhancements and executing a strong product launchcombined revenue in the ~~fourth quarter. The launch of~~ ~~ageLOC Boost~~ ~~will follow the same approach as our 2017-2018 launch of~~ ~~ageLOC LumiSpa.~~ ~~We sold a limited quantity of~~ ~~ageLOC Boost~~ ~~in the third quarter of 2020, and will continue the launch process for this product across our markets during the fourth quarter of 2020 and~~ first quarter of 2021.

Earnings per share for the ~~third~~first quarter of ~~2020~~2021 increased ~~37%~~153% to ~~$1.08,~~$0.91, compared to ~~$0.79 in the prior-year period. Earnings per share for the first nine months of 2020 decreased 7% to $2.23, compared to $2.39~~$0.36 in the prior-year period. The increase in earnings per share ~~for the quarter~~ is primarily driven by the increase in ~~revenue. Increases in freight cost and general and administrative expenses were offset by a~~revenue, lower weighted-average outstanding shares ~~from~~due to our stock repurchases and a lower tax ~~rate. The decrease~~rate, partially offset by an increase in earnings per share for the nine-month period reflects the same factors, along with impacts from the first quarter, when our general and administrative expenses as a percentage of revenue were relatively higher due to the fixed nature of these expenses against our lower first-quarter revenue.selling expenses.

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Segment Results

We report our business in nine segments to reflect our current management approach. These segments consist of our seven geographic Nu Skin segments—Mainland China, Americas/Pacific, South Korea, EMEA, Japan, Southeast Asia, ~~Japan,~~and Hong Kong/Taiwan ~~and EMEA—and~~—and our Manufacturing and Grow Tech segments. The Other category includes miscellaneous corporate revenue and related adjustments.

The following table sets forth revenue for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ for each of our reportable segments (U.S. dollars in thousands):

	Three Months Ended September 30,									Constant- Currency			Nine Months Ended September 30,								Constant- Currency
	2020			2019			Change			Change⁽¹⁾			2020		2019			Change			Change⁽¹⁾			Three Months Ended March 31,							Constant-Currency
																								2021		2020		Change			Change ⁽¹⁾
Nu Skin
Mainland China	$	169,068		$	173,974			(3	)%		(4	)%	$	453,096	$	567,795			(20	)%		(19	)%	$	149,593	$	137,696		9	%		1	%
Americas/Pacific		151,465			83,635			81	%		90	%		353,957		262,932			35	%		43	%		149,465		74,573		100	%		97	%
South Korea		83,460			79,435			5	%		5	%		236,094		248,020			(5	)%		(2	)%		81,131		75,719		7	%		—
EMEA																									76,180		35,403		115	%		98	%
Japan																									69,864		61,300		14	%		11	%
Southeast Asia		84,102			78,963			7	%		8	%		220,517		226,853			(3	)%		(1	)%		67,585		69,586		(3	)%		(5	)%
Japan		70,958			67,197			6	%		4	%		200,549		194,557			3	%		2	%
EMEA		61,411			35,742			72	%		67	%		147,590		120,960			22	%		23	%
Hong Kong/Taiwan		42,265			40,449			4	%		—			115,253		124,719			(8	)%		(10	)%		36,345		35,827		1	%		(3	)%
Other		(314	)		(62	)		(406	)%		(403	)%		374		(239	)		256	%		256	%		705		773		(9	)%		(9	)%
Total Nu Skin		662,415			559,333			18	%		19	%		1,727,430		1,745,597			(1	)%		1	%		630,868		490,877		29	%		22	%
Manufacturing		40,910			30,601			34	%		34	%		105,975		91,430			16	%		16	%		45,985		27,147		69	%		69	%
Grow Tech		22			—			100	%		100	%		336		30			1,020	%		1,020	%		173		4		4,225	%		4,225	%
Total	$	703,347		$	589,934			19	%		19	%	$	1,833,741	$	1,837,057			—			2	%	$	677,026	$	518,028		31	%		25	%

(1)	Constant-currency revenue change is a non-GAAP financial measure. See “Non-GAAP Financial Measures,” below.

The following table sets forth segment contribution for the ~~three- and nine-month~~three-month periods ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ for each of our reportable segments (U.S. dollars in thousands). Segment contribution excludes certain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items. We use segment contribution to measure the portion of profitability that the segment managers have the ability to ~~manage~~control for their respective segments. For additional information regarding our segments and the calculation of segment contribution, see Note 10 to the consolidated financial statements contained in this report. Prior year segment contribution for Americas/Pacific has been recast to conform with first quarter of 2021 changes to our transfer pricing policy.

	Three Months Ended September 30,									Nine Months Ended September 30,
	2020			2019			Change			2020			2019			Change			Three Months Ended March 31,
																			2021			2020			Change
Nu Skin
Mainland China	$	54,522		$	48,619			12	%	$	135,577		$	158,873			(15	)%	$	39,439		$	37,387			5	%
Americas/Pacific		26,256			12,875			104	%		61,184			41,314			48	%		32,144			11,280			185	%
South Korea		25,232			24,770			2	%		73,421			76,417			(4	)%		26,525			24,099			10	%
EMEA																				8,896			631			1,310	%
Japan																				17,981			14,592			23	%
Southeast Asia		20,426			22,063			(7	)%		54,121			60,895			(11	)%		16,249			16,718			(3	)%
Japan		18,245			16,287			12	%		49,292			46,216			7	%
EMEA		7,111			1,529			365	%		11,084			6,114			81	%
Hong Kong/Taiwan		9,048			8,063			12	%		22,825			24,754			(8	)%		7,348			6,938			6	%
Total Nu Skin		160,840			134,206			20	%		407,504			414,583			(2	)%		148,582			111,645			33	%
Manufacturing		6,749			4,577			47	%		15,000			11,598			29	%		5,826			2,849			104	%
Grow Tech		(5,322	)		(5,822	)		9	%		(17,659	)		(14,033	)		(26	)%		(6,091	)		(6,850	)		11	%

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The following table provides information concerning the number of Customers and Sales Leaders as of ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020. “Customers” are persons who have purchased products directly from the Company during the three months ended as of the date indicated. Our Customer numbers do not include consumers who purchase products directly from members of our sales force. “Sales Leaders” are ~~independent distributors,~~our Brand Affiliates, and sales employees and independent marketers in Mainland China, who achieve certain qualification requirements.

	As of September 30, 2020				As of September 30, 2019				% Increase (Decrease)
	Customers		Sales Leaders		Customers		Sales Leaders		Customers		Sales Leaders		As of March 31, 2021				As of March 31, 2020				% Increase (Decrease)
													Customers		Sales Leaders		Customers		Sales Leaders		Customers			Sales Leaders
Mainland China		341,386		20,970		317,257		23,776		8%		(12)%		316,000		16,716		271,536		16,159		16	%		3	%
Americas/Pacific		438,889		14,400		229,013		7,760		92%		86%		407,413		12,340		214,139		6,930		90	%		78	%
South Korea		164,256		7,973		169,589		7,363		(3)%		8%		152,390		7,099		174,004		6,608		(12	)%		7	%
EMEA														296,001		7,950		140,344		4,237		111	%		88	%
Japan														126,525		6,131		119,784		5,635		6	%		9	%
Southeast Asia		163,536		8,357		145,845		7,936		12%		5%		152,889		6,882		145,116		6,634		5	%		4	%
Japan		126,896		6,523		128,373		5,964		(1)%		9%
EMEA		235,202		6,226		147,758		4,060		59%		53%
Hong Kong/Taiwan		69,346		4,067		68,862		4,231		1%		(4)%		66,042		3,501		66,024		3,348		—			5	%
Total		1,539,511		68,516		1,206,697		61,090		28%		12%		1,517,260		60,619		1,130,947		49,551		34	%		22	%

Following is a narrative discussion of our results in each segment, which supplements the tables above.

Mainland China. ~~During~~The 9% increase in revenue for the ~~third~~first quarter of ~~2020, we continued~~2021 is primarily attributable to ~~see sequential stabilization following~~ the 2019 contraction of our business in the Mainland China market, compounded by the impact of COVID-19 and the related public-health restrictions, which severely limited large in-person meetings in the first nine months of 2020. As a result of the foregoing issues, revenue and Sales Leaders declined for the third quarter and first nine months of 2020 on a year-over-year basis, but improved on a sequential basis.8% benefit from favorable foreign-currency fluctuations. Our Customers increased 8%16%, benefiting from ~~successful~~the continued focus on customer initiatives including enJoy program and new customer coupon program. During the second quarter ~~launch~~ of ~~a new loyalty program.~~2021, the ageLOC Boost will be made generally available to all consumers.

The year-over-year increase in segment contribution for the ~~third~~first quarter isof 2021 primarily ~~attributable to improvements~~reflects higher revenue and a 2.3 percentage point improvement in ~~general and administrative expenses from a decrease in promotions~~gross margin, due to ~~COVID-19 restrictions, and~~product mix. This was largely offset by a ~~slight decline~~2.2 percentage point increase in selling expense as a ~~percentage~~percent of ~~revenue, partially offset by the decline in~~ revenue. The salaries and service fees of our ~~Sales Leaders~~sales force in Mainland China are fixed until they are adjusted in a quarterly evaluation process. As a result, we have variations in our selling expenses as a percentage of revenue, particularly when there is a sequential change in revenue. ~~The decrease in segment contribution for the first nine months of 2020 is attributable to the decline in revenue, partially offset by improvements in gross margin, from product mix.~~

Americas/Pacific. Our Americas/Pacific markets continue to benefit from greater adoption of innovative products shared increasingly via the social ~~sharing~~commerce business model supported by our digital tools, combined with the current environment where consumers are spending more time at home, shopping and working online. This contributed to ~~an 81%~~a 100% increase in revenue for the ~~third~~first quarter ~~and a 35% increase for the first nine months~~ of ~~2020.~~2021. The new social and digital tools as well as strong sales leadership in social sharing in these markets have enabled our sales force to more effectively transact business ~~digitally, which has been beneficial to our business during the COVID-19 pandemic.~~digitally. These factors ~~along with a virtual regional convention,~~also led to a significant increase in Customers ~~as well as~~and Sales Leaders. ~~Our Latin America markets also performed well during the quarter, with strong interest in the~~ ~~ageLOC Boost~~ ~~previews being held in the markets and increasing digital maturity leveraging a highly social demographic of leaders.~~ Our reported revenue also reflects a ~~negative currency impact of 9% and 8%~~3% benefit from favorable foreign-currency fluctuations.

The year-over-year increase in segment contribution for ~~the third quarter and first nine months of 2020, respectively, primarily due to the weakening Argentina peso. In our U.S. market, we continue the Sales Leader limited preview of our new~~ ~~Nutricentials Bioadaptive Skin Care~~ ~~product line in the fourth quarter of 2020 and plan to make it widely available for consumer purchase in~~ the first quarter of ~~2021. In~~2021 primarily reflects the increase in revenue and the fixed nature of general and administrative expenses, which as a percentage of revenue decreased 4.7 percentage points.

South Korea. Our first quarter of 2021 constant-currency revenue was flat compared to 2020; our ~~U.S. market, we plan to introduce and launch~~ reported revenue reflects a 7% benefit from favorable foreign-currency fluctuations~~ageLOC Boost~~ ~~during late 2021.~~. Sales Leaders increased 7% from product promotions, while Customers declined 12% from a prior year customer campaign.

The year-over-year increase in segment contribution ~~for the third quarter and first nine months of 2020~~ primarily reflects the ~~increase in~~increased revenue, and a decrease in selling expenses as a percentage of revenue from the strong growth in the quarter. These factors were partially offset by a lower gross margin, which primarily reflects an increase in freight cost and changes in our product mix, with a higher shift to devices, which carry a lower gross margin than our other Nu Skin products. Additionally, general and administrative expenses increased for the third quarter and first nine months of 2020 due to higher labor expenses to support growth and the regional convention, although as a percentage of revenue it decreased due to the higher revenue. The rapid growth in our Americas/Pacific region has placed a strain on our resources and required additional air freight of our products, particularly in the Latin America markets in order to meet the increasing demand.

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~~South Korea~~. Our business in South Korea showed encouraging progress, with 5% revenue growth for the third quarter. Revenue for the first nine months declined 5%, which includes a 3% negative impact from foreign-currency fluctuations, along with ~~the impacts of COVID-19. Revenue also benefited from new product launches in the third quarter, including a local launch of our latest fitness nutrition products and some initial sales of our~~ ~~ageLOC Boost~~ ~~preview.~~

For the third quarter, segment contribution increased slightly due to the higher revenue, partially offset by higher selling expenses as a percentage of revenue. The decrease in segment contribution for the nine-month period ended September 30, 2020 is primarily attributable to the decrease in revenue, partially offset by a slight improvementimprovements in gross margin from ~~the product~~a shift to ~~higher-margin~~more favorable margin products.

~~Southeast Asia~~EMEA. Our ~~Southeast Asia~~EMEA segment ~~performed well in the quarter, with 7%~~strong revenue ~~growth. Revenue for~~trends continued into the first ~~nine months declined 3%; as we previously discussed, the COVID-19 outbreak impacted our Southeast Asia segment longer than others. During the third~~ quarter ~~we held a virtual regional convention in the region, which helped Sales Leaders and Customers grow 5% and 12%, respectively.~~

The third quarter decline in segment contribution is largely attributed to lower gross margin and increased selling expenses as a percentage of revenue from higher sales promotions during the quarter and sales mix, partially offset by increased revenue. The decrease in segment contribution for the first nine months of 2020 is primarily from the decline in revenue and a lower gross margin from higher sales promotions.

~~Japan~~. Our Japan segment continues to perform well, resulting in 6% revenue growth for the third quarter of 2020, including a 2% benefit from favorable foreign-currency fluctuations. For the first nine months of 2020, the market had stable revenue growth.

~~For the third quarter and first nine months of 2020, segment contribution increased due to improved revenue along with lower general and administrative expenses from continued cost-saving measures.~~

~~EMEA.~~ ~~Our EMEA segment had a strong third quarter,~~2021, benefiting from further adoption of the social sharing business model supported by our digital tools, combined with the current environment where consumers are spending more time shopping and working online. This contributed to a ~~72%~~115% increase in revenue, ~~53%~~111% increase in Customers and 88% increase in Sales ~~Leaders and 59% increase in Customers.~~Leaders. Our reported revenue also benefited 5%17% from foreign-currency fluctuations for the ~~third~~first quarter of ~~2020. For the first nine months of 2020, revenue grew 22%.~~2021. Similar to our Americas/Pacific segment, the strong sales leadership in social sharing has allowed the EMEA segment to more effectively transact business ~~digitally, which has been beneficial to our business during the COVID-19 pandemic. In our EMEA~~digitally.

The strong improvement in segment ~~we are planning to preview the~~ ~~Nutricentials Bioadaptive Skin Care~~ ~~product line in the fourth quarter of 2020 and to make it generally available~~contribution for ~~purchase in~~ the first quarter of ~~2021. We plan to introduce and launch~~ ~~ageLOC Boost~~ ~~during 2021.~~

~~The strong improvements in segment contribution for both periods presented were~~2021 is primarily attributable to higher revenue and the fixed nature of general and administrative expenses ~~partially offset~~.

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Japan. Our Japan segment continues to perform well, with increases in revenue, Customers and Sales Leaders over the prior year, due to our ability to attract an increasingly younger demographic that is adept at social sharing. In addition, our Japan segment benefitted from product launches, including the ageLOC Boost along with restages of other product lines.

The year-over-year increase in segment contribution reflects the increased revenue, a slight decline from normal fluctuations in selling expense as a percent of revenue and the fixed nature of general and administrative expenses on increased revenue.

Southeast Asia. The year-over-year decrease in revenue in our Southeast Asia segment primarily reflects impacts from the COVID-19 pandemic. Continued restrictions and logistic challenges have led to a slower economic recovery in some Southeast Asia markets. The increase in Customers for the Southeast Asia segment was primarily driven by ~~a lower gross margin from higher freight cost.~~ successful customer initiatives, which also drove an increase in our Sales Leaders.

The ~~rapid growth~~year-over-year decrease in ~~this region has placed a strain on our resources and required additional air freight~~segment contribution for the first quarter of ~~our products to meet~~2021 primarily reflects the ~~increasing demand.~~decline in revenue.

Hong Kong/~~Taiwan.~~Taiwan. Our Hong ~~Kong/Taiwan~~Kong /Taiwan segment ~~continues to be challenged from the ongoing decline from 2019 and COVID-19, with flat constant-currency~~ revenue ~~and Customers~~increased 1% for the quarter, ~~and~~with a 4% ~~decline~~benefit from favorable foreign-currency fluctuations. The fourth quarter of 2020 product launches drove an increase in Sales ~~Leaders. Our reported revenue benefited 4% from foreign-currency fluctuations for~~Leaders, which increased 5% as of the ~~third~~first quarter of ~~2020. This segment’s performance for~~2021, compared to the ~~nine months ended September 30, 2020 was additionally impacted by the social incidents that began in 2019 and continued into 2020 in Hong Kong.~~prior-year period.

The increase in segment contribution ~~for the third quarter of 2020 is~~was primarily ~~from~~driven by reported revenue growth, with general and ~~improving gross margins. The decline in segment contribution for the first nine months of 2020 is attributable to the decline in~~administrative expenses remaining flat on slightly improved revenue.

Manufacturing. Our Manufacturing segment ~~had~~generated a ~~strong third quarter with a 34% year-over-year~~69% increase in revenue ~~and a 16% increase~~ for the ~~nine-month period ended September 30, 2020.~~ first quarter of 2021. Our previous investments in additional capacity have allowed our manufacturing companies to continue to increase revenue as the demand for nutrition and personal care products continues to expand.

The ~~$2.2 million and $3.4 million improvements~~104% increase in segment contribution ~~for~~is primarily attributable to the ~~three- and nine-month periods ended September 30, 2020, respectively, reflect~~increased revenue, ~~increases and improved gross margin, partially offset by increased~~along with the fixed nature of general and administrative expenses.

Grow Tech. Our Grow Tech segment continues to invest in controlled-environment agriculture technologies. We have found that some of this technology has broader applications in agriculture, and we are investing to pursue these potential opportunities. We are expecting continued losses in ~~2020~~2021 from this segment as we continue to research and refine the technology. We are currently evaluating strategic alternatives with respect to this business.

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Consolidated Results

Revenue

Revenue for the three-month period ended ~~September 30, 2020~~March 31, 2021 increased ~~19%~~31% to ~~$703.3~~$677.0 million, compared to ~~$589.9~~$518.0 million in the prior-year period. ~~Revenue for the nine-month period ended September 30, 2020 and 2019 was $1.8 billion.~~ For a discussion and analysis of these ~~decreases~~increases in revenue, see “Overview” and “Segment Results,” above.

Gross profit

Gross profit as a percentage of revenue was ~~73.9% for the third quarter of 2020, compared to 76.2% for the prior-year period, and 74.7%~~74.8% for the first ~~nine months~~quarter of ~~2020,~~2021 compared to ~~76.0%~~75.7% for the prior-year period. ~~Gross profit as a percentage~~The gross margin of ~~revenue for~~our core Nu Skin ~~decreased 2.3~~business declined 0.3 percentage points to ~~76.3% for~~77.8%. Our gross margin was impacted by the ~~third quarter~~gross margin of ~~2020 and decreased 1.2 percentage points to 77.2% for~~our owned manufacturing entities, which as previously disclosed, is significantly lower than the ~~first nine months~~gross margin of ~~2020. Our~~our core Nu Skin ~~gross profit was negatively impacted by higher freight cost during~~business. With the ~~third quarter and first nine months of 2020 due to express orders to meet higher demand. Also contributing to the lower gross margin is that our~~strong year-over-year growth ~~is being driven by sales increases in the Americas and EMEA, which have lower margins than other markets, combined with an overall increase in our sales percentage from~~within our Manufacturing segment, ~~which produces~~their revenue represented a ~~lower gross margin.~~higher proportion of our overall consolidated revenue in the first quarter of 2021 than in the prior-year quarter.

Selling expenses

Selling expenses as a percentage of revenue ~~were 39.9% for~~remained relatively consistent with the ~~third quarter of 2020, compared to 39.3% for the prior-year period, and 40.1%~~prior year, at 40.4% for the first ~~nine months~~quarter of ~~2020,~~2021, compared to ~~39.6%~~39.8% for the prior-year period. ~~Core~~Selling expenses for core Nu Skin ~~selling expenses~~ as a percentage of revenue increased ~~0.9~~1.4 percentage points to ~~42.4% and 42.6%,~~43.4% for the ~~third~~first quarter ~~and first nine months~~ of ~~2020, respectively.~~ 2021. Selling expenses for our core Nu Skin business are driven by the specific performance of our individual Sales Leaders. Given the size of our sales force and the various components of our compensation and incentive programs, selling expenses as a percentage of revenue typically ~~fluctuate~~fluctuates plus or minus approximately 100 basis points from period to period. Our increase in selling expenses ~~as a percentage~~is also attributable to increases in qualification for our incentive trips due to the growth in the West.

Table of ~~revenue increase in periods of high sequential revenue growth, as more of our Sales Leaders qualify for incentive events.~~Contents

General and administrative expenses

General and administrative expenses ~~as a percentage of revenue decreased to 23.5% for the third quarter of 2020, from 25.1% for the prior-year period, and~~ increased to 25.4% for the first nine months of 2020, from 24.8% for the prior-year period. General and administrative expenses increased to $165.1 million in the third quarter of 2020, compared to $147.9 million in the prior-year period and increased to $466.2$169.8 million in the first ~~nine months~~quarter of ~~2020,~~2021, compared to ~~$456.0~~$149.6 million in the prior-year period. The ~~increases for the third quarter and first nine months of 2020 primarily relate~~$20.2 million increase is mainly driven by a $14.1 million increase in labor expenses, attributable to higher employee performance incentive compensation, and approximately $3.0 million in ~~2020 upon achievement~~increased IT expenses, associated with our cloud transition and ongoing development of ~~performance goals, partially offset by lower travel~~digital tools. General and ~~sales force events~~administrative expenses as a ~~result~~percentage of revenue declined to 25.1% for the ~~COVID-19 restrictions that were in place during~~first quarter of 2021 from 28.9% for the ~~period.~~prior-year period, due to the relatively fixed nature of general and administrative expenses as revenue increased.

Other income (expense), net

Other income (expense), net ~~was~~ ~~$0.5~~ ~~million for the third quarter of 2020 compared to~~ ~~$(5.0)~~ ~~million for the prior-year period, and~~ ~~$(4.1)~~ ~~million~~ for the first ~~nine months~~quarter of ~~2020~~2021 was $1.6 million compared to ~~$(11.2)~~ ~~million~~($6.2 million) for the ~~prior-year period.~~same period in 2020. The increase in other income is largely attributable to a $2.2 million decrease in foreign currency losses, $2.2 million decrease from a loss on asset disposal in the prior year, a $1.2 million decrease interest expense ~~for the three- and nine-month periods ended September 30, 2020 primarily relates to~~from lower interest ~~expenses due to decreased interest~~ rates ~~as well as a benefit from foreign-currency fluctuations.~~and unrealized investment income.

Provision for income taxes

Provision for income taxes for the ~~three- and nine-month periods~~first quarter of ~~2020~~2021 was ~~$18.4 million and $46.9~~$17.1 million, compared to ~~$20.8 million and $68.2~~$10.7 million for the prior-year ~~periods.~~period. The effective tax ~~rates for the three- and nine-month periods were 24.7% and 28.5%~~rate was 26.5% of pre-tax income during the first quarter of 2021 compared to ~~32.1% and 33.8%~~35.1% in the prior-year ~~periods.~~period. The decrease in the effective tax rate for the ~~third~~first quarter ~~and first nine months~~ of ~~2020~~2021 primarily reflects the strong growth in the U.S. market and Manufacturing segment, which enabled us to utilize additional foreign tax credits to offset ~~the~~ U.S. income taxes. In addition, there was a statute of limitation expiration that resulted in a tax benefit in the ~~third quarter of 2020 our effective tax rate benefited from the expiration of statute of limitations for an uncertain tax position.~~

On March 27, 2020, the CARES Act was signed into law, which, among other things, includes provisions relating to net operating loss carryback periods, alternative minimum tax credit refunds, and modifications to the net interest deduction limitations. We have assessed the impact of this new legislation and, at present, do not expect it to have a material impact on our 2020 effective tax rate.first quarter.

Net income

As a result of the foregoing factors, net income for the ~~third~~first quarter of ~~2020~~2021 was ~~$56.3~~$47.4 million compared to ~~$44.1~~$19.7 million in the prior-year period. ~~Net income for the first nine months of 2020 was $117.9 million, compared to $133.4 million for the first nine months of 2019.~~

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Liquidity and Capital Resources

Historically, our principal uses of cash have included operating expenses (particularly selling expenses) and working capital (principally inventory purchases), as well as capital expenditures, stock repurchases, dividends, debt repayment and the development of operations in new markets. We have at times incurred long-term debt, or drawn on our revolving line of credit, to fund strategic transactions, stock repurchases, capital investments and short-term operating needs. We typically generate positive cash flow from operations due to favorable margins and have generally relied on cash from operations to fund operating activities. InHowever, in the first ~~nine~~three months of ~~2020,~~2021, we ~~generated $284.4~~had a net outflow of $18.9 million in cash from operations, compared to ~~$128.0~~$69.0 million in cash from operations during the prior-year period. The ~~increase~~decrease in cash flow from operations primarily reflects ~~cost-saving initiatives implemented by~~a $49.1 million increase in inventory partially attributable to the revenue growth at our ~~markets,~~manufacturing entities and increases in preparation of our product launches, along with ~~higher payout of accruals in~~ the first quarter of ~~2019, mainly~~2021 payout of the accrued commission and accrued employee incentive payments attributable to ~~severance pay-out, along with a decrease in cash outflows in 2020 due to higher commission accrual that will be paid out in the fourth quarter of 2020.~~our fourth-quarter growth. Cash and cash equivalents, including current investments, as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were ~~$378.0~~$362.7 million and ~~$344.0~~$423.9 million, respectively, with the decrease being driven by the ~~positive~~net outflow of cash flow from operations, ~~partially offset by~~purchases of property and equipment, as discussed below, our quarterly dividend payments and stock ~~repurchases.~~repurchases, partially offset by increased borrowings under our revolving credit facility.

Working capital. As of ~~September 30, 2020,~~March 31, 2021, working capital was ~~$305.9~~$339.3 million, compared to ~~$383.4~~$360.3 million as of December 31, ~~2019.~~2020. The decline in working capital ~~reflects~~is primarily attributable to a ~~higher accrued bonus, an~~net $60.0 million increase in ~~accrued commissions from the increased sales~~borrowings under our revolving credit facility during the ~~end of the~~ quarter to fund our stock repurchases and ~~deferred revenue,~~other expenses for operations, partially offset by ~~the increase in cash and accounts receivable from timing of sales.~~increased inventory.

Capital expenditures. Capital expenditures for the ~~first nine~~three months ~~of 2020~~ended March 31, 2021 were ~~$48.8~~$19.4 million. We ~~estimate~~expect that our capital expenditures in 2021 will ~~total approximately $65-75 million for 2020. Our 2020 capital expenditures include the following:~~be primarily related to:

●

the expansion and upgrade of facilities in our ~~facilities and equipment;~~various markets;

●

purchases and expenditures for computer systems and equipment, software, and application development; and

●

~~purchases of equipment and development of our technology~~a new manufacturing plant in ~~our Grow Tech initiative.~~Mainland China

~~Our 2020~~We estimate that capital expenditures ~~also include construction~~for the uses listed above will total approximately $70–85 million for 2021. We are currently in the building phase of athe new manufacturing plant in Mainland China. To date we have spent approximately ~~$17.9~~$26 million ~~on this project, with approximately $7.4 million in 2020,~~ and we expect that our expenditures for this project will total approximately $55 million over the next ~~2-3~~1-2 years, including approximately ~~$12-15~~$15-20 million during ~~2020.~~2021.

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Credit Agreement. In April 2018, we entered into a Credit Agreement (the “Credit Agreement”) with various financial institutions as lenders and Bank of America, N.A., as administrative agent. The Credit Agreement provides for a $400.0 million term loan facility and a $350.0 million revolving credit facility, each with a term of five years. We used the proceeds of the term loan and the draw on the revolving facility to pay off the ~~Previous Credit Agreement,~~previous credit agreement, and the outstanding balance on the ~~Convertible Notes.~~convertible notes. The interest rate applicable to the facilities is subject to adjustments based on our consolidated leverage ratio. The term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 5.0% during the first and second years, 7.5% during the third and fourth years and 10.0% during the fifth year after the closing date of the Credit Agreement, with the remainder payable at final maturity. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we had $60.0 million and no outstanding borrowings under our revolving credit facility, and ~~$345.0~~$330.0 million and ~~$365.0~~$337.5 million remaining balance on our term loan facility. The carrying value of the debt also reflects debt issuance costs of ~~$(2.3)~~$(1.9) million and ~~$(3.0)~~$(2.1) million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, related to the Credit Agreement. The Credit Agreement requires us to maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. We are currently in compliance with all debt covenants under the Credit Agreement.

Derivative Instruments. As of ~~September 30, 2020,~~March 31, 2021, we had four interest rate swaps, with a total notional principal amount of $200 million and a maturity date of July 31, 2025. We entered into these interest rate swap arrangements during the third quarter of 2020 to hedge the variable cash flows associated with our variable-rate debt under the Credit Agreement.

Stock repurchase plan. In 2018, our board of directors approved a stock repurchase plan authorizing us to repurchase up to $500.0 million of our outstanding shares of Class A common stock on the open market or in private transactions. During the first ~~nine~~three months of ~~2020,~~2021, we repurchased approximately ~~4.8~~1.0 million shares of our Class A common stock under the plan for ~~$127.4~~$50.4 million. As of ~~September 30, 2020, $342.8~~March 31, 2021, $275.4 million was available for repurchases under the plan. Our stock repurchases are used primarily to offset dilution from our equity incentive plans and for strategic initiatives.

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Dividends. In February ~~April and July 2020,~~2021, our board of directors declared quarterly cash dividends of ~~$0.375~~$0.38 per share. ~~These~~This quarterly cash ~~dividends~~dividend of ~~$20.7~~$19.3 million ~~$19.4 million and $19.2 million were~~was paid on March ~~11, 2020, June~~ 10, ~~2020 and September 9, 2020~~2021 to stockholders of record on February ~~28, 2020,~~26, 2021. In May ~~29, 2020 and August 28, 2020. In October 2020,~~2021, our board of directors declared a quarterly cash dividend of ~~$0.375~~$0.38 per share to be paid on ~~December~~June 9, ~~2020~~2021 to stockholders of record on ~~November 27, 2020.~~May 28, 2021. Currently, we anticipate that our board of directors will continue to declare quarterly cash dividends and that the cash flows from operations will be sufficient to fund our future dividend payments. However, the continued declaration of dividends is subject to the discretion of our board of directors and will depend upon various factors, including our net earnings, financial condition, cash requirements, future prospects and other relevant factors.

Cash from foreign subsidiaries. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we held ~~$378.0~~$362.7 million and ~~$344.0~~$423.9 million, respectively, in cash and cash equivalents, including current investments. These amounts include ~~$326.2~~$332.0 million and ~~$277.9~~$374.7 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, held in our operations outside of the U.S. Substantially all of our non-U.S. cash and cash equivalents are readily convertible into U.S. dollars or other currencies, subject to procedural or other requirements in certain markets, as well as an indefinite-reinvestment designation, as described below.

We typically fund the cash requirements of our operations in the U.S. through intercompany dividends, intercompany loans and intercompany charges for products, use of intangible property, and corporate services. However, some markets impose government-approval or other requirements for the repatriation of dividends. For example, in Mainland China, we are unable to repatriate cash from current operations in the form of dividends until we file the necessary statutory financial statements for the relevant period. As of ~~September 30, 2020,~~March 31, 2021, we had ~~$60.4~~$91.7 million in cash denominated in Chinese RMB. We also have experienced delays in repatriating cash from Argentina. As of March 31, 2021 and December 31, 2020, we had $10.4 million and $10.6 million, respectively, in intercompany receivable with our Argentina subsidiary. We also have intercompany loan arrangements with some of our markets, including Mainland China, that allow us to access available cash, subject to certain limits in Mainland China and other jurisdictions. We also have drawn on our revolving line of credit to address cash needs until we can repatriate cash from Mainland China or other markets, and we may continue to do so. Except for $60.0 million of earnings in Mainland China that we designated as indefinitely reinvested during the second quarter of 2018, we currently plan to repatriate undistributed earnings from our non-U.S. operations as necessary, considering the cash needs of our non-U.S. operations and the cash needs of our U.S. operations for dividends, stock repurchases, capital investments, debt repayment and strategic transactions. Repatriation of non-U.S. earnings is subject to withholding taxes in certain foreign jurisdictions. Accordingly, we have accrued the necessary withholding taxes related to the non-U.S. earnings.

We currently believe that existing cash balances, future cash flows from operations and existing lines of credit will be adequate to fund our cash needs on both a short- and long-term basis. The majority of our historical expenses have been variable in nature, and as such, a potential reduction in the level of revenue would reduce our cash flow needs. In the event that our current cash balances, future cash flow from operations and current lines of credit are not sufficient to meet our obligations or strategic needs, we would consider raising additional funds in the debt or equity markets or restructuring our current debt obligations. Additionally, we would consider realigning our strategic plans, including a reduction in capital spending, stock repurchases or dividend payments.

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Contingent Liabilities

Please refer to Note 11 to the consolidated financial statements contained in this Quarterly Report for information regarding our contingent liabilities.

Critical Accounting Policies

There were no significant changes in our critical accounting policies during the ~~third~~first quarter of ~~2020.~~2021.

Seasonality and Cyclicality

In addition to general economic factors, we are impacted by seasonal factors and trends such as major cultural events and vacation patterns. For example, most Asian markets celebrate their respective local New Year in the first quarter, which generally has a negative impact on that quarter. We believe that direct selling is also generally negatively impacted during the third quarter, when many individuals, including our sales force, traditionally take vacations.

Prior to making a key product generally available for purchase, we may do one or more introductory offerings of the product, such as a preview of the product to our Sales Leaders, a limited-time offer, or other product introduction or promotion. These offerings may generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue, Sales Leaders and/or Customers during the quarter and can skew year-over-year and sequential comparisons.

Non-GAAP Financial Measures

Constant-currency revenue change is a non-GAAP financial measure that removes the impact of fluctuations in foreign-currency exchange rates, thereby facilitating period-to-period comparisons of the Company’s performance. It is calculated by translating the current period’s revenue at the same average exchange rates in effect during the applicable prior-year period and then comparing that amount to the prior-year period’s revenue. We believe that constant-currency revenue change is useful to investors, lenders and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on our revenue from period to period.

Available Information

Our website address is www.nuskin.com. We make available, free of charge on our Investor Relations website, ir.nuskin.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

We also use our Investor Relations website, ir.nuskin.com, as a channel of distribution of additional Company information that may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts. The contents of our website shall not be deemed to be incorporated herein by reference.

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ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency Risk and Exchange Rate Information

A majority of our revenue and many of our expenses are recognized outside of the United States, except for inventory purchases, a significant portion of which are primarily transacted in U.S. dollars from vendors in the United States. The local currency of each of our Subsidiaries’ primary markets is considered the functional currency with the exception of our Asia product-distribution subsidiary in Singapore and, as discussed below, our subsidiary in Argentina. All revenue and expenses are translated at weighted-average exchange rates for the periods reported. Therefore, our reported revenue and earnings will be positively impacted by a weakening of the U.S. dollar and will be negatively impacted by a strengthening of the U.S. dollar. These impacts may be significant because a large portion of our business is derived from outside of the United States. Given the uncertainty of exchange rate fluctuations, it is difficult to predict the effect of these fluctuations on our future business, product pricing and results of operations or financial condition.

In the second quarter of 2018, published inflation indices indicated that the three-year cumulative inflation in Argentina exceeded 100 percent, and as of July 1, 2018, we elected to adopt highly inflationary accounting for our subsidiary in Argentina. Under highly inflationary accounting, the functional currency for our subsidiary in Argentina became the U.S. dollar, and the income statement and balance sheet for this subsidiary have been measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated monetary assets and liabilities has been reflected in earnings in Other income (expense), net and was not material. As of ~~September 30, 2020,~~March 31, 2021, our subsidiary in Argentina had a small net peso monetary position. Net sales of our subsidiary in Argentina were less than 2%1% of our consolidated net sales for the ~~three- and nine-month~~three-month periods ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

We may seek to reduce our exposure to fluctuations in foreign currency exchange rates through the use of foreign currency exchange contracts and through intercompany loans of foreign currency. We do not use derivative financial instruments for trading or speculative purposes. We regularly monitor our foreign currency risks and periodically take measures to reduce the impact of foreign exchange fluctuations on our operating results. As of ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ we did not hold non-designated mark-to-market forward derivative contracts to hedge foreign denominated intercompany positions or third party foreign debt. As of ~~September 30,~~March 31, 2021, and 2020 ~~and 2019~~ we did not hold any forward contracts designated as foreign currency cash flow hedges. We continue to evaluate our foreign currency hedging policy.

~~Non-GAAP Financial Measures~~

Constant-currency revenue change is a non-GAAP financial measure that removes the impact of fluctuations in foreign-currency exchange rates, thereby facilitating period-to-period comparisons of the Company’s performance. It is calculated by translating the current period’s revenue at the same average exchange rates in effect during the applicable prior-year period and then comparing that amount to the prior-year period’s revenue. We believe that constant-currency revenue change is useful to investors, lenders and analysts because suchFor additional information ~~enables them to gauge the impact of foreign-currency fluctuations on~~about our ~~revenue from period to period.~~

~~Available Information~~

~~Table of Contents~~

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

The information required by Item 3 of Part I of Form 10-Q is incorporated herein by reference from the sections entitled "Derivative Instruments" and “Currency Risk and Exchange Rate Information” in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part I and also frommarket risk see Note 9 to the consolidated financial statements contained in this Quarterly Report.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our CEO and our CFO concluded that our disclosure controls and procedures were effective as of ~~September 30, 2020.~~March 31, 2021.

Changes in Internal Controls Over Financial Reporting.

We made no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended ~~September 30, 2020~~March 31, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

~~The following information supplements and amends our discussion set forth under~~There have been no material developments concerning the matters discussed in the “Legal Proceedings” insection of our Annual Report on Form 10-K for the ~~2019~~2020 fiscal ~~year and subsequent reports.~~

We are currently in litigation with Don Roberts, a consultant in the agriculture industry. Mr. Roberts claims he is a general partner in our indoor-growing business and related businesses. He also claims he was instrumental in developing some of the business’s intellectual property. In May 2019, we filed a lawsuit in the U.S. District Court for the District of Utah, seeking a declaratory judgment that Mr. Roberts is not an inventor of any of the business’s intellectual property and is not a partner in the business. This lawsuit was dismissed on jurisdictional grounds in December 2019. We have appealed that dismissal to the U.S. Court of Appeals for the Tenth Circuit. In November 2019, Mr. Roberts filed suit in Utah’s Fifth Judicial District Court, seeking a declaratory judgment that he is a general partner and, as such, is entitled to a 50% ownership interest and 50% of the profits generated by the business. Mr. Roberts also seeks damages exceeding $250 million. We filed a motion to dismiss this action in state court or, in the alternative, to transfer venue to Utah’s Fourth Judicial District Court. The state court denied our motion, and in October 2020 we filed a motion seeking permission to file an interlocutory appeal. We believe Mr. Roberts’s claims are without merit, and we intend to vigorously defend ourselves.

year. Please refer to Note 11 to the consolidated financial statements contained in this report ~~and to our discussion set forth under “Legal Proceedings” in our Annual Report on Form 10-K~~ for ~~the 2019 fiscal year for additional~~certain information regarding our legal proceedings.

ITEM 1A.

RISK FACTORS

The information presented below supplements and should be read in conjunction with the detailed discussion of risks associated with our business in our recent SEC filings, including our Annual Report on Form 10-K for the ~~2019~~2020 fiscal year and subsequent reports.

~~If we are unable to effectively manage our growth in certain markets, our operations~~Our business could be ~~harmed.~~negatively impacted by corporate citizenship and sustainability matters.

~~At times,~~There are increased expectations and focus from certain investors, Brand Affiliates, consumers, employees and other stakeholders concerning corporate citizenship and sustainability matters, including environmental, social and governance matters; packaging; responsible sourcing; and diversity, equity and inclusion matters. From time to time, we ~~can experience significant growth~~announce certain initiatives and goals in ~~one~~these areas. We could fail, or ~~more of our markets. For example, during the second and third quarters of 2020 we experienced significant growth in some of the markets~~be perceived to fail, in our ~~Americas/Pacific~~achievement of such initiatives or goals or in stakeholders’ expectations, or we could fail in accurately reporting our progress on such initiatives, goals and ~~EMEA segments. Growth can strain our ability~~expectations. Moreover, the standards by which corporate citizenship and sustainability efforts and related matters are measured are developing and evolving, and certain areas are subject to ~~effectively manage our operations, as it requires us to expand our management team, labor force, and manufacturing operations. Insufficient management execution to support growth~~assumptions. The standards or assumptions could result in, among other things, product delays or shortages, operating mistakes and errors, inadequate customer service, inappropriate claims or promotions by our sales force, and governmental inquires and investigations, all of which could harm our revenue and ability to generate sustained growth and result in unanticipated expenses.change over time. In addition, we need to continue to attract and develop qualified management personnel to sustain growth. If we are not able to successfully retain existing personnel and identify, hire and integrate new personnel, our business and growth prospects could be ~~harmed.~~

~~Our ability to conduct business in international markets may be affected by political, legal, tax and regulatory risks.~~

~~Our ability to capitalize on growth in new international markets and to maintain~~criticized for the ~~current level of operations in our existing international markets is exposed to risks associated with our international operations, including:~~

●

~~the possibility that a government might ban or severely restrict our sales compensation and business models;~~

●

~~the possibility that local civil unrest, political instability, or changes in diplomatic or trade relationships might disrupt our operations in one or more markets;~~

●

~~the lack of well-established or reliable legal systems in certain areas where we operate;~~

●

~~the presence of high inflation in the economies of international markets in which we operate;~~

●

the possibility that a government authority might impose legal, tax, customs, or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets;

●

~~the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and~~

●

~~the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash.~~

~~There has been an increasing level of tension in U.S.-China relations over the last year. Given the significant size~~scope of our ~~China business, our business could be harmed if relations continue to deteriorate~~initiatives or ~~additional sanctions or restrictions are imposed by either government.~~ For example, in August 2020, the President of the United States issued an executive order prohibiting certain transactions related to WeChat, the predominant mobile application in China. Although the initial regulations pursuant to the executive order will not impact our business in China, there can be no assurance that the regulations or the executive order will not be broadened. In addition, there have been adverse public reaction and media attention to statements made by representatives of other businesses related to these issues that have adversely affected business. We could similarly face adverse public or media attention, and potentially increased regulatory scrutiny, as a result of increased trade or political tensions or any statements or actions by employees or our sales force that generate publicity with respect to these issues.

~~Table of Contents~~

~~Cyber security risks and the failure to maintain the integrity of company, employee, sales force or guest data could expose us to data loss, litigation, liability and harm to our reputation.~~

We collect, store and transmit large volumes of company, employee, sales force and guest data, including payment card information, personally identifiable information and other personal information, for business purposes, including for transactional and promotional purposes, and our various information technology systems enter, process, summarize and report such data. The integrity and protection of this data is critical to our business.

We are subject to significant security and privacy regulations, as well as requirements imposed by the payment card industry. For example, during 2018, the General Data Protection Regulation went into effect in the European Union, imposing increased data protection regulations, the violation of which could result in fines of up to 4% of our annual revenue. Many other jurisdictions have similarly enacted security and privacy regulations, including California and Mainland China, and we believe this trend will continue. In the United States, congressional committees have held preliminary hearings about the advisability of a federal data privacy law, but it is uncertain whether the federal government will adopt such a law and whether it would preempt state data privacy laws. The prospect of new data privacy laws and ambiguity regarding the interpretation of existing laws has resulted in significant uncertainty and compliance costs. In addition to laws specifically governing privacy and data security, in some cases, federal and state regulators and state attorneys general and administrative agencies have interpreted more general consumer protection laws to impose standards for the online collection, use, dissemination and security of data. Although we monitor regulatory developments in this area, any actualgoals or perceived ~~failure by us to comply~~as not acting responsibly in connection with these ~~requirements could subject us to significant penalties, lawsuits~~matters. Any such matters, or related corporate citizenship and negative publicity and require changes to our business practices. In particular, maintaining compliance with these and other evolving regulations and requirements around the world often requires changes to our information system architecture and data storage processes. Making these changes is, and will likely continue to be, difficult and expensive. Investigations by the regulators of data security laws could also result in the payment of fines and harm our reputation. Private actions by affected individuals could also result in significant monetary or reputational damage.

Similarly, a failure to adhere to the payment card industry’s data security standards could cause us to incur penalties from payment card associations, termination of our ability to accept credit or debit card payments, litigation and adverse publicity, any of whichsustainability matters, could have a material adverse effect on our ~~business and financial condition.~~

In addition, a penetrated or compromised data system or the intentional, inadvertent or negligent release, misuse or disclosure of data could result in theft, loss, or fraudulent or unlawful use of company, employee, sales force or guest data. Although we take measures to protect the security, integrity and confidentiality of our data systems, we experience cyber attacks of varying degrees and types on a regular basis. Our infrastructure may be vulnerable to these attacks, and in some cases it could take time to discover them. Our security measures may also be breached due to employee error or malfeasance, system errors or otherwise. This risk is heightened as a result of the current COVID-19 pandemic as many of our employees are working remotely. Additionally, outside parties may attempt to fraudulently induce employees, users, or customers to disclose sensitive information to gain access to our data or our users’ or customers’ data. Any such breach or unauthorized access could result in the unauthorized disclosure, misuse or loss of sensitive information and lead to significant legal and financial exposure, regulatory inquiries or investigations, loss of confidence by our sales force and customers, disruption of our operations, damage to our reputation, and costs associated with remediating the incident. These risks are heightened as we work with third-party partners, including providers of mobile and cloud technologies, and as our sales force uses social media, as the partners and social media platforms could be vulnerable to the same types of breaches. Acquisition activity, which we have engaged in and which we may continue to engage in, may also heighten these risks, as the systems of the companies we acquire are not under our control prior to the acquisitions and it may take time to evaluate these systems and implement appropriate modifications to them.

~~Table of Contents~~

~~Epidemics, including the recent outbreak of COVID-19, and other crises have and will likely continue to negatively impact our~~ business.

Due to the person-to-person nature of direct selling, our results of operations have been, and will likely continue to be, harmed if the fear of a communicable and rapidly spreading disease or other crises such as natural disasters result in travel restrictions or cause people to avoid group meetings or gatherings or interaction with other people. It is difficult to predict the impact on our business, if any, of the emergence of new epidemics or other crises. The outbreak of COVID-19 and resulting pandemic have resulted in significant contraction of economies around the world and interrupted global supply chains as many governments have issued stay-at-home orders to combat COVID-19. Government-imposed restrictions and public hesitance regarding in-person gatherings, travel and visiting public places have reduced our sales force’s ability to hold sales meetings, resulted in cancellations of key sales leader events and incentive trips, and required us to temporarily close our walk-in and fulfillment locations in certain markets where we have such properties. The outbreak has also impacted our ability to obtain some ingredients and packaging as well as ship products in some markets. Our supply chain and logistics have incurred some interruptions and cost impacts to date, and we could experience more significant interruptions and cost impacts or face more significant closures in the future. These factors and other events related to COVID-19 have negatively impacted our sales and operations and will likely continue to negatively affect our business and our financial results. The COVID-19 situation is changing rapidly, and there is much uncertainty regarding its duration and future impacts.

Any significant decline in our operating results in the future could also adversely affect our financial position and liquidity. Under the terms of our existing credit facility, we are required to maintain certain interest coverage and leverage ratios. In addition, our outstanding borrowings under our credit facility and related term loan impose debt service and amortization requirements. A significant deterioration in our results of operations in the future as a result of the COVID-19 pandemic could impact our ability to comply with our financial covenants and debt service and amortization obligations, which could result in an event of default under the terms of our credit facility. An event of default under our credit facility could result in an inability to access funding under the agreement and the acceleration of our obligations, which would have a material adverse effect on our financial condition and liquidity.

In addition, regulatory authorities closely scrutinize the product- and earnings-related claims made by direct-selling companies and their independent distributors, including claims related to the COVID-19 pandemic. For example, since April 2020, the Federal Trade Commission (“FTC”) has issued letters that have warned several direct-selling companies to remove and address claims that they or their distributors were making about their products’ ability to treat or prevent COVID-19 and/or about the earnings that people who have recently lost income could make. Although we take steps to educate our distributors on proper claims, if our distributors make improper claims, or if regulators determine we are making any improper claims, this could lead to an FTC investigation and could harm our business and reputation.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

(a) (b) (c) (d)
Period
Total
Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs

Approximate Dollar
Value of Shares that May
Yet Be Purchased Under
the Plans or Programs
(in millions)⁽¹⁾

July 1 - 31, 2020 72,166 $ 44.65 72,166 $ 359.6
August 1 - 31, 2020 72,061 46.94 72,061 $ 356.2
September 1 - 30, 2020 276,272 48.46 276,272 $ 342.8
Total 420,499 $ 47.55 420,499

	(a)		(b)		(c)		(d)
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)⁽¹⁾

January 1 - 31, 2021		—	$	—		—	$	325.8
February 1 - 28, 2021		317,217		49.36		317,217	$	310.2
March 1 - 31, 2021		670,187		51.85		670,187	$	275.4
Total		987,404	$	51.05		987,404

(1)	In August 2018, we announced that our board of directors approved a stock repurchase plan. Under this plan, our board of directors authorized the repurchase of up to $500 million of our outstanding Class A common stock on the open market or in privately negotiated transactions.

~~Table of Contents~~

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5.

OTHER INFORMATION

On November 3, 2020, the Executive Compensation Committee (“Committee”) of the Board of Directors of Nu Skin Enterprises, Inc. (the “Company”) adopted the Third Amended and Restated Nu Skin Enterprises, Inc. Deferred Compensation Plan, effective as of January 1, 2021 (the “DCP”). The DCP is a nonqualified deferred compensation plan under which eligible participants may elect to defer the receipt of current compensation. Eligible participants include select employees of the Company, including executive officers. The terms of the DCP will apply to contributions made on or after January 1, 2021.

Pursuant to the DCP, participants may elect to defer up to 80% of their base salary and up to 100% of any cash bonus that otherwise would be payable in a calendar year. Prior to the amendment, participants also could defer up to 100% of restricted stock units granted to them during a calendar year. In addition to such elective deferrals, the DCP also permits the Company to make discretionary contributions, and it provides that the Company shall make matching contributions of up to 5% of a participant’s base salary.

All amounts a participant elects to defer, adjusted for earnings and losses thereon, are 100% vested at all times. All amounts contributed by the Company, adjusted for earnings and losses thereon, will vest 20% per year over five years, subject to acceleration upon the occurrence of certain events including the completion of at least 10 years of employment above a specified compensation level. Under the prior version of the Company’s Deferred Compensation Plan, Company contributions generally vested over a 20-year period.

~~Distributions under the DCP are payable in cash, and the participant may elect either a lump sum payment or monthly, quarterly or annual installments over a maximum of 15 years.~~

The prior version of the Company’s Deferred Compensation Plan did not provide matching contributions. As previously disclosed, the Company has historically made discretionary contributions of 10% of a participant’s base salary each year. In view of the opportunity in the DCP to receive a 5% match, the Company currently anticipates reducing its discretionary contributions to 5% of base salary each year.

The foregoing description of the DCP is not intended to be complete and is qualified in its entirety by reference to the full text of this document, which is filed as an exhibit to this Quarterly Report.None.

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ITEM 6.

EXHIBITS

Exhibits Regulation S-K Number		Description

10.1		~~Third Amended and Restated Nu Skin Enterprises, Inc. Deferred Compensation Plan, effective as of January 1, 2021.~~
~~10.2~~		Employment Letter Agreement ~~between the Company and Joseph Y. Chang, effective as of October 15, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 20, 2020).~~
~~10.3~~		Nu Skin Enterprises, Inc. Executive Severance Policy, amended and restated effective as of October 15, 2020 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 20, 2020).with Connie Tang.
31.1		Certification by Ritch N. Wood, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification by Ritch N. Wood, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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SIGNATURE

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.

~~November 4, 2020~~May 5, 2021

NU SKIN ENTERPRISES, INC.

By:	/s/ Mark H. Lawrence
	Mark H. Lawrence
	Chief Financial Officer
	(Duly Authorized Officer and Principal Financial Officer)

	For the Three Months Ended September 30, 2020
	Class A Common Stock		Additional Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at July 1, 2020	$	91	$	563,115	$	(1,427,064	)	$	(93,441	)	$	1,749,311		$	792,012

Net income		0		0		0			0			56,307			56,307
Other comprehensive loss, net of tax		0		0		0			10,333			0			10,333
Repurchase of Class A common stock (Note 6)		0		0		(19,994	)		0			0			(19,994	)
Exercise of employee stock options (0 million shares)/vesting of stock awards		0		261		684			0			0			945
Stock-based compensation		0		7,115		0			0			0			7,115
Cash dividends		0		0		0			0			(19,245	)		(19,245	)
Balance at September 30, 2020	$	91	$	570,491	$	(1,446,374	)	$	(83,108	)	$	1,786,373		$	827,473

Beginning balance at January 1, 2019	$	15,462
Amounts paid		(15,046	)
Adjustments		(416	)
Ending balance at March 31, 2019	$	0