UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


 
August 6, 2014
 
 
Date of Report (Date of earliest event reported)
 
 
 
NU SKIN ENTERPRISES, INC.
 
 
(Exact name of registrant as specified in its charter)
 
 
Delaware
 
001-12421
 
87-0565309
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
 
(IRS Employer Identification Number)
 
75 West Center Street
Provo, UT 84601
 
 
(Address of principal executive offices and zip code)
 
 
 
(801) 345-1000
 
 
(Registrant's telephone number, including area code)
 
 
 
N/A
 
 
(Former name or former address, if changed since last report)
 
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
□    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
 

 





Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

On August 5, 2014 the Audit Committee (the "Committee") of Nu Skin Enterprises, Inc. (the "Company") determined to restate the Company's consolidated financial statements for the quarter ended March 31, 2014 to correct the accounting related to (i) hyper-inflationary adjustments with respect to operations in Venezuela, and (ii) tax rebates related to the Company's new China headquarters. Based on discussions with its independent registered public accounting firm, PricewaterhouseCoopers LLP, the Committee has determined that hyper-inflationary adjustments should have been recorded as charges to Other Income (Expense) rather than as adjustments to Accumulated Other Comprehensive Loss in the Stockholders' Equity section of the balance sheet. The Committee also determined that the Company should have recorded income to Other Income (Expense) for the China tax rebates.

The Company plans to make these corrections by restating its consolidated financial statements for the period ended March 31, 2014 in an amendment to its Quarterly Report on Form 10-Q to include a $21 million charge to Other Income (Expense) related to the hyper-inflationary accounting error and $7 million of income related to the China tax rebate. With respect to the hyper-inflationary correction, $15 million related to the first quarter of 2014, and $6 million related to periods prior to 2014. The Company does not plan to amend financial statements for periods prior to 2014 as the amounts were determined to be immaterial.

A preliminary estimate of the impact of these corrections is shown in the following tables:
 
 
 
 
 



 
 
 
 
 
  
Three Months Ended
March 31, 2014
(in thousands, except per share amounts)
    
 
 
  
As Reported
    
As Adjusted
    
Difference
  
 
  
   
   
 
Revenue
  
$
671,061
    
$
671,061
    
─
  
 
                  
 
Cost of sales
    
106,644
      
106,644
    
─
  
                 
 
Gross profit
    
564,417
      
564,417
    
─
  
 
                  
 
Operating expenses:
                  
 
Selling expenses
    
313,101
      
313,101
    
─
  
            General and administrative expenses
    
150,119
      
150,119
    
─
  
Total operating expenses
    
463,220
      
463,220
    
─
  
 
                  
 
Operating income
    
101,197
      
101,197
    
─
  
 
                  
 
Other income (expense), net
    
(3,604
)
    
(17,508
)
    
(13,904
)
Income before provision for income taxes
    
97,593
      
83,689
      
(13,904
)
Provision for income taxes
    
33,332
      
28,835
      
(4,497
)
                       
Net income
  
$
64,261
    
$
54,854
      
(9,407
)
 
                        
Net income per share:
                        
Basic
  
$
1.09
    
$
0.93
    
$
(0.16
)
           Diluted
  
$
1.05
    
$
0.90
    
$
(0.15
)
 
                        
Weighted average common shares outstanding:
                        
Basic
    
58,869
      
58,869
    
─
  
           Diluted
    
61,227
      
61,227
    
─
  
 
 

 


 
 
 
 
 
  
  As of
March 31, 2014
(in thousands)
    
 
 
  
As Reported
    
As Adjusted
    
Difference
  
 
  
   
   
 
ASSETS
  
   
   
 
Current assets:
  
   
   
 
Cash and cash equivalents
  
$
284,580
    
$
284,580
    
─
  
Current investments
    
18,703
      
18,703
    
─
  
Accounts receivable
    
56,644
      
56,644
    
─
  
Inventories, net
    
410,668
      
410,668
    
─
  
           Prepaid expenses and other
    
149,523
      
150,375
      
852
  
   
920,118
      
920,970
      
852
  
 
                        
Property and equipment, net
    
411,929
      
411,929
    
─
  
Goodwill
    
112,446
      
112,446
    
─
  
Other intangible assets, net
    
81,377
      
81,377
    
─
  
Other assets
    
115,751
      
115,751
    
─
  
            Total assets
  
$
1,641,621
    
$
1,642,473
      
852
  
 
                        
LIABILITIES AND STOCKHOLDERS' EQUITY
                  
Current liabilities:
                        
Accounts payable
  
$
51,276
    
$
51,276
    
─
  
Accrued expenses
    
449,434
      
439,815
      
(9,619
)
            Current portion of long-term debt
    
88,031
      
88,031
    
─
  
 
    
588,741
      
579,122
      
(9,619
)
                       
Long-term debt
    
109,882
      
109,882
    
─
  
Other liabilities
    
79,418
      
77,910
      
(1,508
)
Total liabilities
    
778,041
      
766,914
      
(11,127
)
 
                        
Stockholders' equity:
                        
Class A common stock
    
91
      
91
    
─
  
           Additional paid-in capital
    
399,677
      
399,677
    
─
  
       Treasury stock, at cost
    
(848,335
)
    
(848,335
)
  
─
  
           Accumulated other comprehensive loss
    
(66,250
)
    
(44,864
)
    
21,386
  
           Retained earnings
    
1,378,397
      
1,368,990
      
(9,407
)
 
    
863,580
      
875,559
      
11,979
  
                          Total liabilities and stockholders' equity
  
$
1,641,621
    
$
1,642,473
      
852
  

 

 

 
On August 5, 2014, the Committee concluded, after discussion with the Company's management and its independent registered public accounting firm that as a result of the error, the financial statements for the three-month period ended March 31, 2014 included in the Company's quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2014 should no longer be relied upon.
 
The Company is in the process of assessing the effectiveness of its internal control over financial reporting and its disclosure controls and procedures in light of the matters disclosed in this Current Report on Form 8-K. The Company will report the results of those assessments in future filings, but expects that, as a result of the restatement of its unaudited financial statements for the first quarter of 2014, it will conclude that its disclosure controls and procedures were not effective as of March 31, 2014.
 
 
 
 
 
 
 
 



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 hereunto duly authorized.
NU SKIN ENTERPRISES, INC.
 (Registrant)


/s/ Ritch Wood
Ritch Wood
 Chief Financial Officer


Date:  August 6, 2014