SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 2, 1997
NU SKIN ASIA PACIFIC, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 001-12421 87-0565309
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
75 West Center Street, Provo, Utah 84601
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (801) 345-6100
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
FEBRUARY 2, 1997 PRESS RELEASE
On February 2, 1997, Nu Skin Asia Pacific, Inc. (the "Company") issued
a press release, a summary of which is set forth below, announcing growth in the
number of distributors for the Company's fourth quarter of 1996 and new product
introductions.
In the press release, the Company reported that the number of active
distributors in the Company's markets increased by more than ten percent in its
fourth quarter ended December 31, 1996. As of December 31, 1996, active
distributors totaled more than 375,000, of which 20,000 achieved sales
leadership positions. The Company stated that it planned to release figures for
distributor growth by country along with year-end earnings on February 19, 1997.
The Company also announced that Nu Skin Japan anticipated the launch
of two nutrition products and a new skin care system, and that Nu ColourJ
cosmetics were introduced in South Korea in January 1997.
The Company noted in the press release that some statements contained
in the release may include forward-looking statements that may involve risks and
uncertainties, and that actual results and outcomes may also differ materially
from those discussed. As the Company noted, factors that might cause such
differences include, but are not limited to, management of growth, expansion of
new markets, fluctuations in currency and risks associated with new products --
those risks inherent with the importation, regulation and sale of new product
lines. The Company referred readers to its prospectus dated Nov. 21, 1996, for a
complete discussion of associated risks.
FEBRUARY 19, 1997 PRESS RELEASE
On February 19, 1997, the Company issued a press release, a summary of
which is set forth below, announcing 1996 earnings and plans to commence
operations in Thailand.
In the press release, the Company reported that revenue for the year
ended December 31, 1996 was $678.6 million, up 89.2 percent from $358.6 million
for the year ended December 31, 1995. Net income for 1996 was $81.7 million, up
103.2 percent from $40.2 million for 1995. Earnings per share were $1.01 for
1996, compared to earnings per share of $0.50 for 1995.
The Company also reported that revenue in its fourth quarter ended
December 31, 1996 was $207.3 million, up 76.9 percent from $117.2 million in the
quarter ended December 31, 1995. Net income in the fourth quarter of 1996 was
$21.4 million, up 71.2 percent from $12.5 million in the fourth quarter of 1995.
Earnings per share for the fourth quarter of 1996 were $0.26, as compared to
$0.15 for the fourth quarter of 1995.
The Company noted that 1996 earnings per share were higher than
analysts' forecasts. The Company attributed this increase to business growth
and, in part, to a lower number of shares outstanding as computed in accordance
with accounting standards.
The Company reported revenue for 1996 in each of its current markets.
In Japan, revenue increased by $148.5 million, or 64.1 percent, to $380.0
million, which the Company attributed to sales growth in the nutrition,
cosmetics and hair categories. In Taiwan, revenue increased by $49.2 million, or
46.7 percent, to $154.6 million, which the Company attributed to the
introduction of new products, including Nu ColourJ cosmetics and LifePak(R)
nutrition supplements. In South Korea, revenue increased to $122.3 million,
which the Company attributed to high levels of distributor sponsorship. In Hong
Kong, revenue remained at $17.0 million. The Company explained that the lack of
growth in local revenue in Hong Kong was due to the fact that several leading
Hong Kong distributors continued to focus their efforts on larger Asian markets.
The Company reported that gross profit as a percentage of revenue was
71.5 percent in 1996, down slightly from 73.1 percent in 1995. The Company
attributed this decline to the strengthening of the U.S. dollar, higher import
duties on nutrition products and the commencement of operations in South Korea,
where local regulations require higher import prices than in other Asian
countries. Operating income in 1996 increased to $128.4 million, up 118.4
percent from $58.8 million in 1995. Operating income as a percentage of revenue
increased to 18.9 percent in 1996 from 16.4 percent in 1995. The Company
attributed this increase primarily to lower selling, general and administrative
expenses as a percentage of revenue, as well as to lower distributor incentives
resulting from a prescribed maximum level of commissions in South Korea of 35
percent.
The Company reported that the total number of active distributors
increased to 377,000 as of December 31, 1996, up 59.7 percent from 236,000 as of
December 31, 1995. The Company noted that growth was particularly strong among
executive distributors, those who achieved sales leadership positions. The total
number of executive distributors increased to 20,483 as of December 31, 1996, up
171.3 percent from 7,550 as of December 31, 1995.
The Company also announced that it plans to launch several new
products in 1997. The Company reported that 1997 product introductions already
included Nu ColourJ cosmetics in South Korea, and FibrenetJ, Multi Hydroxy
AcidsJ and Dermatic EffectsJ Body Contouring Lotion in Japan.
The Company reported that, as a result of the weakening Japanese yen,
management is implementing several strategies to offset the effects of currency
fluctuations, including the implementation of modest price increases in all
markets on most products and the increase of the Company's use of foreign
exchange contracts. The Company stated that this price increase represents the
first meaningful price increase in Japan since operations commenced.
The Company also announced plans to commence operations in Thailand on
March 13, 1997. In addition to the opening of Thailand, the Company expects
further geographic expansion by opening new distribution and walk-in centers in
Japan and South Korea.
The Company stated that it also hopes to increase distributor
productivity through participation in a global distributor equity incentive
program, which will give distributors options to purchase 1.6 million shares of
the company's currently outstanding shares of Class A common stock. The number
of options each distributor receives will be based on the distributor's
performance and productivity through August 31, 1997. The options are
exercisable at a price of $5.75 per share and will vest on December 31, 1997.
The Company reported that, as anticipated, it recorded a $2.0 million charge in
1996 and expects additional charges in 1997 of approximately $18.0 million for
the non-cash and non-recurring expenses associated with this distributor equity
incentive program.
The Company noted in the press release that some statements contained
in the release may include forward-looking statements that may involve risks and
uncertainties, and that actual results and outcomes may differ materially from
those discussed or anticipated. As the Company noted, factors that might cause
such differences include, but are not limited to, risks associated with the
management of growth, dependence on independent distributors, potential impacts
of price increases on sales and distributor growth, expansion into new markets,
fluctuations in currency, risks associated with new product introductions, and
risks inherent with the importation, regulation and sale of new product lines.
The Company referred readers to its prospectus dated Nov. 21, 1996, for a
complete discussion of associated risks.
The Company included in the press release consolidated statements of
income for the three months ended December 31, 1996 and 1995, as set forth
below.
Nu Skin Asia Pacific, Inc.
Consolidated Statements of Income
For the Three Months Ended December 31, 1996
and 1995 (in thousands, except per share
amounts)
<TABLE>
<CAPTION>
As a % of As a % of
1996 Revenue 1995 Revenue
------------ ---------- ----------- --------
<S> <C> <C> <C> <C>
Revenue
Japan $114,972 55.5 % $ 77,940 66.5 %
Taiwan 47,541 22.9 % 31,315 26.7 %
South Korea 38,640 18.6 % -- --
Hong Kong 4,904 2.4 % 6,346 5.4 %
Sales to NSI affiliates 1,227 0.6 % 1,596 1.4 %
----------- ---------- ----------- -------
Revenue 207,284 100.0 % 117,197 100.0 %
Cost of sales 59,566 28.7 % 32,505 27.7 %
------------ --------- ----------- -------
Gross profit 147,718 71.3 % 84,692 72.3 %
Operating expenses
Distributor incentives 74,464 35.9 % 43,829 37.4 %
Selling, general and
administrative 35,507 17.1 % 23,376 20.0 %
Distributor stock expense 1,990 1.0 % -- --
------------- ---------- ----------- -------
Total operating expenses 111,961 54.0 % 67,205 57.4 %
Operating income 35,757 17.3 % 17,487 14.9 %
Other income 1,303 0.6 % 919 0.8 %
------------- ---------- ----------- -------
Income before provision
for income taxes 37,060 17.9 % 18,406 15.7 %
Provision for income taxes 15,684 7.6 % 5,927 5.1 %
Net income $ 21,376 10.3 % $ 12,479 10.6 %
=========== =========== ========= =======
Earnings per share $ 0.26 $ 0.15
Weighted average number
of shares outstanding 82,689 80,518
</TABLE>
The Company also included in the press release a table showing
distributor growth by market, as set forth below.
Nu Skin Asia Pacific, Inc.
Distributor Growth by Market
<TABLE>
<CAPTION>
As of December 31, 1996 As of December 31, 1995 % Increase
Active Executive Active Executive Active Executive
<S> <C> <C> <C> <C> <C> <C>
Japan 215,000 10,169 147,000 4,017 46.3 % 153.1 %
Taiwan 91,000 5,098 75,000 3,014 21.3 % 69.1 %
South Korea 57,000 4,675 -- -- -- --
Hong Kong 14,000 541 14,000 519 0.0 % 4.2 %
------- ------ ------- ----- ------ -------
Total 377,000 20,483 236,000 7,550 59.7 % 171.3 %
======= ====== ======= ====== ======= =======
</TABLE>
The Company also included in the press release consolidated statements
of income for the years ended December 31, 1996 and 1995, as set forth below.
Nu Skin Asia Pacific, Inc.
Consolidated Statements of Income
For the Years Ended December 31, 1996 and 1995
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
As a % of As a % of
1996 Revenue 1995 Revenue
------------ --------- ------- ---------
<S> <C> <C> <C> <C>
Revenue
Japan $380,044 56.0 % $231,540 64.6 %
Taiwan 154,564 22.8 % 105,415 29.4 %
South Korea 122,337 18.0 % -- --
Hong Kong 17,037 2.5 % 17,046 4.7 %
Sales to NSI affiliates 4,614 0.7 % 4,608 1.3 %
---------- ---------- ------------ ---------
Revenue 678,596 100.0 % 358,609 100.0 %
Cost of sales 193,158 28.5 % 96,615 26.9 %
---------- ---------- ----------- ---------
Gross profit 485,438 71.5 % 261,994 73.1 %
---------- ---------- ---------- ---------
Operating expenses
Distributor incentives 249,613 36.8 % 135,722 37.9 %
Selling, general and
administrative 105,477 15.5 % 67,475 18.8 %
Distributor stock expense 1,990 0.3 % -- --
------------- ---------- ------------ ---------
Total operating expenses 357,080 52.6 % 203,197 56.7 %
Operating income 128,358 18.9 % 58,797 16.4 %
Other income 2,833 0.4 % 511 0.1 %
------------- ---------- ------------- ---------
Income before provision
for income taxes 131,191 19.3 % 59,308 16.5 %
Provision for income taxes 49,494 7.3 % 19,097 5.3 %
----------- ----------- ------------ ---------
Net income $ 81,697 12.0 % $ 40,211 11.2 %
============ ========== ============ =========
Earnings per share $ 1.01 $ 0.50
Weighted average number
of shares outstanding 81,060 80,518
</TABLE>
The Company also included in the press release condensed consolidated
balance sheet data at December 31, 1996 and 1995, as set forth below.
Nu Skin Asia Pacific, Inc.
Condensed Consolidated Balance Sheet Data
December 31, 1996 and 1995 (in thousands)
1996 1995
---- ----
Cash and cash equivalents $207,106 $ 63,213
Working capital 66,234 47,863
Total assets 331,714 118,228
Short term notes payable to
stockholders 71,487 --
Short term note payable to NSI 10,000 --
Long term note payable to NSI 10,000 --
Stockholders' equity 107,791 61,771
MARCH 4, 1997 PRESS RELEASES
On March 4, 1997, the Company issued three press releases, each
announcing the appointment of three new members of the Board of Directors.
The new members are former U.S. Senators Paula Hawkins and E.J. "Jake" Garn,
and Daniel W. Campbell. Mrs. Hawkins is a principal in the consulting firm
of Paula Hawkins & Associates. Mr. Garn currently serves as Vice Chairman of
Huntsman Corporation, one of the largest privately held chemical companies in
the United States. Mr. Campbell, a certified public accountant and former
Chief Financial Officer of WordPerfect Corporation, is currently Managing
General Partner of EsNet, Ltd., a property development and management company.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
NU SKIN ASIA PACIFIC, INC.
Dated: March 12, 1997 By: /s/ M. Truman Hunt
Name: M. Truman Hunt
Title: Vice President of Legal Affairs
and Investor Relations
