<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE PLAN YEAR ENDED DECEMBER 31, 1998
NATURE'S SUNSHINE PRODUCTS, INC.
TAX DEFERRED RETIREMENT PLAN
(Full Title of the Plan)
COMMISSION FILE NO. 0-8707
NATURE'S SUNSHINE PRODUCTS, INC.
(Name of Issuer of the Securities Held Pursuant to the Plan)
75 EAST 1700 SOUTH
P.O. BOX 19005
PROVO, UT 84605-9005
(Address of Principal Executive Office)
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
Nature's Sunshine Products Tax Deferred Retirement Plan
Date: July 13, 1999 By: /s/ Douglas Faggioli, Chief Operating Officer
------------- ---------------------------------------------
<PAGE>
NATURE'S SUNSHINE PRODUCTS, INC.
TAX DEFERRED RETIREMENT PLAN
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
DECEMBER 31, 1998 AND 1997
<PAGE>
C O N T E N T S
<TABLE>
<CAPTION>
Page
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE FOR
PLAN BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1998 AND 1997 3
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION FOR THE YEAR ENDED
DECEMBER 31, 1998 4
NOTES TO FINANCIAL STATEMENTS 5
SUPPLEMENTAL INFORMATION
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES 10
SCHEDULE OF REPORTABLE TRANSACTIONS 11
</TABLE>
<PAGE>
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Plan Administrator and Trustee
Nature's Sunshine Products, Inc. Tax Deferred Retirement Plan
We have audited the accompanying statements of net assets available for plan
benefits with fund information of Nature's Sunshine Products, Inc. Tax Deferred
Retirement Plan (the Plan), as of December 31, 1998 and 1997, and the related
statement of changes in net assets available for plan benefits with fund
information for the year ended December 31, 1998. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits with fund
information of Nature's Sunshine Products, Inc. Tax Deferred Retirement Plan as
of December 31, 1998 and 1997, and the changes in net assets available for plan
benefits with fund information for the year ended December 31, 1998 in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Grant Thorton LLP
Provo, Utah
June 24, 1999
<PAGE>
FINANCIAL STATEMENTS
<PAGE>
Nature's Sunshine Products, Inc. Tax Deferred Retirement Plan
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Participant directed
---------------------------------------------------------------------------
Nature's
Sunshine Merrill Fidelity
Fidelity Products, Inc. Bond Lynch RP Advisor Growth
Investments Common Fund of Trust Opportunities
December 31, 1998 Magellan Fund Stock America Fund Fund
------------- -------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Assets
Cash $ 2,385 $ 4,372 $ 286 $ 647 $ 2,169
Investments, at fair value 4,303,094 2,822,822 695,784 1,571,003 3,250,590
Contributions receivable
Participant 5,150 9,893 696 1,025 4,565
Employer 3,823 7,343 516 761 3,388
------------- -------------- ----------- ----------- ---------------
Total assets 4,314,452 2,844,430 697,282 1,573,436 3,260,712
Liabilities - payables 2,111 3,505 253 449 1,919
------------- -------------- ----------- ----------- ---------------
Net assets available for plan benefits $ 4,312,341 $ 2,840,925 $ 697,029 $ 1,572,987 $ 3,258,793
------------- -------------- ----------- ----------- ---------------
------------- -------------- ----------- ----------- ---------------
December 31, 1997
Assets
Cash $ 9,124 $ 21,989 $ 1,793 $ 3,097 $ 8,326
Investments, at fair value 2,672,338 4,524,429 677,170 1,012,746 2,282,215
Contributions receivable
Participant 3,679 9,375 716 796 3,419
Employer 2,488 6,337 484 537 2,313
------------- -------------- ----------- ----------- ---------------
Total assets 2,687,629 4,562,130 680,163 1,017,176 2,296,273
Liabilities - payables 8,966 20,878 1,762 2,519 8,182
------------- -------------- ----------- ----------- ---------------
Net assets available for plan benefits $ 2,678,663 $ 4,541,252 $ 678,401 $ 1,014,657 $ 2,288,091
------------- -------------- ----------- ----------- ---------------
------------- -------------- ----------- ----------- ---------------
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
<TABLE>
<CAPTION>>
Nonparticipant
directed
---------------------------------------------------------- -----------------
Merrill
Lynch Nature's
Global Mutual Sunshine
Allocation Beacon Wasatch PBHG Products, Inc.
Fund Fund Growth Fund Fund Common Stock Total
------------- -------------- ------------ ------------ ----------------- -------------
<S> <C> <C> <C> <C> <C>
$ 277 $ 626 $ 754 $ 749 $ - $ 12,265
160,382 574,691 454,990 425,470 6,050,390 20,309,216
654 1,544 2,062 1,785 - 27,374
486 1,146 1,531 1,325 - 20,319
------------- -------------- ------------ ------------ ----------------- -------------
161,799 578,007 459,337 429,329 6,050,390 20,369,174
245 554 667 663 - 10,366
------------- -------------- ------------ ------------ ----------------- -------------
$ 161,554 $ 577,453 $ 458,670 $ 428,666 $ 6,050,390 $ 20,358,808
------------- -------------- ------------ ------------ ----------------- -------------
------------- -------------- ------------ ------------ ----------------- -------------
$ 1,453 $ 4,119 $ 3,454 $ 4,420 $ - $ 57,775
130,304 406,213 278,488 379,335 12,335,791 24,699,029
655 1,800 1,263 1,808 - 23,511
443 1,216 855 1,224 - 15,897
------------- -------------- ------------ ------------ ----------------- -------------
132,855 413,348 284,060 386,787 12,335,791 24,796,212
1,428 4,048 3,394 4,343 - 55,520
------------- -------------- ------------ ------------ ----------------- -------------
$ 131,427 $ 409,300 $ 280,666 $ 382,444 $ 12,335,791 $ 24,740,692
------------- -------------- ------------ ------------ ----------------- -------------
------------- -------------- ------------ ------------ ----------------- -------------
</TABLE>
<PAGE>
Nature's Sunshine Products, Inc. Tax Deferred Retirement Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS WITH FUND INFORMATION
Year ended December 31, 1998
<TABLE>
<CAPTION>
Participant directed
---------------------------------------------------------------------------
Nature's
Sunshine Merrill Fidelity
Fidelity Products, Inc. Bond Lynch RP Advisor Growth
Investments Common Fund of Trust Opportunities
Magellan Fund Stock America Fund Fund
------------- -------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to
Interest income $ 595 $ - $ 71 $ 738 $ 541
Dividend income 186,796 25,182 54,352 80,235 140,429
Net appreciation (depreciation)
in fair value of investments 796,441 (2,008,721) (21,870) - 475,942
Contributions
Participant salary deferrals 123,849 274,981 20,092 29,092 118,830
Employer 92,689 318,911 13,085 21,334 94,894
------------- -------------- ----------- ----------- ---------------
Total additions 1,200,370 (1,389,647) 65,730 131,399 830,636
------------- -------------- ----------- ----------- ---------------
Net interfund transfers 641,078 (147,470) (13,952) 639,557 317,594
Deductions from net assets
attributed to
Benefits paid to participants 207,695 163,135 33,075 212,551 177,453
Other 75 75 75 75 75
------------- -------------- ----------- ----------- ---------------
Total deductions 207,770 163,210 33,150 212,626 177,528
------------- -------------- ----------- ----------- ---------------
Net additions 1,633,678 (1,700,327) 18,628 558,330 970,702
Net assets available for plan benefits
at beginning of year 2,678,663 4,541,252 678,401 1,014,657 2,288,091
------------- -------------- ----------- ----------- ---------------
Net assets available for plan benefits
at end of year $ 4,312,341 $ 2,840,925 $ 697,029 $ 1,572,987 $ 3,258,793
------------- -------------- ----------- ----------- ---------------
------------- -------------- ----------- ----------- ---------------
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
<TABLE>
<CAPTION>
Nonparticipant
directed
---------------------------------------------------------- ----------------
Merrill Lynch Nature's
Global Mutual Sunshine
Allocation Beacon Wasatch Products, Inc. 1998 1997
Fund Fund Growth Fund PBHG Fund Common Stock Total Total
------------- -------------- ------------ ------------ ---------------- ------------ ---------------
(memorandum
only)
<S> <C> <C> <C> <C> <C> <C>
$ 69 $ 156 $ 188 $ 187 $ - $ 2,545 $ 4,928
16,680 52,227 15,410 - 53,976 625,287 590,268
(18,579) (46,541) (11,896) 22,723 (4,305,461) (5,117,962) 6,098,153
19,959 42,538 54,229 52,420 - 735,990 774,656
13,821 33,076 38,554 35,122 - 661,486 523,737
------------- -------------- ------------ ------------ ---------------- ------------ ---------------
31,950 81,456 96,485 110,452 (4,251,485) (3,092,654) 7,991,742
------------- -------------- ------------ ------------ ---------------- ------------ ---------------
2,704 94,366 111,313 (56,970) (1,588,220) - -
4,452 7,594 29,730 7,185 445,621 1,288,491 1,472,394
75 75 64 75 75 739 350
------------- -------------- ------------ ------------ ---------------- ------------ ---------------
4,527 7,669 29,794 7,260 445,696 1,289,230 1,472,744
------------- -------------- ------------ ------------ ---------------- ------------ ---------------
30,127 168,153 178,004 46,222 (6,285,401) (4,381,884) 6,518,998
131,427 409,300 280,666 382,444 12,335,791 24,740,692 18,221,694
------------- -------------- ------------ ------------ ---------------- ------------ ---------------
$ 161,554 $ 577,453 $ 458,670 $ 428,666 $ 6,050,390 $ 20,358,808 $ 24,740,692
------------- -------------- ------------ ------------ ---------------- ------------ ---------------
------------- -------------- ------------ ------------ ---------------- ------------ ---------------
</TABLE>
<PAGE>
Nature's Sunshine Products, Inc. Tax Deferred Retirement Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE A - DESCRIPTION OF PLAN
The following description of the Nature's Sunshine Products, Inc. Tax
Deferred Retirement Plan (the Plan) provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
GENERAL
Nature's Sunshine Products, Inc. (the Company) adopted the Plan effective
October 13, 1986. The Plan is a defined contribution plan which was
established to provide employees with an opportunity to accumulate funds
for retirement or disability and to provide death benefits for employees'
dependents and beneficiaries. The Plan is subject to the Employee
Retirement Income Security Act of 1974. Effective December 28, 1994, the
Company amended and restated the Plan to comply with the Tax Reform Act
of 1986.
During 1998 and 1997, certain corporate officers served as trustees and
plan administrator of the Plan's assets. Rocky Mountain Employee
Benefits, Inc., is the third party administrator.
ELIGIBILITY
Employees who have completed six months of service are eligible to
participate in the Plan. Each eligible employee is required to make an
election in order to actively participate in the Plan.
INVESTMENT OPTIONS
The Plan currently provides nine separate participant-directed investment
funds and one nonparticipant-directed investment fund as follows:
PARTICIPANT-DIRECTED INVESTMENT FUNDS
FIDELITY INVESTMENTS MAGELLAN FUND - Funds are invested in
shares of various common stocks.
NATURE'S SUNSHINE PRODUCTS, INC. COMMON STOCK - Funds are
invested in shares of Nature's Sunshine Products, Inc. Common
Stock (a party-in-interest) which is traded on the NASDAQ
National Market System.
BOND FUND OF AMERICA - Funds are invested in long-term bonds.
MERRILL LYNCH RETIREMENT PRESERVATION TRUST FUND - Funds are
invested in short-term debt securities such as Treasury Bills.
5
<PAGE>
NOTE A - DESCRIPTION OF PLAN - CONTINUED
PARTICIPANT-DIRECTED INVESTMENT FUNDS - CONTINUED
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND - Funds are invested
in shares of various common stocks.
MERRILL LYNCH GLOBAL ALLOCATION FUND - Funds are invested in
shares of various international common stocks.
MUTUAL BEACON FUND - Funds are invested in shares of various
common stocks.
WASATCH GROWTH FUND - Funds are invested in shares of
various common stocks.
PBHG FUND - Funds are invested in shares of various common
stocks.
NONPARTICIPANT-DIRECTED INVESTMENT FUNDS
NATURE'S SUNSHINE PRODUCTS, INC. COMMON STOCK (PREVIOUSLY ESOP)
- On December 31, 1991, the Nature's Sunshine Products, Inc.,
Employee Stock Ownership Plan (ESOP) (a party in interest), was
merged with the Plan. The assets transferred to the Plan from
the ESOP are reflected as a separate nonparticipant-directed
investment fund. The nonparticipant-directed investment fund
provides an opportunity for employees to share in the growth and
prosperity of the Company. No employee of the Company is
permitted to contribute to the nonparticipant-directed
investment fund. However, participants may liquidate these funds
and have them allocated to participant directed funds. The
Company is the sole contributor. The amount contributed annually
is determined by the Board of Directors of the Company.
Contributions are allocated to individual participant accounts
based on the ratio of their compensation for the year to total
compensation for all participants. No contributions were made to
this fund during 1998.
PARTICIPANT-DIRECTED INVESTMENT FUNDS
Participants elect both the amount of salary deferral contributions and
the allocation of the salary deferral contributions among the various
participant-directed investment funds available within the Plan. Salary
deferral contributions cannot exceed 10 percent of a participant's gross
compensation. Participants are 100 percent vested at all times in their
salary deferral contributions and related earnings. The Company remits
each participant's salary deferral contribution to the Plan on a biweekly
basis. Participants may not make voluntary contributions to the Plan
other than through salary deferral contributions.
6
<PAGE>
NOTE A - DESCRIPTION OF PLAN - CONTINUED
PARTICIPANT-DIRECTED INVESTMENT FUNDS - CONTINUED
The Company may make matching contributions at its discretion which are
allocated to participants on a pro rata basis. During 1998 and 1997, the
Company matched employee contributions at a rate of 100 percent of such
contributions up to a maximum of five percent of the employee's gross
compensation.
The Company may also make additional contributions to the Plan at its
discretion. The amount contributed annually is determined by the Board of
Directors of the Company. Contributions are allocated to individual
participant accounts based on the ratio of their compensation for the
year to total compensation for all participants. No such contributions
were made to the funds during 1998.
VESTING
Vesting in Company contributions occurs upon (1) completion of four years
of service with the Company, (2) attaining the Plan's normal retirement
age of 59-1/2, (3) death, or (4) disability.
PAYMENT OF BENEFITS
Benefits are normally paid upon retirement, death, disability, or other
termination and may be paid in lump sums, installments over a designated
period, or rolled over into an IRA or other retirement plan. Participants
may withdraw funds from the Plan while actively employed for hardships
subject to specific restrictions set forth in the Plan agreement.
TERMINATION OF THE PLAN
The Company may terminate the Plan at any time subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended. If
the Plan is suspended or terminated, all participants shall be fully
vested in their accounts, including employer contributions and related
earnings.
INVESTMENTS
Net unrealized appreciation or depreciation caused by fluctuations in the
market value of investments is reflected in the Statement of Changes in
Net Assets Available for Benefits with Fund Information. Amounts invested
earn interest and dividends which in turn are reinvested in the
participant's respective funds. Contributions to the
nonparticipant-directed investment fund are invested solely in the
Company's common stock. Contributions related to the participant-directed
investment funds are invested by the trustee as directed by the
participants.
7
<PAGE>
NOTE A - DESCRIPTION OF PLAN - CONTINUED
EXPENSES
The Company paid all administrative expense of the Plan including
legal and accounting fees during 1998.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared in conformity
with generally accepted accounting principles as applied to employee
benefit plans, and in accordance with the Plan agreement.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan administrator to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices which represent
the net asset value of shares held by the Plan at year-end. The Company
stock is valued at its quoted market price.
Purchases and sales of securities are recorded on a trade-date basis.
Income from interest and dividends is recorded on the accrual basis.
Earnings and losses within each fund are allocated to participants based
on their proportionate shares in the fund.
NOTE C - FEDERAL INCOME TAXES
The Plan is subject to the Employee Retirement Income Security Act of
1974 and certain provisions of the Internal Revenue Code (IRC). The Plan
is intended to qualify under Section 401(a) of the IRC and the Internal
Revenue Service has issued a favorable determination letter ruling dated
June 17, 1995, that the Plan was designed in accordance with applicable
IRC requirements as of the date of their letter. Management believes that
the Plan is currently designed and operated in accordance with applicable
IRC requirements. As a result, the Plan has not provided for federal
income taxes.
8
<PAGE>
SUPPLEMENTAL INFORMATION
<PAGE>
Nature's Sunshine Products, Inc. Tax Deferred Retirement Plan
Employer Identification Number: 87-0327982
Plan Number: 002
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1998
<TABLE>
<CAPTION>
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
(a) (b) (c) (d) (e)
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF INVESTMENT INCLUDING COST CURRENT
LESSOR, OR SIMILAR PARTY MATURITY DATE, RATE OF INTEREST, VALUE
COLLATERAL, PAR OR MATURITY VALUE
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
<S> <C> <C> <C> <C>
Merrill Lynch RP Trust Fund Money Market Fund $ 1,571,003 $ 1,571,003
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
Fidelity Investments Magellan Mutual Fund 2,992,996 4,303,094
Fund
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
* Nature's Sunshine Products, Inc. Corporate Stock 1,589,358 2,822,822
Common Stock (participant
directed)
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
Fidelity Advisor Growth Mutual Fund 2,333,161 3,250,590
Opportunities Fund
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
* Nature's Sunshine Products, Inc. Corporate Stock 1,469,856 6,050,390
Common Stock (nonparticipant
directed)
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
Merrill Lynch Global Allocation Mutual Fund 188,937 160,382
Fund
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
Mutual Beacon Fund Mutual Fund 592,747 574,691
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
Wasatch Growth Fund Mutual Fund 460,872 454,990
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
PBHG Fund Mutual Fund 414,426 425,470
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
Bond Fund of America Bond Fund 707,440 695,784
- -------- ---------------------------------- --------------------------------------- ------------ ----------------
</TABLE>
10
<PAGE>
Nature's Sunshine Products, Inc. Tax Deferred Retirement Plan
Employer Identification Number: 87-0327982
Plan Number: 002
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
Year ended December 31, 1998
<TABLE>
<CAPTION>
- -------------------- ------------------------- ------------- -----------
(a) (b) (c) (d)
IDENTITY OF PARTY DESCRIPTION OF ASSET PURCHASE SELLING
INVOLVED PRICE PRICE
- -------------------- ------------------------- ------------- -----------
<S> <C> <C> <C>
Nature's Sunshine Corporate Stock $ $2,582,929
Products, Inc.
Common Stock
- -------------------- ------------------------- ------------- -----------
- ---------- ------------ ----------- -------------- ----------
(e) (f) (g) (h) (i)
LEASE EXPENSE COST OF CURRENT NET GAIN
RENTAL INCURRED ASSET VALUE OF OR (LOSS)
WITH ASSET ON
TRANSACTION TRANSACTION
DATE
- ---------- ------------ ----------- -------------- ----------
<C> <C> <C> <C> <C>
$ - $ - $1,132,968 $2,582,929 $1,449,961
- ---------- ------------ ----------- -------------- ----------
</TABLE>
11
<PAGE>
CONSENT
We consent to the incorporation by reference in this annual report on Form 11-K
for the year ended December 31, 1998, of our report dated June 24, 1999,
appearing in the Registration Statement on Form S-8 (file No. 0-8707) of
Nature's Sunshine Products, Inc. Tax Deferred Retirement Plan filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1993 which
became effective May 22, 1995.
GRANT THORNTON LLP
Provo, Utah
July 13, 1999
