18.	Segment Information

As a result of the Company’s management changes in the first quarter of 2017, the Company concluded that the Chief Operating Decision Maker, as defined in ASC 280, is now comprised of the CEO, President and CFO. This change required the Company to reevaluate its determination of operating segments. The Company’s operating segments are based on geographic regions that generate revenue and hold its long-lived assets. The Company sells and distributes its products through a global network of customers and sales leaders in approximately 50 markets. The Company has divided these markets into seven operating segments, which are the Company’s reportable segments: Mainland China, Hong Kong/Taiwan, South Korea, Japan, Southeast Asia, Americas/Pacific and EMEA. The seven reportable segments generate revenue from the sale of personal care products and nutritional supplements under the Nu Skin and Pharmanex brands, have similar business characteristics and align with how the CODM function began assessing performance and allocating resources in the first quarter of 2017. The Other category includes the manufacturing and product-packaging companies that the Company acquired during the first quarter of 2018.

Segment information for the years ended December 31, 2017 and 2016 has been recast to reflect the move of the Pacific components from the "Southeast Asia/Pacific" operating segment to the "Americas/Pacific" operating segment. Consolidated financial information is not affected.

Profitability by segment as reported under US GAAP is driven primarily by the Company’s international taxation 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, marketing and supply chain functions not recorded at the segment level.

The accounting policies of the segments are the same as those described in Note 1, “The Company.” 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

	Year ended December 31,
(U.S. dollars in thousands)	2018		2017		2016

Mainland China	$	886,472	$	716,991	$	610,414
Americas/Pacific		385,034		342,429		298,774
South Korea		373,357		361,692		413,696
Southeast Asia		316,890		268,631		271,897
Japan		254,939		256,085		279,042
Hong Kong/Taiwan		185,893		166,696		183,979
EMEA		182,394		160,275		147,318
Other		94,029		6,300		2,677
Total	$	2,679,008	$	2,279,099	$	2,207,797

Segment Contribution

	Year ended December 31,
(U.S. dollars in thousands)	2018			2017			2016

Mainland China	$	253,598		$	211,625		$	135,174
Americas/Pacific		52,433			51,885			47,803
South Korea		107,215			100,964			117,142
Southeast Asia		78,598			63,296			67,952
Japan		56,676			51,372			59,175
Hong Kong/Taiwan		33,392			27,958			35,978
EMEA		14,773			11,749			10,386
Total segment contribution		596,685			518,849			473,610
Corporate and other		(355,825	)		(244,366	)		(242,506	)
Operating income		240,860			274,483			231,104
Other income (expense)		(21,194	)		(8,916	)		(18,265	)
Income before provision for income taxes	$	219,666		$	265,567		$	212,839

Depreciation and Amortization

	Year ended December 31,
(U.S. dollars in thousands)	2018		2017		2016

Mainland China	$	13,036	$	15,122	$	16,775
Americas/Pacific		988		1,746		2,837
South Korea		6,266		6,499		6,787
Southeast Asia		2,123		2,234		2,168
Japan		3,604		3,554		3,782
Hong Kong/Taiwan		1,316		1,395		2,507
EMEA		847		985		1,387
Corporate and other		54,823		40,029		36,154
Total	$	83,003	$	71,564	$	72,397

Capital Expenditures

	Year ended December 31,
(U.S. dollars in thousands)	2018		2017		2016

Mainland China	$	11,658	$	4,539	$	13,656
Americas/Pacific		974		800		1,171
South Korea		285		469		556
Southeast Asia		1,120		1,753		2,206
Japan		788		994		1,288
Hong Kong/Taiwan		4,113		1,350		634
EMEA		734		1,168		1,224
Corporate and other		50,699		49,083		29,486
Total	$	70,371	$	60,156	$	50,221

Revenue by Major Market

A major market is defined as one with total revenue greater than 10% of consolidated total revenue. Based on this criteria, the Company has identified three major markets: Mainland China, South Korea and Japan. There are approximately 50 other markets, each of which individually is less than 10%. The table below also includes the Company’s country of domicile (the U.S.). No single customer accounted for 10% or more of net sales for the periods presented. Sales are recorded in the jurisdiction in which the transactions occurred:

	Year ended December 31,
(U.S. dollars in thousands)	2018		2017		2016

Mainland China	$	886,472	$	716,991	$	610,414
South Korea		373,357		361,692		413,696
Japan		254,939		256,085		279,042
United States		311,436		218,734		201,239
All others		852,804		725,597		703,406
Total	$	2,679,008	$	2,279,099	$	2,207,797

Revenue by Product Line

	Year ended December 31,
(U.S. dollars in thousands)	2018		2017		2016

Nu Skin	$	1,659,737	$	1,456,386	$	1,308,135
Pharmanex		921,328		817,230		892,738
Other		97,943		5,483		6,924
Total	$	2,679,008	$	2,279,099	$	2,207,797

Long-Lived Assets by Major Market

A major market is defined as a market with long-lived assets greater than 10% of consolidated long-lived assets and also includes the Company’s country of domicile (the U.S.). Long-lived assets in Mainland China consist primarily of property, plant and equipment related to manufacturing, distribution facilities and the Mainland China headquarters. Long-lived assets in the U.S. consist primarily of property, plant and equipment, including the Company’s corporate offices and distribution facilities. Long-lived assets by major market are set forth below for the periods ended December 31, 2018, 2017 and 2016:

	Year ended December 31,
(U.S. dollars in thousands)	2018		2017		2016

United States	$	317,516	$	302,884	$	283,868
Mainland China		89,447		97,046		97,867
South Korea		36,325		42,211		41,545
Japan		6,864		9,342		11,517
All others		14,383		13,104		9,935
Total	$	464,535	$	464,587	$	444,732