NATURES SUNSHINE PRODUCTS INC
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
NATR$10.87+5.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001628280-24-021178
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001628280-24-036235
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 92 previous paragraphs and 93 current paragraphs.
56 unchanged; 27 reworded; 8 added; 8 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 3 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Second Quarter Performance
Current report
Net sales related to Asia for the three and six months ended June 30, 2024 were $50.0 million and $96.2 million, respectively, compared to $54.9 million and $101.2 million for the same periods in 2023, or decreases of 8.9 percent and 5.0 percent, respectively. In local currency, net sales for the three and six months ended June 30, 2024 decreased 3.2 percent and increased 0.6 percent, respectively, compared to the same periods in 2023.
Current report
In our Japan market, net sales decreased $1.4 million and $2.2 million, or 12.3 percent and 10.5 percent, for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. In local currencies, net sales for the three and six months ended June 30, 2024 decreased 0.4 percent and increased 1.1 percent, respectively, compared to the same periods in 2023. The decrease in net sales was primarily the result of strong customer acquisition that was offset by lower average order values.
Current report
In the United States, net sales for the three and six months ended June 30, 2024 decreased $1.3 million and increased $0.6 million, or a decrease of 3.6 percent and an increase of 0.9 percent, respectively, compared to the same periods in 2023. The decrease was primarily due to temporary disruptions related to the launch of our enhanced digital platform.
Current report
Selling, general and administrative expenses decreased by $3.7 million and $6.6 million, respectively, to $38.6 million and $79.3 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. Selling, general and administrative expenses were 34.9 percent and 35.8 percent of net sales for the three and six months ended June 30, 2024, compared to 36.3 percent and 38.2 percent for the same periods in 2023. The decrease was primarily related to the streamlining of our global overhead expenses and reduced service fees due to China's lower net sales.
Current report
Other Income (Loss), Net
Current report
tax purposes as well as recording a valuation allowance against deferred tax assets which were expected to expire before utilization.
Current report
The difference between the effective tax rate for the three and six months ended June 30, 2024, compared to June 30, 2023, is primarily caused by a decrease in the utilization of foreign tax credits in the current period.
Removed paragraphs (8)
Previous report
First Quarter Performance
Previous report
Net sales related to Asia for the three months ended March 31, 2024 and 2023, were $46.2 million and $46.3 million respectively, or a decrease of 0.3 percent. In local currency, net sales for the three months ended March 31, 2024, increased 5.2 percent, compared to the same periods in 2023. Fluctuations in foreign exchange rates had unfavorable impacts on net sales of $2.5 million for the three months ended March 31, 2024.
Previous report
In our Japan market, net sales decreased $0.8 million, or 8.4 percent, for the three months ended March 31, 2024, compared to the same periods in 2023. In local currency, net sales for the three months ended March 31, 2024, increased 2.7 percent, compared to the same periods in 2023. We attribute the increase in net sales in local currency primarily to focus on our field activation initiatives.
Previous report
In the United States, net sales for the three months ended March 31, 2024, increased $1.7 million, or 5.3 percent, compared to the same period in 2023. The increase was primarily due to growth in our digital channel, momentum with our field activation initiatives, along with an increase in new customers.
Previous report
Selling, general and administrative expenses decreased by $2.9 million to $40.8 million for the three months ended March 31, 2024, compared to the same periods in 2023. Selling, general and administrative expenses were 36.7 percent and 40.2 percent of net sales for the three months ended March 31, 2024 and 2023, respectively. The decrease was driven primarily by a non-recurring loss in Japan in the prior year, partially offset by investments to drive digital growth.
Previous report
Other Income, Net
Previous report
adjustments to deferred tax assets and foreign tax credits.
Previous report
The difference between the effective tax rate for the three months ended March 31, 2024 compared to March 31, 2023 was primarily caused by an increase in tax liability related to operations in foreign countries which are treated as a branch for US tax purposes as well as favorable adjustments to deferred tax assets in the prior year which did not repeat in the current period.
Reworded paragraphs (27)
Previous wording
On February 24, 2022, Russian forces launched significant military action against Ukraine. There continues to be sustained conflict and disruption in the region, which is expected to endure for the foreseeable future. Our consultants in our Eastern Europe market, a market within our Europe business segment that includes Russia, Ukraine, Belarus and other Common Independent States in the region, continue to operate their independent businesses, albeit at a reduced level than prior to the start of the conflict. We expect that this will continue to impact our business for the foreseeable future. We will continue monitoring the social, political, regulatory and economic environment in Ukraine and Russia, and will consider further actions as appropriate.
Current wording
On February 24, 2022, Russian forces launched significant military action against Ukraine. There continues to be sustained conflict and disruption in the region, which is expected to endure for the foreseeable future. Our consultants in our Russia and Other market, a market within our Europe business segment that includes Russia, Ukraine, Belarus and other Common Independent States in the region, continue to operate their independent businesses, albeit at a reduced level than prior to the start of the conflict. We expect that this will continue to impact our business for the foreseeable future. We will continue monitoring the social, political, regulatory and economic environment in Ukraine and Russia, and will consider further actions as appropriate.
Previous wording
Net sales related to Eastern Europe for the three months ended March 31, 2024 and 2023 were $14.7 million and $14.5 million, respectively. Operating income related to Eastern Europe for the three months ended March 31, 2024 and 2023, were $1.6 million and $0.5 million, respectively. As of March 31, 2024, Eastern Europe had assets of $7.1 million net of working capital reserves related to inventories.
Current wording
Net sales related to Eastern Europe for the three and six months ended June 30, 2024 were $14.2 million and $28.9 million, respectively, compared to $14.6 million and $29.1 million for the same periods in 2023. Operating income related to Eastern Europe for the three and six months ended June 30, 2024 was $0.8 million and $2.3 million, respectively, compared to $0.3 million and $0.8 million for the same periods in 2023. As of June 30, 2024, Eastern Europe had assets of $6.7 million net of working capital reserves related to inventories.
Previous wording
In the first quarter of 2024, we experienced an increase in our consolidated net sales of 2.2 percent (or 3.8 percent in local currencies) compared to the same period in 2023. Asia net sales decreased approximately 0.3 percent (or increased 5.2 percent in local currencies) compared to the same period in 2023. Europe net sales increased approximately 4.2 percent (or 1.9 percent in local currencies) compared to the same period in 2023. North America net sales increased approximately 5.4 percent (or 5.4 percent in local currencies) compared to the same period in 2023. Latin America and Other net sales decreased approximately 4.6 percent (or 8.0 percent in local currencies) compared to the same period in 2023. The strengthening of the U.S. dollar versus the local currencies, primarily in our Asian markets, resulted in an approximate 1.6 percent, or $1.8 million, decrease of our net sales during the quarter.
Current wording
In the second quarter of 2024, we experienced a decrease in our consolidated net sales of 5.1 percent (or 2.6 percent in local currencies) compared to the same period in 2023. Asia net sales decreased approximately 8.9 percent (or 3.2 percent in local currencies) compared to the same period in 2023. Europe net sales increased approximately 1.7 percent (or 0.9 percent in local currencies) compared to the same period in 2023. North America net sales decreased approximately 3.2 percent (or 3.0 percent in local currencies) compared to the same period in 2023. Latin America and Other net sales decreased approximately 6.5 percent (or 7.6 percent in local currencies) compared to the same period in 2023. The strengthening of the U.S. dollar versus the local currencies, primarily in our Asian markets, resulted in an approximate 2.5 percent, or $3.0 million, decrease of our net sales during the quarter.
Previous wording
Cost of sales increased $0.3 million during the three months ended March 31, 2024, compared to the same period in 2023, and as a percentage of net sales were 28.8 percent and 29.2 percent for the three months ended March 31, 2024 and 2023, respectively. The decrease in cost of sales percentage is primarily due to improvements in market mix, sales price increases, and contribution margin improvement initiatives, partially offset by increases related to inflation and unfavorable foreign currency exchange. Part of the decrease also relates to prior-year inventory valuation reserves taken as a result of the conflict between Russia and Ukraine.
Current wording
Cost of sales decreased $0.3 million during the three months ended June 30, 2024, compared to the same period in 2023, and as a percentage of net sales were 28.6 percent and 27.4 percent for the three months ended June 30, 2024 and 2023, respectively. The increase in cost of sales percentage is primarily due to increases related to higher inflation and unfavorable foreign exchange which offset our savings initiatives.
Previous wording
In absolute terms, selling, general and administrative expenses decreased $2.9 million during the three months ended March 31, 2024, compared to the same period in 2023, and as a percentage of net sales were 36.7 percent and 40.2 percent for the three months ended March 31, 2024 and 2023, respectively. The decrease was driven primarily by a non-recurring loss in Japan in the prior year, partially offset by investments to drive digital growth.
Current wording
In absolute terms, selling, general and administrative expenses decreased $3.7 million during the three months ended June 30, 2024, compared to the same period in 2023, and as a percentage of net sales were 34.9 percent and 36.3 percent for the three months ended June 30, 2024 and 2023, respectively. The decrease was primarily related to the streamlining of our global overhead expenses and reduced service fees due to China's lower net sales.
Previous wording
Consolidated net sales for the three months ended March 31, 2024 and 2023, were $111.0 million and $108.6 million respectively, which represents an increases of 2.2 percent. The increase was primarily related to product sales improvements in our Asia, Europe, and North America operating segments. Excluding the impact of foreign currency exchange rate fluctuations, consolidated net sales for the three months ended March 31, 2024, increased 3.8 percent from the same period in 2023.
Current wording
Consolidated net sales for the three and six months ended June 30, 2024 were $110.6 million and $221.5 million, respectively, compared to $116.5 million and $225.2 million for the same period in 2023, which represents decreases of 5.1 percent and 1.6 percent, respectively. The decrease was primarily related to product sales declines in our Asia operating segment. Excluding the impact of foreign currency exchange rate fluctuations, consolidated net sales for the three and six months ended June 30, 2024 decreased 2.6 percent and increased 0.5 percent, respectively, from the same periods in 2023.
Previous wording
In our Taiwan market, net sales increased $1.6 million, or 11.4 percent, for the three months ended March 31, 2024, compared to the same periods in 2023. In local currency, net sales for the three months ended March 31, 2024, increased 15.1 percent, compared to the same periods in 2023. We attribute the growth in net sales primarily to effective execution of fundamentals within our sales force with a continued focus on leadership development and incentives intended to stimulate sales activity.
Current wording
In our Taiwan market, net sales increased $0.3 million and $1.8 million, or 1.7 percent and 6.2 percent, for the three and six months ended June 30, 2024, compared to the same periods in 2023. In local currencies, net sales for the three and six months ended June 30, 2024 increased 7.1 percent and 10.9 percent, compared to the same periods in 2023. We attribute the growth in net sales primarily to effective execution of fundamentals to accelerate customer acquisition.
Previous wording
In our South Korea market, net sales increased $0.4 million, or 3.4 percent for the three months ended March 31, 2024, compared to the same periods in 2023. In local currency, net sales for the three months ended March 31, 2024, increased 7.8 percent, compared to the same period in 2023. The increase in net sales was primarily the result of focus on our field activation initiatives.
Current wording
In our South Korea market, net sales for the three months ended June 30, 2024 decreased $0.4 million or 2.8 percent, compared to the same period in 2023. Net sales remained flat for the six months ended June 30, 2024, compared to the same period in 2023. In local currency, net sales for the three and six months ended June 30, 2024 increased 1.4 percent and 4.3 percent, respectively, compared to the same periods in 2023. Net sales continued to show a modest improvement.
Previous wording
In our China market, net sales decreased $1.2 million, or 12.6 percent, for the three months ended March 31, 2024, compared to the same periods in 2023. In local currency, net sales for the three months ended March 31, 2024, decreased 9.3 percent, compared to the same periods in 2023. The decrease in net sales was primarily the result of reduced activity that resulted from challenging macroeconomic factors.
Current wording
In our China market, net sales decreased $3.6 million and $4.8 million, or 28.6 percent and 21.8 percent, for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. In local currencies, net sales for the three and six months ended June 30, 2024 decreased 26.3 percent and 19.1 percent, respectively, compared to the same periods in 2023. The decrease in net sales was primarily the result of reduced activity resulting from challenging macroeconomic factors.
Previous wording
Net sales related to Europe for the three months ended March 31, 2024 and 2023, were $22.3 million and $21.4 million, respectively, or a increase of 4.2 percent. In local currency, net sales for the three months ended March 31, 2024, increased 1.9 percent, compared to the same period in 2023. The functional currency for many of these markets is the U.S. Dollar which reduces the effect from foreign currency fluctuations. For markets where the dollar is not the functional currency, foreign exchange rates had a favorable impact on net sales of $0.5 million for the three months ended March 31, 2024. Net sales increased as a result of continued execution of field activation initiatives and new product launches in Central Europe.
Current wording
Net sales related to Europe for the three and six months ended June 30, 2024 were $21.6 million and $43.9 million, respectively, compared to $21.2 million and $42.6 million for the same periods in 2023, or an increase of 1.7 percent and 2.9 percent, respectively. In local currency, net sales for the three and six months ended June 30, 2024 increased 0.9 percent and 1.4 percent, respectively, compared to the same periods in 2023. The functional currency for many of these markets is the U.S. Dollar which reduces the effect from foreign currency fluctuations. Fluctuations in foreign currency exchange rates had favorable impacts on net sales of $0.2 million and $0.7 million for the three and six months ended June 30, 2024, respectively. We attribute the increase in net sales in local currency primarily due to the increased focus on our field activation initiatives.
Previous wording
Net sales related to North America for the three months ended March 31, 2024 and 2023, were $36.5 million and $34.6 million, respectively, or an increase of 5.4 percent. In local currency, net sales for the three months ended March 31, 2024, increased 5.4 percent, compared to the same period in 2023.
Current wording
Net sales related to North America for the three and six months ended June 30, 2024 were $33.6 million and $70.1 million, respectively, compared to $34.7 million and $69.3 million for the same periods in 2023, or a decrease of 3.2 percent and an increase of 1.1 percent, respectively. In local currency, net sales for the three and six months ended June 30, 2024 decreased 3.0 percent and increased 1.2 percent, respectively, compared to the same periods in 2023.
Previous wording
Net sales related to Latin America and Other for the three months ended March 31, 2024 and 2023, were $6.0 million and $6.2 million respectively, or a decreases of 4.6 percent. In local currency, net sales for the three months ended March 31, 2024, decreased 8.0 percent, compared to the same periods in 2023. Fluctuations in foreign currency had favorable impacts on net sales of $0.2 million for the three months ended March 31, 2024.
Current wording
Net sales related to Latin America and Other markets for the three and six months ended June 30, 2024 were $5.4 million and $11.4 million, respectively, compared to $5.8 million and $12.0 million for the same periods in 2023, or decreases of 6.5 percent and 5.5 percent, respectively. In local currency, net sales for the three and six months ended June 30, 2024 decreased 7.6 percent and 7.8 percent, respectively, compared to the same periods in 2023. Fluctuations in foreign currency had favorable impacts on net sales of $0.1 million and $0.3 million for the three and six months ended June 30, 2024, respectively.
Previous wording
Cost of sales as a percent of net sales was 28.8 percent and 29.2 percent for the three months ended March 31, 2024 and 2023, respectively. The decrease in cost of sales percentage is primarily due to improvements in market mix and gross margin improvement initiatives, partially offset by increases related to inflation and unfavorable foreign currency exchange.
Current wording
Cost of sales as a percent of net sales was 28.6 percent and 28.7 percent for the three and six months ended June 30, 2024, compared to 27.4 percent and 28.3 percent for the same periods in 2023. The increase in cost of sales percentage is primarily due to increases related to higher inflation and unfavorable foreign exchange which offset our savings initiatives.
Previous wording
Volume incentives expense as a percent of net sales was 30.2 percent and 30.5 percent for the three months ended March 31, 2024 and 2023, respectively. These payments are designed to provide incentives for reaching certain sales levels. Volume incentives vary slightly, on a percentage basis, by product due to pricing policies and commission plans in place in our various operations. We do not pay volume incentives in China, instead we pay independent service fees which are included in selling, general and administrative expenses. Volume incentives as a percentage of net sales can fluctuate based on promotional activity and mix of sales by market.
Current wording
Volume incentives expense as a percent of net sales was 31.4 percent and 30.8 percent for the three and six months ended June 30, 2024, respectively, compared to 30.3 percent and 30.4 percent for the same periods in 2023. The increase was primarily due to the timing of promotional incentives and changes in market mix. These payments are designed to provide incentives for reaching certain sales levels. Volume incentives vary slightly, on a percentage basis, by product due to pricing policies and commission plans in place in our various operations. We do not pay volume incentives in China, instead we pay independent service fees which are included in selling, general and administrative expenses. Volume incentives as a percentage of net sales can fluctuate based on the timing of promotional incentives and changes in market mix.
Previous wording
Other income, net, for the three months ended March 31, 2024 and 2023, were gains of $31,000 and $1.5 million, respectively. Other income, net for the three months ended March 31, 2024 primarily consisted of foreign exchange gains as a result of net changes in foreign currencies.
Current wording
Other income (loss), net, for the three and six months ended June 30, 2024, were losses of $1.2 million and $1.2 million, respectively, compared to loss of $1.1 million and income of $0.4 million during the same periods in 2023, respectively. Other income (loss), net for the three and six months ended June 30, 2024 primarily consisted of foreign exchange losses as a result of net changes in foreign currencies primarily in Asia.
Previous wording
For the three months ended March 31, 2024 and 2023, our provision for income taxes, as a percentage of income before income taxes was 46.5 percent and 25.7 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent.
Current wording
For the three months ended June 30, 2024 and 2023, our provision for income taxes, as a percentage of income before income taxes was 66.4 percent and 55.0 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent. For the six months ended June 30, 2024 and 2023, our provision for income taxes, as a percentage of income before income taxes was 56.2 percent and 48.5 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent.
Previous wording
The difference between the effective tax rate and the U.S. federal statutory tax rate for the three months ended March 31, 2024, was primarily attributed to operations in foreign countries which are treated as a branch for US tax purposes and current year foreign losses that presently do not provide future tax benefit.
Current wording
The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and six months ended June 30, 2024, was primarily attributed to operations in foreign countries which are treated as a branch for US tax purposes and current year foreign losses that presently do not provide future tax benefit, partially offset by foreign tax credits.
Previous wording
The difference between the effective tax rate and the U.S. federal statutory tax rate for the three months ended March 31, 2023, was primarily attributed to tax liability related to foreign operations which are treated as a branch for US
Current wording
The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and six months ended June 30, 2023, was primarily attributed to tax liability related to foreign operations which are treated as a branch for US
Previous wording
As of March 31, 2024 and December 31, 2023, we have accrued $0.6 million and $0.3 million, respectively, related to unrecognized tax positions.
Current wording
As of June 30, 2024 and December 31, 2023, we have accrued $0.9 million and $0.3 million, respectively, related to unrecognized tax positions.
Previous wording
See Note 7, Segment Information, for a summary of the U.S. dollar amounts from the sale of general health, immune, cardiovascular, digestive, personal care and weight management products for the three months ended March 31, 2024 and 2023, by business segment.
Current wording
See Note 7, Segment Information, for a summary of the U.S. dollar amounts from the sale of general health, immune, cardiovascular, digestive, personal care and weight management products for the three and six months ended June 30, 2024 and 2023, by business segment.
Previous wording
Our principal use of cash is to pay for operating expenses, including volume incentives, inventory and raw material purchases, capital assets and funding of international expansion. As of March 31, 2024, working capital was $91.3 million, compared to $89.1 million as of December 31, 2023. At March 31, 2024, we had $77.8 million in cash, of which $4.8 million was held in the U.S. and $73.0 million was held in foreign markets and may be subject to various withholding taxes and other restrictions related to repatriation before becoming available to be used along with the normal cash flows from operations to fund any unanticipated shortfalls in future cash flows.
Current wording
Our principal use of cash is to pay for operating expenses, including volume incentives, inventory and raw material purchases, capital assets and funding of international expansion. As of June 30, 2024, working capital was $88.4 million, compared to $89.1 million as of December 31, 2023. At June 30, 2024, we had $68.7 million in cash, of which $6.4 million was held in the U.S. and $62.3 million was held in foreign markets and may be subject to various withholding taxes and other restrictions related to repatriation before becoming available to be used along with the normal cash flows from operations to fund any unanticipated shortfalls in future cash flows.
Previous wording
For the three months ended March 31, 2024, operating activities provided cash of $2.2 million, compared to $9.3 million in the same period in 2023. Operating cash flows decreased primarily due to the timing of payments for accrued liabilities, accounts payable and timing of receipts of accounts receivable, slightly offset by improved net income and reduced inventory purchases.
Current wording
For the six months ended June 30, 2024, operating activities provided cash of $3.5 million, compared to $17.3 million in the same period in 2023. Operating cash flows decreased primarily due to the timing of payments for accrued liabilities, lease liabilities, income taxes payable, and timing of receipts of accounts receivable.
Previous wording
For the three months ended March 31, 2024, investing activities used $3.7 million, compared to $2.3 million for the same period in 2023, which consisted of capital expenditures related to the purchase of equipment, computer systems and software.
Current wording
For the six months ended June 30, 2024, investing activities used $7.0 million, compared to $4.7 million for the same period in 2023, which consisted of capital expenditures related to the purchase of equipment, computer systems and software.
Previous wording
For the three months ended March 31, 2024, financing activities provided cash of $0.1 million, compared to using cash of $1.2 million for the same period in 2023.
Current wording
For the six months ended June 30, 2024, financing activities used $8.3 million, compared to $1.8 million in cash for the same period in 2023.
Previous wording
During the three months ended March 31, 2024, we used cash to repurchase 105,000 shares of our common stock under the share repurchase program for $1.8 million. At March 31, 2024, the remaining balance available for repurchases under the program was $15.8 million.
Current wording
During the six months ended June 30, 2024, we used cash to repurchase 453,000 shares of our common stock under the share repurchase program for $7.7 million. At June 30, 2024, the remaining balance available for repurchases under the program was $9.9 million.
Previous wording
We maintain a revolving credit agreement with Bank of America, N.A (the “Credit Agreement”), as well as a credit agreement with Banc of America Leasing and Capital, LLC (the "Capital Credit Agreement"). At March 31, 2024, there was $2.1 million outstanding balance under the Credit Agreement. Our debt obligations are discussed in greater detail in Note 4, “Revolving Credit Facility and Other Obligations,” to our Condensed Consolidated Financial Statements in Item 1, Part 1 of this report.
Current wording
We maintain a revolving credit agreement with Bank of America, N.A (the “Credit Agreement”), as well as a credit agreement with Banc of America Leasing and Capital, LLC (the "Capital Credit Agreement"). At June 30, 2024, there was no outstanding balances under the Credit Agreement or the Capital Credit Agreement. Our debt obligations are discussed in greater detail in Note 4, “Revolving Credit Facility and Other Obligations,” to our Condensed Consolidated Financial Statements in Item 1, Part 1 of this report.
Previous wording
Inventories are adjusted to lower of cost and net realizable value, using the first-in, first-out method. The components of inventory cost include raw materials, labor and overhead. To estimate any necessary adjustments, various assumptions are made in regard to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning and market conditions. If future demand and market conditions are less favorable than our assumptions, additional inventory adjustments could be required.
Current wording
Inventories are adjusted to the lower of cost and net realizable value, using the first-in, first-out method. The components of inventory cost include raw materials, labor and overhead. To estimate any necessary adjustments, various assumptions are made regarding excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning and market conditions. If future demand and market conditions are less favorable than our assumptions, additional inventory adjustments could be required.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The following table summarizes our unaudited consolidated operating results from continuing operations in U.S. dollars and as a percentage of net sales for the six months ended June 30, 2024 and 2023 (dollar amounts in thousands):
Current report — wording carried from elsewhere
The following table summarizes the changes in net sales by operating segment with a reconciliation to net sales excluding the impact of currency fluctuations for the six months ended June 30, 2024 and 2023 (dollar amounts in thousands):
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
tax purposes and prior year foreign losses that were not expected to provide future tax benefit, partially offset by favorable