55 NU SKIN ENTERPRISES services fees were billed to the affiliated entities pursuant to the Management Services Agreement between the Company and the affiliated entities and consisted of all direct expenses incurred by the Company and indirect expenses allocated to the affiliated entities based on the entities’ net sales. The sales revenue, royalties, licenses and manage- ment fees charged to the affiliated entities prior to the acquisition were recorded as revenue in the consolidated statements of income and totaled $72,691,000 and $13,610,000 for the years ended December 31, 1998 and 1999, respectively. NOTES PAYABLE TO STOCKHOLDERS: In connection with the NSI Acquisition described in Notes 1 and 3, the Company assumed S Distribution Notes totaling $171.3 million and long-term notes payable to the NSI Stockholders totaling $6.2 million, both bearing interest at 6.0% per annum. These amounts were paid in full, including accrued interest of $3.3 million, during 1998. Prior to the NSI Acquisition, the Acquired Entities paid $2.5 million of the S Distribution Notes, plus accrued interest of $1.8 million in 1998. CERTAIN RELATIONSHIPS WITH STOCKHOLDER DISTRIB- UTORS: Two major stockholders of the Company have been independent distributors for the Company since 1984. These stockholders are partners in an entity which receives substantial commissions from the Company, including commissions relating to sales within the countries in which the Company operates. By agreement, the Company pays commissions to this partnership at the highest level of distributor compensation to allow the stockholders to use their expertise and reputations in network marketing to further develop the Company’s distributor force, rather than focusing solely on their own distributor organizations. The commissions paid to this partnership relating to sales within the countries in which the Company operates were $800,000, $3,331,000 and $3,368,000 for the years ended December 31, 1998, 1999 and 2000, respectively. The increase in the 1999 and 2000 commissions paid to this partnership reflects the amounts paid relating to sales in 1999 and 2000 within the North American countries and Big Planet, which were not included in the amounts in 1998. LOAN TO STOCKHOLDER: The Company has loaned $5.0 million to a non-management stockholder. The loan is partly secured by shares of Class B common stock, and matures in December 2001. Interest accrues at a rate of 6.0% per annum on this loan. The loan balance, including accrued interest, totaled $5.6 million and $6.0 million at December 31, 1999 and 2000, respectively. Amortization of goodwill and intangible assets totaled $3,248,000, $14,929,000 and $14,934,000 for the years ended December 31, 1998, 1999 and 2000, respectively. Amortization of the distribution rights asset totaled $438,000 for each of the years ended December 31, 1998, 1999 and 2000. Depreciation of property and equipment totaled $11,543,000, $14,148,000 and $16,978,000 for the years ended December 31, 1998, 1999 and 2000, respectively. LEASE AGREEMENTS: The Company leases corporate office and ware- house space from two affiliated entities. Total lease payments to these two affiliated entities were $3.0 million, $2.8 million and $2.7 million for the years ended December 31, 1998, 1999 and 2000, respectively. NOTE 8. PROPERTY AND EQUIPMENT NOTE 9. OTHER ASSETS Property and equipment are comprised of the following December 31,  December 31, (U.S. dollars in thousands): As of 1999 2000 Furniture and fixtures $ 33,598 $ 35,995 Computers and equipment 64,588 71,377 Leasehold improvements 25,057 23,797 Vehicles 1,414 1,187 124,657 132,356 Less: accumulated depreciation (66,709) (71,794) $ 57,948 $ 60,562 Other assets consist of the following  December 31,  December 31, (U.S. dollars in thousands): As of 1999 2000 Goodwill and intangibles $ 198,450 $ 203,730 Deposits for noncancelable operating leases 10,179 11,837 Distribution rights 8,687 8,750 Deferred taxes 86,341 88,551 Other 15,749 26,063 319,406 338,931 Less: accumulated amortization (17,024) (30,581) $ 302,382 $ 308,350 Accrued expenses consist of the following December 31,  December 31, (U.S. dollars in thousands): As of 1999 2000 Income taxes payable $ 18,121 $ 10,756 Accrued commission payments to distributors 39,857 26,425 Other taxes payable 9,385 13,016 Other accruals 47,328 24,002 $ 114,691 $  74,199 Year ending December 31, (U.S. dollars in thousands) 2001–2003 $ — 2004 12,126 2005 12,126 Thereafter 60,632 Total $ 84,884 Year ending December 31, (U.S. dollars in thousands) 2001 $ 9,300 2002 7,062 2003 4,726 2004 2,754 2005 2,094 Total minimum lease payments $ 25,936 The Company’s authorized capital stock consists of 25 million shares of preferred stock, par value $.001 per share, 500 million shares of Class A common stock, par value $.001 per share and 100 million shares of Class B common stock, par value $.001 per share. The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Rental expense for operating leases totaled $15,969,000, $18,354,000 and $20,683,000 for the years ended December 31, 1998, 1999 and 2000, respectively. During 2000, the Company renewed a $10.0 million revolving credit agreement with ABN-AMRO, N.V. Advances are available under the agreement through May 18, 2001, with a possible extension upon approval of the lender. There were no outstanding bal- ances under this credit facility at December 31, 2000. The Notes contain other terms and conditions and affirmative and negative financial covenants customary for credit facilities of this type. As of December 31, 2000, the Com- pany is in compliance with all financial covenants under the Notes.  On October 12, 2000, the Company refinanced the $87.1 million remaining balance of its existing credit facility with the proceeds of a private placement of $90.0 million of ten-year senior notes (the “Notes”) to The Prudential Insurance Company of America. The Notes are denominated in Japanese yen. The Notes bear interest at an effective rate of 3.03% annually and become due October 2010 with principal payments begin- ning October 2004. The debt is classified as long-term in the consolidated financial statements as of December 31, 2000. Interest expense relating to the long-term debt totaled $4.7 million, $5.7 million and $4.8 million for the years ended December 31, 1998, 1999 and 2000, respectively. In 1998, the Company and its Japanese subsidiary Nu Skin Japan Co., Ltd. (“Nu Skin Japan”) entered into a $180.0 million credit facility with a syndicate of financial institu- tions. This unsecured credit facility was used to satisfy Company liabilities which were assumed as part of the NSI Acquisition. The Company borrowed $110.0 million and Nu Skin Japan borrowed the Japanese yen equivalent of $70.0 million denominated in local currency. Payments totaling $41.6 million, $14.5 million and $55.7 million were made during 1998, 1999 and 2000, respectively, relating to the $180.0 million credit facility. The Company leases office space and computer hardware under noncancelable long-term operating leases. Most leases include renewal options of up to three years. Minimum future operating lease obligations at December 31, 2000 are as follows: NOTE 12. LEASE OBLIGATIONS NOTE 11. LONG-TERM DEBT NOTE 13. CAPITAL STOCK NOTE 10. ACCRUED EXPENSES Maturities of long-term debt at December 31, 2000 are as follows: NU SKIN ENTERPRISES  56