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SEGMENT INFORMATION
 6 Months Ended
Jun. 30, 2014
SEGMENT INFORMATION  
SEGMENT INFORMATION

16.                            SEGMENT INFORMATION

 

The Company has two operating and reportable segments, namely Direct Store Delivery (“DSD”), whose principal products comprise energy drinks, and Warehouse (“Warehouse”), whose principal products comprise juice-based and soda beverages.  The DSD segment develops, markets and sells products primarily through an exclusive distributor network, whereas the Warehouse segment develops, markets and sells products primarily direct to retailers. Corporate and unallocated amounts that do not relate to DSD or Warehouse segments have been allocated to “Corporate & Unallocated.”

 

The net revenues derived from the DSD and Warehouse segments and other financial information related thereto are as follows:

 

 

 

Three-Months Ended June 30, 2014

 

 

 

DSD

 

Warehouse

 

Corporate and
Unallocated

 

Total

 

Net sales

 

  $

660,105

 

  $

27,095

 

  $

-

 

  $

687,200

 

Contribution margin*

 

256,147

 

1,320

 

-

 

257,467

 

Corporate and unallocated expenses

 

-

 

-

 

(41,654)

 

(41,654)

 

Operating income

 

 

 

 

 

 

 

215,813

 

Other income (expense)

 

272

 

-

 

(94)

 

178

 

Income before provision for income taxes

 

 

 

 

 

 

 

215,991

 

Depreciation and amortization

 

(5,018)

 

(82)

 

(1,444)

 

(6,544)

 

 

 

 

Three-Months Ended June 30, 2013

 

 

 

DSD

 

Warehouse

 

Corporate and
Unallocated

 

Total

 

Net sales

 

  $

600,992

 

  $

29,942

 

  $

-

 

  $

630,934

 

Contribution margin*

 

215,018

 

1,130

 

-

 

216,148

 

Corporate and unallocated expenses

 

-

 

-

 

(36,721)

 

(36,721)

 

Operating income

 

 

 

 

 

 

 

179,427

 

Other income (expense)

 

99

 

-

 

(3,501)

 

(3,402)

 

Income before provision for income taxes

 

 

 

 

 

 

 

176,025

 

Depreciation and amortization

 

(4,598)

 

(64)

 

(615)

 

(5,277)

 

 

*Contribution margin is defined as gross profit less certain operating expenses deemed by management to be directly attributable to the respective reportable segment. Contribution margin is used by management as a key indicator of reportable segment profitability.

 

Revenue is derived from sales to external customers.  Operating expenses that pertain to each segment are allocated to the appropriate segment.

 

Corporate and unallocated expenses were $41.7 million for the three-months ended June 30, 2014 and included $21.6 million of payroll costs, of which $8.1 million was attributable to stock-based compensation expense (see Note 13, “Stock-Based Compensation”), $15.3 million of professional service expenses, including accounting and legal costs and $4.8 million of other operating expenses.  Corporate and unallocated expenses were $36.7 million for the three-months ended June 30, 2013 and included $21.4 million of payroll costs, of which $7.4 million was attributable to stock-based compensation expense (see Note 13, “Stock-Based Compensation”), $9.3 million of professional service expenses, including accounting and legal costs and $6.0 million of other operating expenses.

 

Coca-Cola Refreshments USA Inc. (“CCR”), a customer of the DSD segment, accounted for approximately 28% and 29% of the Company’s net sales for the three-months ended June 30, 2014 and 2013, respectively.

 

Net sales to customers outside the United States amounted to $148.4 million and $127.6 million for the three-months ended June 30, 2014 and 2013, respectively.

 

The net revenues derived from the DSD and Warehouse segments and other financial information related thereto are as follows:

 

 

 

Six-Months Ended June 30, 2014

 

 

 

DSD

 

Warehouse

 

Corporate and
Unallocated

 

Total

 

Net sales

 

  $

1,174,460

 

  $

48,869

 

  $

-

 

  $

1,223,329

 

Contribution margin*

 

442,615

 

1,616

 

-

 

444,231

 

Corporate and unallocated expenses

 

-

 

-

 

(79,554)

 

(79,554)

 

Operating income

 

 

 

 

 

 

 

364,677

 

Other income (expense)

 

298

 

-

 

34

 

332

 

Income before provision for income taxes

 

 

 

 

 

 

 

365,009

 

Depreciation and amortization

 

(9,962)

 

(163)

 

(2,870)

 

(12,995)

 

 

 

 

Six-Months Ended June 30, 2013

 

 

 

DSD

 

Warehouse

 

Corporate and
Unallocated

 

Total

 

Net sales

 

  $

1,061,168

 

  $

53,990

 

  $

-

 

  $

1,115,158

 

Contribution margin*

 

353,991

 

1,511

 

-

 

355,502

 

Corporate and unallocated expenses

 

-

 

-

 

(68,770)

 

(68,770)

 

Operating income

 

 

 

 

 

 

 

286,732

 

Other income (expense)

 

288

 

-

 

(5,591)

 

(5,303)

 

Income before provision for income taxes

 

 

 

 

 

 

 

281,429

 

Depreciation and amortization

 

(9,019)

 

(123)

 

(1,195)

 

(10,337)

 

 

*Contribution margin is defined as gross profit less certain operating expenses deemed by management to be directly attributable to the respective reportable segment. Contribution margin is used by management as a key indicator of reportable segment profitability.

 

Revenue is derived from sales to external customers.  Operating expenses that pertain to each segment are allocated to the appropriate segment.

 

Corporate and unallocated expenses were $79.6 million for the six-months ended June 30, 2014 and included $42.6 million of payroll costs, of which $15.1 million was attributable to stock-based compensation expense (see Note 13, “Stock-Based Compensation”), $25.4 million of professional service expenses, including accounting and legal costs and $11.6 million of other operating expenses.  Corporate and unallocated expenses were $68.8 million for the six-months ended June 30, 2013 and included $40.8 million of payroll costs, of which $14.4 million was attributable to stock-based compensation expense (see Note 13, “Stock-Based Compensation”), $16.9 million of professional service expenses, including accounting and legal costs and $11.1 million of other operating expenses.

 

Coca-Cola Refreshments USA Inc. (“CCR”), a customer of the DSD segment, accounted for approximately 29% and 30% of the Company’s net sales for the six-months ended June 30, 2014 and 2013, respectively.

 

Net sales to customers outside the United States amounted to $264.1 million and $233.9 million for the six-months ended June 30, 2014 and 2013, respectively.

 

The Company’s net sales by product line were as follows:

 

 

 

Three-Months Ended

 

Six-Months Ended

 

 

 

June 30,

 

June 30,

 

Product Line

 

2014

 

2013

 

2014

 

2013

 

Energy drinks

 

  $

640,231

 

  $

582,899

 

  $

1,139,244

 

  $

1,028,925

 

Non-carbonated (primarily juice based beverages and Peace Tea® iced teas)

 

34,625

 

36,166

 

61,071

 

64,138

 

Carbonated (primarily soda beverages)

 

8,526

 

8,264

 

15,542

 

14,665

 

Other

 

3,817

 

3,605

 

7,472

 

7,430

 

 

 

  $

687,199

 

  $

630,934

 

  $

1,223,329

 

  $

1,115,158