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SEGMENT INFORMATION | 9 Months Ended
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Sep. 30, 2014
SEGMENT INFORMATION |
SEGMENT INFORMATION | 17. 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 September 30, 2014
|  | DSD |  | Warehouse |  | Corporate and Unallocated |  | Total
Net sales |  | $ | 609,938 |  | $ | 26,034 |  | $ | - |  | $ | 635,972
Contribution margin* |  | 232,666 |  | 604 |  | - |  | 233,270
Corporate and unallocated expenses |  | - |  | - |  | (43,363) |  | (43,363)
Operating income |  |  |  |  |  |  |  | 189,907
Other income (expense) |  | 231 |  | - |  | (1,269) |  | (1,038)
Income before provision for income taxes |  |  |  |  |  |  |  | 188,869
Depreciation and amortization |  | (4,626) |  | (85) |  | (1,419) |  | (6,130)
|  | Three-Months Ended September 30, 2013
|  | DSD |  | Warehouse |  | Corporate and Unallocated |  | Total
Net sales |  | $ | 566,768 |  | $ | 23,654 |  | $ | - |  | $ | 590,422
Contribution margin* |  | 194,915 |  | (2,193) |  | - |  | 192,722
Corporate and unallocated expenses |  | - |  | - |  | (41,293) |  | (41,293)
Operating income |  |  |  |  |  |  |  | 151,429
Other income (expense) |  | 180 |  | - |  | (886) |  | (706)
Income before provision for income taxes |  |  |  |  |  |  |  | 150,723
Depreciation and amortization |  | (5,069) |  | (78) |  | (961) |  | (6,108)
*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 $43.4 million for the three-months ended September 30, 2014 and included $21.9 million of payroll costs, of which $7.4 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $12.7 million of professional service expenses, including accounting and legal costs and $8.8 million of other operating expenses. Corporate and unallocated expenses were $41.3 million for the three-months ended September 30, 2013 and included $19.8 million of payroll costs, of which $7.2 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $10.9 million attributable to professional service expenses, including accounting and legal costs, and $10.6 million attributable to 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 September 30, 2014 and 2013, respectively. Net sales to customers outside the United States amounted to $136.3 million and $121.1 million for the three-months ended September 30, 2014 and 2013, respectively. The net revenues derived from the DSD and Warehouse segments and other financial information related thereto are as follows:
|  | Nine-Months Ended September 30, 2014
|  | DSD |  | Warehouse |  | Corporate and Unallocated |  | Total
Net sales |  | $ | 1,784,398 |  | $ | 74,903 |  | $ | - |  | $ | 1,859,301
Contribution margin* |  | 675,281 |  | 2,221 |  | - |  | 677,502
Corporate and unallocated expenses |  | - |  | - |  | (122,918) |  | (122,918)
Operating income |  |  |  |  |  |  |  | 554,584
Other income (expense) |  | 529 |  | (1) |  | (1,235) |  | (707)
Income before provision for income taxes |  |  |  |  |  |  |  | 553,877
Depreciation and amortization |  | (14,588) |  | (248) |  | (4,288) |  | (19,124)
|  | Nine-Months Ended September 30, 2013
|  | DSD |  | Warehouse |  | Corporate and Unallocated |  | Total
Net sales |  | $ | 1,627,936 |  | $ | 77,643 |  | $ | - |  | $ | 1,705,579
Contribution margin* |  | 548,906 |  | (682) |  | - |  | 548,224
Corporate and unallocated expenses |  | - |  | - |  | (110,064) |  | (110,064)
Operating income |  |  |  |  |  |  |  | 438,160
Other income (expense) |  | 468 |  | (1) |  | (6,476) |  | (6,009)
Income before provision for income taxes |  |  |  |  |  |  |  | 432,151
Depreciation and amortization |  | (14,091) |  | (201) |  | (2,152) |  | (16,444)
*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 $122.9 million for the nine-months ended September 30, 2014 and included $64.6 million of payroll costs, of which $22.5 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $33.9 million of professional service expenses, including accounting and legal costs and $24.4 million of other operating expenses. Corporate and unallocated expenses were $110.1 million for the nine-months ended September 30, 2013 and included $60.6 million of payroll costs, of which $21.6 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $27.9 million attributable to professional service expenses, including accounting and legal costs, and $21.6 million attributable to other operating expenses. Coca-Cola Refreshments USA Inc. (“CCR”), a customer of the DSD segment, accounted for approximately 29% of the Company’s net sales for both the nine-months ended September 30, 2014 and 2013. Net sales to customers outside the United States amounted to $400.4 million and $354.9 million for the nine-months ended September 30, 2014 and 2013, respectively. The Company’s net sales by product line were as follows:
|  | Three-Months Ended |  | Nine-Months Ended
|  | September 30, |  | September 30,
Product Line |  | 2014 |  | 2013 |  | 2014 |  | 2013
Energy drinks |  | $ | 591,358 |  | $ | 548,109 |  | $ | 1,730,602 |  | $ | 1,577,034
Non-carbonated (primarily juice based beverages and Peace Tea® iced teas) |  | 33,626 |  | 30,622 |  | 94,698 |  | 94,760
Carbonated (primarily soda beverages) |  | 7,216 |  | 8,067 |  | 22,756 |  | 22,732
Other |  | 3,772 |  | 3,624 |  | 11,245 |  | 11,053
|  | $ | 635,972 |  | $ | 590,422 |  | $ | 1,859,301 |  | $ | 1,705,579

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 + Details
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