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SEGMENT INFORMATION
 12 Months Ended
Dec. 31, 2014
SEGMENT INFORMATION  
SEGMENT INFORMATION

 

17.      SEGMENT INFORMATION

 

The Company has two operating and reportable segments, namely Direct Store Delivery (“DSD”), the principal products of which comprise energy drinks, and Warehouse (“Warehouse”), the principal products of which 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 specifically have been allocated to “Corporate & Unallocated.” No asset information has been provided for the Company’s reportable segments as management does not measure or allocate assets on a segment basis. Following the consummation of the TCCC Transaction, the Company anticipates that it will have two operating and reporting segments: Concentrate, the principal products of which will likely include the various energy drink brands transferred to the Company from TCCC, and Finished Products, the principal products of which will likely include the Company’s Monster Energy® drink products that currently make up the majority of the DSD segment.

 

The net revenues derived from DSD and Warehouse segments and other financial information related thereto for the years ended December 31, 2014, 2013 and 2012 are as follows:

 

 

 

Year Ended December 31, 2014

 

 

DSD

 

Warehouse

 

Corporate
and
Unallocated

 

Total

Net sales

 

 $
2,369,208

 

 $
95,659

 

 $

-

 

 $
2,464,867

 

Contribution margin*

 
908,781

 
3,003

 

-

 
911,784

 

Corporate & unallocated expenses

 

-

 

-

 
(164,279)

 
(164,279

)

Operating income

 

 

 

 

 

 

 
747,505

 

Interest and other income, net

 
664

 
(3)

 
(2,378)

 
(1,717

)

Income before provision for income taxes

 

 

 

 

 

 

 
745,788

 

Depreciation & amortization

 
(19,778)

 
(293)

 
(5,540)

 
(25,611

)

Trademark amortization

 

-

 
(33)

 
(8)

 
(41

)

 

 

 

Year Ended December 31, 2013

 

 

DSD

 

Warehouse

 

Corporate
and
Unallocated

 

Total

Net sales

 

 $
2,147,355

 

 $
99,073

 

 $

-

 

 $
2,246,428

 

Contribution margin*

 
726,826

 
(1,652)

 

-

 
725,174

 

Corporate & unallocated expenses

 

-

 

-

 
(152,258)

 
(152,258

)

Operating income

 

 

 

 

 

 

 
572,916

 

Interest and other income, net

 
755

 
(2)

 
(9,775)

 
(9,022

)

Income before provision for income taxes

 

 

 

 

 

 

 
563,894

 

Depreciation & amortization

 
(19,023)

 
(244)

 
(3,446)

 
(22,713

)

Trademark amortization

 

-

 
(44)

 
(5)

 
(49

)

 

 

 

Year Ended December 31, 2012

 

 

DSD

 

Warehouse

 

Corporate
and
Unallocated

 

Total

Net sales

 

 $
1,966,481

 

 $
94,221

 

 $

-

 

 $
2,060,702

 

Contribution margin*

 
660,607

 
3,496

 

-

 
664,103

 

Corporate & unallocated expenses

 

-

 

-

 
(113,480)

 
(113,480

)

Operating income

 

 

 

 

 

 

 
550,623

 

Interest and other income, net

 
494

 
(2)

 
(1,961)

 
(1,469

)

Income before provision for income taxes

 

 

 

 

 

 

 
549,154

 

Depreciation & amortization

 
(15,660)

 
(139)

 
(4,714)

 
(20,513

)

Trademark amortization

 

-

 
(44)

 
(5)

 
(49

)

 

*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 $164.3 million for the year ended December 31, 2014 and included $86.2 million of payroll costs, of which $28.6 million was attributable to stock-based compensation expense (see Note 13, “Stock-Based Compensation”), $43.8 million of professional service expenses, including accounting and legal costs, $7.4 million of insurance costs and $26.9 million of other operating expenses. Corporate and unallocated expenses were $152.3 million for the year ended December 31, 2013 and included $82.5 million of payroll costs, of which $28.8 million was attributable to stock-based compensation expense (see Note 13, “Stock-Based Compensation”), $38.7 million of professional service expenses, including accounting and legal costs, and $31.1 million of other operating expenses. Corporate and unallocated expenses were $113.5 million for the year ended December 31, 2012 and included $73.0 million of payroll costs, of which $28.4 million was attributable to stock-based compensation expense (see Note 13, “Stock-Based Compensation”), $19.7 million of professional service expenses, including accounting and legal costs, $4.4 million of depreciation and $16.4 million of other operating expenses.

 

CCR, a customer of the DSD segment, accounted for 29%, 29% and 28% of the Company’s net sales for the years ended December 31, 2014, 2013 and 2012, respectively.

 

Net sales to customers outside the United States amounted to $534.2 million, $467.2 million and $415.8 million for the years ended December 31, 2014, 2013 and 2012, respectively.  Such sales were approximately 21.7%, 20.8% and 20.2% of net sales for the years ended December 31, 2014, 2013 and 2012, respectively.

 

The Company’s net sales by product line for years ended December 31, 2014, 2013 and 2012, respectively, were as follows:

 

Product Line

 

2014

 

2013

 

2012

 

Energy drinks

 

$
2,302,225 

 

$
2,082,238 

 

$
1,906,236 

 

 

 

 

 

 

 

 

 

 

 

 

Non-carbonated (primarily juice based beverages)

 
119,204 

 
120,145 

 
110,217 

 

Carbonated (primarily soda beverages)

 
28,425 

 
29,245 

 
31,044 

 

Other

 
15,013 

 
14,800 

 
13,205 

 

 

 

$
2,464,867 

 

$
2,246,428 

 

$
2,060,702