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Business Segments
9 Months Ended
Sep. 30, 2011
Business Segments
 
11.
Business Segments
 
Operating segments are components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker about how to allocate resources and in assessing performance.  The Company has two reportable operating segments:  Medifast, and MWCC and Wholesale.  The Medifast reporting segment consists of the following distribution channels:   Medifast Direct and Take Shape for Life. The MWCC and Wholesale segment consists of Medifast Corporate and Franchise Weight Control Centers as well as Medifast Wholesale Physicians.
 
Total assets and operating expenses not identified with a specific segment are listed as “Other” and include items such as auditors’ fees, attorney’s fees, stock compensation expense and corporate governance related to NYSE, Sarbanes Oxley, and SEC regulations.   Evaluation of the performance of operating segments is based on their respective income from operations before taxes. The accounting policies of the segments are the same as those of the Company.  The presentation and allocation of assets, liabilities and results of operations may not reflect the actual economic costs of the segments as stand-alone businesses. If a different basis of allocation were utilized, the relative contributions of the segments might differ, but management believes that the relative trends in segments would likely not be impacted.
 
We previously included Medifast Weight Control Centers in “Other” segment, however, in 2010 due to the Weight Control Centers growth we separated this segment along with the Medifast Wholesale Physicians.  In addition, we reclassified segment amounts for the prior periods.
 
The following tables present segment information for the three and nine months ended September 30, 2011 and 2010:

   
Three Months Ended September 30,2011
  
   
Medifast
    
MWCC &
Wholesales
    
Other
    
Consolidated
  
                         
Revenues
   $ 65,624,000     $ 10,443,000     $ -     $ 76,067,000  
Cost of Sales
     17,089,000       2,536,000       -       19,625,000  
Selling,General and Administrative Expense
     37,083,000       9,091,000       1,466,000       47,640,000  
Depreciation and Amortization
     1,717,000       329,000       85,000       2,131,000  
Interest(net) and other
     10,000       -       (141,000 )     (131,000 )
Income before income taxes
   $ 9,725,000     $ (1,513,000 )   $ (1,410,000 )   $ 6,802,000  
                                 
Segment Assets
   $ 48,491,000     $ 11,364,000     $ 43,498,000     $ 103,353,000  

   
Three Months Ended September 30,2010
  
   
Medifast
    
MWCC &
Wholesales
    
Other
    
Consolidated
  
                         
Revenues
   $ 60,179,000     $ 7,103,000     $ -     $ 67,282,000  
Cost of Sales
     15,188,000       1,635,000       -       16,823,000  
Selling,General and Administrative Expense
     34,789,000       3,813,000       1,321,000       39,923,000  
Depreciation and Amortization
     1,229,000       183,000       76,000       1,488,000  
Interest(net) and other
     2,000       -       (35,000 )     (33,000 )
Income before income taxes
   $ 8,971,000     $ 1,472,000     $ (1,362,000 )   $ 9,081,000  
                                 
Segment Assets
   $ 49,570,000     $ 8,398,000     $ 33,352,000     $ 91,320,000  

   
Nine Months Ended September 30,2011
  
   
Medifast
    
MWCC &
Wholesales
    
Other
    
Consolidated
  
                         
Revenues
   $ 200,324,000     $ 28,293,000     $ -     $ 228,617,000  
Cost of Sales
     49,738,000       6,715,000       -       56,453,000  
Selling,General and Administrative Expense
     115,212,000       20,912,000       4,538,000       140,662,000  
Depreciation and Amortization
     4,682,000       861,000       250,000       5,793,000  
Interest(net) and other
     20,000       -       (537,000 )     (517,000 )
Income before income taxes
   $ 30,672,000     $ (195,000 )   $ (4,251,000 )   $ 26,226,000  
                                 
Segment Assets
   $ 48,491,000     $ 11,364,000     $ 43,498,000     $ 103,353,000  

   
Nine Months Ended September 30,2010
  
   
Medifast
    
MWCC &
Wholesales
    
Other
    
Consolidated
  
                         
Revenues
   $ 173,730,000     $ 20,797,000     $ -     $ 194,527,000  
Cost of Sales
     44,018,000       4,816,000       -       48,834,000  
Selling,General and Administrative Expense
     100,470,000       10,616,000       3,798,000       114,884,000  
Depreciation and Amortization
     3,450,000       623,000       231,000       4,304,000  
Interest(net) and other
     99,000       -       (93,000 )     6,000  
Income before income taxes
   $ 25,693,000     $ 4,742,000     $ (3,936,000 )   $ 26,499,000  
                                 
Segment Assets
   $ 49,570,000     $ 8,398,000     $ 33,352,000     $ 91,320,000