Segment and Enterprise-wide Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment and Enterprise-wide Information

SEGMENT AND ENTERPRISE-WIDE INFORMATION

We operate in three segments - Direct, Retail, and Commercial and Specialty. Based on the aggregation criteria of ASC 280-10, we determined that two of the operating segments (Retail and Commercial and Specialty) can be aggregated due to these segments having similar economic and other characteristics. As a result, we have two reportable segments - Direct and Retail. This financial reporting structure was effective as of December 31, 2015, the date on which we acquired Octane.

We evaluate performance using several factors, of which the primary financial measures are net sales and reportable segment contribution.Contribution is the measure of profit or loss, defined as net sales less product costs and directly attributable expenses. Directly attributable expenses include selling and marketing expenses, general and administrative expenses, and research and development expenses that are directly related to segment operations. Segment assets are those directly assigned to an operating segment's operations, primarily accounts receivable, inventories, goodwill and other intangible assets. Unallocated assets primarily include cash and cash equivalents, available-for-sale securities, shared information technology infrastructure, distribution centers, corporate headquarters, prepaids and other current assets, deferred income tax assets and other assets. Capital expenditures directly attributable to the Direct and Retail segments were not significant in any period.

Following is summary information by reportable segment (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net sales:
Direct	$	44,940		$	41,662		$	126,174		$	115,719
Retail	32,911			17,404			71,716			38,694
Royalty	678			629			1,567			1,521
Consolidated net sales	$	78,529		$	59,695		$	199,457		$	155,934
Contribution:
Direct	$	7,525		$	5,106		$	28,669		$	24,677
Retail	4,117			1,176			8,061			2,676
Royalty	678			629			1,548			1,521
Consolidated contribution	$	12,320		$	6,911		$	38,278		$	28,874
Reconciliation of consolidated contribution to income from continuing operations:
Consolidated contribution	$	12,320		$	6,911		$	38,278		$	28,874
Amounts not directly related to segments:
Operating expenses	(5,747		)	(2,979		)	(12,405		)	(7,337		)
Other expense, net	(582		)	(228		)	(1,118		)	(305		)
Income tax expense	(2,295		)	(1,485		)	(9,473		)	(8,154		)
Income from continuing operations	$	3,696		$	2,219		$	15,282		$	13,078

There was no material change in the allocation of assets by segment during the first six months of 2016 and, accordingly, assets by segment are not presented.

For the three and six months ended June 30, 2016, Amazon.com accounted for 12.3% and 10.0%, respectively, of total net sales. For the second quarter of 2015, Amazon.com represented 13.2% of our total net sales, and no customer represented 10.0% or more of total net sales for the first six months of 2015.