SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2011

SEGMENT INFORMATION

SEGMENT INFORMATION

15. SEGMENT INFORMATION

The Company has two 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 the 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, 2011
	DSD			Warehouse			Corporate and Unallocated			Total
Net sales	$	447,113		$	27,596		$	-		$	474,709
Contribution margin	153,098			2,482			-			155,580
Corporate and unallocated expenses	-			-			(23,490		)	(23,490		)
Operating income										132,090
Other income (expense)	(73		)	-			(789		)	(862		)
Income before provision for income taxes										131,228
Depreciation and amortization	3,358			25			1,101			4,484
Intangible amortization	-			11			5			16
	Three-Months Ended September 30, 2010
	DSD			Warehouse			Corporate and Unallocated			Total
Net sales	$	356,737		$	24,729		$	-		$	381,466
Contribution margin	130,557			(1,904		)	-			128,653
Corporate and unallocated expenses	-			-			(21,098		)	(21,098		)
Operating income										107,555
Other income (expense)	(5		)	-			(181		)	(186		)
Income before provision for income taxes										107,369
Depreciation and amortization	1,709			16			1,276			3,001
Trademark amortization	-			11			1			12

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 $23.5 million for the three-months ended September 30, 2011 and included $14.1 million of payroll costs, of which $4.9 million was attributable to stock-based compensation expense (see Note 12, “Stock-Based Compensation”), $4.5 million attributable to professional service expenses, including accounting and legal costs, and $4.9 million of other operating expenses. Corporate and unallocated expenses were $21.1 million for the three-months ended September 30, 2010 and included $12.8 million of payroll costs, of which $4.3 million was attributable to stock-based compensation expense (see Note 12, “Stock-Based Compensation”), $5.0 million attributable to professional service expenses, including accounting and legal costs, $1.3 million of depreciation and $2.0 million of other operating expenses. Certain items, including income taxes as well as operating assets, are not allocated to individual segments and therefore are not presented above.

On October 2, 2010, The Coca-Cola Company (“TCCC”) completed its acquisition of the North American business operations of Coca-Cola Enterprises, Inc. (“CCE”), through a merger with a wholly owned subsidiary of TCCC. The surviving wholly owned subsidiary was subsequently renamed Coca-Cola Refreshments USA, Inc. (“CCR”), and currently distributes certain of the Company’s products in those portions of the United States in which CCE previously distributed certain of the Company’s products. Concurrently with this acquisition, a new entity, which retained the name Coca-Cola Enterprises, Inc. (“New CCE”), was formed which is currently the Company’s distributor in Great Britain, France, Belgium, the Netherlands, Luxembourg, Monaco and Sweden (added during the first quarter of 2011).

CCR, a customer of the DSD segment, accounted for approximately 29% of the Company’s net sales for the three-months ended September 30, 2011. CCE, a customer of the DSD segment, accounted for approximately 33% of the Company’s net sales for the three-months ended September 30, 2010.

Net sales to customers outside the United States amounted to $92.5 million and $56.6 million for the three-months ended September 30, 2011 and 2010, respectively. Such sales were approximately 19.5% and 14.8% of net sales for the three-months ended September 30, 2011 and 2010, 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, 2011
	DSD			Warehouse		Corporate and Unallocated			Total
Net sales	$	1,218,491		$	74,782	$	-		$	1,293,273
Contribution margin	413,629			3,545		-			417,174
Corporate and unallocated expenses	-			-		(64,148		)	(64,148		)
Operating income									353,026
Other income (expense)	(81		)	-		(205		)	(286		)
Income before provision for income taxes									352,740
Depreciation and amortization	8,975			61		3,116			12,152
Trademark amortization	-			33		6			39
	Nine-Months Ended September 30, 2010
	DSD			Warehouse		Corporate and Unallocated			Total
Net sales	$	915,182		$	70,095	$	-		$	985,277
Contribution margin	333,006			193		-			333,199
Corporate and unallocated expenses	-			-		(65,182		)	(65,182		)
Operating income									268,017
Other income (expense)	49			-		1,070			1,119
Income before provision for income taxes									269,136
Depreciation and amortization	4,738			39		3,673			8,450
Trademark amortization	-			31		5			36

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 $64.1 million for the nine-months ended September 30, 2011 and included $39.1 million of payroll costs, of which $12.8 million was attributable to stock-based compensation expense (see Note 12, “Stock-Based Compensation”), $13.1 million attributable to professional service expenses, including accounting and legal costs, and $11.9 million of other operating expenses. Corporate and unallocated expenses were $65.2 million for the nine-months ended September 30, 2010 and included $37.5 million of payroll costs, of which $12.8 million was attributable to stock-based compensation expense (see Note 12, “Stock-Based Compensation”), $15.3 million attributable to professional service expenses, including accounting and legal costs, $3.7 million of depreciation, $1.6 million of bad debt expense and $7.1 million of other operating expenses. Certain items, including income taxes as well as operating assets, are not allocated to individual segments and therefore are not presented above.

CCR, a customer of the DSD segment, accounted for approximately 29% of the Company’s net sales for the nine-months ended September 30, 2011. CCE, a customer of the DSD segment, accounted for approximately 35% of the Company’s net sales for the nine-months ended September 30, 2010.

Net sales to customers outside the United States amounted to $226.0 million and $138.5 million for the nine-months ended September 30, 2011 and 2010, respectively. Such sales were approximately 17.5% and 14.1% of net sales for the nine-months ended September 30, 2011 and 2010, respectively.

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

	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Energy drinks	$	434,038	$	343,303	$	1,186,739	$	887,022
Non-carbonated (primarily juice based beverages and Peace Tea™ iced teas)	27,404		24,454		71,882		62,210
Carbonated (primarily soda beverages)	10,339		8,298		26,225		25,998
Other	2,928		5,411		8,427		10,047
	$	474,709	$	381,466	$	1,293,273	$	985,277