15.

Segments

At December 31, 2012, we had two operating segments and two reportable segments: Primo Water ("Water") and Primo Dispensers ("Dispensers").

Our Water segment sales consist of the sale of multi-gallon purified bottled water (exchange services) and our self-serve filtered drinking water vending service (refill services) offered through retailers in each of the contiguous United States and Canada. Our Water services are offered through point of purchase display racks or self-serve filtered water vending displays and recycling centers that are prominently located at major retailers in space that is often underutilized.

Our Dispensers segment sells water dispensers that are designed to dispense Primo and other dispenser-compatible bottled water. Our Dispensers sales are primarily generated through major U.S. retailers and are sold primarily through a direct-import model, where we recognize revenues for the sale of the water dispensers when title is transferred. We support retail sell-through with domestic inventory. We design, market and arrange for certification and inspection of our water dispensers.

The 2011 amounts included in Other include the sale inventory that does not relate to Water or Dispensers.

As discussed in Note 5, in 2012 we committed to a plan to sell the assets related to the Disposal Group, which met all the criteria for classification as discontinued operations. As a result, current and prior year amounts and disclosures reflect these operations as discontinued operations, which were previously reported as the Flavorstation segment. In 2011, the income and expenses associated with the sale of our Flavorstation products as well as the results of the Omnifrio Single-Serve Beverage Business acquired in 2011 were reported in "Other".

We evaluate the financial results of these segments focusing primarily on segment net sales and segment income (loss) from operations before depreciation and amortization ("segment income (loss) from operations"). We utilize segment net sales and segment income (loss) from operations because we believe they provide useful information for effectively allocating our resources between business segments, evaluating the health of our business segments based on metrics that management can actively influence and gauging our investments and our ability to service, incur or pay down debt.

Cost of sales for Water consists of costs for distribution, bottles and related packaging materials for our exchange services and servicing and material costs for our refill services. Cost of sales for Dispensers consists of contract manufacturing, freight and duties.

Selling, general and administrative expenses for Water and Dispensers consist primarily of personnel costs for sales, marketing, operations support and customer service, as well as other supporting costs for operating each segment.

Expenses not specifically related to operating segments are shown separately as Corporate. Corporate expenses are comprised mainly of compensation and other related expenses for corporate support, information systems, and human resources and administration. Corporate expenses also include certain professional fees and expenses and compensation of our Board of Directors.

The following table presents segment information for each of the last two years:

	Year ended December 31,
	2012			2011
Segment net sales
Water	$	62,667		$	58,696
Dispensers		28,812			23,595
Other		-			771
	$	91,479		$	83,062

Segment income (loss) from operations
Water	$	15,942		$	13,563
Dispensers		(1,319	)		(1,021	)
Corporate		(10,933	)		(10,887	)
Non-recurring and acquisition-related costs		(743	)		(2,091	)
Depreciation and amortization		(11,102	)		(8,863	)
Goodwill and other impairment		(82,013	)		–
	$	(90,168	)	$	(9,299	)

Depreciation and amortization expense:
Water	$	9,777		$	7,965
Dispensers		633			437
Corporate		692			461
	$	11,102		$	8,863

Capital expenditures:
Water	$	4,315		$	18,699
Dispensers		910			672
Corporate		104			564
	$	5,329		$	19,935

	At December 31,
Identifiable assets:	2012		2011
Water	$	65,483	$	72,709
Dispensers		9,490		11,346
Corporate		3,761		2,865
Assets of disposal group held for sale		3,009		18,706
	$	81,743	$	105,626

Goodwill:
Water	$	-	$	78,823
	$	-	$	78,823