10.

Segments

We have 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-service refill water 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 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.

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 the following periods:

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Segment net sales
Water	$	18,860		$	17,544		$	51,851		$	48,686
Dispensers		7,514			7,975			24,905			23,010
	$	26,374		$	25,519		$	76,756		$	71,696

Income (loss) from operations
Water	$	6,279		$	4,985		$	16,640		$	13,789
Dispensers		319			447			1,049			701
Corporate		(3,090	)		(2,661	)		(9,491	)		(8,303	)
Non-recurring costs		(54	)		(96	)		(2,773	)		(190	)
Depreciation and amortization		(2,593	)		(3,050	)		(8,094	)		(8,579	)
Loss on disposal and impairment of property and equipment		(58	)		(61	)		(1,081	)		(137	)
	$	803		$	(436	)	$	(3,750	)	$	(2,719	)

Depreciation and amortization expense:
Water	$	2,365		$	2,733		$	7,403		$	7,601
Dispensers		85			148			236			445
Corporate		143			169			455			533
	$	2,593		$	3,050		$	8,094		$	8,579

Capital expenditures:
Water							$	5,357		$	5,394
Dispensers								436			62
Corporate								17			193
							$	5,810		$	5,649

	At September 30,		At December 31,
Identifiable assets:	2014		2013
Water	$	54,528	$	58,057
Dispensers		12,576		9,757
Corporate		1,918		2,932
Assets of disposal group held for sale		4		225
	$	69,026	$	70,971