Segment Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

CVSL operates five operating segments, three of which are reportable segments, as a direct-to-consumer company that sells a wide range of products primarily through independent sales forces across many countries around the world. For the nine months ended September 30, 2015 and September 30, 2014, respectively approximately $62.4 million or 67.9% and $32.5 million or 43.1% of our revenues were generated in international markets. For the three months ended September 30, 2015 and September 30, 2014, respectively approximately $27.5 million or 74.5% and $10.8 million or 45.1% of our revenues were generated in international markets. We have grouped our products into the following five operating segments: Gourmet Food Products, Nutritional and Wellness, Home Décor, Publishing and Printing, and Other. Substantially all of our long-lived assets are located in the U.S. Of these five operating segments, Gourmet Food Products, Home Décor, and Nutritional and Wellness qualify as reportable segments in line with the specifications established in ASC 280-10-50.

We have identified three reportable segments as each segment engages in business activities, incurring expenses and producing revenues, the operating results of these segments are regularly reviewed by chief decision makers and there is discrete financial information available for each unit. Also, the reported revenue of each reportable segment, both external and intercompany, is 10% or more of the combined revenue of all of the operating segments. In prior periods we had identified and presented one reportable segment, with revenue broken down into five categories within our segment discussion. However, with the addition of Kleeneze, the continued growth of Your Inspiration at Home and anticipated future growth, both organically and through acquisitions, we now view the Company as having five operating segments, three of which are reportable segments as discussed above. As revenues have concentrated within these three reportable segments, our chief operating decision makers ("CODM") now view these segments as appropriate for decision making purposes because they each represent a significant part of our business. The following is a brief description of our three reportable segments.

Gourmet Food Products - Segment consists of operations related to the production and sale of hand-crafted spices, oils and other food products from around the world. These operations have a presence in many of our markets both in the U.S. and internationally such as in Australia, New Zealand, Canada, and the United Kingdom. The CVSL subsidiaries involved in this line of business are Your Inspiration at Home and My Secret Kitchen.

Home Décor - Segment consists of operations related to the production and sale of premium hand-crafted baskets and the selling of products for the home, including pottery, cleaning, health, beauty, home, outdoor and customizable vinyl expressions for display. These operations are primarily located within the United States and the United Kingdom. The primary CVSL subsidiaries involved in this line of business are Kleeneze, TLC and Uppercase Living.

Nutritionals and Wellness - Segment consists of operations related to the selling of nutritional supplements and skin care products. These operations have a presence in many foreign markets and over 40 countries such as Italy, Russia, Spain, and Israel. The CVSL subsidiary primarily involved in this type of products is Agel.

We note that these three segments exceed 75% of The Company's consolidated revenue. Therefore, no further aggregation or disclosures are required for the remaining operating segments.

Although they do not qualify as reportable segments, we have included our Publishing and Printing and Other operating segments within the tables below to provide easier reconciliation to our results found on the condensed consolidated statements of operations and further transparency. The Publishing and Printing Segment consists of HCG and Paperly. The Other Segment consists of Tomboy Tools ("TBT").

In the tables below we present revenues and gross profit by operating segment. Our CODM evaluates performance on a segment basis from the standpoint of gross profit because many of our operating expenses are part of our shared services group at the corporate level, providing services to all of our operating segments, which is consistent with our post-acquisition integration strategies. In addition, there are numerous intercompany allocations and expenses that are most appropriately viewed on a consolidated basis for the Company as a whole. We do not have intersegment revenues.

Segment information, which includes all operating segments, for the three and nine months ended September 30, 2015 and September 30, 2014 are shown in the tables below (in thousands): 

Three months ended
		Gourmet Food Products		Home Décor		Nutritionals and Wellness		Publishing & Printing		Other		Consolidated
	2015
	Revenue	$	6,543	$	22,433	$	7,667	$	226	$	85	$	36,954
	Gross profit	2,366		13,297		6,193		149		82		22,087
	Operating expenses											(26,488		)
	Loss on marketable securities											(2		)
	Gain on Acquisition											—
	Interest expense											(564		)
	Loss from operations before income tax provision											$	(4,967	)
	2014
	Revenue	$	2,381	$	12,165	$	8,950	$	323	$	198	$	24,017
	Gross profit	1,318		3,794		7,614		204		134		13,064
	Operating expenses											(18,823		)
	Loss on marketable securities											108
	Gain on Acquisition											—
	Interest expense											(713		)
	Loss from operations before income tax provision											$	(6,364	)

Nine months ended
		Gourmet Food Products		Home Décor		Nutritionals and Wellness		Publishing & Printing		Other		Consolidated
	2015
	Revenue	$	14,250	$	54,147	$	22,425	$	729	$	364	$	91,915
	Gross profit	5,092		31,908		17,796		465		263		55,524
	Operating expenses											(66,654		)
	Loss on marketable securities											(9		)
	Gain on Acquisition											2,819
	Interest expense											(1,906		)
	Loss from operations before income tax provision											$	(10,226	)
	2014
	Revenue	$	4,989	$	39,623	$	29,106	$	936	$	620	$	75,274
	Gross profit	2,685		12,380		24,210		597		373		40,245
	Operating expenses											(52,850		)
	Loss on marketable securities											(444		)
	Gain on Acquisition											—
	Interest expense											(1,192		)
	Loss from operations before income tax provision											$	(14,241	)

In accordance with ASC 280-10-50, we have disclosed below the total assets for which there has been a material change from the amount disclosed in the last annual report. The total assets related to the reportable segment, Home Décor, increased over $27.7 million from December 31, 2014 to September 30, 2015 primarily due to the acquisition of Kleeneze in March 2015, which at September 30, 2015, had approximately $21 million in total assets.

The below table shows the total assets for each reportable segment, which have been reconciled to the consolidated total assets (in thousands):

	September 30, 2015		December 31, 2014
Gourmet Food Products	$	552	$	1,142
Home Décor	55,926		28,184
Nutritionals and Wellness	9,675		11,693
All other segments	11,569		16,288
Consolidated total assets	$	77,722	$	57,307