This excerpt taken from the VLG 10-K filed Sep 28, 2006.
Shipping and Handling Fees and Distribution Costs
The Company recognizes delivery and freight charges to customers as elements of net sales. Costs of third-party freight are recognized as cost of products sold. The majority of the costs associated with the distribution of the Companys products, which include direct labor and overhead associated with filling, warehousing and delivery by Company vehicles, is reflected in operating, distribution and administrative expenses and amounted to $26,736,000, $20,987,000 and $20,581,000 for the fiscal years ended June 30, 2006, 2005 and 2004, respectively. The Company conducts multiple operations out of the same facilities and does not allocate facility-related expenses to each operational function. Accordingly, there is no facility-related expense in the distribution costs disclosed above. Depreciation expense associated with the Companys delivery fleet amounted to $1,893,000, $1,491,000 and $1,179,000 for the fiscal years ended June 30, 2006, 2005 and 2004, respectively, and is included in depreciation expense.
Third party freight costs relating to the delivery of products to customers totaled $652,000, $570,000 and $716,000 for the years ended June 30, 2006, 2005 and 2004, respectively, and were classified as operating, distribution and administrative expenses.
The Company has classified cost of deliveries by its employees and vehicles as operating, distribution and administrative expenses which amounted to $19,749,000, $15,396,000 and $14,916,000 for the years ended June 30, 2006, 2005 and 2004, respectively.