Segment Reporting

9 Months Ended

Sep. 30, 2012

Basis Of Presentation

8. Segment Reporting

The Company operates in six segments: concentrated apple juice and apple aroma, concentrated kiwifruit juice and kiwifruit puree, concentrated pear juice, fruit juice beverages, fresh fruits and vegetables, and other products. Our concentrated apple juice and apple aroma are primarily produced by our Huludao Wonder factory. Our concentrated pear juice is primarily produced by the Company’s Jingyang factory. The Company uses the same type of production line to manufacture both concentrated apple juice and concentrated pear juice. In addition, both Jingyang factory and Huludao Wonder factory are located in regions abundant with fresh apple and pear supplies. As such, Jingyang factory also produces concentrated apple juice and Huludao Wonder factory also produces concentrated pear juice when necessary. Our concentrated kiwifruit juice and kiwifruit puree, as well as our fruit juice beverages, are primarily produced by our Qiyiwangguo factory. The Company’s other products include fructose, concentrated turnjujube juice, and other by-products, such as kiwifruit seeds.

Concentrated fruit juice is used as a basic ingredient for manufacturing juice drinks and as an additive to fruit wine and fruit jam, cosmetics and medicines. The Company sells its concentrated fruit juice to domestic customers and exports directly or via distributors. The Company believes that its main export markets are the United States, the European Union, South Korea, Russia and the Middle East. The Company sells its Hedetang branded bottled fruit beverages domestically primarily to supermarkets in the PRC. The Company sells its fresh fruit and vegetables to supermarkets and wholesalers in the PRC.

Some of these product segments may not individually meet the quantitative thresholds for determining reportable segments and we determine the reportable segments based on the discrete financial information provided to the chief operating decision maker. The chief operating decision maker evaluates the results of each segment in assessing performance and allocating resources among the segments. Since there is an overlap of services provided and products manufactured between different subsidiaries of the Company, the Company does not allocate operating expenses and assets based on the product segments. Therefore, operating expenses and assets information by segment are not presented.  Segment profit represents the gross profit of each reportable segment.

For the Three Months Ended September 30, 2012	Concentrated apple juice and apple aroma			Concentrated kiwifruit juice and kiwifruit puree			Concentrated pear juice		Fruit juice beverages			Fresh fruits and vegetables		Others		Total
Reportable segment revenue	$	4,211		$	444			11,382	$	10,498		$	707	$	1,653	$	28,895
Inter-segment revenue		(249	)		(45	)		-		(38	)		-		-		(332	)
Revenue from external customers		3,962			399			11,382		10,460			707		1,653		28,563
Segment gross profit	$	679		$	189		$	3,469	$	3,951		$	218	$	19	$	8,525

For the Three Months Ended September 30, 2011	Concentrated apple juice and apple aroma			Concentrated kiwifruit juice and kiwifruit puree			Concentrated pear juice			Fruit juice beverages		Fresh fruits and vegetables		Others		Total
Reportable segment revenue	$	8,839		$	566		$	2,068		$	5,188	$	897	$	35	$	17,593
Inter-segment revenue		(57	)		(67	)		(32	)		-		-		-		(156	)
Revenue from external customers		8,782			499			2,036			5,188		897		35		17,437
Segment gross profit	$	2,045		$	267		$	516		$	1,582	$	424	$	7	$	4,841

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Table of Contents

For the Nine Months Ended September 30, 2012	Concentrated apple juice and apple aroma			Concentrated kiwifruit juice and kiwifruit puree			Concentrated pear juice			Fruit juice beverages			Fresh fruits and vegetables		Others		Total
Reportable segment revenue	$	8,594		$	4,885		$	20,045		$	20,234		$	1,295	$	3,150	$	58,203
Inter-segment revenue		(1,373	)		(236	)		(162	)		(38	)		-		-		(1,809	)
Revenue from external customers		7,221			4,649			19,883			20,196			1,295		3,150		56,394
Segment gross profit	$	1,186		$	2,099		$	6,709		$	6,924		$	514	$	100	$	17,532

For the Nine Months Ended September 30, 2011	Concentrated apple juice and apple aroma			Concentrated kiwifruit juice and kiwifruit puree			Concentrated pear juice			Fruit juice beverages		Fresh fruits and vegetables		Others		Total
Reportable segment revenue	$	15,024		$	5,595		$	8,036		$	17,898	$	2,354	$	825	$	49,732
Inter-segment revenue		(182	)		(400	)		(87	)		-		-		-		(669	)
Revenue from external customers		14,842			5,195			7,949			17,898		2,354		825		49,063
Segment gross profit	$	3,734		$	2,795		$	2,541		$	7,230	$	1,160	$	154	$	17,614

The following table reconciles reportable segment profit to the Company’s consolidated income before income tax provision for the three and nine months ended September 30, 2012 and 2011, respectively:

	Three Months Ended September 30,
	2012			2011
Segment profit	$	8,524,910		$	4,841,122
Unallocated amounts:
Operating expenses		1,835,445			2,000,830
Other(income)/expenses		(479,996	)		176,213
Income before tax provision	$	7,169,461		$	2,664,079

	Nine Months Ended September 30,
	2012			2011
Segment profit	$	17,532,300		$	17,613,826
Unallocated amounts:
Operating expenses		5,299,306			5,204,035
Other(income)/expenses		(1,315,668	)		(237,021	)
Income before tax provision	$	13,548,662		$	12,646,812