Segment Reporting

6 Months Ended

Jun. 30, 2013

Basis Of Presentation

9. 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 and fresh fruits and vegetables, and others. Our concentrated apple juice and apple aroma is primarily produced by the Company’s Huludao Wonder factory; concentrated pear juice is primarily produced by the Company’s Jingyang factory. However, as the Company use the same production line to manufacture concentrated apple juice and concentrated pear juice. In addition, both Shaanxi Province, where the factory of Jingyang factory is located, and Liaoning Province, where the factory of Huludao Wonder is located, are rich in fresh apple and pear supplies, Jingyang factory also produces concentrated apple juice and Huludao Wonder factory also produces concentrated pear juice when necessary. Concentrated kiwifruit juice and kiwifruit puree is primarily produced by the Company’s Qiyiwangguo factory, and fruit juice beverages is primarily produced by the Company’s 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 exported 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 to North America, Europe, Russia, South Korea 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 whole sellers in the PRC.

Some of these product segments might never 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.

(Amount in thousands)

For the Three Months Ended June 30, 2013	Concentrated apple juice and apple aroma		Concentrated kiwifruit juice and kiwifruit puree			Concentrated pear juice			Fruit juice beverages			Fresh fruits and vegetables		Other		Total
Reportable segment revenue	$	1,052	$	17		$	713		$	8,721		$	4	$	6	$	10,513
Inter-segment revenue		-		(7	)		(29	)		(127	)		-		-		(163	)
Revenue from external customers		1,052		10			684			8,594			4		6		10,350
Segment gross profit	$	77	$	5		$	121		$	3,147		$	3	$	1	$	3,354

(Amount in thousands)

For the Three Months Ended June 30, 2012	Concentrated apple juice and apple aroma			Concentrated kiwifruit juice and kiwifruit puree		Concentrated pear juice			Fruit juice beverages		Fresh fruits and vegetables		Other		Total
Reportable segment revenue	$	1,157		$	489	$	3,834		$	6,366	$	-	$	1,497	$	13,343
Inter-segment revenue		(406	)		-		(100	)		-		-		-		(506	)
Revenue from external customers		751			489		3,734			6,366		-		1,497		12,837
Segment gross profit	$	94		$	223	$	1,705		$	2,118	$	-	$	81	$	4,221

(Amount in thousands)

For the Six Months Ended June 30, 2013	Concentrated apple juice and apple aroma		Concentrated kiwifruit juice and kiwifruit puree		Concentrated pear juice			Fruit juice beverages		Fresh fruits and vegetables		Other		Total
Reportable segment revenue	$	1,785	$	3,490	$	5,897		$	17,368	$	802	$	6	$	29,348
Inter-segment revenue		(97		(61		(40	)		(189		-		-		(387	)
Revenue from external customers		1,688		3,429		5,857			17,179		802		6		28,961
Segment gross profit	$	108	$	2,119	$	1,720		$	6,659	$	388	$	1	$	10,995

(Amount in thousands)

For the Six Months Ended June 30, 2012	Concentrated apple juice and apple aroma			Concentrated kiwifruit juice and kiwifruit puree			Concentrated pear juice			Fruit juice beverages		Fresh fruits and vegetables		Other		Total
Reportable segment revenue	$	4,383		$	4,441		$	8,663		$	9,736	$	588	$	1,497	$	29,308
Inter-segment revenue		(1,124	)		(191	)		(162	)		-		-		-		(1,477	)
Revenue from external customers		3,259			4,250			8,501			9,736		588		1,497		27,831
Segment gross profit	$	507		$	1,910		$	3,240		$	2,973	$	296	$	81	$	9,007

The following table reconciles reportable segment profit to the Company’s condensed consolidated income before income tax provision for the three months ended June 30, 2013 and 2012:

	Three Months ended June 30,
	2013			2012
Segment profit	$	3,353,990		$	4,221,391
Unallocated amounts:
Operating expenses		(2,414,794	)		(1,318,270)
Other (income)/expenses		167,747			488,291
Income before tax provision	$	1,106,943		$	3,391,412

	Six Months ended June 30,
	2013		2012
Segment profit	$	10,994,888	$	9,007,390
Unallocated amounts:
Operating expenses		(4,560,496)		(3,464,861	)
Other (income)/expenses		313,277		836,672
Income before tax provision	$	6,747,669	$	6,379,201