SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2013

SEGMENT INFORMATION

SEGMENT INFORMATION

(4)  SEGMENT INFORMATION

The Partnership is one of the leading growers and processors of macadamia nuts in the world, processing and marketing macadamia nuts in-shell, in bulk form and as snack products marketed under the Royal Hawaiian Orchards® brand name.  The Partnership has three reportable segments which are organized on the basis of revenues and assets:  owned orchards, contract farming and branded products.  The owned-orchard segment derives its revenues primarily from the sale of wet-in-shell macadamia nuts grown in orchards owned or leased by the Partnership.  This segment also has a portion of its wet-in-shell nuts processed into macadamia kernel for sale to the branded products segment.  The contract farming segment derives its revenues from the farming of macadamia orchards it owns and orchards owned by other growers.  The contracts provide for reimbursement of actual farming cost incurred plus a mark-up fee which is a percentage of farming costs or a fixed amount per acre.  Contract farming revenues tend to be less variable than revenues from the owned-orchard segment.  The branded products segment derives its revenues from the sale of branded macadamia nut snack products and the sale of bulk macadamia nut kernel.

Management evaluates the performance of each segment on the basis of operating income.  The Partnership’s reportable segments are distinct business enterprises that offer different products or services.  All intersegment sales and transfers are eliminated in consolidation.

The following tables summarize each reportable segment’s revenues, operating income (loss), assets and other information as of and for the three and nine-month periods ended September 30, 2013 and 2012.  Due to the seasonality of crop patterns and the timing of nut purchase contract fulfillment, interim results are not necessarily indicative of annual performance.

	Three months ended September 30, 2013 (unaudited)
	(in thousands)
	Owned Orchards			Farming		Branded Products			Consolidation/ Reconciliation			Total
Revenues
External customers	$	3,391		$	570	$	438		$	—		$	4,399
Intersegment revenue	571			2,780		—			(3,351		)	—
Total revenue	$	3,962		$	3,350	$	438		$	(3,351	)	$	4,399
Operating income (loss)
External customers	$	(577	)	$	28	$	(498	)	$	—		$	(1,047	)
Intersegment operating income	164			—		(16		)	(148		)	—
Total operating income (loss)	$	(413	)	$	28	$	(514	)	$	(148	)	$	(1,047	)
Depreciation	$	771		$	108	$	4		$	—		$	883
Expenditures for property & equipment	$	5		$	82	$	14		$	—		$	101
Segment assets
Segment assets	$	44,235		$	9,238	$	1,940		$	—		$	55,413
Intersegment eliminations	4,813			—		321			(5,134		)	—
Total segment assets	$	49,048		$	9,238	$	2,261		$	(5,134	)	$	55,413

	Three months ended September 30, 2012 (unaudited)
	(in thousands)
	Owned Orchards		Farming		Branded Products			Consolidation/ Reconciliation			Total
Revenues
External customers	$	5,495	$	759	$	—		$	—		$	6,254
Intersegment revenue	—		4,060		—			(4,060		)	—
Total revenue	$	5,495	$	4,819	$	—		$	(4,060	)	$	6,254
Operating income (loss)	$	537	$	35	$	(147	)	$	—		$	425
Depreciation	$	671	$	99	$	—		$	—		$	770
Expenditures for property & equipment	$	176	$	6	$	83		$	—		$	265
Segment assets	$	51,014	$	7,481	$	161		$	—		$	58,656

	Nine months ended September 30, 2013 (unaudited)
	(in thousands)
	Owned Orchards			Farming		Branded Products			Consolidation/ Reconciliation			Total
Revenues
External customers	$	4,805		$	1,231	$	905		$	—		$	6,941
Intersegment revenue	1,220			4,416		—			(5,636		)	—
Total revenue	$	6,025		$	5,647	$	905		$	(5,636	)	$	6,941
Operating income (loss)
External customers	$	(1,204	)	$	75	$	(1,583	)	$	—		$	(2,712	)
Intersegment operating income	337			—		(16		)	(321		)	—
Total operating income (loss)	$	(867	)	$	75	$	(1,599	)	$	(321	)	$	(2,712	)
Depreciation	$	982		$	329	$	12		$	—		$	1,323
Expenditures for property & equipment	$	57		$	155	$	46		$	—		$	258
Segment assets
Segment assets	$	44,235		$	9,238	$	1,940		$	—		$	55,413
Intersegment eliminations	4,813			—		321			(5,134		)	—
Total segment assets	$	49,048		$	9,238	$	2,261		$	(5,134	)	$	55,413

	Nine months ended September 30, 2012 (unaudited)
	(in thousands)
	Owned Orchards		Farming		Branded Products			Consolidation/ Reconciliation			Total
Revenues
External customers	$	9,050	$	1,471	$	—		$	—		$	10,521
Intersegment revenue	—		7,551		—			(7,551		)	—
Total revenue	$	9,050	$	9,022	$	—		$	(7,551	)	$	10,521
Operating income (loss)	$	202	$	95	$	(450	)	$	—		$	(153	)
Depreciation	$	1,001	$	301	$	—		$	—		$	1,302
Expenditures for property & equipment	$	200	$	57	$	83		$	—		$	340
Segment assets	$	51,014	$	7,481	$	161		$	—		$	58,656

All revenues are from sources within the United States of America.

The Partnership has reclassified its September 30, 2012 segment information to conform to the current period presentation.