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Segment Reporting
 6 Months Ended
Jun. 30, 2011
Segment Reporting

7) SEGMENT REPORTING

 

The Company has identified two operating segments, Produced Wine and Bacchus Distribution. Bacchus Distribution (dba Bacchus Fine Wines), is the Company’s in-state distribution department. Bacchus distributes produced wine, purchased wine and Riedel glassware at wholesale prices to in-state customers. Produced wine represents all Willamette Valley Vineyard branded wine which is produced at the winery. Purchased wines and Riedel glassware are brands purchased from other wine distributors and wineries for sale to in-state customers. For segment reporting, the produced wines distributed by Bacchus are consolidated with Retail and Out-of-State sales and shown as Produced Wines.

 

The two segments reflect how the Company’s operations are evaluated by senior management and the structure of its internal financial reporting. The Company evaluates performance based on the gross profit of the respective business segment. Sales, general and administrative expenses are not allocated between operating segments, therefore net income information for the respective segments is not available. Discrete financial information related to segment assets, other than inventory, is not available and that information continues to be aggregated.

 

The following tables outline the sales, cost of sales and gross profit, for the three month and six month periods ended June 30, 2011 and 2010 by operating segment:

 

          Three Months Ended June 30, 2011
          Bacchus   Produced    
          Distribution   Wine   Total
                   
Net sales      $               900,730    $            2,888,915    $            3,789,645
Cost of sales                      695,664                  1,183,806                  1,879,470
Gross profit                      205,066                  1,705,109                  1,910,175
Percentage of sales 22.8%   59.0%   50.4%
                   
          Three Months Ended June 30, 2010
          Bacchus   Produced    
          Distribution   Wine   Total
                   
Net sales      $            1,131,368    $            2,964,062    $            4,095,430
Cost of sales                      792,949                  1,444,594                  2,237,543
Gross profit                      338,419                  1,519,468                  1,857,887
Percentage of sales 29.9%   51.3%   45.4%
                   
          Six Months Ended June 30, 2011
          Bacchus   Produced    
          Distribution   Wine   Total
                   
Net sales      $            1,758,780    $            5,656,558    $            7,415,338
Cost of sales                  1,316,809                  2,449,069                  3,765,878
Gross profit                      441,971                  3,207,489                  3,649,460
Percentage of sales 25.1%   56.7%   49.2%
                   
          Six Months Ended June 30, 2010
          Bacchus   Produced    
          Distribution   Wine   Total
                   
Net sales      $            2,096,449    $            5,552,556    $            7,649,005
Cost of sales                  1,573,187                  2,749,205                  4,322,392
Gross profit                      523,262                  2,803,351                  3,326,613
Percentage of sales 25.0%   50.5%   43.5%
                   

 

Total inventory for Bacchus Distribution was $1,327,244 of purchased wines and $321,615 of non-wine merchandise at June 30, 2011. At June 30, 2010 total inventory for Bacchus Distribution was $1,461,997 of purchased wines and $342,522 of non-wine merchandise, a reduction of $134,753 of purchased wines and a decrease of $20,907 of non-wine merchandise from 2010 to 2011. Total inventory for produced wine inventory was $6,294,207 and $2,305,847 of non-wine merchandise and work-in-process at June 30, 2011. At June 30, 2010 total produced wine inventory of $6,429,662 and $3,373,092 of non-wine merchandise and work-in-process for the same period, a reduction of $135,455 for produced wine inventory and a reduction of $1,067,245 in work-in-process from 2010 to 2011.