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SEGMENT REPORTING
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements 
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 nine month periods ended September 30, 2011 and 2010 by operating segment:

 

   Three Months Ended September 30, 2011
    Bacchus    Produced      
    Distribution    Wine    Total 
                
Net sales  $883,103   $3,461,817   $4,344,920 
Cost of sales   717,340    1,538,050    2,255,390 
Gross profit   165,763    1,923,767    2,089,530 
Percentage of sales   18.8%   55.6%   48.1%
                
    Three Months Ended September 30, 2010           
    Bacchus    Produced      
    Distribution    Wine    Total 
                
Net sales  $1,078,711   $3,521,633   $4,600,344 
Cost of sales   884,087    1,745,699    2,629,786 
Gross profit   194,624    1,775,934    1,970,558 
Percentage of sales   18.0%   50.4%   42.8%
                
    Nine Months Ended September 30, 2011           
    Bacchus    Produced      
    Distribution    Wine    Total 
                
Net sales  $2,641,883   $9,118,374   $11,760,257 
Cost of sales   2,034,148    3,987,120    6,021,268 
Gross profit   607,735    5,131,254    5,738,989 
Percentage of sales   23.0%   56.3%   48.8%
                
    Nine Months Ended September 30, 2010           
    Bacchus    Produced      
    Distribution    Wine    Total 
                
Net sales  $3,082,062   $9,167,287   $12,249,349 
Cost of sales   2,457,273    4,494,905    6,952,178 
Gross profit   624,789    4,672,382    5,297,171 
Percentage of sales   20.3%   51.0%   43.2%

 

Total inventory for Bacchus Distribution was $1,081,871 of purchased wines and $389,287 of non-wine merchandise at September 30, 2011. At September 30, 2010 total inventory for Bacchus Distribution was $1,371,656 of purchased wines and $367,348 of non-wine merchandise, a reduction of $289,785 of purchased wines and an increase of $21,939 of non-wine merchandise from 2010 to 2011. Total inventory for produced wine inventory was $4,955,583 and $3,073,241 of non-wine merchandise and work-in-process at September 30, 2011. At September 30, 2010 total produced wine inventory of $6,471,438 and $2,822,743 of non-wine merchandise and work-in-process for the same period, a reduction of $1,515,855 for produced wine inventory and an increase of $250,498 in work-in-process from 2010 to 2011.