Segment Profit 3 and Segment Margin

  Distribution Investment & Production Movie Theater Talent Agency Consolidated
Segment Profit (US$mm) 2.3 3.3 9.7 0.2 15.5
As % of Total Segment Profit 15.4% 21.1% 62.5% 1.0% 100%
Segment Margin 40.8% 43.8% 57.8% 100.0% 54.9%

Segment margin for the distribution segment decreased to 40.8% in the second quarter of 2013 from 61.3% in the second quarter of 2012, primarily as a result of the imported film The Three Musketeers in 2012, which carried a higher gross margin due to lower distribution costs.

Segment margin from the Company's investment and production business increased to 43.8% in the second quarter of 2013, compared with a segment margin of 9.9% in the second quarter of 2012. This increase in segment margin was mainly due to sales of the Company's TV series Flying Swords of Dragon Gate.

Segment margin from the Company's movie theater business increased to 57.8% in the second quarter of 2013, compared with 56.7% in the second quarter of 2012. This increase was in-line with the Company's normal business based on current theater operations.

Operating Income and Operating Margin
  2Q13 2Q12 Y-o-Y%
Operating Expenses (US$mm) 14.7 11.6 27.1%
Operating Income (US$mm) 1.2 0.7 73.1%
Operating Margin 4.4% 3.5% --

Total operating expenses, including participation expenses, general and administrative expenses, and sales and marketing expenses, increased 27.1% to US$14.7 million from US$11.6 million in the second quarter of 2012. The year-over-year increase in operating expenses was primarily due to increased general and administrative expenses related to the expansion of the Company's movie theater business.

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