Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information [Abstract]

Segment Information

6. Segment Information

The Company’s reportable segments are strategic business units that offer different products and have varied customer bases. In previous years there were three reportable segments: Domestic, Export, and IKONICS Imaging. Domestic sells screen printing film, emulsions, and inkjet receptive film to distributors located in the United States and Canada. IKONICS Imaging sells photo resistant film, art supplies, glass, metal medium and related abrasive etching equipment to end user customers located in the United States and Canada. The IKONICS Imagining segment also included products and customers for etched composites, ceramics, glass and silicon wafers along with sound deadening technology to the aerospace industry, which beginning in 2011 the Company now defines as Micromachining. In addition, IKONICS Imaging included products and customers related to proprietary inkjet technology used for mold texturing and referred to by the Company as Digital Texturing (DTX). Export sells primarily the same products as Domestic and the IKONICS Imaging products not related to Micromachining or DTX. Beginning in 2011, the Company no longer includes Micromaching and DTX financial information under the IKONICS Imaging segment. The financial information for Micromaching and DTX are combined into a new segment called “Other”. As the Company is unable to provide comparable 2010 financial information for the newly defined segments, the Company will disclose in 2011 both the new basis and previous basis of segment reporting. The accounting policies applied to determine the segment information are the same as those described in the summary of significant accounting policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Management evaluates the performance of each segment based on the components of divisional income, and does not allocate assets and liabilities to segments except for accounts receivables which is allocated based on the previous segmentation. Financial information with respect to the reportable segments follows:

For the three months ended June 30, 2011 (previous segment method):

					IKONICS
	Domestic		Export		Imaging		Unalloc.			Total
Net sales	$	1,796,286	$	1,613,353	$	1,177,793	$	—		$	4,587,432
Cost of goods sold		1,015,528		1,187,819		530,095		—			2,733,442
Gross profit		780,758		425,534		647,698		—			1,853,990
Selling, general and administrative*		307,975		145,389		484,696		329,635			1,267,695
Research and development*		—		—		—		137,488			137,488
Income from operations	$	472,783	$	280,145	$	163,002	$	(467,123	)	$	448,807

For the three months ended June 30, 2010 (previous segment method):

					IKONICS
	Domestic		Export		Imaging		Unalloc.			Total
Net sales	$	1,791,392	$	1,472,989	$	983,674	$	—		$	4,248,055
Cost of goods sold		903,151		1,004,707		510,438		—			2,418,296
Gross profit		888,241		468,282		473,236		—			1,829,759
Selling, general and administrative*		255,752		166,995		283,406		416,322			1,122,475
Research and development*		—		—		—		204,498			204,498
Income from operations	$	632,489	$	301,287	$	189,830	$	(620,820	)	$	502,786

For the three months ended June 30, 2011 (new segment method):

					IKONICS
	Domestic		Export		Imaging		Other		Unalloc.			Total
Net sales	$	1,796,286	$	1,613,353	$	884,750	$	293,043	$	—		$	4,587,432
Cost of goods sold		1,015,528		1,187,819		430,836		99,259		—			2,733,442
Gross profit		780,758		425,534		453,914		193,784		—			1,853,990
Selling general and adminstrative*		307,975		145,389		302,698		181,998		329,635			1,267,695
Research and development*		—		—		—		—		137,488			137,488
Income from operations	$	472,783	$	280,145	$	151,216	$	11,786	$	(467,123	)	$	448,807

For the six months ended June 30, 2011 (previous segment method):

					IKONICS
	Domestic		Export		Imaging		Unalloc.			Total
Net sales	$	3,127,335	$	2,809,566	$	2,303,630	$	—		$	8,240,531
Cost of goods sold		1,761,536		2,069,545		1,088,617		—			4,919,698
Gross profit		1,365,799		740,021		1,215,013		—			3,320,833
Selling, general and administrative*		584,480		277,863		980,426		768,567			2,611,336
Research and development*		—		—		—		237,399			237,399
Income from operations	$	781,319	$	462,158	$	234,587	$	(1,005,966	)	$	472,098

For the six months ended June 30, 2010 (previous segment method):

					IKONICS
	Domestic		Export		Imaging		Unalloc.			Total
Net sales	$	3,291,563	$	2,629,779	$	2,011,290	$	—		$	7,932,632
Cost of goods sold		1,701,356		1,805,715		1,112,007		—			4,619,078
Gross profit		1,590,207		824,064		899,283		—			3,313,554
Selling, general and administrative*		486,607		325,654		568,067		942,536			2,322,864
Research and development*		—		—		—		365,202			365,202
Income from operations	$	1,103,600	$	498,410	$	331,216	$	(1,307,738	)	$	625,488

For the six months ended June 30, 2011 (new segment method):

					IKONICS
	Domestic		Export		Imaging		Other			Unalloc.			Total
Net sales	$	3,127,335	$	2,809,566	$	1,775,669	$	527,961		$	—		$	8,240,531
Cost of goods sold		1,761,536		2,069,545		887,103		201,514			—			4,919,698
Gross profit		1,365,799		740,021		888,566		326,447			—			3,320,833
Selling general and adminstrative*		584,480		277,863		599,938		380,488			768,567			2,611,336
Research and development*		—		—		—		—			237,399			237,399
Income from operations	$	781,319	$	462,158	$	288,628	$	(54,041	)	$	(1,005,966	)	$	472,098

* The Company does not allocate all general and administrative expenses or any research and development expenses to its operating segments for internal reporting.

Accounts receivable related to the “Other” segment are included in IKONICS Imaging. Accounts receivable by segment as of June 30, 2011 and December 31, 2010 were as follows:

	June 30, 2011			Dec 31, 2010
Domestic	$	988,527		$	874,535
Export		855,087			725,007
IKONICS Imaging		404,865			325,334
Unallocated, net of allowances		(21,770	)		(41,448	)
Total	$	2,226,709		$	1,883,428