Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information

Segment Information

6. Segment Information

The Company’s reportable segments are strategic business units that offer different products and have varied customer bases.  There are four reportable segments:  Domestic, Export, IKONICS Imaging and Other.  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 Other segment includes products and customers for etched composites, ceramics, glass and silicon wafers along with sound deadening technology to the aerospace industry, which the Company defines as Micromachining.  In addition, the Other segment includes 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 Micro-Machining or DTX.  The accounting policies applied to determine the segment information are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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 trade receivables which are allocated based on the previous segmentation.  Financial information with respect to the reportable segments follows:

For the three months ended June 30, 2013:

IKONICS

	Domestic		Export		Imaging		Other			Unalloc.			Total
Net sales	$	2,003,601	$	1,497,478	$	923,134	$	230,532		$	—		$	4,654,745
Cost of goods sold	1,103,787		1,039,050		488,048		139,902			—			2,770,787
Gross profit	899,814		458,428		435,086		90,630			—			1,883,958
Selling general and adminstrative*	324,722		167,288		258,095		227,398			351,553			1,329,056
Research and development*	—		—		—		—			153,412			153,412
Income (loss) from operations	$	575,092	$	291,140	$	176,991	$	(136,768	)	$	(504,965	)	$	401,490

For the three months ended June 30, 2012:

IKONICS

	Domestic		Export		Imaging		Other			Unalloc.			Total
Net sales	$	1,976,404	$	1,503,965	$	875,882	$	190,829		$	—		$	4,547,080
Cost of goods sold	1,102,446		1,109,487		412,477		119,384			—			2,743,794
Gross profit	873,958		394,478		463,405		71,445			—			1,803,286
Selling general and adminstrative*	292,489		172,187		291,451		183,534			345,710			1,285,371
Research and development*	—		—		—		—			153,265			153,265
Income (loss) from operations	$	581,469	$	222,291	$	171,954	$	(112,089	)	$	(498,975	)	$	364,650

For the six months ended June 30, 2013:

IKONICS

	Domestic		Export		Imaging		Other			Unalloc.			Total
Net sales	$	3,519,872	$	2,938,937	$	1,766,605	$	451,603		$	—		$	8,677,017
Cost of goods sold	2,008,945		2,144,140		901,797		273,918			—			5,328,800
Gross profit	1,510,927		794,797		864,808		177,685			—			3,348,217
Selling general and adminstrative*	667,359		321,034		539,533		433,115			833,561			2,794,602
Research and development*	—		—		—		—			325,927			325,927
Income (loss) from operations	$	843,568	$	473,763	$	325,275	$	(255,430	)	$	(1,159,488	)	$	227,688

For the six months ended June 30, 2012:

IKONICS

	Domestic		Export		Imaging		Other			Unalloc.			Total
Net sales	$	3,459,741	$	2,868,871	$	1,717,583	$	510,509		$	—		$	8,556,704
Cost of goods sold	1,968,954		2,136,004		829,495		313,405			—			5,247,858
Gross profit	1,490,787		732,867		888,088		197,104			—			3,308,846
Selling general and adminstrative*	599,410		323,106		597,163		396,022			795,867			2,711,568
Research and development*	—		—		—		—			328,979			328,979
Income (loss) from operations	$	891,377	$	409,761	$	290,925	$	(198,918	)	$	(1,124,846	)	$	268,299

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

Trade receivables by segment as of June 30, 2013 and December 31, 2012 were as follows:

	June 30, 2013			Dec 31, 2012
Domestic	$	1,118,109		$	928,698
Export	870,732			708,933
IKONICS Imaging	259,825			272,346
Other	151,877			174,674
Unallocated	(16,752		)	(24,339		)
Total	$	2,383,791		$	2,060,312