Segment Information

9 Months Ended

Sep. 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 five reportable segments:  Domestic, Export, IKONICS Imaging, Digital Texturing (DTX) and Micro-Machining.  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.  Micro-Machining provides sound deadening technology to the aerospace industry along with products and services for etched composites, ceramics, glass and silicon wafers.  DTX includes products and customers related to patented and proprietary inkjet technology used for mold texturing.  Export sells primarily the same products as Domestic and the IKONICS Imaging products not related to Micro-Machining or DTX.  In previous periods, the segment designated as Other included both Micro-Machining and DTX.  Beginning in the third quarter of 2013, the Company began to report DTX and Micro-Machining as separate segments.  The accounting policies applied to determine the segment information are consistent with those included 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 September 30, 2013:

					IKONICS					Micro-
	Domestic		Export		Imaging		DTX			Machining			Unalloc.			Total
Net sales	$	1,881,210	$	1,310,281	$	874,442	$	104,339		$	46,853		$	—		$	4,217,125
Cost of goods sold	1,048,869		967,923		414,656		20,774			123,335			—			2,575,557
Gross profit (loss)	832,341		342,358		459,786		83,565			(76,482		)	—			1,641,568
Selling general and adminstrative*	305,297		127,346		234,096		128,968			106,974			427,518			1,330,199
Research and development*	—		—		—		—			—			149,864			149,864
Income (loss) from operations	$	527,044	$	215,012	$	225,690	$	(45,403	)	$	(183,456	)	$	(577,382	)	$	161,505

For the three months ended September 30, 2012:

					IKONICS					Micro-
	Domestic		Export		Imaging		DTX			Machining			Unalloc.			Total
Net sales	$	1,782,944	$	1,256,669	$	958,399	$	100,879		$	132,344		$	—		$	4,231,235
Cost of goods sold	1,009,697		920,397		426,750		9,928			111,586			—			2,478,358
Gross profit	773,247		336,272		531,649		90,951			20,758			—			1,752,877
Selling general and adminstrative*	283,567		141,599		284,113		144,333			69,101			350,573			1,273,286
Research and development*	—		—		—		—			—			141,186			141,186
Income (loss) from operations	$	489,680	$	194,673	$	247,536	$	(53,382	)	$	(48,343	)	$	(491,759	)	$	338,405

For the nine months ended September 30, 2013:

					IKONICS					Micro-
	Domestic		Export		Imaging		DTX			Machining			Unalloc.			Total
Net sales	$	5,401,082	$	4,249,218	$	2,641,047	$	333,656		$	269,139		$	—		$	12,894,142
Cost of goods sold	3,057,814		3,112,063		1,316,453		57,323			360,704			—			7,904,357
Gross profit (loss)	2,343,268		1,137,155		1,324,594		276,333			(91,565		)	—			4,989,785
Selling general and adminstrative*	972,656		448,380		773,629		340,711			328,346			1,261,079			4,124,801
Research and development*	—		—		—		—			—			475,791			475,791
Income (loss) from operations	$	1,370,612	$	688,775	$	550,965	$	(64,378	)	$	(419,911	)	$	(1,736,870	)	$	389,193

For the nine months ended September 30, 2012:

					IKONICS					Micro-
	Domestic		Export		Imaging		DTX			Machining			Unalloc.			Total
Net sales	$	5,242,685	$	4,125,540	$	2,675,982	$	347,747		$	395,985		$	—		$	12,787,939
Cost of goods sold	2,978,651		3,056,401		1,256,245		103,366			331,553			—			7,726,216
Gross profit	2,264,034		1,069,139		1,419,737		244,381			64,432			—			5,061,723
Selling general and adminstrative*	882,977		464,705		881,276		374,888			234,568			1,146,440			3,984,854
Research and development*	—		—		—		—			—			470,165			470,165
Income (loss) from operations	$	1,381,057	$	604,434	$	538,461	$	(130,507	)	$	(170,136	)	$	(1,616,605	)	$	606,704

*  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 September 30, 2013 and December 31, 2012 were as follows:

	Sep 30, 2013		Dec 31, 2012
Domestic	$	922,029	$	928,698
Export	649,256		708,933
IKONICS Imaging	252,229		272,346
DTX	45,666		117,552
Micro-Machining	27,477		57,122
Unallocated	3,057		(24,339		)
Total	$	1,899,714	$	2,060,312