Segment Information

9 Months Ended

Sep. 30, 2014

Segment Information

Segment Information

6.Segment Information

The Company’s reportable segments are strategic business units that offer different products or have varied customer bases.  There are five reportable segments:  Domestic, Export, IKONICS Imaging, Digital Texturing (DTX) and Advanced Materials Solutions (AMS).  AMS was previously branded as 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, and related abrasive etching equipment to end user customers located in the United States and Canada.  AMS 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 AMS 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, 2013.

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.  Financial information with respect to the reportable segments follows:

For the three months ended September 30, 2014:

					IKONICS
	Domestic		Export		Imaging		DTX			AMS			Unalloc.			Total
Net sales	$	2,059,074	$	1,299,652	$	998,778	$	44,850		$	75,660		$	—		$	4,478,014
Cost of goods sold	1,175,363		916,063		468,290		90,968			199,365			—			2,850,049
Gross profit (loss)	883,711		383,589		530,488		(46,118		)	(123,705		)	—			1,627,965
Selling general and adminstrative*	343,502		136,811		235,238		35,864			109,481			421,265			1,282,161
Research and development*	—		—		—		—			—			169,145			169,145
Income (loss) from operations	$	540,209	$	246,778	$	295,250	$	(81,982	)	$	(233,186	)	$	(590,410	)	$	176,659

For the three months ended September 30, 2013:

						IKONICS
	Domestic		Export			Imaging		DTX			AMS			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 nine months ended September 30, 2014:

					IKONICS
	Domestic		Export		Imaging		DTX			AMS			Unalloc.			Total
Net sales	$	5,659,005	$	4,113,046	$	3,607,174	$	251,979		$	236,133		$	—		$	13,867,337
Cost of goods sold	3,278,919		2,985,182		1,634,797		255,436			615,013			—			8,769,347
Gross profit (loss)	2,380,086		1,127,864		1,972,377		(3,457		)	(378,880		)	—			5,097,990
Selling general and adminstrative*	972,295		403,655		707,402		121,730			317,070			1,301,072			3,823,224
Research and development*	—		—		—		—			—			489,954			489,954
Income (loss) from operations	$	1,407,791	$	724,209	$	1,264,975	$	(125,187	)	$	(695,950	)	$	(1,791,026	)	$	784,812

For the nine months ended September 30, 2013:

					IKONICS
	Domestic		Export		Imaging		DTX			AMS			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

*  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, 2014 and December 31, 2013 were as follows:

	Sep 30, 2014		Dec 31, 2013
Domestic	$	937,607	$	1,012,057
Export	701,733		667,343
IKONICS Imaging	328,746		339,537
DTX	14,238		26,910
AMS	64,559		40,222
Unallocated	2,170		(35,216		)
Total	$	2,049,053	$	2,050,853