Segment Information

9 Months Ended

Sep. 30, 2015

Segment Information

Segment Information

7.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 Advanced Material Solutions (AMS).  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.  AMS provides sound deadening and weight reduction 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 and prototyping. 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, 2014.

Management evaluates the performance of each segment based on the components of divisional income.  Assets and liabilities are not allocated 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, 2015:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	1,924,930	$	1,367,780	$	892,811	$	188,074	$	169,135	$	—	$	4,542,730
Cost of goods sold		1,115,154		1,038,354		398,520		71,986		301,048		—		2,925,062
Gross profit (loss)		809,776		329,426		494,291		116,088		(131,913)		—		1,617,668
Selling general and administrative*		321,810		147,370		259,976		44,649		78,986		417,675		1,270,466
Research and development*		—		—		—		—		—		157,814		157,814
Income (loss) from operations	$	487,966	$	182,056	$	234,315	$	71,439	$	(210,899)	$	(575,489)	$	189,388

For the three months ended September 30, 2014:

	IKONICS
						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 administrative*		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 nine months ended September 30, 2015:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	5,414,229	$	3,823,195	$	2,777,684	$	385,130	$	393,929	$	—	$	12,794,167
Cost of goods sold		3,163,486		2,940,707		1,308,007		214,080		809,802		—		8,436,082
Gross profit (loss)		2,250,743		882,488		1,469,677		171,050		(415,873)		—		4,358,085
Selling general and administrative*		961,707		439,361		758,399		134,892		256,645		1,387,580		3,938,584
Research and development*		—		—		—		—		—		506,197		506,197
Income (loss) from operations	$	1,289,036	$	443,127	$	711,278	$	36,158	$	(672,518)	$	(1,893,777)	$	(86,696)

For the nine months ended September 30, 2014:

	IKONICS
						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 administrative*		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

*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, 2015 and December 31, 2014 were as follows:

	Sep 30 2015		Dec 31 2014
Domestic	$	962,232	$	1,068,170
Export		895,662		640,464
IKONICS Imaging		262,230		254,483
DTX		72,498		86,507
AMS		113,314		85,170
Unallocated		(23,325)		(38,466)
Total	$	2,282,611	$	2,096,328