Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information

Segment Information

13. Segment Information

Our small arms weapons systems segment represents our core business, as all of our operations are conducted through this segment.  The small arms weapons systems segment consists of two operating segments, weapons systems and spares/other. These operating segments have similar economic characteristics and have been aggregated into the Company’s one reportable segment.  The small arms weapons systems segment designs, develops and manufactures small arms weapons systems for military and law enforcement personnel both domestically and internationally.  In addition, we manufacture and sell rifles and carbines to Colt’s Manufacturing, which sells them into the commercial market.

Adjusted EBITDA consists of income (loss) from continuing operations before interest, income taxes depreciation and amortization and other expenses as noted below. Management uses Adjusted EBITDA to evaluate the financial performance of and make operating decisions for the small arms weapons systems segment.  See the footnotes that follow the reconciliation table below for additional information regarding the adjustments made to arrive at Adjusted EBITDA of the small arms weapons systems segment.

The following tables represent a reconciliation of Adjusted EBITDA from continuing operations to (loss) income from continuing operations:

	Year Ended December 31,
	2012			2011		2010
Statements of Operations Data:
(Loss) income from continuing operations	$	(7,055	)	$	4,988	$	(10,276	)
Provision for foreign income taxes	1,750			3,171		2,499
Depreciation and amortization (i)	5,696			5,476		4,562
Interest expense, net	24,579			24,010		24,598
Sciens Management fees and expenses (ii)	356			450		389
Pension curtailment expense (iii)	1,325			—		—
Other expenses, net (iv)	381			764		2,087
Adjusted EBITDA	$	27,032		$	38,859	$	23,859

(i) Includes depreciation and amortization of intangible assets.

(ii) Includes fees and expenses pursuant to our advisory agreement with Sciens Management.

(iii) Noncash expense associated with the curtailment of our bargaining unit pension plan.

(iv) Includes income and/or expenses such as the write-off of unamortized deferred financing fees associated with the refinancing of credit facilities, transaction costs incurred in connection with our contemplated merger and acquisition activities, foreign currency exchange gains or losses and other less significant charges not related to on-going operations.

Geographical Information

Geographic external revenues are attributed to the geographic regions based on the customer’s location of origin.  Our reported net sales in the United States include revenues that arise from sales to the U.S. Government under its Foreign Military Sales program, which involves product that is resold by the U.S. Government to foreign governments and we generally ship directly to the foreign government.

The table below presents net sales for specific geographic regions:

	2012		2011		2010
United States	$	111,852	$	89,538	$	108,348
Canada	29,982		26,064		17,564
Europe	16,501		34,908		32,079
Asia/Pacific	45,866		26,762		5,036
Middle East/Africa	3,675		26,188		5,770
Latin America/Caribbean	5,452		5,350		7,008
	$	213,328	$	208,810	$	175,805

Long-lived assets are net fixed assets attributed to specific geographic regions:

	2012		2011
United States	$	17,272	$	18,249
Canada	4,862		4,340
	$	22,134	$	22,589

Major Customer Information

Sales to Colt’s Manufacturing represented 34% of sales in 2012. In 2011 and 2010 sales to Colt’s Manufacturing did not exceed 10% of net sales. Sales to the U.S. government represented 11% of net sales in 2012, 31% in 2011 and 55% 2010.

In 2012, two direct foreign customers accounted for 21% and 10% of net sales, respectively. In 2011, sales to a direct foreign customer represented 11% of our net sales. No sales to any one direct foreign customer exceeded 10% of our net sales in 2010.