Segment Information

9 Months Ended

Sep. 30, 2013

Segment Information

Segment Information

Note 5— Segment Information

The Company reports financial information based on the organizational structure used by management for making operating and investment decisions and for assessing performance. The Company’s reportable business segments consist of: (1) United States; (2) Canada and (3) Europe. As described below, the activities of the Company’s Asian operations are closely linked to those of the U.S. operations; accordingly, management reviews the financial results of both on a consolidated basis, and the results of the Asian operations have been aggregated with the results of the United States operations to form one reportable segment called the “United States segment” or “U.S. segment”. Each reportable segment derives its revenue from the sales of cutting devices, measuring instruments and safety products for school, office, home, hardware and industrial use.

Domestic sales orders are filled from the Company’s distribution center in North Carolina. The Company is responsible for the costs of shipping, insurance, customs clearance, duties, storage and distribution related to such products. Orders filled from the Company’s inventory are generally for less than container-sized lots.

Direct import sales are products sold by the Company’s Asian subsidiary, directly to major U.S. retailers, who take ownership of the products in Asia. These sales are completed by delivering product to the customers’ common carriers at the shipping points in Asia. Direct import sales are made in larger quantities than domestic sales, typically full containers. Direct import sales represented approximately 15% and 22% of the Company’s total net sales for the three and nine months ended September 30, 2013, respectively compared to 12% and 16% for the comparable periods in 2012.

The chief operating decision maker evaluates the performance of each operating segment based on segment revenues and operating income. Segment amounts below are presented after converting to U.S. dollars and consolidating eliminations.

Financial data by segment:

(in thousands) 

	Three months ended September 30,						Nine months ended September 30,
Sales to external customers:	2013			2012			2013		2012
United States	$	18,273		$	16,541		$	55,992	$	51,702
Canada		1,782			2,170			6,549		7,137
Europe		2,080			1,652			5,657		5,996
Consolidated	$	22,135		$	20,363		$	68,198	$	64,835
Operating income (loss):
United States	$	1,183		$	1,240		$	4,454	$	3,992
Canada		130			182			592		753
Europe		96			(63	)		69		149
Consolidated	$	1,409		$	1,359		$	5,115	$	4,895
Interest expense, net		99			83			242		200
Other expense (income), net		(13	)		7			15		93
Consolidated income before income taxes	$	1,323		$	1,269		$	4,858	$	4,602

Assets by segment:
( in thousands )
	September 30,		December 31,
	2013		2012
United States	$	59,745	$	56,115
Canada		5,762		6,107
Europe		5,231		5,606
Consolidated	$	70,738	$	67,828