Segment Information

3 Months Ended

Mar. 31, 2016

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 first aid products for school, office, home, hardware, sporting and industrial markets.

Domestic sales orders are primarily 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 shipping points in Asia. Direct import sales are made in larger quantities than domestic sales, typically full containers. Direct import sales represented approximately 13% and 10% of the Company’s total net sales for the three months ended March 31, 2016 and 2015, respectively.

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

Financial data by segment:

(in thousands)

	Three months ended March 31
Sales to external customers:	2016			2015
United States	$	22,526		$	20,134
Canada		1,389			1,244
Europe		1,373			1,459
Consolidated	$	25,288		$	22,837
Operating income:
United States	$	945		$	971
Canada		32			(108	)
Europe		(22	)		(36	)
Consolidated	$	955		$	827
Interest expense, net		184			130
Other (income) expense, net		(38	)		76
Consolidated income before income taxes	$	809		$	621

	March 31		December 31
Assets by segment	2016		2015
United States	$	80,144	$	73,688
Canada		4,295		3,709
Europe		3,851		4,024
Consolidated	$	88,290	$	81,421