Business Segments

12 Months Ended

Dec. 31, 2012

Business Segments

Business Segments

(18) Business Segments

        As a result of the acquisition of Dansensor, the chief operating decision maker (the Company's President and CEO) has restructured the operations of the Company beginning in the third quarter of 2012. In prior reporting periods the Company had three operating segments and one reportable segment, whereas the Company now has four operating segments, structured by differences in products and services, that are regularly reviewed by the Company's chief operating decision maker to make decisions about allocating resources and assessing segment performance. The segment performance is evaluated at segment operating income which is defined as gross profit less selling, general and administrative expenses and research and development expenses. General corporate expenses, including costs associated with various support functions such as human resources, information technology, finance and accounting, and general and administrative costs, are allocated to the reportable segments primarily on the basis of segment gross margin. The Company's four operating segments have been aggregated into three reportable segments based on the authoritative guidance. The Company aggregated its Other Products and Services operating segment into the Industrial Analyzer Products and Services segment based on minimal business activity and materiality.

        The Permeation segment includes instruments and services that measure the rate at which various gases and vapors permeate through a variety of materials. The Package Testing segment provides customers with the ability to assess package performance, shelf-life, package improvement, cost reduction, sustainability and product safety using Modified Atmosphere Packaging and other technologies. The Industrial Analyzers and Other segment includes advanced gas analysis and monitoring instrumentation used in applications such as oil and gas exploration, beverage and specialty gas analysis, industrial hygiene and safety, food safety, environmental air monitoring and homeland security.

        The accounting policies of the reportable segments are the same as those described in Note 1. There were no intersegment sales for the years ended December 31, 2012, 2011 and 2010. The financial information provided for the Package Testing segment for the year ended December 31, 2012 includes a nonrecurring adjustment of $865,000 related to an inventory fair value purchase accounting adjustment and also includes nonrecurring acquisition related costs of approximately $812,000.

        Segment information for the years ended December 31, 2012, 2011 and 2010 are as follows:

	Package Testing			Permeation		Industrial Analyzers and Other			Unallocated— Corporate		Consolidated
December 31, 2012
Sales	$	19,682,513		$	21,235,611	$	9,022,401		$	—	$	49,940,525
Gross profit		8,450,145			13,682,530		5,201,242			—		27,333,917
Income before income taxes		(1,501,182	)		4,369,845		511,459			—		3,380,122
Capital expenditures		800,553			842,957		221,695			—		1,865,205
Depreciation and amortization		1,432,638			401,577		115,567			—		1,949,782
Interest expense		308,389			—		—			—		308,389
Intangible assets, net		11,314,783			994,001		72,830			—		12,381,614
December 31, 2011
Sales	$	4,713,270		$	25,303,120	$	7,344,477		$	—	$	37,360,867
Gross profit		2,021,484			17,389,010		4,057,803			—		23,468,297
Income before income taxes		873,092			7,726,113		(395,225	)		—		8,203,980
Capital expenditures		61,048			699,392		122,544			—		882,984
Depreciation and amortization		47,353			474,044		95,054			—		616,451
Interest expense		—			—		—			—		—
Intangible assets, net		86,484			744,465		78,587			—		909,536
December 31, 2010
Sales	$	3,845,341		$	21,203,559	$	6,499,729		$	—	$	31,548,629
Gross profit		1,778,899			14,214,618		3,171,103			—		19,164,620
Income before income taxes		671,692			5,803,499		(11,821	)		—		6,463,370
Capital expenditures		148,012			1,252,348		263,849			—		1,664,209
Depreciation and amortization		44,331			420,985		79,025			—		544,341
Interest expense		—			—		—			—		—
Intangible assets, net		78,988			603,543		83,365			—		765,896
Total assets as of December 31, 2012	$	28,798,541		$	20,630,686	$	4,471,779		$	3,318,765	$	57,219,771
Total assets as of December 31, 2011	$	7,188,806		$	25,735,107	$	3,552,840		$	3,227,758	$	39,704,511

        Property, Plant and Equipment, net of accumulated depreciation, by geographic location as of December 31, 2012, 2011 and 2010 is as follows:

	2012		2011		2010
United States	$	3,699,258	$	2,896,793	$	2,660,156
Foreign countries:
Germany		333,662		277,955		182,799
Denmark		943,507		—		—
Other European countries		373,883		—		—
Total assets foreign countries		1,651,052		277,955		182,799
Consolidated total assets	$	5,350,310	$	3,174,748	$	2,842,955

        The following table summarizes total sales, based upon the country to which sales to external customers were made for fiscal years 2012, 2011 and 2010.

	Years Ended December 31,
	2012		2011		2010
Domestic sales	$	17,973,487	$	16,297,487	$	13,806,660
Foreign sales:
Europe		18,744,215		8,654,088		7,148,879
Asia		9,591,071		8,237,348		8,482,788
Other		3,631,752		4,171,944		2,110,302
Total foreign sales		31,967,038		21,063,380		17,741,969
Total sales	$	49,940,525	$	37,360,867	$	31,548,629

        The Company's products are marketed outside of North America through various independent representatives. One independent representative accounted for approximately 10% of the consolidated sales in 2010.