Business Segments

9 Months Ended

Sep. 30, 2013

Business Segments

Business Segments

Note 15 — Business Segments

As a result of the acquisition of Dansensor during fiscal 2012, the chief operating decision maker (the Company’s President and CEO) restructured the operations of the Company.  In prior reporting periods the Company had three operating segments and one reportable segment, whereas the Company now has four operating segments and three reportable 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 and environmental air monitoring.

The accounting policies of the reportable segments are the same as those described in Note 1 to the Consolidated Financial Statements found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.  There were no intersegment sales for the three and nine-month periods ended September 30, 2013 and 2012.

Financial information by reportable segment for the three and nine-month periods ended September 30, 2013 and 2012 is as follows:

	Three months ended September 30, 2013					Three months ended September 30, 2012
	Trade Revenue		Segment Operating Income (Loss)			Trade Revenue		Segment Operating Income (Loss)
Permeation	$	5,596,470	$	1,325,605		$	4,680,997	$	1,089,981
Package Testing	6,328,402		674,797			5,533,628		(638,286		)
Industrial Analyzers and Other	2,265,001		(85,434		)	2,091,526		313,787
Total	$	14,189,873	$	1,914,968		$	12,306,151	$	765,482

	Nine months ended September 30, 2013				Nine months ended September 30, 2012
	Trade Revenue		Segment Operating Income		Trade Revenue		Segment Operating Income (Loss)
Permeation	$	15,550,031	$	2,630,193	$	15,753,250	$	3,491,806
Package Testing	18,976,020		1,183,960		12,745,486		(1,923,758		)
Industrial Analyzers and Other	7,799,015		265,383		6,190,149		196,087
Total	$	42,325,066	$	4,079,536	$	34,688,885	$	1,764,135