SEGMENT INFORMATION

Effective

January 1, 2017,

we updated our reporting segments to better reflect how management analyzes the business and allocates resources, as follows:

Prior Reporting Structure	New Reporting Structure
1. Wholesale – chain of wholesale stores operating under the name, The Leather Factory, located in North America	1. North America – chain of stores located in North America (combined prior Wholesale and Retail)
2. Retail – chain of retail stores operating under the name, Tandy Leather Company, located in North America	2. International – no change
3. International – four stores, 2 located in UK, 1 in Spain and 1 in Australia

Our reportable operating segments have been determined as separately identifiable business units, and we measure segment earnings as operating earnings, defined as income before interest and income taxes. The

2016

segment information has been restated to conform to the current segment structure.

	North America			International			Total
For the quarter ended June 30 , 20 17
Net sales	$	18,427,425		$	853,345		$	19,280,770
Gross profit		12,449,202			446,332			12,895,534
Operating income (loss)		1,814,887			(159,450	)		1,655,437
Interest (expense)		(53,680	)		-			(53,680	)
Other income (expense), net		15,195			1,817			17,012
Income (loss) before income taxes		1,776,402			(157,633	)		1,618,769

Depreciation and amortization		448,788			22,502			471,290
Fixed asset additions		387,054			18,095			405,149
Total assets	$	67,412,189		$	4,831,270		$	72,243,459

For the quarter ended June 30 , 20 16
Net sales	$	18,558,938		$	963,967		$	19,522,905
Gross profit		12,155,311			740,479			12,895,790
Operating income		2,714,312			124,579			2,838,891
Interest (expense)		(42,027	)		-			(42,027	)
Other income (expense), net		8,986			14,448			23,434
Income before income taxes		2,681,271			139,027			2,820,298

Depreciation and amortization		394,943			22,622			417,565
Fixed asset additions		242,235			48,840			291,075
Total assets	$	61,820,547		$	4,797,768		$	66,618,315

	North America			International			Total
For the six months ended June 30 , 20 17
Net sales	$	37,659,139		$	1,771,476		$	39,430,615
Gross profit		24,202,159			979,420			25,181,579
Operating income (loss)		3,626,450			(233,522	)		3,392,928
Interest (expense)		(90,024	)		-			(90,024	)
Other income (expense), net		32,849			(13,186	)		19,663
Income (loss) before income taxes		3,569,275			(246,708	)		3,322,567

Depreciation and amortization		885,069			44,339			929,408
Fixed asset additions		984,880			20,026			1,004,906
Total assets	$	67,412,189		$	4,831,270		$	72,243,459

For the six months ended June 30 , 20 16
Net sales	$	38,298,429		$	1,896,703		$	40,195,132
Gross profit		24,240,120			1,308,416			25,548,536
Operating income		5,055,521			146,160			5,201,681
Interest (expense)		(65,456	)		-			(65,456	)
Other income (expense), net		14,732			8,663			23,395
Income before income taxes		5,004,797			154,823			5,159,620

Depreciation and amortization		788,535			43,258			831,793
Fixed asset additions		845,099			52,908			898,007
Total assets	$	61,820,547		$	4,797,768		$	66,618,315

Net sales for geographic areas were as follows:

Three months ended June 30,	20 17		20 16
United States	$	16,546,075	$	16,610,634
Canada		1,646,224		1,746,547
All other countries		1,088,471		1,165,724
	$	19,280,770	$	19,522,905

Six months ended June 30,	2017		20 16
United States	$	33,828,738	$	34,338,263
Canada		3,419,734		3,488,303
All other countries		2,182,143		2,368,566
	$	39,430,615	$	40,195,132

Geographic sales information is based on the location of the customer.

single foreign country, except for Canada, accounted for any material amount of our consolidated net sales for the

three

and

six

-month periods ended

June 30, 2017

and

2016.

We do

not

have any significant long-lived assets outside of the United States.