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 S e ptember 30 , 20 17
Net sales	$	17,421,013		$	967,368		$	18,388,381
Gross profit		11,037,486			597,845			11,635,331
Operating income (loss)		649,797			478			650,275
Interest (expense)		(53,141	)		-			(53,141	)
Other income (expense), net		94,196			1,740			95,936
Income (loss) before income taxes		690,852			2,218			693,070

Depreciation and amortization		513,250			23,876			537,126
Fixed asset additions		523,546			2,095			525,641
Total assets	$	70,083,363		$	4,288,478		$	74,371,841

For the quarter ended September 30 , 20 16
Net sales	$	17,745,130		$	883,232		$	18,628,362
Gross profit		11,124,269			520,602			11,644,871
Operating income (loss)		1,589,071			(49,012	)		1,540,059
Interest (expense)		(43,493	)		-			(43,493	)
Other income (expense), net		7,052			(3,482	)		3,570
Income (loss) before income taxes		1,552,630			(52,494	)		1,500,136

Depreciation and amortization		419,091			22,194			441,285
Fixed asset additions		485,347			2,077			487,424
Total assets	$	65,960,965		$	3,837,798		$	69,798,763

	North America			International			Total
For the nine months ended September 30 , 20 17
Net sales	$	55,080,152		$	2,738,844		$	57,818,996
Gross profit		35,239,645			1,577,265			36,816,910
Operating income (loss)		4,276,247			(233,044	)		4,043,203
Interest (expense)		(143,165	)		-			(143,165	)
Other income (expense), net		127,045			(11,446	)		115,599
Income (loss) before income taxes		4,260,127			(244,490	)		4,015,637

Depreciation and amortization		1,398,319			68,215			1,466,534
Fixed asset additions		1,508,426			22,121			1,530,547
Total assets	$	70,083,363		$	4,288,478		$	74,371,841

For the nine months ended September 30 , 20 16
Net sales	$	56,043,559		$	2,779,935		$	58,823,494
Gross profit		35,364,389			1,829,018			37,193,407
Operating income		6,644,592			97,148			6,741,740
Interest (expense)		(108,949	)		-			(108,949	)
Other income (expense), net		21,784			5,181			26,965
Income before income taxes		6,557,427			102,329			6,659,756

Depreciation and amortization		1,186,990			86,088			1,273,078
Fixed asset additions		1,330,446			54,985			1,385,431
Total assets	$	65,960,965		$	3,837,798		$	69,798,763

Net sales for geographic areas were as follows

Three months ended S e ptember 30,	20 17		20 16
United States	$	15,551,725	$	15,955,084
Canada		1,653,051		1,597,652
All other countries		1,183,605		1,075,626
	$	18,388,381	$	18,628,362

Nine months ended September 30,	2017		20 16
United States	$	49,380,463	$	50,293,346
Canada		5,072,785		5,085,955
All other countries		3,365,748		3,444,193
	$	57,818,996	$	58,823,494

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

nine

-month periods ended

September 30, 2017

and

2016.

We do

not

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