Segment Information

9 Months Ended

Sep. 30, 2016

Segment Information [Abstract]

Segment Information

6. Segment Information

Since the December 2015 sale of the NATG business, the Company has operated and is internally managed in two reportable business segments— Industrial Products Group (“IPG”) and EMEA Technology Products Group (“EMEA”).   Smaller business operations and corporate functions are aggregated and reported as the additional segment – Corporate and Other (“Corporate”).  As previously stated in December 2015, the Company sold certain assets and liabilities of the NATG business and since that time has been winding down the NATG business.  This wind-down was substantially completed during the second quarter of 2016 and during the third quarter, the Company continued with collecting accounts receivable, settling accounts payable, marketing remaining leased facilities, as well as, settling remaining lease obligations and other contingencies. On September 2, 2016 the Company sold certain assets of its Misco Germany operations which had been reported as part of its European Technology Products Group (“EMEA”) segment.  As this disposition was not a strategic shift with a major impact as defined under ASU 2014-08, prior and current year results of the German operations are presented within continuing operations in the Condensed Consolidated Financial Statements.  For the quarter ended September 30, 2016, net sales of Misco Germany included in continuing operations were $7.5 million and net loss was $3.4 million. For the nine months ended September 30, 2016, net sales of Misco Germany included in continuing operations were $33.8 million and net loss was $5.8 million.

IPG sells a wide array of maintenance, repair and operations (“MRO”) products which are marketed in North America.  Most of these products are manufactured by other companies; however, the Company does offer a selection of products that are manufactured to our own design and marketed on a private label basis.

EMEA sells products categorized as Information and Communications Technology (“ICT”) and Consumer Electronics (“CE”).  These products include computers, computer supplies and consumer electronics which are marketed in Europe.  Substantially all of these products are manufactured by other companies; however, the Company does offer a selection of products that are manufactured to our own design and marketed on a private label basis.

The Company’s chief operating decision-maker is the Company’s Chief Executive Officer (“CEO”).  The CEO, in his role as Chief Operating Decision Maker (“CODM”), evaluates segment performance based on operating income (loss) from continuing operations.  The CODM reviews assets and makes significant capital expenditure decisions for the Company on a consolidated basis only.  The accounting policies of the segments are the same as those of the Company.  Corporate costs not identified with the disclosed segments are grouped as “Corporate and other expenses”.

The IPG and EMEA segments sell dissimilar products.  IPG products are generally higher in price, lower in volume and higher in product margin.  EMEA products are generally higher in volume, lower in price and lower in product margin as compared to IPG.  This results in higher operating margin for the IPG segment.  Each segment incurs specifically identifiable selling, general and administrative expenses, with the selling, general and administrative expenses for the IPG segment being higher as a percentage of sales than those of the EMEA segment as a result of the IPG segment having a longer selling cycle for its business customers and a business model requiring greater advertising expenditures than the EMEA segment. Additionally, the IPG segment’s vendors generally do not provide funding to offset its marketing expenses.

Financial information relating to the Company’s continuing operations by reportable segment was as follows (in millions).  NATG which was previously shown as its own reportable segment is included below for net sales and operating losses that remain in continuing operations.

	Three Months Ended September 30						Nine Months Ended September 30
	2016			2015			2016			2015
Net sales:
IPG	$	187.4		$	180.1		$	539.8		$	519.9
EMEA		226.5			241.8			722.8			767.0
NATG		-			0.1			-			98.4
Corporate and other		0.9			1.3			2.8			4.2
Consolidated	$	414.8			423.3			1,265.4			1,389.5
Operating income (loss):
IPG	$	8.3		$	10.3		$	24.8		$	34.0
EMEA		(7.4	)		(1.8	)		(10.6	)		(8.2	)
NATG		-			(1.3	)		(2.4	)		(37.4	)
Corporate and other expenses		(4.4	)		(3.8	)		(14.7	)		(13.8	)
Consolidated	$	(3.5	)	$	3.4		$	(2.9	)	$	(25.4	)

Financial information relating to the Company’s continuing operations by geographic area was as follows (in millions):

	Three Months Ended September 30				Nine Months Ended September 30
	2016		2015		2016		2015
Net sales:
United States	$	181.4	$	174.1	$	522.4	$	583.9
France		94.4		82.4		298.2		264.4
United Kingdom		62.0		82.3		194.3		263.0
Other Europe		70.1		77.1		230.3		239.6
Other North America		6.9		7.4		20.2		38.6
Consolidated	$	414.8	$	423.3	$	1,265.4	$	1,389.5

Revenue is attributed to countries based on the location of the selling subsidiary.