Revenue

9 Months Ended

Sep. 30, 2019

4. Revenue—The Company operates in the fastener industry and is in the business of manufacturing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines. Revenue is recognized when control of the promised goods or services is transferred to our customers, generally upon shipment of goods or completion of services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. For certain assembly equipment segment transactions, revenue is recognized based on progress toward completion of the performance obligation using a labor-based measure. Labor incurred and specific material costs are compared to milestone payments per sales contract. Based on our experience, this method most accurately reflects the transfer of goods under such contracts. During the second quarter of 2019, the Company realized $219,700 related to such a contract and the remaining performance obligation under that contract of $118,300 was recognized as revenue in the third quarter.

Sales taxes we may collect concurrent with revenue producing activities are excluded from revenue. Revenue is recognized net of certain sales adjustments to arrive at net sales as reported on the statement of income. These adjustments primarily relate to customer returns and allowances. The Company records a liability and reduction in sales for estimated product returns based upon historical experience. If we determine that our obligation under warranty claims is probable and subject to reasonable determination, an estimate of that liability is recorded as an offset against revenue at that time. As of September 30, 2019 and December 31, 2018 reserves for warranty claims were not material. Cash received by the Company prior to shipment is recorded as unearned revenue.

Shipping and handling fees billed to customers are recognized in net sales, and related costs as cost of sales, when incurred.

Sales commissions are expensed when incurred because the amortization period is less than one year. These costs are recorded within selling and administrative expenses in the statement of income.

The following table presents revenue by segment, further disaggregated by end-market:

	Fastener	Assembly Equipment	Consolidated
Three Months Ended September 30, 2019:
Automotive	$ 4,698,298	$ 61,298	$ 4,759,596
Non-automotive	2,608,597	820,712	3,429,309
Total net sales	$ 7,306,895	$ 882,010	$ 8,188,905

Three Months Ended September 30, 2018:
Automotive	$ 5,291,033	$ 100,751	$ 5,391,784
Non-automotive	2,645,765	818,500	3,464,265
Total net sales	$ 7,936,798	$ 919,251	$ 8,856,049

Nine Months Ended September 30, 2019:
Automotive	$ 14,296,552	$ 166,713	$ 14,463,265
Non-automotive	8,406,167	2,816,602	11,222,769
Total net sales	$ 22,702,719	$ 2,983,315	$ 25,686,034

Nine Months Ended September 30, 2018:
Automotive	$ 17,225,475	$ 189,656	$ 17,415,131
Non-automotive	8,670,697	2,574,646	11,245,343
Total net sales	$ 25,896,172	$ 2,764,302	$ 28,660,474

The following table presents revenue by segment, further disaggregated by location:

	Fastener	Assembly Equipment	Consolidated
Three Months Ended September 30, 2019:
United States	$ 6,252,110	$ 823,137	$ 7,075,247
Foreign	1,054,785	58,873	1,113,658
Total net sales	$ 7,306,895	$ 882,010	$ 8,188,905

Three Months Ended September 30, 2018:
United States	$ 6,926,372	$ 856,248	$ 7,782,620
Foreign	1,010,426	63,003	1,073,429
Total net sales	$ 7,936,798	$ 919,251	$ 8,856,049

Nine Months Ended September 30, 2019:
United States	$ 19,443,934	$ 2,731,126	$ 22,175,060
Foreign	3,258,785	252,189	3,510,974
Total net sales	$ 22,702,719	$ 2,983,315	$ 25,686,034

Nine Months Ended September 30, 2018:
United States	$ 22,659,279	$ 2,608,197	$ 25,267,476
Foreign	3,236,893	156,105	3,392,998
Total net sales	$ 25,896,172	$ 2,764,302	$ 28,660,474