Segment Information

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements

Segment Information

Note 5— Segment Information

The Company reports financial information based on the organizational structure used by management for making operating and investment decisions and for assessing performance. The Company’s reportable business segments consist of: (1) United States; (2) Canada and (3) Europe. As described below, the activities of the Company’s Asian operations are closely linked to those of the U.S. operations; accordingly, management reviews the financial results of both on a consolidated basis, and the results of the Asian operations have been aggregated with the results of the United States operations to form one reportable segment called the “United States segment” or “U.S. segment”. Each reportable segment derives its revenue from the sales of cutting devices, measuring instruments and safety products for school, office, home, hardware and industrial use.

Domestic sales orders are filled from the Company’s distribution center in North Carolina. The Company is responsible for the costs of shipping, insurance, customs clearance, duties, storage and distribution related to such products.  Orders filled from the Company’s inventory are generally for less than container-sized lots.

Direct import sales are products sold by the Company’s Asian subsidiary, directly to major U.S. retailers, who take ownership of the products in Asia. These sales are completed by delivering product to the customers’ common carriers at the shipping points in Asia. Direct import sales are made in larger quantities than domestic sales, typically full containers. Direct import sales represented approximately 28% and 22% of the Company’s total net sales for the three and six months ended June 30, 2012 compared to 23% and 18% for the comparable periods in 2011.

The chief operating decision maker evaluates the performance of each operating segment based on segment revenues and operating income. Segment amounts are presented after converting to U.S. dollars and consolidating eliminations.

Financial data by segment:

(in thousands)

	Three months ended June 30,						Six months ended June 30,
Sales to external customers:	2012			2011			2012		2011
United States	$	22,563		$	18,527		$	35,160	$	29,086
Canada		3,310			3,324			4,967		5,178
Europe		1,721			2,178			4,345		4,166
Consolidated	$	27,594		$	24,029		$	44,472	$	38,430
Operating income (loss):
United States	$	2,587		$	1,862		$	2,753	$	1,983
Canada		521			599			571		749
Europe		(30	)		(1	)		212		(89	)
Consolidated	$	3,078		$	2,460		$	3,536	$	2,643
Interest expense, net		62			74			117		121
Other expense (income), net		43			3			86		(22	)
Consolidated income before taxes	$	2,973		$	2,383		$	3,333	$	2,544

Assets by segment:
( in thousands )
		June 30,		December 31,
		2012		2011
United States	$	57,236	$	43,174
Canada		6,326		6,033
Europe		5,592		6,015
Consolidated	$	69,154	$	55,222