Segment Information

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

Segment Information

10. 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 include (1) United States; (2) Canada and (3) Europe.  The financial results for the Company’s Asian operations have been aggregated with the results of its United States operations to form one reportable segment called the “United States segment”.  Sales in the United States segment include both domestic sales as well as direct import sales.  Each reportable segment derives its revenue from the sales of cutting devices, measuring instruments and first aid 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 19% and 15% of the Company’s total net sales in 2012 and 2011, respectively.

The Chief Operating Decision Maker evaluates the performance of each operating segment based on segment revenues and operating income. Segment revenues are defined as total revenues, including both external customer revenue and inter-segment revenue. Segment operating earnings are defined as segment revenues, less cost of goods sold and operating expenses. Identifiable assets by segment are those assets used in the respective reportable segment’s operations. Inter-segment amounts are eliminated to arrive at consolidated financial results.

Financial data by segment:

2012
(000's omitted)	United States		Canada		Europe			Consolidated
Sales to unaffiliated customers	$	67,510		8,808		8,052		$	84,370
Operating income		4,394		775		192			5,361
Assets		56,115		6,107		5,606			67,828
Additions to property, plant and equipment		656		14		11			681
Depreciation and amortization		980		36		73			1,089
2011
Sales to unaffiliated customers	$	56,663	$	8,514	$	8,125		$	73,302
Operating income (loss)		3,485		924		(124	)		4,285
Assets		43,174		6,033		6,015			55,222
Additions to property, plant and equipment		912		26		3			941
Depreciation and amortization		857		36		85			978

The following is a reconciliation of segment operating income to consolidated income before taxes:

	2012		2011
Total operating income	$	5,361	$	4,285
Interest expense, net		264		255
Other expense, net		99		4
Consolidated income before taxes	$	4,998	$	4,026
Net Income	$	3,549	$	2,811

The table below presents revenue by geographic area. Revenues are attributed to countries based on location of the customer.

Revenues	2012		2011
United States	$	66,694	$	55,856
International:
Canada		8,808		8,514
Europe		8,052		8,125
Other		816		807
Total International	$	17,676	$	17,446
Total Revenues	$	84,370	$	73,302