Segment Information

12 Months Ended

Dec. 31, 2013

Segment Information

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 17% and 16% of the Company’s total net sales in 2013 and 2012, 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:

2013
(000's omitted)		United States	Canada	Europe		Consolidated
Net sales	$	73,608	8,092	7,877	$	89,577
Operating income		5,082	557	240		5,879
Assets		57,068	5,329	5,682		68,079
Additions to property, plant and equipment		4,500	47	45		4,592
Depreciation and amortization		845	9	80		934
2012
Net sales		67,510	8,808	8,052		84,370
Operating income (loss)		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

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

	2013		2012
Total operating income	$	5,879	$	5,361
Interest expense, net		350		264
Other expense, net		35		99
Consolidated income before taxes	$	5,494	$	4,998
Net Income	$	4,003	$	3,549

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

Revenues	2013		2012
United States	$	72,676	$	66,694
International:
Canada		8,092		8,808
Europe		7,877		8,052
Other		932		816
Total International	$	16,901	$	17,676
Total Revenues	$	89,577	$	84,370