Segment Information

3 Months Ended

Mar. 31, 2014

Segment Information

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. operating 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 10% and 12% of the Company’s total net sales for the three months ended March 31, 2014 and 2013, respectively.

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 March 31
Sales to external customers:	2014			2013
United States	$	16,105		$	14,227
Canada		1,510			1,625
Europe		1,537			1,799
Consolidated	$	19,152		$	17,651
Operating income:
United States	$	676		$	564
Canada		32			(10	)
Europe		(83	)		(41	)
Consolidated	$	625		$	513
Interest expense, net		83			69
Other expense, net		19			3
Consolidated income before income taxes	$	523		$	441

	March 31		December 31
Assets by segment	2014		2013
United States	$	51,542	$	57,068
Canada		5,555		5,329
Europe		4,684		5,682
Consolidated	$	61,781	$	68,079