Segment Information

6 Months Ended

Jun. 30, 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. 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 26% and 20% of the Company’s total net sales for the three and six months ended June 30, 2014 compared to 27% and 21% for the comparable periods in 2013.

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:	2014			2013		2014			2013
United States	$	27,870		$	23,496	$	43,974		$	37,721
Canada		3,673			3,139		5,184			4,765
Europe		1,853			1,777		3,390			3,577
Consolidated	$	33,396		$	28,412	$	52,548		$	46,063
Operating income (loss):
United States	$	3,239		$	2,701	$	3,916		$	3,267
Canada		527			475		559			463
Europe		(28	)		16		(112	)		(24	)
Consolidated	$	3,738		$	3,192	$	4,363		$	3,706
Interest expense, net		106			74		188			142
Other (income) expense , net		(3	)		25		16			28
Consolidated income before taxes	$	3,635		$	3,093	$	4,159		$	3,536

Assets by segment:
( in thousands )
	June 30,		December 31,
	2014		2013
United States	$	75,565	$	57,068
Canada		7,676		5,329
Europe		4,746		5,682
Consolidated	$	87,987	$	68,079