Segment Information

6 Months Ended

Jun. 30, 2016

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 first aid products for school, office, home, hardware, sporting and industrial markets.

Domestic sales orders are primarily 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 shipping points in Asia. Direct import sales are made in larger quantities than domestic sales, typically full containers. Direct import sales represented approximately 25% and 20% of the Company’s total net sales for the three and six months ended June 30, 2016 compared to 27% and 20% for the comparable periods in 2015.

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:	2016		2015			2016			2015
United States	$	36,296	$	29,649		$	58,822		$	49,782
Canada		2,646		2,813			4,039			4,054
Europe		2,055		1,492			3,425			2,955
Consolidated	$	40,997	$	33,954		$	66,285		$	56,791
Operating income (loss):
United States	$	4,246	$	3,552		$	5,190		$	4,522
Canada		377		282			410			175
Europe		17		41			(6	)		4
Consolidated	$	4,640	$	3,875		$	5,595		$	4,701
Interest expense, net		211		141			395			271
Other expense (income) , net		11		(20	)		(27	)		56
Consolidated income before taxes	$	4,418	$	3,754		$	5,227		$	4,374

Assets by segment:
( in thousands )
	June 30,		December 31,
	2016		2015
United States	$	95,643	$	73,688
Canada		5,130		3,709
Europe		3,955		4,024
Consolidated	$	104,728	$	81,421