Segment Information

12 Months Ended

Dec. 31, 2016

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, home, office, hardware, sporting goods and industrial use.

Domestic sales orders are filled from the Company’s distribution centers in North Carolina, Washington and Massachusetts. 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 18% of the Company’s total net sales in 2016 and 2015, 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.

The following table sets forth certain financial data by segment for the fiscal years ended December 31, 2016 and 2015:

Financial data by segment:

Year Ended December 31, 2016
(000's omitted)	United States		Canada		Europe		Consolidated
Net sales	$	110,793	$	6,824	$	6,957	$	124,574
Operating income		7,769		568		105		8,442
Assets		84,104		3,882		4,080		92,066
Additions to property, plant and equipment		1,737		7		44		1,789
Depreciation and amortization		2,362		8		23		2,393
Year Ended December 31, 2015
Net sales	$	96,622	$	6,804	$	6,385	$	109,812
Operating income		7,147		56		144		7,347
Assets		73,688		3,709		4,024		81,421
Additions to property, plant and equipment		1,720		19		17		1,757
Depreciation and amortization		2,017		8		28		2,053

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

	2016		2015
Total operating income	$	8,442	$	7,347
Interest expense, net		869		565
Other expense, net		77		167
Consolidated income before taxes	$	7,497	$	6,614
Net Income	$	5,851	$	4,794

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

Revenues	2016		2015
United States	$	109,823	$	95,652
International:
Canada		6,824		6,804
Europe		6,957		6,385
Other		970		971
Total International	$	14,751	$	14,160
Total Revenues	$	124,574	$	109,812