Segment Information

12 Months Ended

Dec. 31, 2018

Segment Information

Segment Information

11. Segment Information

The Company reports financial information based on the organizational structure used by the Company’s chief operating decision makers 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, the Company’s chief operating decision makers review 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, sporting and industrial use.

Domestic sales orders are filled primarily from the Company’s distribution centers in North Carolina, Washington, Massachusetts, Tennessee and California. 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 12% and 11% of the Company’s total net sales in 2018 and 2017, 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, 2018 and 2017:

Financial data by segment:   

(000’s omitted) 

Year Ended December 31, 2018:
	United States		Canada		Europe		Consolidated
Net sales	$	120,993	$	7,040	$	9,288	$	137,321
Operating income		6,103		884		470		7,457
Assets		99,720		3,839		5,918		109,477
Additions to property, plant and equipment		2,705		83		63		2,851
Depreciation and amortization		3,153		9		67		3,229

Year Ended December 31, 2017:
	United States		Canada		Europe		Consolidated
Net sales	$	115,407	$	6,935	$	8,208	$	130,550
Operating income		6,788		775		320		7,883
Assets		104,431		4,926		5,373		114,730
Additions to property, plant and equipment		7,014		19		113		7,146
Depreciation and amortization		2,845		8		42		2,895

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

	2018		2017
Total operating income	$	7,457	$	7,883
Interest expense, net		1,858		1,327
Other expense		67		63
Consolidated income before taxes	$	5,532	$	6,493

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

Revenues	2018		2017
United States	$	119,573	$	114,231
International:
Canada		7,040		6,935
Europe		9,288		8,208
Other		1,420		1,176
Total International	$	17,748	$	16,319
Total Revenues	$	137,321	$	130,550