Segment Information

3 Months Ended

Mar. 31, 2022

Segment Information [Abstract]

Segment Information

5. 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 first aid and medical products, cutting and sharpening devices and measuring instruments 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, Florida 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 6% of the Company’s total net sales for the three months ended March 31, 2022, compared to 7% for the comparable period in 2021. The decrease resulted primarily from COVID-related supply chain disruptions in China.

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 three months ended March 31, 2022 and 2021:

Financial data by segment:

(in thousands)

	Three Months Ended March 31,
Sales to external customers:	2022			2021
United States	$	35,741		$	36,048
Canada		3,615			3,333
Europe		3,977			4,144
Consolidated	$	43,333		$	43,525
Operating income:
United States	$	811		$	2,133
Canada		386			370
Europe		174			465
Consolidated	$	1,371		$	2,968
Interest expense, net		305			221
Other (income) expense, net		(2	)		77
Consolidated income before income taxes	$	1,068		$	2,670

Assets by segment:

(in thousands)

	March 31,		December 31,
	2022		2021
United States	$	134,291	$	125,521
Canada		9,327		9,100
Europe		9,459		9,818
Consolidated	$	153,077	$	144,439