(8) BUSINESS SEGMENTS
Our business is organized in the following three segments: Explosive Metalworking, Oilfield Products, and AMK Welding. The Explosive Metalworking segment uses explosives to perform metal cladding and shock synthesis of industrial diamonds. The most significant product of this group is clad metal which is used in the fabrication of pressure vessels, heat exchangers, and transition joints for various industries, including upstream oil and gas, oil refinery, petrochemicals, hydrometallurgy, aluminum production, shipbuilding, power generation, industrial refrigeration, and similar industries. The Oilfield Products segment manufactures, markets and sells oilfield perforating equipment and explosives, including detonating cords, detonators, bi-directional boosters and shaped charges, and seismic related explosives and accessories. AMK Welding utilizes a number of welding technologies to weld components for manufacturers of jet engine and ground-based turbines.
The accounting policies of all the segments are the same as those described in the summary of significant accounting policies. Our reportable segments are separately managed strategic business units that offer different products and services. Each segment’s products are marketed to different customer types and require different manufacturing processes and technologies.
Beginning in 2011, we changed our methodology of allocating corporate overhead to our business segments. In connection with this change, we no longer allocate certain corporate expenses that do not directly benefit our business segments. The business segment disclosure for the years ended December 31, 2010 and 2009 presented below reflects our new allocation methodology.
Segment information is presented for the years ended December 31, 2011, 2010 and 2009 as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Explosive |
|
Oilfield |
|
AMK |
|
|
|
|
|
Metalworking |
|
Products |
|
Welding |
|
Total |
|
As of and for the year ended December 31, 2011: |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
126,199 |
|
$ |
72,782 |
|
$ |
9,910 |
|
$ |
208,891 |
|
Depreciation and amortization |
|
$ |
5,833 |
|
$ |
4,877 |
|
$ |
489 |
|
$ |
11,199 |
|
Income from operations |
|
$ |
16,058 |
|
$ |
6,188 |
|
$ |
2,056 |
|
$ |
24,302 |
|
Unallocated amounts: |
|
|
|
|
|
|
|
|
|
Corporate expenses |
|
|
|
|
|
|
|
(2,686 |
) |
Stock-based compensation |
|
|
|
|
|
|
|
(3,397 |
) |
Other income |
|
|
|
|
|
|
|
528 |
|
Interest expense |
|
|
|
|
|
|
|
(1,945 |
) |
Interest income |
|
|
|
|
|
|
|
8 |
|
Consolidated income before income taxes |
|
|
|
|
|
|
|
$ |
16,810 |
|
Segment assets |
|
$ |
102,473 |
|
$ |
92,070 |
|
$ |
6,006 |
|
$ |
200,549 |
|
Assets not allocated to segments: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
5,276 |
|
Prepaid expenses and other assets |
|
|
|
|
|
|
|
5,647 |
|
Deferred tax assets |
|
|
|
|
|
|
|
1,954 |
|
Consolidated total assets |
|
|
|
|
|
|
|
$ |
213,426 |
|
Capital expenditures |
|
$ |
4,338 |
|
$ |
2,904 |
|
$ |
484 |
|
$ |
7,726 |
|
|
|
Explosive |
|
Oilfield |
|
AMK |
|
|
|
|
|
Metalworking |
|
Products |
|
Welding |
|
Total |
|
As of and for the year ended December 31, 2010: |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
98,570 |
|
$ |
45,332 |
|
$ |
10,837 |
|
$ |
154,739 |
|
Depreciation and amortization |
|
$ |
5,891 |
|
$ |
4,351 |
|
$ |
471 |
|
$ |
10,713 |
|
Income from operations |
|
$ |
7,461 |
|
$ |
2,426 |
|
$ |
2,617 |
|
$ |
12,504 |
|
Equity in earnings of joint ventures |
|
$ |
— |
|
$ |
255 |
|
$ |
— |
|
255 |
|
Unallocated amounts: |
|
|
|
|
|
|
|
|
|
Corporate expenses |
|
|
|
|
|
|
|
(2,214 |
) |
Stock-based compensation |
|
|
|
|
|
|
|
(3,501 |
) |
Other income |
|
|
|
|
|
|
|
2,316 |
|
Interest expense |
|
|
|
|
|
|
|
(3,046 |
) |
Interest income |
|
|
|
|
|
|
|
74 |
|
Consolidated income before income taxes |
|
|
|
|
|
|
|
$ |
6,388 |
|
Segment assets |
|
$ |
96,344 |
|
$ |
89,169 |
|
$ |
5,403 |
|
$ |
190,916 |
|
Assets not allocated to segments: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
4,572 |
|
Prepaid expenses and other assets |
|
|
|
|
|
|
|
4,600 |
|
Deferred tax assets |
|
|
|
|
|
|
|
1,305 |
|
Consolidated total assets |
|
|
|
|
|
|
|
$ |
201,393 |
|
Capital expenditures |
|
$ |
2,407 |
|
$ |
832 |
|
$ |
288 |
|
$ |
3,527 |
|
|
|
Explosive |
|
Oilfield |
|
AMK |
|
|
|
|
|
Metalworking |
|
Products |
|
Welding |
|
Total |
|
As of and for the year ended December 31, 2009: |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
134,096 |
|
$ |
21,764 |
|
$ |
9,038 |
|
$ |
164,898 |
|
Depreciation and amortization |
|
$ |
5,988 |
|
$ |
3,662 |
|
$ |
456 |
|
$ |
10,106 |
|
Income (loss) from operations |
|
$ |
23,301 |
|
$ |
(3,074 |
) |
$ |
1,671 |
|
$ |
21,898 |
|
Equity in earnings of joint ventures |
|
$ |
— |
|
$ |
221 |
|
$ |
— |
|
221 |
|
Unallocated amounts: |
|
|
|
|
|
|
|
|
|
Corporate expenses |
|
|
|
|
|
|
|
(2,235 |
) |
Stock-based compensation |
|
|
|
|
|
|
|
(3,425 |
) |
Other expense |
|
|
|
|
|
|
|
(219 |
) |
Interest expense |
|
|
|
|
|
|
|
(3,473 |
) |
Interest income |
|
|
|
|
|
|
|
216 |
|
Consolidated income before income taxes |
|
|
|
|
|
|
|
$ |
12,983 |
|
Segment assets |
|
$ |
114,501 |
|
$ |
76,325 |
|
$ |
5,715 |
|
$ |
196,541 |
|
Assets not allocated to segments: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
22,411 |
|
Prepaid expenses and other assets |
|
|
|
|
|
|
|
3,840 |
|
Deferred tax assets |
|
|
|
|
|
|
|
2,384 |
|
Consolidated total assets |
|
|
|
|
|
|
|
$ |
225,176 |
|
Capital expenditures |
|
$ |
3,017 |
|
$ |
743 |
|
$ |
157 |
|
$ |
3,917 |
|
The geographic location of our property, plant and equipment, net of accumulated depreciation, is as follows:
|
|
As of December 31, |
|
|
|
2011 |
|
2010 |
|
2009 |
|
United States |
|
$ |
21,810 |
|
$ |
20,784 |
|
$ |
21,393 |
|
Germany |
|
9,924 |
|
9,234 |
|
10,388 |
|
France |
|
5,767 |
|
5,742 |
|
6,402 |
|
Canada |
|
2,339 |
|
2,145 |
|
2,311 |
|
Rest of the world |
|
1,562 |
|
1,901 |
|
1,558 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
41,402 |
|
$ |
39,806 |
|
$ |
42,052 |
|
All of our sales are from products shipped from our manufacturing facilities and distribution centers located in the United States, Germany, France, Canada, Sweden (subsequently closed during 2011), Russia and Kazakhstan. The following represents our net sales based on the geographic location of the customer:
|
|
For the years ended December 31, |
|
|
|
2011 |
|
2010 |
|
2009 |
|
United States |
|
$ |
81,410 |
|
$ |
44,587 |
|
$ |
62,955 |
|
South Korea |
|
29,951 |
|
10,309 |
|
5,424 |
|
Canada |
|
24,151 |
|
29,907 |
|
12,991 |
|
Germany |
|
12,960 |
|
25,109 |
|
11,702 |
|
Russia |
|
8,658 |
|
7,067 |
|
4,649 |
|
France |
|
3,828 |
|
5,425 |
|
5,788 |
|
Rest of the world |
|
47,933 |
|
32,335 |
|
61,389 |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
208,891 |
|
$ |
154,739 |
|
$ |
164,898 |
|
During the years ended December 31, 2011, 2010, and 2009, no one customer accounted for more than 10% of total net sales. |