6. Segment Information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Information

The Company and its subsidiaries operate in the business of pigment manufacturing and related products in three geographic segments – United States, European and Asian.

United States – This segment represents products manufactured at our facility located in Corpus Christi, Texas. The segment manufactures HITOX, BARTEX, HALTEX, OPTILOAD and TIOPREM which is sold primarily in North, Central and South America. Sales of this segment, which includes intercompany purchases of ALUPREM from our European operation, represented approximately 69% of our consolidated sales for both of the years ended December 31, 2016 and 2015.

European – This segment represents products manufactured at the Company’s wholly-owned operation, TPT, located in the Netherlands. TPT manufactures ALUPREM and BARYPREM which is sold primarily in Europe. Sales of this segment, which include intercompany purchases HITOX and TIOPREM from our Asian operation, represented approximately 24% and 23% of our consolidated sales for the years ended December 31, 2016 and 2015, respectively. Intercompany sales of ALUPREM between the TPT and the U.S. operation are eliminated in consolidation represented 44% and 33% of this segments total sales for the years ended December 31, 2016 and 2015, respectively.

Asian – This segment represents products manufactured at the Company’s wholly-owned operation, TMM, located in Malaysia. TMM manufactures HITOX and TIOPREM which is sold primarily in Asia. Sales of this segment represented approximately 6% and 8% of our consolidated sales for the years ended December 31, 2016 and 2015, respectively. Intercompany sales of HITOX, TIOPREM and SR between the TMM and the U.S. and European operations are eliminated in consolidation represented 65% and 68% of this segments total sales for the years ended December 31, 2016 and 2015, respectively .

The accounting policies of the segments are the same as those described in the Summary of Significant Policies (See Note 1). Product sales of inventory between the U.S., European and Asian operations are based on inter-company pricing, which includes an inter-company profit margin. The segment profit (loss),included in the table below, from each location is reflective of these inter-company prices, as is inventory at the Corpus Christi location prior to elimination adjustments. The elimination entries include an adjustment to the cost of sales resulting from the adjustment to ending inventory to eliminate inter-company profit, and the reversal of a similar adjustment from a prior period. To the extent there are net increases/declines period over period in segment inventories that include an inter-company component, the net effect of these adjustments can decrease/increase location profit.

Such presentation is consistent with the internal reporting reviewed by the Company’s chief operating decision maker (“CODM”). Our CODM regularly reviews financial information about our segments in order to allocate resources and evaluate performance. Our CODM assesses segment performance based on segment sales and segment net income (loss) before depreciation and amortization, interest expense, income taxes, and other items which management does not believe reflect the underlying performance of the segment.

For the year ended December 31, 2016, the U.S. operations received approximately 35% of its total third party sales revenue from a single customer; the European operations received approximately 17% from a single customer; and, the Asian operations received approximately 22% of its total third party sales revenue from a single customer. For the year ended December 31, 2015, the U.S. operations received approximately 25% of its total third party sales revenue from a single customer; the European operations received approximately 28% from two customers (16% and 12%); and, the Asian operations received approximately 34% of its total third party sales revenue from three customers (12%, 11%, and 11%).

Sales from the subsidiary to the parent company are based upon profit margins which represent competitive pricing of similar products. Intercompany sales consisted of ALUPREM, SR, HITOX and TIOPREM.

The Company's principal products, ALUPREM and HITOX, accounted for approximately 44% and 21%, respectively, of net consolidated sales in 2016 and approximately 36% and 28%, respectively in 2015.

The Company sells its products to customers located in more than 60 countries. Sales to external customers are attributed to geographic area based on country of distribution. Sales to customers located in the U.S. represented approximately 62% and 58% for the years ended December 31, 2016 and 2015, respectively.

For the year ended December 31, 2016 and 2015, sales to customers in Germany represented approximately 22% and 23%, respectively, of our total foreign sales and sales to customers in Italy represented 10% of our 2016 total foreign sales.

Approximately 7% of the Company's employees are represented by an in-house collective bargaining agreement during 2016 as compared to approximately 12% in 2015.

A summary of the Company’s manufacturing operations by geographic segment is presented below:

(In thousands)		United States (Corpus Christi)		European (TPT)		Asian (TMM)		Inter-Company Eliminations		Consolidated
As of and for the years ended:
December 31, 2016
Net Sales:
Customer sales	$	26,678	$	9,313	$	2,465	$	-	$	38,456
Intercompany sales		98		7,357		4,535		(11,990)		-
Total Net Sales	$	26,776	$	16,670	$	7,000	$	(11,990)	$	38,456
Share based compensation	$	170	$	-	$	-	$	-	$	170
Depreciation	$	1,076	$	1,343	$	142	$	-	$	2,561
Interest (income) expense	$	(2)	$	107	$	72	$	-	$	177
Income tax (benefit) expense	$	(131)	$	247	$	-	$	(9)	$	107
Location profit (loss)	$	(406)	$	826	$	34	$	(10)	$	444
Capital expenditures	$	463	$	735	$	5	$	-	$	1,203
Location long-lived assets	$	5,291	$	9,832	$	784	$	-	$	15,907
Location assets	$	17,013	$	13,417	$	6,013	$	(714)	$	35,729
December 31, 2015
Net Sales:
Customer sales	$	25,646	$	8,619	$	2,794	$	-	$	37,059
Intercompany sales		37		4,309		5,832		(10,178)		-
Total Net Sales	$	25,683	$	12,928	$	8,626	$	(10,178)	$	37,059
Share based compensation	$	133	$	-	$	-	$	-	$	133
Depreciation	$	1,011	$	1,174	$	678	$	-	$	2,863
Interest expense	$	13	$	25	$	170	$	-	$	208
Income tax (benefit) expense	$	(318)	$	(69)	$	681	$	16	$	310
Location profit (loss)	$	(760)	$	(225)	$	(5,437)	$	58	$	(6,364)
Capital expenditures	$	1,335	$	4,676	$	6	$	-	$	6,017
Location long-lived assets	$	5,904	$	10,618	$	950	$	-	$	17,472
Location assets	$	16,449	$	13,617	$	8,061	$	(1,419)	$	36,708