17.

FINANCIAL INFORMATION BY SEGMENT & GEOGRAPHIC AREA

The Company offers its broad array of measuring and cutting products to the market through multiple channels of distribution throughout the world. The Company’s products include precision tools, electronic gages, gage blocks, optical vision and laser measuring equipment, custom engineered granite solutions, tape measures, levels, chalk products, squares, band saw blades, hole saws, hacksaw blades, jig saw blades, reciprocating saw blades,

M1®

lubricant and precision ground flat stock. The Company reviews and manages its business geographically and has historically made decisions based on worldwide operations. In fiscal

2016,

the Company changed its reportable business segment from

one

reportable segment to

two

reportable segments, specifically, North American Operations and International Operations. The Company has recast its segment information disclosure for all periods presented to conform to this segment presentation.

The North American segment’s operations include all manufacturing and sales in the United States, Canada and Mexico. The International segment’s operations include all locations outside North America, primarily in Brazil, United Kingdom and China. The chief operating decision maker reviews operations on a geographical basis and decisions about where to invest the Company’s resources are made based on the current results and forecasts of operations in those geographies. Since the markets for the Company’s products are sufficiently different in North America than they are in the rest of the world and in view of the significant impact that currency fluctuation plays outside the United States on the revenue of the Company, the Company’s business review separates North America from operations outside North America. For this reason, the Company is reflecting

two

operating segments that align with management’s review of operations and decisions to allocate resources.

Segment income is measured for internal reporting purposes by excluding corporate expenses, other income and expense including interest income and interest expense and income taxes. Corporate expenses consist primarily of executive compensation, certain professional fees, and costs associated with the Company’s global headquarters. Financial results for each reportable segment are as follows (in thousands):

	Year Ended June 30, 2018
	North America		International		Unallocated			Total
Sales 1	$	128,442	$	87,886	$	-		$	216,328
Operating income		8,175		2,128		(5,579	)		4,724
Capital expenditures and software development		3,426		2,336		-			5,762
Depreciation and amortization		4,923		2,588		-			7,511
Current assets 4		37,546		60,855		14,827			113,228
Long-lived assets 5		37,489		13,010		18,559			69,058

	Year Ended June 30, 2017
	North America			International			Unallocated			Total
Sales 2	$	124,606		$	82,417		$	-		$	207,023
Restructuring charges		(82	)		(906	)		-			(988	)
Operating income		6,138			268			(7,450	)		(1,044	)
Capital expenditures and software development		2,765			3,071			-			5,836
Depreciation and amortization		4,551			2,475			-			7,026
Current assets 4		33,555			61,961			14,607			110,123
Long-lived assets 5		39,199			14,684			28,659			82,542

	Year Ended June 30, 2016
	North America			International			Unallocated			Total
Sales 3	$	130,108		$	79,577		$	-		$	209,685
Asset impairment		4,114			-			-			4,114
Operating loss		(8,311	)		(3,117	)		(9,017	)		(20,445	)
Capital expenditures and software development		5,040			3,200			-			8,240
Depreciation and amortization		4,537			2,677			-			7,214
Current assets 4		33,787			62,810			24,314			120,911
Long-lived assets 5		36,539			13,995			30,153			80,687

Excludes

$6,468

of North American segment intercompany sales to the International segment and

$14,239

intercompany sales of the International segment to the North American segment.

Excludes

$7,902

of North American segment intercompany sales to the International segment and

$11,677

intercompany sales of the International segment to the North American segment.

Excludes

$8,259

of North American segment intercompany sales to the International segment and

$9,282

intercompany sales of the International segment to the North American segment.

Current assets primarily consist of accounts receivable, inventories and prepaid expenses. Assets

not

allocated to the segments include cash and cash equivalents, deferred income taxes, and other non-current assets.

Long lived assets consist of property, plant and equipment, goodwill, and other intangible assets. Long term deferred and other tax assets are

not

allocated to the segments.

Geographic information about the Company’s sales and long-lived assets are as follows (in thousands):

Sales

	Year Ended June 30,
North America	2018		2017		2016
United States	$	119,226	$	115,562	$	119,638
Canada & Mexico		9,216		9,044		10,470
		128,442		124,606		130,108
International
Brazil		49,726		45,614		43,283
United Kingdom		25,099		24,954		24,485
China		7,323		6,873		7,207
Australia & New Zealand		5,738		4,976		4,602
		87,886		82,417		79,577
Total Sales	$	216,328	$	207,023	$	209,685

Long-lived Assets

	Year Ended June 30,
North America	2018		2017		2016
United States	$	37,437	$	39,131	$	36,189
Canada & Mexico		52		68		350
		37,489		39,199		36,539
International
Brazil		8,662		10,111		8,818
United Kingdom		1,876		1,976		2,143
China		2,346		2,426		2,887
Australia & New Zealand		126		171		147
		13,010		14,684		13,995

Total Long Lived Assets	$	50,499	$	53,883	$	50,534