Annual report pursuant to Section 13 and 15(d)

Industry, Segment and Geographic Information

v3.6.0.2
Industry, Segment and Geographic Information
 12 Months Ended
Dec. 31, 2016
Industry, Segment and Geographic Information  
Industry, Segment and Geographic Information

9.  Industry, Segment and Geographic Information

 

The Company distributes software developed by others through resellers indirectly to customers worldwide.  We also resell computer software and hardware developed by others and provide technical services directly to customers in the USA and Canada.  We also operate a sales branch in Europe to serve our customers in this region of the world.

 

Geographic revenue and identifiable assets related to operations as of and for the years ended December 31, 2016, 2015 and 2014 were as follows. Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.  No one country other than the USA represents more than 10% of net sales for 2016, 2015 or 2014.

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2016

    

2015

    

2014

 

Net sales to Unaffiliated Customers:

 

 

              

 

 

              

 

 

              

 

USA

 

$
364,989

 

$
336,110

 

$
294,274

 

Canada

 

 
28,491

 

 
23,957

 

 
23,757

 

Rest of the world

 

 
24,651

 

 
22,023

 

 
22,727

 

Total

 

$
418,131

 

$
382,090

 

$
340,758

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2016

    

2015

    

2014

 

Identifiable Assets by Geographic Areas at December 31,

 

 

               

 

 

               

 

 

               

 

USA

 

$
106,014

 

$
87,679

 

$
87,324

 

Canada

 

 
7,684

 

 
6,403

 

 
7,657

 

Total

 

$
113,698

 

$
94,082

 

$
94,981

 

 

FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the Company’s Chief Operating Decision Maker (CODM) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s CODM is the Chief Executive Officer.

 

The Company is organized into two reportable operating segments.  The “Lifeboat Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide.  The “TechXtend” segment is a value-added reseller of software, hardware and services for corporations, government organizations and academic institutions in the USA and Canada.

 

As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada with the domestic segments as they provide the same products and services to similar clients and are considered together when the CODM decides how to allocate resources.

 

Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to a business unit. The Company only identifies accounts receivable and inventory by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

 

December 31,

 

 

    

2016

    

2015

    

2014

 

Revenue:

 

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
369,519

 

$
339,708

 

$
290,449

 

TechXtend

 

 
48,612

 

 
42,382

 

 
50,309

 

 

 

 
418,131

 

 
382,090

 

 
340,758

 

Gross Profit:

 

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
22,349

 

$
21,530

 

$
19,194

 

TechXtend

 

 
4,982

 

 
5,043

 

 
5,616

 

 

 

 
27,331

 

 
26,573

 

 
24,810

 

Direct Costs:

 

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
7,478

 

$
7,719

 

$
5,660

 

TechXtend

 

 
2,098

 

 
2,269

 

 
3,104

 

 

 

 
9,576

 

 
9,988

 

 
8,764

 

Segment Income Before Taxes:

 

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
14,871

 

$
13,811

 

$
13,534

 

TechXtend

 

 
2,884

 

 
2,774

 

 
2,512

 

Segment Income Before Taxes

 

 
17,755

 

 
16,585

 

 
16,046

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 
9,139

 

 
8,075

 

 
7,749

 

Interest income

 

 
318

 

 
368

 

 
472

 

Foreign currency translation

 

 
(1)

 

 
(20)

 

 
(11)

 

Income before taxes

 

$
8,933

 

$
8,858

 

$
8,758

 

 

 

 

 

 

 

 

 

 

 

    

As of 

    

As of 

 

 

 

December 31,

 

December 31,

 

Selected Assets By Segment:

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
64,558

 

$
45,300

 

TechXtend

 

 
32,202

 

 
23,005

 

Segment Select Assets

 

 
96,760

 

 
68,305

 

Corporate Assets

 

 
16,938

 

 
25,777

 

Total Assets

 

$
113,698

 

$
94,082

 

 

The Company had two customers that each accounted for more than 10% of total sales for 2016. For the year ended December 31, 2016, Software House International Corporation (“SHI”), and CDW Corporation (“CDW”) accounted for 19.6%, and 17.9%, respectively, of consolidated net sales and, as of December 31, 2016, 13.3% and 23.2%, respectively, of total net accounts receivable. For the year ended December 31, 2016, Sophos and Solarwinds accounted for 23.1% and 10.8% , respectively of our  consolidated purchases.

 

For the year ended December 31, 2015, SHI, and CDW accounted for 19.0%, and 17.9%, respectively, of consolidated net sales.. For the year ended December 31, 2015, Sophos was the only individual vendor from whom our purchases exceeded 10% of our total purchases and accounted for 24.2% of our total purchases. 

 

For the year ended December 31, 2014, SHI, CDW, and Insight Enterprises, Inc.  accounted for 17.4%,  16.4% and 11.0%, respectively, of consolidated net sales.  For the year ended December 31, 2014, Sophos was the only individual vendor from whom our purchases exceeded 10% of our total purchases and accounted for 14.7% of our total purchases.

 

 Our top five customers accounted for 48%,  52%, and 52% of consolidated net sales in 2016, 2015 and 2014, respectively.