Annual report pursuant to Section 13 and 15(d)

Industry, Segment and Geographic Information

v3.3.1.900
Industry, Segment and Geographic Information
 12 Months Ended
Dec. 31, 2015
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, 2015, 2014 and 2013 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 2015, 2014 or 2013.

 

 

 

2015

 

2014

 

2013

 

Net sales to Unaffiliated Customers:

 

 

 

 

 

 

 

USA

 

$
336,110 

 

$
294,274 

 

$
254,337 

 

Canada

 
23,957 

 
23,757 

 
21,602 

 

Rest of the world

 
22,023 

 
22,727 

 
24,451 

 

 

 

 

 

 

 

 

 

Total

 

$
382,090 

 

$
340,758 

 

$
300,390 

 

 

 

 

 

 

 

 

 

 

 

 

 

Identifiable Assets by Geographic Areas at December 31,

 

2015

 

2014

 

2013

 

USA

 

$
87,679 

 

$
87,324 

 

$
87,025 

 

Canada

 
6,403 

 
7,657 

 
7,735 

 

 

 

 

 

 

 

 

 

Total

 

$
94,082 

 

$
94,981 

 

$
94,760 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2015

 

2014

 

2013

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
339,708

 

$
290,449

 

$
237,632

 

TechXtend

 
42,382

 
50,309

 
62,758

 

 

 

 

 

 

 

 

 

 

 
382,090

 
340,758

 
300,390

 

 

 

 

 

 

 

 

 

Gross Profit:

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
21,530

 

$
19,194

 

$
17,448

 

TechXtend

 
5,043

 
5,616

 
6,907

 

 

 

 

 

 

 

 

 

 

 
26,573

 
24,810

 
24,355

 

 

 

 

 

 

 

 

 

Direct Costs:

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
7,719

 

$
5,660

 

$
4,717

 

TechXtend

 
2,269

 
3,104

 
3,280

 

 

 

 

 

 

 

 

 

 

 
9,988

 
8,764

 
7,997

 

 

 

 

 

 

 

 

 

Segment Income Before Taxes:

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
13,811

 

$
13,534

 

$
12,731

 

TechXtend

 
2,774

 
2,512

 
3,627

 

 

 

 

 

 

 

 

 

Segment Income Before Taxes

 
16,585

 
16,046

 
16,358

 

General and administrative

 
8,075

 
7,749

 
7,508

 

Interest income

 
368

 
472

 
562

 

Foreign currency translation

 
(20

)
(11

)

—

 

 

 

 

 

 

 

 

 

Income before taxes

 

$
8,858

 

$
8,758

 

$
9,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of
December
31, 2015

 

As of
December
31,2014

 

Selected Assets By Segment:

 

 

 

 

 

 

 

Lifeboat Distribution

 

$
45,300 

 

$
39,780 

 

TechXtend

 
23,005 

 
30,153 

 

 

 

 

 

 

 

Segment Select Assets

 
68,305 

 
69,933 

 

Corporate Assets

 
25,777 

 
25,048 

 

 

 

 

 

 

 

Total Assets

 

$
94,082 

 

$
94,981 

 

 

 

 

 

 

 

 

 

 

The Company had two customers that each accounted for more than 10% of total sales for 2015. For the year ended December 31, 2015, Software House International Corporation (“SHI”), and CDW Corporation (“CDW”) accounted for 19.0%, and 17.9%, respectively, of consolidated net sales and, as of December 31, 2015, 14.0%, and 21.9%, respectively, of total net accounts receivable. 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. (“Insight”) 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. For the year ended December 31, 2013, SHI, CDW, and Insight accounted for 14.9%, 13.8% and 12.2%, respectively, of consolidated net sales. For the year ended December 31, 2013, Dell/Quest Software was the only individual vendor from whom our purchases exceeded 10% of our total purchases and accounted for 10.2% of our total purchases. Our top five customers accounted for 52%, 52%, and 48% of consolidated net sales in 2015, 2014 and 2013, respectively.