Annual report pursuant to Section 13 and 15(d)

Industry, Segment and Geographic Information

v3.8.0.1
Industry, Segment and Geographic Information
 12 Months Ended
Dec. 31, 2017
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, 2017, 2016 and 2015 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 2017, 2016 or 2015.

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2017

    

2016

    

2015

 

Net sales to Unaffiliated Customers:

 

 

              

 

 

              

 

 

              

 

USA

 

$

389,925

 

$

364,989

 

$

336,110

 

Canada

 

 

30,289

 

 

28,491

 

 

23,957

 

Rest of the world

 

 

29,165

 

 

24,651

 

 

22,023

 

Total

 

$

449,379

 

$

418,131

 

$

382,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2017

    

2016

    

2015

 

Identifiable Assets by Geographic Areas at December 31,

 

 

               

 

 

               

 

 

               

 

USA

 

$

95,516

 

$

106,014

 

$

87,679

 

Canada

 

 

7,209

 

 

7,684

 

 

6,403

 

Total

 

$

102,725

 

$

113,698

 

$

94,082

 

 

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,

 

  

2017

  

2016

  

2015

Revenue:

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$

417,427

 

$

369,519

 

$

339,708

TechXtend

 

 

31,952

 

 

48,612

 

 

42,382

 

 

 

449,379

 

 

418,131

 

 

382,090

Gross Profit:

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$

23,183

 

$

22,349

 

$

21,530

TechXtend

 

 

3,893

 

 

4,982

 

 

5,043

 

 

 

27,076

 

 

27,331

 

 

26,573

Direct Costs:

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$

7,952

 

$

7,478

 

$

7,719

TechXtend

 

 

1,879

 

 

2,098

 

 

2,269

 

 

 

9,831

 

 

9,576

 

 

9,988

Segment Income Before Taxes:

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$

15,231

 

$

14,871

 

$

13,811

TechXtend

 

 

2,014

 

 

2,884

 

 

2,774

Segment Income Before Taxes

 

 

17,245

 

 

17,755

 

 

16,585

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$

9,432

 

$

9,139

 

$

8,075

Interest, net

 

 

699

 

 

318

 

 

368

Foreign currency translation

 

 

41

 

 

(1)

 

 

(20)

Income before taxes

 

$

8,553

 

$

8,933

 

$

8,858

 

 

 

 

 

 

 

 

 

 

 

    

As of 

    

As of 

 

 

 

December 31,

 

December 31,

 

Selected Assets By Segment:

 

2017

 

2016

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$

72,806

 

$

64,558

 

TechXtend

 

 

21,200

 

 

32,202

 

Segment Select Assets

 

 

94,006

 

 

96,760

 

Corporate Assets

 

 

8,719

 

 

16,938

 

Total Assets

 

$

102,725

 

$

113,698

 

 

The Company had two customers that each accounted for more than 10% of total sales for 2017. For the year ended December 31, 2017, Software House International Corporation (SHI”), and CDW Corporation (“CDW”) accounted for 23.0%, and 19.4%, respectively, of consolidated net sales and, as of December 31, 2017, 15.1% and 28.6%, respectively, of total net accounts receivable. For the year ended December 31, 2017, Sophos and Solarwinds accounted for 26.4% and 14.7%, respectively of our consolidated purchases.

 

For the year ended December 31, 2016, SHI, and CDW accounted for 19.6%, and 17.9%, respectively, of consolidated net sales. 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. 

 

 Our top five customers accounted for 52%,  48%, and 52% of consolidated net sales in 2017, 2016 and 2015, respectively.