Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.22.1
Segment Information
3 Months Ended
Mar. 31, 2022
Segment Information  
Segment Information

15.          Segment 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 worldwide.

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 public 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 “Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “Solutions” segment is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide.

As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada, Europe and the United Kingdom with the domestic segments as the international operations provide the same products and services to similar clients and are considered together when the Company’s 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 an individual segment business unit. The Company only identifies accounts receivable, vendor prepayments and inventory by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided:

Three months ended

March 31,

  

2022

  

2021

Net Sales:

Distribution

$

65,784

$

54,820

Solutions

 

5,535

 

7,993

 

71,319

 

62,813

Gross Profit:

Distribution

$

9,593

$

7,874

Solutions

 

2,388

 

2,969

 

11,981

 

10,843

Direct Costs:

Distribution

$

3,664

$

3,913

Solutions

 

1,138

 

1,408

 

4,802

 

5,321

Segment Income Before Taxes: (1)

Distribution

$

5,929

$

3,961

Solutions

 

1,250

 

1,561

Segment Income Before Taxes

 

7,179

 

5,522

General and administrative

$

3,447

$

3,091

Amortization and depreciation expense

357

399

Interest, net

(10)

10

Foreign currency transaction gain (loss)

 

143

 

(91)

Income before taxes

$

3,508

$

1,951

(1) Excludes general corporate expenses including interest and foreign currency transaction gain (loss).

    

    

    

As of

As of 

March 31,

December 31,

Selected Assets by Segment:

2022

2021

Distribution

$

123,762

$

133,506

Solutions

 

19,586

 

18,895

Segment Select Assets

 

143,348

 

152,401

Corporate Assets

 

45,422

 

38,351

Total Assets

$

188,770

$

190,752

Geographic areas and net sales mix related to operations for the three months ended March 31, 2022 and 2021 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.

    

Three months ended

    

March 31, 2022

Distribution

  

Solutions

Total

Geography

              

              

USA

$

53,116

$

2,512

$

55,628

Europe and United Kingdom

 

7,437

 

2,557

 

9,994

Canada

 

5,231

 

466

 

5,697

Total net sales

$

65,784

$

5,535

$

71,319

Timing of Revenue Recognition

              

              

Transferred at a point in time where the Company is principal (1)

$

59,140

$

4,010

$

63,150

Transferred at a point in time where the Company is agent (2)

 

6,644

 

1,525

 

8,169

Total net sales

$

65,784

$

5,535

$

71,319

    

Three months ended

    

March 31, 2021

Distribution

  

Solutions

Total

Geography

              

              

USA

$

41,084

$

4,979

$

46,063

Europe and United Kingdom

 

7,246

 

2,743

 

9,989

Canada

 

6,490

 

271

 

6,761

Total net sales

$

54,820

$

7,993

$

62,813

Timing of Revenue Recognition

              

              

Transferred at a point in time where the Company is principal (1)

$

49,357

$

6,150

$

55,507

Transferred at a point in time where the Company is agent (2)

 

5,463

 

1,843

 

7,306

Total net sales

$

54,820

$

7,993

$

62,813

(1) Includes net sales from third-party hardware and software products.

(2) Includes net sales from third-party maintenance, software support and services.

Geographic identifiable assets related to operations as of March 31, 2022 and December 31, 2021 were as follows.

    

March 31,

December 31,

 

Identifiable Assets by Geographic Areas

2022

    

2021

USA

$

115,823

$

122,445

Canada

25,614

24,923

Europe and United Kingdom

47,333

43,384

Total

$

188,770

$

190,752