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10. Industry, Segment and Geographic Information
The Company markets software to software development and information technology professionals in the United States 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, 2011, 2010 and 2009 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 United Sates represents more than 10% of net sales for 2011, 2010 or 2009.
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2011
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2010
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2009
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Net sales to Unaffiliated Customers:
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United States
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$
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209,946
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$
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174,180
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$
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123,197
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Canada
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18,672
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15,048
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11,364
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Other
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21,551
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17,502
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11,823
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Total
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$
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250,169
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$
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206,730
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$
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146,384
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2011
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2010
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2009
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Identifiable Assets by Geographic Areas at December 31,
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United States
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$
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69,309
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$
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64,237
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$
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50,236
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Canada
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5,552
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4,446
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3,431
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Total
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$
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74,861
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$
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68,683
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$
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53,667
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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 “TechXtend” segment (formerly the Programmer’s Paradise” segment), which sells technical software, hardware and services directly to end-users (such as individual programmers, corporations, government agencies, and educational institutions) and the “Lifeboat” segment, which distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators.
As permitted by 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”; it does not allocate its other assets, including capital expenditures by segment.
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Year Ended
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December 31,
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2011
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2010
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2009
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Revenue:
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TechXtend
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$
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57,449
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$
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57,579
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$
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48,326
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Lifeboat
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192,720
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149,151
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98,058
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250,169
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206,730
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146,384
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Gross Profit:
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TechXtend
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$
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6,437
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$
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6,307
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$
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5,652
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Lifeboat
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16,804
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13,703
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9,941
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23,241
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20,010
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15,593
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Direct Costs:
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TechXtend
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$
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3,058
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$
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2,932
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$
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2,650
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Lifeboat
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4,715
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3,934
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2,866
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7,773
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6,866
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5,516
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Income Before Taxes:
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TechXtend
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3,379
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3,375
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3,002
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Lifeboat
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12,089
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9,769
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7,075
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Segment Income
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15,468
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13,144
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10,077
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General and administrative
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6,850
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6,341
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5,803
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Interest income
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368
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405
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521
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Foreign currency translation gains
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1
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2
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—
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Income before taxes
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$
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8,987
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$
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7,210
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$
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4,795
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Selected Assets By Segment:
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TechXtend
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$
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27,881
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$
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26,644
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Lifeboat
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29,314
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23,872
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Segment Select Assets
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57,195
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50,516
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Corporate Assets
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17,666
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18,167
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Total Assets
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$
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74,861
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$
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68,683
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The Company had three customers that accounted for more than 10% of total sales for 2011. For the year ended December 31, 2011, CDW Corporation, Insight and Software House International accounted for 14.0%, 11.0% and 10.5%, respectively, of consolidated net sales and, as of December 31, 2011, 12.4%, 6.8%, and 4.7%, respectively of total net accounts receivable. For the year ended December 31, 2010, CDW Corporation accounted for 15.8% of consolidated net sales. For the year ended December 31, 2009, CDW Corporation and Software House International accounted for 10.5% and 10.7%, respectively, of consolidated net sales. Our top five customers accounted for 42%, 44%, and 36% of consolidated net sales in 2011, 2010 and 2009, respectively.
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