| Information Concerning Industry Segments and Major Customers |
NOTE 13 - INFORMATION CONCERNING INDUSTRY SEGMENTS AND MAJOR CUSTOMERS
As previously noted, the Company classifies its remaining businesses into three segments as follows:
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Transition Networks develops and manufactures PoE switches, media converters, NICs, Ethernet switches and other connectivity products that offer the ability to affordably integrate the benefits of fiber optics into any data network as well as provide connectivity and power to end devices in the IoT ecosystem;
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·
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JDL Technologies provides technology solutions that address prevalent IT challenges, including virtualization and cloud solutions, managed services, wired and wireless network design and implementation, and converged infrastructure configuration and deployment; and
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Net2Edge develops, manufactures and sells products to transmit packetized voice and data across networks and between copper-wired and fiber optic equipment.
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Management has chosen to organize the enterprise and disclose reportable segments based on products and services. Intersegment revenues are eliminated upon consolidation. “Other” includes non-allocated corporate overhead costs. As a result of our treatment of Suttle as discontinued operations, “Other” includes amounts previously allocated to Suttle that do not meet the criteria to be included in income from discontinued operations.
Transition Networks manufactures its products in Asia and the United States and makes sales in both the U.S. and international markets. JDL Technologies operates in the U.S. and makes sales in the U.S. Net2Edge operates in the U.K. and primarily makes sales in the international markets. Net long-lived assets held in foreign countries were approximately $112,000 and $159,000 at December 31, 2019 and 2018, respectively. Consolidated sales to U.S. customers were approximately 74% and 77% of sales from continuing operations in 2019 and 2018 respectively. In 2019, sales to two of Transition Networks’ customers accounted for 21.2% and 16.2% of consolidated sales. In 2018, sales to two of Transition Networks’ customers accounted for 17.6% and 15.4% of consolidated sales. At December 31, 2019, Transition Networks had two customers that made up 45% and 17% of consolidated accounts receivable. At December 31, 2018, Transition Networks had two customers that made up 23% and 19% of consolidated accounts receivable and JDL had one customer that made up 21% of accounts receivable.
Information concerning the Company’s operations in the various segments for the years ended December 31, 2019 and 2018 is as follows:
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Transition
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JDL
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Intersegment
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Networks
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Technologies
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Net2Edge
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Other
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Eliminations
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Total
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2019
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Sales
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$
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44,860,000
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$
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4,741,000
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$
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2,330,000
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$
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-
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$
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(1,025,000)
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$
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50,906,000
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Cost of sales
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24,258,000
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3,259,000
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1,371,000
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-
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(168,000)
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28,720,000
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Gross profit
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20,602,000
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1,482,000
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959,000
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-
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(857,000)
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22,186,000
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Selling, general and
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administrative expenses
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15,036,000
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1,485,000
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2,486,000
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4,027,000
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(857,000)
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22,177,000
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Operating income (loss)
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5,566,000
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(3,000)
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(1,527,000)
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(4,027,000)
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-
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9,000
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Other income (expense)
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(15,000)
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(10,000)
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8,000
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243,000
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-
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226,000
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Income (loss) from continuing operations before tax
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$
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5,551,000
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$
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(13,000)
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$
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(1,519,000)
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$
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(3,784,000)
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$
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-
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$
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235,000
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Depreciation and amortization
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$
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286,000
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$
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92,000
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$
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74,000
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$
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581,000
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$
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-
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$
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1,033,000
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Capital expenditures
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$
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62,000
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$
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69,000
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$
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19,000
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$
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275,000
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$
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-
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$
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425,000
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Assets
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$
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16,682,000
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$
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1,694,000
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$
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3,220,000
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$
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37,582,000
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$
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(27,000)
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$
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59,151,000
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Transition
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JDL
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Intersegment
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Networks
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Technologies
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Net2Edge
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Other
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Eliminations
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Total
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2018
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Sales
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$
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36,470,000
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$
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5,134,000
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$
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1,700,000
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$
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-
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$
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(935,000)
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$
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42,369,000
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Cost of sales
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19,775,000
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3,830,000
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1,215,000
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-
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(73,000)
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24,747,000
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Gross profit
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16,695,000
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1,304,000
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485,000
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-
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(862,000)
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17,622,000
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Selling, general and
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administrative expenses
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13,716,000
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1,603,000
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3,279,000
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4,637,000
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(862,000)
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22,373,000
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Operating income (loss)
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2,979,000
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(299,000)
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(2,794,000)
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(4,637,000)
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-
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(4,751,000)
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Other income (expense)
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(31,000)
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3,000
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22,000
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230,000
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-
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224,000
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Income (loss) from continuing operations before tax
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$
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2,948,000
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$
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(296,000)
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$
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(2,772,000)
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$
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(4,407,000)
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$
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-
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$
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(4,527,000)
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Depreciation and amortization
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$
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420,000
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$
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179,000
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$
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65,000
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$
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597,000
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$
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-
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$
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1,261,000
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Capital expenditures
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$
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81,000
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$
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-
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$
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127,000
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$
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486,000
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$
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-
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$
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694,000
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Assets
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$
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19,228,000
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$
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2,572,000
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$
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1,894,000
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$
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29,654,000
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$
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(27,000)
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$
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53,321,000
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