Quarterly report pursuant to Section 13 or 15(d)

Segment Information

Segment Information

6 Months Ended

Jun. 30, 2019

NOTE 13. SEGMENT INFORMATION

As a result of our August 21, 2017 acquisition of Sierra, we operate our business structure within two segments. These segments are defined based on the internal financial reporting used by management. Certain significant selling and general and administrative expenses are not allocated to the segments including non-cash stock compensation expense. Each segment is described below:

Black Diamond segment, which includes Black Diamond Equipment, PIEPS, and SKINourishment, is a global leader in designing, manufacturing, and marketing innovative outdoor engineered equipment and apparel for climbing, mountaineering, trail running, backpacking, skiing, and a wide range of other year-round outdoor recreation activities. Black Diamond segment offers a broad range of products including: high performance activity-based apparel (such as shells, insulation, midlayers, pants and logowear); rock-climbing footwear and equipment (such as carabiners, protection devices, harnesses, belay devices, helmets, and ice-climbing gear); technical backpacks and high-end day packs; trekking poles; headlamps and lanterns; gloves and mittens; and skincare and other sport-enhancing products. We also offer advanced skis, ski poles, ski skins, and snow safety products, including avalanche airbag systems, avalanche transceivers, shovels, and probes.

Sierra segment, which includes Sierra, is an iconic American manufacturer of a wide range of high-performance bullets and ammunition for both rifles and pistols. These bullets and ammunition are used for precision target shooting, hunting and military and law enforcement purposes.

The Company recognizes revenue when a contract exists with a customer that specifies the goods and services to be provided at an agreed upon sales price and when the performance obligation is satisfied by transferring the goods or service to the customer. The performance obligation is considered complete when products are shipped or delivered to the customer depending on the terms of the contract. Sales are made on normal and customary short-term credit terms or upon delivery at point of sale transactions. As noted above, the Company has a wide variety of technical outdoor equipment and lifestyle products focused on the climb, ski, mountain and sport product categories that are sold to a variety of customers in multiple end markets. While there are multiple products sold, the terms and nature of revenue recognition policy is similar for all segments. The sport product category represents the Sierra segment revenue.

We divide our product offerings into four primary categories of climb, mountain, ski and sport. Revenue by category is as follows:


	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018

Climb	37	%	35	%	36	%	35	%
Mountain	36	%	33	%	32	%	34	%
Ski	8	%	8	%	15	%	12	%
Sport	19	%	24	%	17	%	19	%

Contract liabilities are recorded as a component of accounts payable and accrued liabilities when customers remit contractual cash payments in advance of us satisfying performance obligations which are satisfied at a future point of time. Contract liabilities were not material at June 30, 2019 and December 31, 2018. Contract liabilities are derecognized when the performance obligation is satisfied. Revenue recognized from satisfaction of performance obligations relating to the advanced payments during the three and six months ended June 30, 2019 was not material. No other material remaining performance obligations exist at June 30, 2019.

Financial information for our segments is as follows:


	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Sales to external customers:
Black Diamond
Domestic sales	$	22,149	$	20,323	$	46,681	$	39,594
International sales		15,696		14,630		43,565		40,386
Total Black Diamond		37,845		34,953		90,246		79,980
Sierra
Domestic sales		6,273		7,522		12,330		13,905
International sales		2,876		3,406		5,636		5,263
Total Sierra		9,149		10,928		17,966		19,168
Total sales to external customers		46,994		45,881		108,212		99,148
Segment operating income:
Black Diamond		(468)		(322)		4,708		1,615
Sierra		1,418		2,374		3,079		3,171
Total segment operating income		950		2,052		7,787		4,786
Restructuring charge		-		(24)		(13)		(64)
Transaction costs		(41)		(168)		(87)		(333)
Corporate and other expenses		(1,967)		(2,175)		(4,351)		(4,089)
Interest expense, net		(315)		(463)		(625)		(717)
Income before income tax	$	(1,373)	$	(778)	$	2,711	$	(417)

There were no intercompany sales between the Black Diamond and Sierra segments for the periods presented. Restructuring charges for the periods presented relate to the Black Diamond segment.

Total assets by segment, as of June 30, 2019 and December 31, 2018, were as follows:


	June 30, 2019		December 31, 2018

Black Diamond	$	138,672	$	138,029
Sierra		74,931		72,796
Corporate		3,101		2,303
	$	216,704	$	213,128

Capital expenditures, depreciation and amortization by segment is as follows.


	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Capital expenditures:
Black Diamond	$	426	$	558	$	1,190	$	1,216
Sierra		522		107		804		302
Total capital expenditures	$	948	$	665	$	1,994	$	1,518
Depreciation:
Black Diamond	$	631	$	633	$	1,242	$	1,220
Sierra		508		502		1,000		988
Total depreciation	$	1,139	$	1,135	$	2,242	$	2,208
Amortization:
Black Diamond	$	277	$	275	$	556	$	550
Sierra		611		693		1,221		1,387
Total amortization	$	888	$	968	$	1,777	$	1,937