Disclosure About Segments of Enterprise and Related Information

12 Months Ended

Dec. 31, 2011

Disclosure About Segments of Enterprise and Related Information [Abstract]

Disclosure About Segments of Enterprise and Related Information

8. Disclosure About Segments of Enterprise and Related Information

Prior to October 2010, the Company reported that it conducted its operations primarily through six operating segments. To more accurately reflect current operations, executive reporting management structure and organization, and internal reporting the Company modified its segment structure and reporting to reflect that it operates through four operating segments, each led by a different senior executive who reports directly to the Company's Chief Executive Officer. The changes made to arrive at the four segments from the six previous segments were that the former Semicon Associates segment is now included in the Advanced Ceramic Operations segment and the former Ceradyne Canada segment is now included in the Boron segment. All of the financial data for 2010 and 2009 have been changed to reflect four segments. The Company's assets are managed by segment regardless of their physical location and are not reviewed on a geographic basis by our chief operating decision maker. Additionally, in the current year, the Company reallocated $8.5 million of inter-company corporate charges from the Advanced Ceramic Operations segment to all its other operating segments. The charges to the other segments were $4.2 million to the Thermo Materials segment, $1.8 million to the ESK Ceramics segment and $2.5 million to the Boron segment. This allocation had no impact on the consolidated statement of income for the year ended 2011. In prior years, the amounts allocated from the Advanced Ceramic Operations segment to the other operating segments were immaterial.

The Company serves its markets and manages its business through four operating segments, each of which has its own manufacturing facilities and selling functions and each has a senior executive who reports directly to the Company's Chief Executive Officer. The Company's Advanced Ceramic Operations, with operations located in Costa Mesa and Irvine, California, Lexington, Kentucky, Wixom, Michigan, Salem, New Hampshire, Mountain Green, Utah, Seattle, Washington and Bangalore, India primarily produces armor, orthodontic products, diesel engine parts, components for semiconductor equipment, cathodes, specialty glass compositions for solar, health care and other applications, and houses the Company's SRBSN research and development activities. Fused silica products, including missile radomes and crucibles, for photovoltaic solar cell applications are produced at the Company's Thermo Materials division located in Scottdale and Clarkston, Georgia. The Company's manufacturing facilities in Tianjin, China manufactures fused silica crucibles, and are part of the Thermo Materials operating segment. Minco, Inc., which Ceradyne acquired in July 2007, also is included in the Thermo Materials operating segment. Minco, located in Midway, Tennessee, manufactures fused silica, which is a primary raw material used in products manufactured by our Thermo Materials division. The Company's ESK Ceramics subsidiary is located in Kempten, Germany. This subsidiary produces ceramic powders, including boron carbide powder for ceramic body armor, evaporation boats for metallization, functional and frictional coatings utilized in the automotive and textile industries, high performance pump seals, fluid handling, refractory products and ceramic powders used in cosmetics. The Company's remaining segment is Boron. This segment is comprised of three subsidiaries, Boron Products, Ceradyne Canada and SemEquip, Inc. Boron Products owns certain assets, including approximately 155 acres and several buildings, equipment and technology, related to the production of the boron isotope 10B. This isotope is a strong neutron absorber and is used for both nuclear waste containment and nuclear power plant neutron radiation control. Boron Products also produces complementary chemical isotopes used in the normal operation and control of nuclear power plants. SemEquip, Inc., which the Company acquired in August 2008, develops and markets cluster ion source materials for the manufacture of logic and memory semiconductor chips. SemEquip is included in the Boron operating segment. The Company's Ceradyne Canada subsidiary acquired certain assets in June 2006, including a building, equipment and technology, related to the production of structural neutron absorbing materials for use in the storage of spent nuclear rods. The building and operations of Ceradyne Canada are located in Chicoutimi, Quebec, Canada.

 The U.S. government and government agencies collectively represented approximately 37.6% of our net sales in 2011, 17.5% in 2010 and 40.8% in 2009. As of December 31, 2011 and 2010, there were no other external customers that accounted for 10% or more of our revenue.

SEGMENT INFORMATION FOR THE YEARS ENDED

DECEMBER 31, 2011, 2010 AND 2009

(amounts in thousands)

	2011			2010			2009
Revenue
Advanced Ceramic Operations	$	277,541		$	152,578		$	221,751
ESK Ceramics		163,592			130,747			105,117
Thermo Materials		98,895			98,770			66,116
Boron		55,430			35,010			28,951
Inter-segment elimination		(23,476	)		(14,167	)		(21,360	)
Total revenue from external customers	$	571,982		$	402,938		$	400,575
Depreciation and Amortization
Advanced Ceramic Operations	$	9,790		$	9,238		$	10,389
ESK Ceramics		12,742			12,625			11,686
Thermo Materials		8,015			6,176			4,878
Boron		8,203			8,109			8,193
Total	$	38,750		$	36,148		$	35,146
Segment Income (Loss) from Operations and Income before  Provision for Income Taxes
Advanced Ceramic Operations	$	60,253		$	(23,113	)	$	25,031
ESK Ceramics		30,865			21,133			(21,501	)
Thermo Materials		20,029			33,951			14,712
Boron		16,822			(2,385	)		(11,048	)
Inter-segment elimination		492			(430	)		536
Total segment income from operations	$	128,461		$	29,156		$	7,730
Other expense		(505	)		(785	)		(7,313	)
Total income before provision for income taxes	$	127,956		$	28,371		$	417
Segment Assets
Advanced Ceramic Operations	$	474,633		$	414,425		$	406,866
ESK Ceramics		170,193			173,387			207,733
Thermo Materials		172,806			149,960			105,332
Boron		130,499			127,541			129,773
Total	$	948,131		$	865,313		$	849,704
Expenditures for PP&E
Advanced Ceramic Operations	$	6,276		$	6,811		$	4,880
ESK Ceramics		5,278			2,497			426
Thermo Materials		13,780			32,087			7,952
Boron		5,928			2,825			1,276
Total	$	31,262		$	44,220		$	14,534

SEGMENT INFORMATION FOR THE YEARS ENDED

DECEMBER 31,2011, 2010 AND 2009

	2011			2010			2009
Percentage of U.S. net sales from external customers
Advanced Ceramic Operations		43	%		34	%		53	%
ESK Ceramics		3	%		5	%		3	%
Thermo Materials		4	%		5	%		6	%
Boron		5	%		5	%		4	%
Total percentage of U.S. net sales from external customers		55	%		49	%		66	%
Percentage of foreign net sales from external customers
Advanced Ceramic Operations		6	%		4	%		2	%
ESK Ceramics		22	%		26	%		20	%
Thermo Materials		13	%		19	%		9	%
Boron		4	%		2	%		3	%
Total percentage of foreign net sales from external customers		45	%		51	%		34	%
Percentage of total net sales from external customers
Advanced Ceramic Operations		49	%		38	%		55	%
ESK Ceramics		25	%		31	%		23	%
Thermo Materials		17	%		24	%		15	%
Boron		9	%		7	%		7	%
Total percentage of net sales from external customers		100	%		100	%		100	%

The following is revenue by market application for the Advanced Ceramic Operations segment for the years ended December 31, 2011, 2010 and 2009 (amounts in thousands):

	December 31,
	2011		2010		2009
Defense	$	203,058	$	105,362	$	189,028
Industrial		35,067		26,684		16,177
Energy		17,858		2,117		2,053
Automotive		10,364		10,057		5,006
Commercial		11,194		8,358		9,487
	$	277,541	$	152,578	$	221,751