Segment, Customer and Geographical Reporting

12 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 16 – Segment, Customer and Geographical Reporting

Segment Financial Information

Operating segments are based upon Dynasil’s internal organizational structure, the manner in which the operations are managed, the criteria used by the Chief Operating Decision Makers (CODM) to evaluate segment performance and the availability of separate financial information. Dynasil reports three reportable segments: contract research (“Contract Research”), optics (“Optics”) and biomedical (“Biomedical”). Within these segments, there is a segregation of operating segments based upon the organizational structure used to evaluate performance and make decisions on resource allocation, as well as availability and materiality of separate financial results consistent with that structure. Dynasil’s Contract Research segment is one of the largest small business participants in U.S. government-funded research. The Optics segment aggregates four operating segments – Dynasil Fused Silica, Optometrics, Hilger Crystals, and Evaporated Metal Films – that manufacture commercial products, including optical crystals for sensing in the security and medical imaging markets, as well as optical components, optical coatings and optical materials for scientific instrumentation and other applications. The Biomedical segment consists of a single operating segment, Dynasil Biomedical Corporation (“Dynasil Biomedical”), a medical technology incubator which owns rights to certain early stage medical technologies. Dynasil Biomedical holds the common stock of the Xcede joint venture which is developing a tissue sealant technology and currently has no other operations.

During 2016, we implemented a new procedure to allocate overhead expenses to our Xcede subsidiary in the Biomedical segment due to the time commitment invested by the corporate employees. This allocation reduced SG&A expense in the other two segments. Segment expenses in 2015 have been adjusted accordingly to reflect the proper comparison. These allocations were $0.6 million in both 2016 and 2015. We do not expect the same time commitment to be necessary to support Xcede in 2017, based on the previously announced Cook Biomedical agreement.

The Company’s segment information is summarized below:

Results of Operations for the Fiscal Year Ended September 30,
2016
	Optics			Contract Research			Biomedical		Total
Revenue	$	23,686,000		$	19,756,000		$	-	$	43,442,000
Gross profit		8,010,000			7,593,000			-		15,603,000
GM %		34	%		38	%		-		36	%
SG&A		6,239,000			6,619,000			2,070,000		14,928,000
Gain on sale of assets		(4,000)			-			-		(4,000)
Operating income (loss)		1,775,000			974,000			(2,070,000)		679,000
Depreciation and amortization		949,000			249,000			69,000		1,267,000
Capital expenditures		1,503,000			432,000			109,000		2,044,000
Intangibles, net		517,000			230,000			320,000		1,067,000
Goodwill		959,000			4,939,000			-		5,898,000
Total assets	$	17,397,000		$	8,325,000		$	647,000	$	26,369,000

Results of Operations for the Fiscal Year Ended September 30,
2015
	Optics			Contract Research			Biomedical		Total
Revenue	$	21,783,000		$	18,753,000		$	-	$	40,536,000
Gross profit		6,818,000			8,176,000			-		14,994,000
GM %		31	%		44	%		-		37	%
SG&A		6,020,000			7,301,000			1,717,000		15,038,000
Gain on sale of assets		(178,000)			-			-		(178,000)
Operating income (loss)		976,000			875,000			(1,717,000)		134,000
Depreciation and amortization		839,000			296,000			61,000		1,196,000
Capital expenditures		1,173,000			91,000			119,000		1,383,000
Intangibles, net		678,000			264,000			283,000		1,225,000
Goodwill		1,192,000			4,939,000			-		6,131,000
Total assets	$	15,984,000		$	7,692,000		$	828,000	$	24,504,000

Customer Financial Information

For the years ended September 30, 2016 and 2015, the top three customers for the Contract Research segment were each various agencies of the U.S. Government. For the years ended September 30, 2016 and 2015, these customers made up 56% and 57%, respectively, of Contract Research revenue.

 

For the Optics segment, there was one customer whose revenue represented 22% and 9% of the total segment revenue for the years ended September 30, 2016 and 2015.

 

The Biomedical segment did not have any revenue in the years ending September 30, 2016 and 2015.

Geographic Financial Information

Revenue by geographic location in total and as a percentage of total revenue, for the years ended September 30, 2016 and 2015 are as follows:

	2016					2015
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	32,622,000		75	%	$	30,928,000		76	%
Europe		7,888,000		18	%		4,902,000		12	%
Other		2,932,000		7	%		4,706,000		12	%
	$	43,442,000		100	%	$	40,536,000		100	%