SEGMENT INFORMATION

12 Months Ended

Sep. 30, 2013

SEGMENT INFORMATION

11. SEGMENT INFORMATION

We report our continuing operations in three operating segments: Fine Chemicals, Specialty Chemicals, and Other Businesses. These segments are based upon business units that offer distinct products and services, are operationally managed separately and produce products using different production methods. Segment operating income or loss includes all sales and expenses directly associated with each segment. Environmental remediation charges, corporate general and administrative costs, which consist primarily of executive, investor relations, accounting, human resources and information technology expenses, and interest are not allocated to segment operating results.

Fine Chemicals. Our Fine Chemicals segment includes the operating results of our wholly-owned subsidiaries Ampac Fine Chemicals LLC and AMPAC Fine Chemicals Texas, LLC (collectively, “AFC”). AFC is a custom manufacturer of active pharmaceutical ingredients and registered intermediates for commercial customers in the pharmaceutical industry. AFC operates in compliance with the U.S. Food and Drug Administration’s current Good Manufacturing Practices and the requirements of certain other regulatory agencies such as the European Union’s European Medicines Agency and Japan’s Pharmaceuticals and Medical Devices Agency. AFC also complies with Drug Enforcement Administration requirements related to the manufacture and sale of certain controlled substances. AFC has distinctive competencies and specialized engineering capabilities in performing chiral separations, manufacturing chemical compounds that require high containment, performing energetic chemistries at large scale, and manufacturing Schedule II controlled substances.

Specialty Chemicals. Our Specialty Chemicals segment manufactures and sells: (i) perchlorate chemicals, principally ammonium perchlorate, which is the predominant oxidizing agent for solid propellant rockets, booster motors and missiles used in space exploration, commercial satellite transportation and national defense programs, (ii) sodium azide, a chemical used in pharmaceutical manufacturing, and (iii) Halotron^®, a series of clean fire extinguishing agents used in fire extinguishing products ranging from portable fire extinguishers to total flooding systems.

Other Businesses. Our Other Businesses segment contains our water treatment equipment division and real estate activities. Our water treatment equipment business markets, designs, and manufactures electrochemical On Site Hypochlorite Generation, or OSHG, systems. These systems are used in the disinfection of drinking water, control of noxious odors, and the treatment of seawater to prevent the growth of marine organisms in cooling systems. We supply our equipment to municipal, industrial and offshore customers. Our real estate activities are not material.

Our revenues are characterized by individually significant orders and relatively few customers. As a result, in any given reporting period, certain customers may account for more than 10% of our consolidated revenues. The following table provides disclosure of the percentage of our consolidated revenues attributed to customers that exceed 10% of the total in each of the fiscal years ended September 30:

	2013		2012		2011
Fine chemicals customer		28%		31%		23%
Fine chemicals customer				12%
Specialty chemicals customer				17%
Specialty chemicals customer		20%		12%		24%

The following provides financial information about our segment operations for the fiscal years ended September 30:

	2013			2012			2011
Revenues:
Fine Chemicals	$	124,898		$	111,536		$	89,497
Specialty Chemicals		82,636			68,513			66,905
Other Businesses		7,551			5,578			4,312
Total Revenues	$	215,085		$	185,627		$	160,714
Segment Operating Income (Loss):
Fine Chemicals	$	11,295		$	8,678		$	(6,283	)
Specialty Chemicals		47,961			34,919			35,600
Other Businesses		(1,066	)		(473	)		(1,308	)
Total Segment Operating Income		58,190			43,124			28,009
Corporate Expenses		(17,101	)		(14,326	)		(14,124	)
Environmental Remediation Charges		-			(700	)		(6,000	)
Operating Income	$	41,089		$	28,098		$	7,885
Depreciation and Amortization:
Fine Chemicals	$	12,013		$	11,914		$	12,473
Specialty Chemicals		1,144			1,401			1,136
Other Businesses		21			18			17
Corporate		275			367			432
Total	$	13,453		$	13,700		$	14,058
Capital Expenditures:
Fine Chemicals	$	11,138		$	7,383		$	11,153
Specialty Chemicals		2,661			1,353			756
Other Businesses		6			18			8
Corporate		111			34			14
Total	$	13,916		$	8,788		$	11,931
Assets, at year end:
Fine Chemicals	$	154,707		$	143,551		$	144,003
Specialty Chemicals		27,427			21,029			19,785
Other Businesses		5,319			7,302			5,064
Corporate		89,854			74,582			60,954
Total	$	277,307		$	246,464		$	229,806

All of our continuing operations are located in the United States. Export sales consist mostly of fine chemicals and water treatment equipment sales. For the year ended September 30, 2013, sales outside the U.S. represented 43% of consolidated revenues. Of this amount 19% was sold to customers in Ireland, with no other individual country representing more than 10%. For the year ended September 30, 2012, sales outside the U.S. represented 36% of consolidated revenues. Of this amount, 17% was sold to customers in Ireland and 12% sold to customers in Belgium, with no other individual country representing more than 10%. For the year ended September 30, 2011, sales outside the U.S. represented 25% of consolidated revenues, with no individual country representing more than 10%.