Segment Information

12 Months Ended

Jun. 30, 2012

Segment Information

L. Segment Information

As a result of our efforts to commercialize our patent and trademark estate and the increased level of income we have recently received from such efforts, beginning with the first quarter of fiscal 2012, our business consists of three segments for financial reporting purposes. The three segments are identified as (i) private-label contract manufacturing, which primarily relates to the provision of private-label contract manufacturing services to companies that market and distribute nutritional supplements and other health care products, (ii) patent and trademark licensing, which primarily includes royalty income from our license and supply agreements associated with the sale and use of beta-alanine under our CarnosSyn^® trade name and the sale of beta-alanine raw material, and (iii) branded products, which relates to the marketing and distribution of our branded nutritional supplements and consists primarily of the products sold under our Pathway to Healing^® product line.

We evaluate performance based on a number of factors. The primary performance measures for each segment are net sales and income or loss from operations before corporate allocations. Operating income or loss for each segment does not include corporate general and administrative expenses, interest expense and other miscellaneous income and expense items. Corporate general and administrative expenses include, but are not limited to: human resources, corporate legal, finance, information technology, and other corporate level related expenses, which are not allocated to any segment. The accounting policies of our segments are the same as those described in the summary of significant accounting policies in Note A.

Our operating results by business segment for the years ended June 30 were as follows (in thousands):

	2012			2011
Net Sales
Private-label contract manufacturing	$	63,268		$	52,310
Patent and trademark licensing		7,990			1,747
Branded products		1,564			1,825
	$	72,822		$	55,882
	2012			2011
Operating Income
Private-label contract manufacturing	$	8,914		$	6,756
Patent and trademark licensing		2,010			(148	)
Branded products		160			326
Income from operations of reportable segments		11,084			6,934
Corporate expenses not allocated to segments		(4,884	)		(4,609	)
	$	6,200		$	2,325

	2012		2011
Total Assets
Private-label contract manufacturing	$	43,975	$	40,824
Patent and trademark licensing		2,964		111
Branded products		258		209
	$	47,197	$	41,144

Our private-label contract manufacturing products are sold both in the U.S. and in markets outside the U.S., including Europe, Australia and Asia. Our primary market outside the U.S. is Europe. Our patent and trademark licensing activities are primarily based in the U.S. and our branded products are only sold in the U.S.

Net sales by geographic region, based on the customers’ location, for the two years ended June 30 were as follows (in thousands):

	2012		2011
United States	$	43,407	$	34,074
Markets outside the United States		29,415		21,808
Total net sales	$	72,822	$	55,882

Products manufactured by NAIE accounted for 67% of net sales in markets outside the U.S. in fiscal 2012 and 66% in fiscal 2011. No products manufactured by NAIE were sold in the U.S. during the fiscal years ended June 30, 2012 and 2011.

Assets and capital expenditures by geographic region, based on the location of the company or subsidiary at which they were located or made, for the two years ended June 30 were as follows (in thousands):

2012	Long-Lived Assets		Total Assets		Capital Expenditures
United States	$	10,287	$	33,556	$	1,778
Europe		2,391		13,641		481
	$	12,678	$	47,197	$	2,259
2011	Long-Lived Assets		Total Assets		Capital Expenditures
United States	$	10,835	$	30,210	$	959
Europe		2,481		10,934		758
	$	13,316	$	41,144	$	1,717