Segment Information

3 Months Ended

Sep. 30, 2012

Segment Information

G.  Segment Information

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 Note A above and in the consolidated financial statements included in our 2012 Annual Report.

Our operating results by business segment were as follows (in thousands):

	Three Months Ended September 30,
	2012		2011
Net Sales
Private label contract manufacturing	$	14,744	$	16,606
Patent and trademark licensing		1,374		1,334
Branded products		342		401
	$	16,460	$	18,341

	Three Months Ended September 30,
	2012		2011
Income from Operations
Private label contract manufacturing	$	1,943	$	2,982
Patent and trademark licensing		149		614
Branded products		34		48
Income from operations of reportable segments		2,126		3,644
Corporate expenses not allocated to segments		(1,097)		(1,297)
	$	1,029	$	2,347

	September 30,   2012		June 30, 2012
Total Assets
Private label contract manufacturing		$ 43,107	$	43,975
Patent and trademark licensing		2,012		2,964
Branded products		289		258
		$  45,408	$	47,197

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, were as follows (in thousands):

	Three Months Ended September 30,
	2012		2011
United States	$	9,631	$	10,190
Markets outside the United States		6,829		8,151
Total net sales	$	16,460	$	18,341

Products manufactured by NAIE accounted for 68% of net sales in markets outside the U.S. for the three months ended September 30, 2012, and 63% for the three months ended September 30, 2011. No products manufactured by NAIE were sold in the U.S during the three months ended September 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, were as follows (in thousands):

	Long-Lived Assets				Total Assets				Capital Expenditures
									Three Months Ended
	September 30, 2012		June 30, 2012		September 30, 2012		June 30, 2012		September 30, 2012		September 30, 2011
United States	$	9,819	$	10,287	$	31,990	$	33,556	$	178	$	327
Europe		2,248		2,391		13,418		13,641		55	$	93
	$	12,067	$	12,678	$	45,408	$	47,197	$	233	$	420