Segment Information

12 Months Ended

Jun. 30, 2013

Segment Information

L. 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 (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):

	2013		2012
Net Sales
Private-label contract manufacturing	$	56,672	$	63,268
Patent and trademark licensing		4,799		7,990
Branded products		1,326		1,564
	$	62,797	$	72,822

	2013			2012
Operating Income
Private-label contract manufacturing	$	5,137		$	8,914
Patent and trademark licensing		1,519			2,010
Branded products		67			160
Income from operations of reportable segments		6,723			11,084
Corporate expenses not allocated to segments		(4,570	)		(4,884	)
	$	2,153		$	6,200

	2013		2012
Total Assets
Private-label contract manufacturing	$	45,032	$	43,975
Patent and trademark licensing		1,388		2,964
Branded products		220		258
	$	46,640	$	47,197

Our private-label contract manufacturing products are sold both in the U.S. and in markets outside the U.S., including Europe, Canada, Mexico, 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):

	2013		2012
United States	$	36,710	$	43,407
Markets outside the United States		26,087		29,415
Total net sales	$	62,797	$	72,822

Products manufactured by NAIE accounted for 67% of net sales in markets outside the U.S. in fiscal 2013 and fiscal 2012. No products manufactured by NAIE were sold in the U.S. during the fiscal years ended June 30, 2013 and 2012.

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):

2013	Long- Lived Assets		Total Assets		Capital Expenditures
United States	$	6,728	$	32,450	$	838
Europe		2,477		14,190		783
	$	9,205	$	46,640	$	1,621
2012	Long- Lived Assets		Total Assets		Capital Expenditures
United States	$	8,329	$	33,556	$	1,803
Europe		2,318		13,641		481
	$	10,647	$	47,197	$	2,284