Segment Information

3 Months Ended

Sep. 30, 2013

Segment Information

H. 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 2013 Annual Report.

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

	Three Months Ended September 30,
	2013		2012
Net Sales
Private label contract manufacturing	$	15,320	$	14,744
Patent and trademark licensing		1,518		1,374
Branded products		317		342
	$	17,155	$	16,460

	Three Months Ended September 30,
	2013			2012
Income from Operations
Private label contract manufacturing	$	815		$	1,943
Patent and trademark licensing		432			149
Branded products		7			34
Income from operations of reportable segments		1,254			2,126
Corporate expenses not allocated to segments		(1,164	)		(1,097	)
	$	90		$	1,029

	September 30, 2013		June 30, 2013
Total Assets
Private label contract manufacturing	$	45,859	$	45,032
Patent and trademark licensing		1,368		1,388
Branded products		327		220
	$	47,554	$	46,640

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, were as follows (in thousands):

	Three Months Ended September 30,
	2013		2012
United States	$	9,488	$	9,631
Markets outside the United States		7,667		6,829
Total net sales	$	17,155	$	16,460

Products manufactured by NAIE accounted for 55% of net sales in markets outside the U.S. for the three months ended September 30, 2013, and 68% for the three months ended September 30, 2012. No products manufactured by NAIE were sold in the U.S during the three months ended September 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, were as follows (in thousands):

	Long-Lived Assets				Total Assets				Capital Expenditures
									Three Months Ended
	September  30, 2013		June 30, 2013		September  30, 2013		June 30, 2013		September  30, 2013		September 30, 2012
United States	$	6,480	$	6,728	$	32,768	$	32,450	$	321	$	203
Europe		2,397		2,477		14,786		14,190		91		55
	$	8,877	$	9,205	$	47,554	$	46,640	$	412	$	258