Note M - Segment Information

12 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

M. 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, and (ii) patent and trademark licensing, which primarily includes direct raw material sales and royalty income from our license and supply agreements associated with the sale and use of beta-alanine under our CarnoSyn® trade mark, 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.

Due to the steady decline in sales of our Pathway to

Healing

®

product line over the prior several years, we decided to discontinue the product line. All termination activities related to the Pathway to Healing® product line were substantially completed by December 31, 2014. We did not change the financial presentation in this report to reflect the branded products segment as “Discontinued Operations” as the wind down of this product line did not meet the criteria for discontinued operations presentation as prescribed by applicable accounting regulations (ASC 205-20).

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):

	201 6		201 5
Net Sales
Private-label contract manufacturing	$	92,420	$	69,670
Patent and trademark licensing		21,781		9,140
Branded products		–		698
	$	114,201	$	79,508

	201 6			201 5
Operating Income
Private-label contract manufacturing	$	12,184		$	5,172
Patent and trademark licensing		6,153			3,811
Branded products		–			248
Income from operations of reportable segments		18,337			9,231
Corporate expenses not allocated to segments		(6,079	)		(5,072	)
	$	12,258		$	4,159

	201 6		201 5
Total Assets
Private-label contract manufacturing	$	66,375	$	50,313
Patent and trademark licensing		7,800		3,503
	$	74,175	$	53,816

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, South Africa 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):

	201 6		201 5
United States	$	50,575	$	43,671
Markets outside the United States		63,626		35,837
Total net sales	$	114,201	$	79,508

Products manufactured by NAIE accounted for 61% of net sales in markets outside the U.S. in fiscal 2016 and 74% in fiscal 2015. No products manufactured by NAIE were sold in the U.S. during the fiscal years ended June 30, 2016 and 2015.

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):

201 6	Long-Lived Assets		Total Assets		Capital Expenditures
United States	$	9,678	$	49,755	$	6,423
Europe		5,489		24,420		4,018
	$	15,167	$	74,175	$	10,441

2015	Long-Lived Assets		Total Assets		Capital Expenditures
United States	$	5,525	$	34,988	$	1,071
Europe		2,108		18,828		637
	$	7,633	$	53,816	$	1,708