Note H - Segment Information

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

H

. Segment Information

Our business consists of

two

segments for financial reporting purposes. The

two

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® and SR CarnoSyn® trade names.

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 the allocation of certain corporate level expenses. 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. Transfers of raw materials between segments are recorded at cost. The accounting policies of our segments are the same as those described in the summary of significant accounting policies in Note A above and in the consolidated financial statements included in our

2019

Annual Report.

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

	Three Months Ended March 31,				Nine Months Ended March 31,
	20 20		2019		2020		2019
Net Sales
Private-label contract manufacturing	$	22,650	$	31,758	$	73,490	$	94,505
Patent and trademark licensing		2,832		3,697		10,290		13,525
Total Net Sales	$	25,482	$	35,455	$	83,780	$	108,030

	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			20 20			2019
(Loss) Income from Operations
Private-label contract manufacturing	$	(3,123	)	$	3,534		$	187		$	9,534
Patent and trademark licensing		813			470			1,870			3,745
(Loss) income from operations of reportable segments		(2,310	)		4,004			2,057			13,279
Corporate expenses not allocated to segments		(1,913	)		(2,169	)		(5,637	)		(6,513	)
Total (Loss) Income from Operations	$	(4,223	)	$	1,835		$	(3,580	)	$	6,766

	March 3 1 , 20 20		June 30, 201 9
Total Assets
Private-label contract manufacturing	$	97,113	$	74,431
Patent and trademark licensing		21,242		19,059
	$	118,355	$	93,490

Our private-label contract manufacturing products are sold both in the U.S. and in markets outside the U.S., including Europe, Canada, Australia, New Zealand, and Asia. Our primary markets outside the U.S. are Europe and Asia. Our patent and trademark licensing activities are primarily based in the U.S.

Net sales by geographic region, based on the customers’ location, were as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	20 20		2019		2020		2019
United States	$	12,908	$	16,222	$	48,682	$	52,417
Markets outside of the United States		12,574		19,233		35,098		55,613
Total	$	25,482	$	35,455	$	83,780	$	108,030

Products manufactured by our Swiss subsidiary ("NAIE") accounted for

88%

of net sales in markets outside the U.S. for the

three

months ended

March 31, 2020

and

90%

for the

nine

months ended

March 31, 2020.

Products manufactured by NAIE accounted for

74%

of net sales in markets outside the U.S. for the

three

months ended

March 31, 2019

and

78%

for the

nine

months ended

March 31, 2019.

No

products manufactured by NAIE were sold in U.S. markets during the

three

or

nine

month periods ended

March 31, 2020

and

2019.

Long-lived assets by geographic region, based on the location of the company or subsidiary at which they were located or made, were as follows (in thousands):

	March 3 1 , 2020		June 30, 2019
United States	$	22,095	$	10,977
Europe		18,184		10,108
Total Long-Lived Assets	$	40,279	$	21,085

As a result of the implementation of ASC

842,

operating lease right-of-use assets are now recorded as part of long-lived assets for segment reporting.

Total assets by geographic region, based on the location of the company or subsidiary at which they were located or made, were as follows (in thousands):

	March 3 1 , 20 20		June 30, 2019
United States	$	68,305	$	54,785
Europe		50,050		38,705
Total Assets	$	118,355	$	93,490

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):

	Nine Months Ended
	March 3 1 , 20 20		March 3 1 , 201 9
United States	$	1,110	$	1,295
Europe		2,322		2,854
Total Capital Expenditures	$	3,432	$	4,149