Note K - Business Segment and Geographic Disclosures

6 Months Ended

Jun. 30, 2011

Segment Reporting Disclosure [Text Block]

Note K:                      Business Segment and Geographic Disclosures

Fuel Tech segregates its financial results into two reportable segments representing two broad technology segments as follows:

- The Air Pollution Control technology segment includes technologies to reduce NOx emissions in flue gas from boilers, incinerators, furnaces and other stationary combustion sources.   These include Low and Ultra Low NOx Burners (LNB and ULNB), Over-Fire Air (OFA) systems, NOxOUT® and HERT™ Selective Non-Catalytic Reduction (SNCR) systems, and Advanced Selective Catalytic Reduction (ASCRTM) systems.  The ASCR system includes ULNB, OFA, and SNCR components, along with a downsized SCR catalyst, Ammonia Injection Grid (AIG), and Graduated Straightening Grid™ (GSG) systems to provide high NOx reductions at significantly lower capital and operating costs than conventional SCR systems.  The NOxOUT-CASCADE® and NOxOUT-SCR® processes are basic types of ASCR systems, using just SNCR and SCR catalyst components.  ULTRA™ technology creates ammonia at a plant site using safe urea for use with any SCR application.  Flue Gas Conditioning systems are chemical injection systems offered in markets outside the U.S. and Canada to enhance electrostatic precipitator and fabric filter performance in controlling particulate emissions.

- The FUEL CHEM® technology segment, which uses chemical processes in combination with advanced Computational Fluid Dynamics (CFD) and Chemical Kinetics Modeling (CKM) boiler modeling, for the control of slagging, fouling, corrosion, opacity and other sulfur trioxide-related issues in furnaces and boilers through the addition of chemicals into the furnace using TIFI® Targeted In-Furnace Injection™ technology.

The “Other” classification includes those profit and loss items not allocated by Fuel Tech to each reportable segment.  Further, there are no intersegment sales that require elimination.

Fuel Tech evaluates performance and allocates resources based on reviewing gross margin by reportable segment.  The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies (Note 1 in our annual report on Form 10-K).  Fuel Tech does not review assets by reportable segment, but rather, in aggregate for Fuel Tech as a whole.

Information about reporting segment net sales and gross margin are provided below:

Three months ended June 30, 2011	Air Pollution Control Segment		FUEL CHEM Segment		Other			Total
Revenues from external customers	$	9,644	$	9,377	$	-		$	19,021
Cost of sales		5,246		5,307		-			10,553
Gross margin		4,398		4,070		-			8,468
Selling, general and administrative		-		-		7,966			7,966
Research and development		-		-		315			315
Gain from revaluation of ACT liability		-		-		(758	)		(758	)
Operating income	$	4,398	$	4,070	$	7,523		$	945

Three months ended June 30, 2010	Air Pollution Control Segment		FUEL CHEM Segment		Other		Total
Revenues from external customers	$	9,291	$	9,611	$	-	$	18,902
Cost of sales		6,046		5,021		-		11,067
Gross margin		3,245		4,590		-		7,835
Selling, general and administrative		-		-		8,018		8,018
Research and development		-		-		165		165
Operating income (loss)	$	3,245	$	4,590	$	8,183	$	(348	)

Six months ended June 30, 2011	Air Pollution Control Segment		FUEL CHEM Segment		Other			Total
Revenues from external customers	$	20,736	$	20,907	$	-		$	41,643
Cost of sales		10,799		11,220		-			22,019
Gross margin		9,937		9,687		-			19,624
Selling, general and administrative		-		-		15,917			15,917
Research and development		-		-		717			717
Gain from revaluation of ACT liability		-		-		(758	)		(758	)
Operating income	$	9,937	$	9,687	$	15,876		$	3,748

Six months ended June 30, 2010	Air Pollution Control Segment		FUEL CHEM Segment		Other		Total
Revenues from external customers	$	17,505	$	19,014	$	-	$	36,519
Cost of sales		11,304		9,263		-		20,567
Gross margin		6,201		9,751		-		15,952
Selling, general and administrative		-		-		15,498		15,498
Research and development		-		-		311		311
Operating income	$	6,201	$	9,751	$	15,809	$	143

Information concerning Fuel Tech’s operations by geographic area is provided below.  Revenues are attributed to countries based on the location of the customer.  Assets are those directly associated with operations of the geographic area.

	Three months ended June 30				Six months ended June 30
	2011		2010		2011		2010
Revenues:
United States	$	15,529	$	14,461	$	35,147	$	29,502
Foreign		3,492		4,441		6,496		7,017
	$	19,021	$	18,902	$	41,643	$	36,519
	June 30, 2011		December 31, 2010
Assets:
United States	$	91,821	$	92,485
Foreign		11,029		10,718
	$	102,850	$	103,203