Segment Reporting

6 Months Ended

Jun. 30, 2011

Segment Reporting [Abstract]

Segment Reporting

16. Segment Reporting

     The Company has two division segments based on the products it delivers:

     Heavy Duty Diesel Systems division — The Heavy Duty Diesel Systems division includes retrofit of legacy diesel fleets with emissions control systems and the emerging opportunity for new engine emissions controls for on- and off-road vehicles. In 2007, the Company acquired Engine Control Systems (ECS), an Ontario, Canada-based company focused on a variety of heavy duty vehicle applications. This environmental business segment specializes in the design and manufacture of verified exhaust emissions control solutions. The operations of CDTI are included in the Heavy Duty Diesel Systems division from the October 15, 2010 Merger date. Globally, the Heavy Duty Diesel Systems division offers a range of products for the verified retrofit and OEM markets through its distributor/dealer network and direct sales. The ECS and Clean Diesel Technologies-branded products are used to reduce exhaust emissions created by on-road, off-road and stationary diesel and alternative fuel engines including propane and natural gas. The retrofit market in the U.S. is driven in particular by state and municipal environmental regulations and incentive funding for voluntary early compliance. The Heavy Duty Diesel Systems division derives significant revenues from retrofit with a portfolio of solutions verified by the California Air Resources Board and the United States Environmental Protection Agency.

     Catalyst division — The Catalyst division is the original part of the Catalytic Solutions (CSI) business behind the Company’s proprietary Mixed Phase Catalyst (MPC^®) technology enabling the Company to produce catalyst formulations for gasoline, diesel and natural gas induced emissions that offer performance, proven durability and cost effectiveness for multiple markets and a wide range of applications. A family of unique high-performance catalysts has been developed — with base-metals or low platinum group metal (PGM) and zero PGM content — to provide increased catalytic function and value for technology-driven automotive industry customers. The Catalyst division’s technical and manufacturing competence in the light duty vehicle market is aimed at meeting auto makers’ most stringent requirements, and it has supplied over ten million parts to light duty vehicle customers since 1996. The Catalyst division also provides catalyst formulations for the Company’s Heavy Duty Diesel Systems division.

     Corporate — Corporate includes cost for personnel, insurance, recapitalization expense and public company expenses such as legal, audit and taxes that are not allocated down to the operating divisions.

     Discontinued operations — In 2006, the Company purchased AUS, a provider of cost-effective, engineered solutions for the clean and efficient utilization of fossil fuels. AUS, referred to as the Company’s Energy Systems division, provided emissions control and energy systems solutions for industrial and utility boilers, process heaters, gas turbines and generation sets used largely by major utilities, industrial process plants, OEMs, refineries, food processors, product manufacturers and universities. The Energy Systems division delivered integrated systems built for customers’ specific combustion processes. As discussed in Note 13, this division was sold on October 1, 2009.

     Summarized financial information for the Company’s reportable segments for the three and six months ended June 30, 2011 and 2010 is as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Net sales
Heavy Duty Diesel Systems	$	9,571		$	8,277		$	19,029		$	15,776
Catalyst		3,421			4,852			8,088			9,936
Corporate		—			—			—			—
Eliminations (1)		(1,460	)		(203	)		(1,801	)		(341	)
Total	$	11,532		$	12,926		$	25,316		$	25,371
Income (loss) from operations
Heavy Duty Diesel Systems	$	(393	)	$	811		$	(126	)	$	1,913
Catalyst (2)		(887	)		(554	)		(1,361	)		3,104
Corporate		(2,294	)		(1,469	)		(4,128	)		(2,915	)
Eliminations		(91	)		—			(108	)		—
Total	$	(3,665	)	$	(1,212	)	$	(5,723	)	$	2,102

(1)	Elimination of Catalyst revenue related to sales to Heavy Duty Diesel Systems.
(2)	Catalyst division income from operations includes a $3.9 million gain on sale of intellectual property to TKK in the six months ended June 30, 2010.

     Net sales by geographic region for the three and six months ended June 30, 2011 and 2010 as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
United States	$	3,892	$	5,579	$	9,735	$	11,346
Canada		5,550		6,027		11,314		11,177
Europe		2,090		1,320		4,267		2,848
Total	$	11,532	$	12,926	$	25,316	$	25,371

     Geographic information is based on country of origin. The majority of Canadian sales are to U.S. customers.