Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Operating Segments

v3.5.0.2
Note 10 - Operating Segments
 6 Months Ended
Jun. 30, 2016
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
10.
Operating Segments
 
In accordance with ASC 280, “Segment Reporting”, the Company defines an operating segment as a business activity: (a) from which we may earn revenue and incur expenses; (2) whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and (3) for which discrete financial information is available.
 
Our reporting segments are defined as below:
 
TREATMENT SEGMENT reporting includes:
 
-
nuclear, low-level radioactive, mixed, hazardous and non-hazardous waste treatment, processing and disposal services primarily through four uniquely licensed and permitted treatment and storage facilities; and
 
-
R&D activities to identify, develop and implement innovative waste processing techniques for problematic waste streams.
 
SERVICES SEGMENT, which includes:
 
-
On-site waste management services to commercial and government customers;
 
-
Technical services, which include:
 
 
 
o
professional radiological measurement and site survey of large government and commercial installations using advanced methods, technology and engineering;
 
o
integrated Occupational Safety and Health services including industrial hygiene (“IH”) assessments; hazardous materials surveys, e.g., exposure monitoring; lead and asbestos
management/abatement oversight; indoor air quality evaluations; health risk and exposure assessments; health & safety plan/program development, compliance auditing and training services; and Occupational Safety and Health Administration (“OSHA”) citation assistance;
 
o
global technical services providing consulting, engineering, project management, waste management, environmental, and decontamination and decommissioning field, technical, and management personnel and services to commercial and government customers;
 
-
Nuclear services, which include:
 
o
technology-based services including engineering, decontamination and decommissioning (“D&D”), specialty services and construction, logistics, transportation, processing and disposal;
 
o
remediation of nuclear licensed and federal facilities and the remediation cleanup of nuclear legacy sites. Such services capability includes: project investigation; radiological engineering; partial and total plant D&D; facility decontamination, dismantling, demolition, and planning; site restoration; site construction; logistics; transportation; and emergency response; and
 
-
A company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental) of health physics, IH and customized nuclear, environmental, and occupational safety and health (“NEOSH”) instrumentation.
 
MEDICAL SEGMENT reporting includes: R&D costs for the new medical isotope production technology from our majority-owned Polish subsidiary, PF Medical. The Medical Segment has not generated any revenue as it continues to be primarily in the R&D stage.
All costs incurred for the Medical Segment are reflected within R&D in the accompanying Consolidated Statements of Operations and consist primarily of employee salaries and benefits, laboratory costs, third party fees, and other related costs associated with the development of this new technology.
 
Our reporting segments exclude our corporate headquarters and our discontinued operations (see Note 9 – “Discontinued Operations”) which do not generate revenues.
 
 
The table below presents certain financial information of our operating segments for the three and six months ended June 30, 2016 and 2015 (in thousands).
 
Segment Reporting for the Quarter Ended June 30, 2016
   
Treatment
    
Services
    
Medical
    
Segments
Total
    
Corporate
(1)
    
Consolidated
Total
  
Revenue from external customers
   $ 7,985     $ 6,824       —     $ 14,809     $ —     $ 14,809  
Intercompany revenues
     6       10       —       16       —       —  
Gross profit
    582       1,234       —       1,816       —       1,816  
Research and development
     120       7       416       543       11       554  
Interest income
     2       —       —       2       29       31  
Interest expense
     (14 )     —       —       (14 )     (94 )     (108 )
Interest expense-financing fees
     —       —       —       —       (29 )     (29 )
Depreciation and amortization
     705       160       —       865       47       912  
Segment (loss) income before income taxes
     (10,557 )
 (2)
   1,046       (416 )     (9,927 )     (1,374 )     (11,301 )
Income tax (benefit) expense
     (3,167 )
 (2)
   —       —       (3,167 )     —       (3,167 )
Segment (loss) income
    (7,390 )     1,046       (416 )     (6,760 )     (1,374 )     (8,134 )
Expenditures for segment assets
     16       4       —       20       —       20  
 
Segment Reporting for the Quarter Ended June 30, 2015
   
Treatment
    
Services
    
Medical
    
Segments
Total
    
Corporate
(1)
    
Consolidated
Total
  
Revenue from external customers
   $ 11,087     $ 5,267       —     $ 16,354     $ —     $ 16,354  
Intercompany revenues
     1       6       —       7       —       —  
Gross profit
    3,335       697       —       4,032       —       4,032  
Research and development
     55       —       432       487       2       489  
Interest income
     1       —       —       1       10       11  
Interest expense
     (11 )     —       —       (11 )     (129 )     (140 )
Interest expense-financing fees
     —       —       —       —       (56 )     (56 )
Depreciation and amortization
     743       190       —       933       10       943  
Segment income (loss) before income taxes
     2,294       60       (432 )     1,922       (1,479 )     443  
Income tax expense
     36       —       —       36       —       36  
Segment income (loss)
     2,258       60       (432 )     1,886       (1,479 )     407  
Expenditures for segment assets
     138       —       —       138       6       144  
 
Segment Reporting for the Six Months Ended June 30, 2016
   
Treatment
    
Services
    
Medical
    
Segments
Total
    
Corporate
(1)
    
Consolidated
Total
  
Revenue from external customers
   $ 15,189     $ 9,658       —     $ 24,847     $ —     $ 24,847  
Intercompany revenues
     10       15       —       25       —       —  
Gross profit
     444       1,406       —       1,850       —       1,850  
Research and development
     226       33       854       1,113       15       1,128  
Interest income
     2       —       —       2       45       47  
Interest expense
     (16 )     —       —       (16 )     (260 )     (276 )
Interest expense-financing fees
     —       —       —       —       (85 )     (85 )
Depreciation and amortization
     1,418       321       —       1,739       57       1,796  
Segment (loss) income before income taxes
     (11,805 )
(2)
     322       (854 )     (12,337 )     (2,773 )     (15,110 )
Income tax (benefit) expense
     (3,130 )
(2)
     —       —       (3,130 )     —       (3,130 )
Segment (loss) income
    (8,675 )     322       (854 )     (9,207 )     (2,773 )     (11,980 )
Expenditures for segment assets
     23       4       1       28       —       28  
 
Segment Reporting for the Six Months Ended June 30, 2015
   
Treatment
    
Services
    
Medical
    
Segments
Total
    
Corporate
(1)
    
Consolidated
Total
  
Revenue from external customers
   $ 20,836     $ 9,119       —     $ 29,955     $ —     $ 29,955  
Intercompany revenues
     2       15       —       17       —       —  
Gross profit
     4,570       940       —       5,510       —       5,510  
Research and development
     89       —       827       916       2       918  
Interest income
     2       —       —       2       18       20  
Interest expense
     (34 )     —       —       (34 )     (233 )     (267 )
Interest expense-financing fees
     (2 )     —       —       (2 )     (113 )     (115 )
Depreciation and amortization
     1,507       380       —       1,887       22       1,909  
Segment income (loss) before income taxes
     2,514       (241 )     (827 )     1,446       (2,981 )     (1,535 )
Income tax expense
     71       —       —       71       —       71  
Segment income (loss)
     2,443       (241 )     (827 )     1,375       (2,981 )     (1,606 )
Expenditures for segment assets
     244       13       —       257       8       265  
 
 
 
(
1
)
Amounts reflect the activity for corporate headquarters not included in the segment information.
 
(
2
)
Amounts include tangible and intangible asset impairment losses of $1,816,000 and $8,288,000, respectively for the Company’s M&EC subsidiary (see Note 3 – “East Tennessee Materials and Energy Corporation (“M&EC”)”). Also includes a tax benefit of approximately $3,203,000 recorded resulting from the intangible impairment loss recorded for our M&EC subsidiary (see Note 11 – “Income Taxes” below).