Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Operating Segments

v3.5.0.2
Note 10 - Operating Segments
 9 Months Ended
Sep. 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 nine months ended September 30, 2016 and 2015 (in thousands).
 
Segment Reporting for the Quarter Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
Treatment
    
Services
    
Medical
    
Segments
Total
    
Corporate
(1)
    
Consolidated
Total
  
Revenue from external customers
   $ 7,643     $ 5,278       —     $ 12,921     $ —     $ 12,921  
Intercompany revenues
     28       8       —       36       —       —  
Gross profit
    837       970       —       1,807       —       1,807  
Research and development
     95       4       342       441       —       441  
Interest income
     —       —       —       —       31       31  
Interest expense
     (2 )     (2 )     —       (4 )     (97 )     (101 )
Interest expense-financing fees
     —       —       —       —       (14 )     (14 )
Depreciation and amortization
     1,019       161       —       1,180       9       1,189  
Segment (loss) income before income taxes
     (90 )     360       (342 )     (72 )     (1,391 )     (1,463 )
Income tax expense
     35       —       —       35       2       37  
Segment (loss) income
    (125 )     360       (342 )     (107 )     (1,393 )     (1,500 )
Expenditures for segment assets
     63       13       —       76       —       76  
 
Segment Reporting for the Quarter Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
Treatment
    
Services
    
Medical
    
Segments
Total
    
Corporate
(1)
    
Consolidated
Total
  
Revenue from external customers
   $ 10,866     $ 6,443       —     $ 17,309     $ —     $ 17,309  
Intercompany revenues
     32       7       —       39       —       —  
Gross profit
    3,696       1,250       —       4,946       —       4,946  
Research and development
     49       —       527       576       7       583  
Interest income
     4       —       —       4       12       16  
Interest expense
     (1 )     —       —       (1 )     (123 )     (124 )
Interest expense-financing fees
     —       —       —       —       (56 )     (56 )
Depreciation and amortization
     729       172       —       901       11       912  
Segment income (loss) before income taxes
     2,745       490       (527 )     2,708       (1,371 )     1,337  
Income tax expense (benefit)
     64       (17 )     —       47       6       53  
Segment income (loss)
     2,681       507       (527 )     2,661       (1,377 )     1,284  
Expenditures for segment assets
     58       15       —       73       —       73  
 
Segment Reporting for the Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
Treatment
    
Services
    
Medical
    
Segments
Total
    
Corporate
(1)
    
Consolidated Total
  
Revenue from external customers
   $ 22,832     $ 14,936       —     $ 37,768     $ —     $ 37,768  
Intercompany revenues
     38       23       —       61       —       —  
Gross profit
     1,280       2,377       —       3,657       —       3,657  
Research and development
     321       38       1,196       1,555       15       1,570  
Interest income
     3       —       —       3       75       78  
Interest expense
     (19 )     (2 )     —       (21 )     (356 )     (377 )
Interest expense-financing fees
     —       —       —       —       (99 )     (99 )
Depreciation and amortization
     2,437       482       —       2,919       67       2,986  
Segment (loss) income before income taxes
     (11,895 )
 (2)
   682       (1,196 )     (12,409 )     (4,164 )     (16,573 )
Income tax (benefit) expense
     (3,095 )
 (2)
   —       —       (3,095 )     2       (3,093 )
Segment (loss) income
    (8,800 )     682       (1,196 )     (9,314 )     (4,166 )     (13,480 )
Expenditures for segment assets
     86       17       1       104       —       104  
 
Segment Reporting for the Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
Treatment
    
Services
    
Medical
    
Segments
Total
    
Corporate
(1)
    
Consolidated Total
  
Revenue from external customers
   $ 31,702     $ 15,562       —     $ 47,264     $ —     $ 47,264  
Intercompany revenues
     34       22       —       56       —       —  
Gross profit
     8,265       2,190       —       10,455       —       10,455  
Research and development
     137       —       1,354       1,491       9       1,500  
Interest income
     6       —       —       6       30       36  
Interest expense
     (34 )     —       —       (34 )     (356 )     (390 )
Interest expense-financing fees
     —       (2 )     —       (2 )     (169 )     (171 )
Depreciation and amortization
     2,236       552       —       2,788       33       2,821  
Segment income (loss) before income taxes
     5,259       248       (1,354 )     4,153       (4,351 )     (198 )
Income tax expense (benefit)
     135       (17 )     —       118       6       124  
Segment income (loss)
     5,124       265       (1,354 )     4,035       (4,357 )     (322 )
Expenditures for segment assets
     303       27       —       330       8       338  
 
(
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 recorded in the second quarter of 2016 (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).