The APC segment recorded revenues of $44.2 million in the first three quarters of 2012, an increase of $11.3 million or 34% from the prior year amount of $32.9 million. Segment gross margin for the year-to-date period stood at 39% versus 44% reported in the prior year. This decrease is attributable to the aforementioned lower margin international projects.

The FUEL CHEM ® technology segment generated revenues of $9.2 million in the third quarter of 2012, a decrease of $2.6 million, or 22%, from the comparable 2011 quarter. The revenue decrease is due in part to attrition at existing customer accounts due to the soft electric demand market and fuel switching as a result of low natural gas prices. These factors led to combustion units operating at less than full capacity which, along with unscheduled outages, resulted in a corresponding decrease in revenues. Segment gross margins increased from 43% in the third quarter of 2011 to 54% in the current quarter, the result of a higher mix of FUEL CHEM TIFI-XP™ applications where extreme performance is needed for higher slagging coals. The quarterly gross margin in 2011 was negatively impacted by $0.4 million attributable to the costs of a FUEL CHEM demonstration in China.

Revenues for the FUEL CHEM segment for the nine-month period totaled $26.8 million, a decrease of $5.9 million or 18% versus the prior year amount of $32.7 million. Nine-month revenues for 2011 include approximately $1.3 million in non-recurring lower-margin installation work for a specific new customer. Segment gross margin increased to 53% in the first three quarters of 2012 from 49% in the comparable period in 2011. The higher gross margin in 2012 is attributable to a higher margin mix of customer orders and the previously mentioned non-recurring, lower margin installation work that was recognized in 2011.

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