Annual report pursuant to Section 13 and 15(d)

Business Segments

v3.8.0.1
Business Segments
12 Months Ended
Sep. 30, 2017
Segment Reporting [Abstract]  
Business Segments
BUSINESS SEGMENTS
We operate our business in two distinct segments: basics and branded. Although the two segments are similar in their production processes and regulatory environments, they are distinct in their economic characteristics, products, marketing, and distribution methods.
The basics segment is comprised of our business units primarily focused on garment styles characterized by low fashion risk, and includes our Delta Activewear (which includes Delta Catalog and FunTees) and Art Gun business units. We market, distribute and manufacture unembellished knit apparel under the main brands of Delta Pro Weight® and Delta Magnum Weight® for sale to a diversified audience ranging from large licensed screen printers to small independent businesses. We also manufacture private label products for major branded sportswear companies, trendy regional brands, retailers, and sports licensed apparel marketers. Typically, our private label products are sold with value-added services such as hangtags, ticketing, hangers, and embellishment so that they are fully ready for retail. Using digital print equipment and its proprietary technology, Art Gun embellishes garments to create private label, custom decorated apparel servicing the fast-growing e-retailer channels, as well as the ad specialty, promotional products and retail marketplaces.
The branded segment is comprised of our business units focused on specialized apparel garments, headwear and related accessories to meet consumer preferences and fashion trends, and includes our Salt Life, Soffe, and Coast business units. Our branded segment also included our The Game and Junkfood business units prior to their dispositions on March 2, 2015, and March 31, 2017, respectively. These branded products are sold through specialty and boutique shops, upscale and traditional department stores, mid-tier retailers, sporting goods stores, e-retailers and the U.S. military, as well as direct-to-consumer through branded ecommerce sites and "brick and mortar" retail stores. Products in this segment are marketed under our lifestyle brands of Salt Life®, Soffe®, and COAST®, as well as other labels. On August 30, 2016, we purchased substantially all of the assets comprising our Coast Apparel business ("Coast"), continuing our strategy of building lifestyle brands that take advantage of our creative capabilities, direct-to-consumer infrastructure, vertical manufacturing platform and sourcing competencies. The results of the Coast business have been included in the branded segment since its acquisition on August 30, 2016.
Our Chief Operating Decision Maker and management evaluate performance and allocate resources based on profit or loss from operations before interest, income taxes and special charges ("segment operating earnings"). Our segment operating earnings may not be comparable to similarly titled measures used by other companies. The accounting policies of our reportable segments are the same as those described in Note 2. Intercompany transfers between operating segments are transacted at cost and have been eliminated within the segment amounts shown in the following table (in thousands).
 
Fiscal Year Ended
 
September 30, 2017
 
October 1, 2016
 
October 3, 2015
Segment net sales:
 
 
 
 
 
Basics
$
280,283

 
$
277,146

 
$
282,467

Branded
104,799

 
148,103

 
166,675

Total net sales
385,082

 
425,249

 
449,142

 
 
 
 
 
 
Segment operating income:
 
 
 
 
 
Basics
24,189

 
22,307

 
13,060

Branded
3,943

 
6,950

 
12,379

Total segment operating income
28,132

 
29,257

 
25,439

 
 
 
 
 
 
Purchases of property, plant and equipment:
 
 
 
 
 
Basics
4,829

 
10,734

 
6,037

Branded
2,111

 
1,501

 
689

Corporate
145

 
80

 
1,047

Total purchases of property, plant and equipment
7,085

 
12,315

 
7,773

 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
Basics
6,553

 
6,437

 
6,208

Branded
2,647

 
2,772

 
2,902

Corporate
409

 
416

 
432

Total depreciation and amortization
9,609

 
9,625

 
9,542


The following reconciles the segment operating income to the consolidated income before provision for income taxes (in thousands):
 
Fiscal Year Ended
 
September 30, 2017
 
October 1, 2016
 
October 3, 2015
Segment operating income
$
28,132

 
$
29,257

 
$
25,439

Unallocated corporate expenses
11,953

 
12,925

 
9,320

Unallocated interest expense
5,011

 
5,287

 
6,021

Consolidated income before provision for income taxes
$
11,168

 
$
11,045

 
$
10,098


Our revenues include sales to domestic and foreign customers. Foreign customers are composed of companies whose headquarters are located outside of the United States. Supplemental information regarding our revenues by geographic area based on the location of the customer is as follows (in thousands):
 
Fiscal Year Ended
 
September 30, 2017
 
October 1, 2016
 
October 3, 2015
United States
$
383,672

 
$
418,627

 
$
442,207

Foreign
1,410

 
6,622

 
6,935

Total net sales
$
385,082

 
$
425,249

 
$
449,142


Our total assets and equity investment by segment are as follows (in thousands):
 
As of
 
September 30, 2017
 
October 1, 2016
Total assets by segment:
 
 
 
Basics
191,585

 
178,347

Branded
117,437

 
156,119

Corporate
8,780

 
10,186

Total assets
317,802

 
344,652

 
 
 
 
Equity investment in joint venture:
 
 
 
Basics
4,140

 
3,593

Branded

 

Total equity investment in joint venture
4,140

 
3,593


Our long-lived assets, excluding goodwill and intangible assets, consist of property, plant and equipment for all locations. We attribute our property, plant and equipment to a particular country based on the location of the long-lived assets. Summarized financial information by geographic area is as follows (in thousands):
 
As of
 
September 30, 2017
 
October 1, 2016
 
 
 
 
United States
$
19,587

 
$
18,523

 
 
 
 
Honduras
18,151

 
19,650

El Salvador
3,853

 
4,215

Mexico
1,115

 
1,115

All foreign countries
23,119

 
24,980

 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
$
42,706

 
$
43,503