Quarterly report pursuant to Section 13 or 15(d)

Business Segments

v2.4.0.6
Business Segments
 3 Months Ended
Sep. 29, 2012
Segment Reporting [Abstract]  
Business Segments
Business Segments
We operate our business in two distinct segments: branded and basics. Although the two segments are similar in their production processes and regulatory environments, they are distinct in their economic characteristics, products and distribution methods.
The branded segment is comprised of our business units focused on specialized apparel garments and headwear to meet consumer preferences and fashion trends, and includes Soffe (which includes The Cotton Exchange as the bookstore division of Soffe), Junkfood, To The Game and Art Gun. These branded embellished and unembellished products are sold through specialty and boutique shops, upscale and traditional department stores, mid-tier retailers, sporting goods stores, college bookstores and the U.S. military. Products in this segment are marketed under our lifestyle brands of Soffe®, Intensity Athletics®, The Cotton Exchange®, Junk Food®, and The Game®, licensed brands of Salt Life® and Realtree Outfitters®, as well as other labels.
The basics segment is comprised of our business units primarily focused on garment styles that are characterized by low fashion risk, and includes our Delta Catalog and FunTees businesses. Within the Delta Catalog business, we market, distribute and manufacture unembellished knit apparel under the main brands of Delta Pro Weight® and Delta Magnum Weight®. Delta Catalog products are sold to a diversified audience ranging from large licensed screen printers all the way to small independent businesses. We also manufacture private label products for major branded sportswear companies, retailers, corporate industry programs, and sports licensed apparel marketers. Typically these products are sold with value-added services such as hangtags, ticketing, hangers, and embellishment so that they are fully ready for retail. The majority of the private label products are sold through the FunTees business.
Robert W. Humphreys, 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 Income”). Our Segment Operating Income may not be comparable to similarly titled measures used by other companies. Intercompany transfers between operating segments are transacted at cost and have been eliminated within the segment amounts shown in the following table. We expensed a one-time charge of $1.2 million in the fiscal 2013 first quarter for legal and professional fees related to the Audit Committee internal investigation that was completed during the quarter. This one-time charge is included in the basics segment.
Information about our operations as of and for the three months ended September 29, 2012, and October 1, 2011, by operating segment, is as follows (in thousands):
 
Basics
 
Branded
 
Consolidated
Three months ended September 29, 2012
 
 
 
 
 
Net sales
$
66,581

 
$
63,533

 
$
130,114

Segment operating income
3,165

 
2,671

 
5,836

Segment assets *
165,102

 
149,456

 
314,558

 
 
 
 
 
 
Three months ended October 1, 2011
 
 
 
 
 
Net sales
$
52,598

 
$
70,925

 
$
123,523

Segment operating income
1,584

 
5,114

 
6,698

Segment assets *
174,688

 
153,423

 
328,111

*
 
All goodwill and intangibles on our balance sheet are included in the branded segment.

The following reconciles the segment operating income to the Company's consolidated income before income taxes (in thousands):
 
Three Months Ended
 
September 29,
2012
 
October 1,
2011
Segment operating income
$
5,836

 
$
6,698

Unallocated interest expense
1,076

 
893

Consolidated income before taxes
$
4,760

 
$
5,805