Quarterly report pursuant to Section 13 or 15(d)

Business Segments

v2.4.0.6
Business Segments
 9 Months Ended
Mar. 30, 2013
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, 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 previously disclosed Audit Committee internal investigation that was completed during that quarter. This one-time charge is included in the basics segment.
Information about our operations as of and for the three and nine months ended March 30, 2013, and March 31, 2012, by operating segment, is as follows (in thousands):
 
Basics
 
Branded
 
Consolidated
Three months ended March 30, 2013
 
 
 
 
 
Net sales
$
67,445

 
$
52,647

 
$
120,092

Segment operating income (loss)
3,655

 
(1,091
)
 
2,564

Segment assets *
166,771

 
153,327

 
320,098

 
 
 
 
 
 
Three months ended March 31, 2012
 
 
 
 
 
Net sales
$
67,048

 
$
58,493

 
$
125,541

Segment operating loss
1,514

 
1,342

 
2,856

Segment assets *
180,332

 
157,546

 
337,878

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

 
Basics
 
Branded
 
Consolidated
Nine months ended March 30, 2013
 
 
 
 
 
Net sales
$
192,828

 
$
164,128

 
$
356,956

Segment operating income (loss)
10,461

 
(1,215
)
 
9,246

 
 
 
 
 
 
Nine months ended March 31, 2012
 
 
 
 
 
Net sales
$
177,200

 
$
177,350

 
$
354,550

Segment operating (loss) income
(15,592
)
 
5,159

 
(10,433
)

The following reconciles the segment operating income to the Company's consolidated income before income taxes (in thousands):
 
Three Months Ended
 
Nine Months Ended
 
March 30,
2013
 
March 31,
2012
 
March 30,
2013
 
March 31,
2012
Segment operating income (loss)
$
2,564

 
$
2,856

 
$
9,246

 
$
(10,433
)
Unallocated interest expense
1,015

 
1,017

 
2,978

 
2,901

Consolidated earnings (loss) before taxes
$
1,549

 
$
1,839

 
$
6,268

 
$
(13,334
)