Annual report pursuant to Section 13 and 15(d)

Business Segments

v2.4.0.8
Business Segments
 12 Months Ended
Jun. 29, 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, marketing and distribution methods.
The branded segment is comprised of our business units which are 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®, Junk Food®, The Game®, American Threads™, Salt Life® and Realtree Outfitters® as well as other labels. The results of The Cotton Exchange have been included in the branded segment since its acquisition on July 12, 2010.
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. We market, distribute and manufacture for sale 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, 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.
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 (loss)”). Our segment operating income (loss) 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). 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.
 
Basics
 
Branded
 
Consolidated
Fiscal Year 2013:
 
 
 
 
 
Net sales
$
270,876

 
$
219,647

 
$
490,523

Segment operating income (loss)
15,771

 
(1,868
)
 
13,903

Segment assets **
161,716

 
150,194

 
311,910

Equity investment in joint venture
2,909

 
—

 
2,909

Purchases of property and equipment
3,477

 
4,445

 
7,922

Depreciation and amortization
5,149

 
2,866

 
8,015

 
 
 
 
 
 
Fiscal Year 2012:
 
 
 
 
 
Net sales
$
254,718

 
$
235,205

 
$
489,923

Segment operating (loss) income
(12,484
)
 
6,262

 
(6,222
)
Segment assets **
168,492

 
151,902

 
320,394

Equity investment in joint venture
2,818

 
—

 
2,818

Purchases of property and equipment
3,828

 
2,798

 
6,626

Depreciation and amortization
5,547

 
1,945

 
7,492

 
 
 
 
 
 
Fiscal Year 2011:
 
 
 
 
 
Net sales
$
253,494

 
$
221,742

 
$
475,236

Gain on contingent consideration, net of impairment charges *
—

 
918

 
918

Segment operating income
16,889

 
8,407

 
25,296

Segment assets **
162,932

 
148,933

 
311,865

Equity investment in joint venture
2,664

 
—

 
2,664

Purchases of property and equipment
4,164

 
3,802

 
7,966

Depreciation and amortization
4,912

 
2,345

 
7,257

______________________
*
 
See Note 2(m) for further information regarding the remeasurement of contingent consideration and impairment testing of goodwill and intangibles.

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


The following reconciles the segment operating income (loss) to the consolidated income (loss) before provision for (benefit from) income taxes (in thousands):
 
Year Ended
 
June 29,
2013
 
June 30,
2012

 
July 2,
2011

Segment operating income (loss)
$
13,903

 
$
(6,222
)
 
$
25,296

Unallocated interest expense
3,997

 
4,132

 
2,616

Consolidated income (loss) before provision for (benefit from) income taxes
$
9,906

 
$
(10,354
)
 
$
22,680



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):
 
Year Ended
 
June 29,
2013
 
June 30,
2012

 
July 2,
2011

United States
$
480,981

 
$
484,419

 
$
470,909

Foreign
9,542

 
5,504

 
4,327

Total net sales
$
490,523

 
$
489,923

 
$
475,236


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):
 
June 29, 2013
 
June 30, 2012
United States
$
23,011

 
$
22,146

 
 
 
 
Honduras
12,144

 
13,220

El Salvador
3,163

 
2,979

Mexico
1,128

 
1,080

All foreign countries
16,435

 
17,279

 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
$
39,446

 
$
39,425