Annual report pursuant to Section 13 and 15(d)

Business Segments

v3.3.1.900
Business Segments
 12 Months Ended
Oct. 03, 2015
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 our Salt Life, Junkfood, and Soffe business units as well as The Game business unit prior to its disposition on March 2, 2015. These branded embellished and unembellished 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. Products in this segment are marketed under our lifestyle brands of Salt Life®, Junk Food®, and Soffe®, as well as other labels.
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 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, e-retailers, and sports licensed apparel marketers. Art Gun produces custom private label garments through digital printing. Typically the private label 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 September 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 2015:
 
 
 
 
 
Net sales
$
282,467

 
$
166,675

 
$
449,142

Segment operating income
9,703

 
6,416

 
16,119

Segment assets
165,651

 
159,259

 
324,910

Equity investment in joint venture
3,195

 
—

 
3,195

Purchases of property and equipment
6,037

 
1,736

 
7,773

Depreciation and amortization
6,396

 
3,146

 
9,542

 
 
 
 
 
 
Fiscal Year 2014:
 
 
 
 
 
Net sales
$
265,882

 
$
187,019

 
$
452,901

Segment operating income (loss)
3,448

 
(5,109
)
 
(1,661
)
Segment assets
174,814

 
179,764

 
354,578

Equity investment in joint venture
2,879

 
—

 
2,879

Purchases of property and equipment
6,435

 
2,459

 
8,894

Depreciation and amortization
6,261

 
3,232

 
9,493

 
 
 
 
 
 
Transition Period:
 
 
 
 
 
Net sales
$
64,996

 
$
57,563

 
$
122,559

Segment operating income
359

 
197

 
556

Segment assets
162,505

 
189,257

 
351,762

Equity investment in joint venture
2,938

 
—

 
2,938

Purchases of property and equipment
2,509

 
483

 
2,992

Depreciation and amortization
1,451

 
619

 
2,070

 
 
 
 
 
 
Fiscal Year 2013:
 
 
 
 
 
Net sales
$
278,020

 
$
212,503

 
$
490,523

Segment operating income (loss)
15,831

 
(1,928
)
 
13,903

Segment assets
166,570

 
145,340

 
311,910

Equity investment in joint venture
2,909

 
—

 
2,909

Purchases of property and equipment
3,978

 
3,944

 
7,922

Depreciation and amortization
5,794

 
2,221

 
8,015


The following reconciles the segment operating income (loss) to the consolidated income (loss) before provision for (benefit from) income taxes (in thousands):
 
Fiscal Year Ended
 
Fiscal Year Ended
 
13-Week Transition Period Ended
 
Fiscal Year Ended
 
October 3,
2015
 
September 27,
2014
 
September 28,
2013
 
June 29,
2013
Segment operating income (loss)
$
16,119

 
$
(1,661
)
 
$
556

 
$
13,903

Unallocated interest expense
6,021

 
5,792

 
1,033

 
3,997

Consolidated income (loss) before provision for (benefit from) income taxes
$
10,098

 
$
(7,453
)
 
$
(477
)
 
$
9,906



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
 
Fiscal Year Ended
 
13-Week Transition Period Ended
 
Fiscal Year Ended
 
October 3,
2015
 
September 27,
2014
 
September 28,
2013
 
June 29,
2013
United States
$
442,207

 
$
442,062

 
$
117,813

 
$
480,981

Foreign
6,935

 
10,839

 
4,746

 
9,542

Total net sales
$
449,142

 
$
452,901

 
$
122,559

 
$
490,523

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
 
October 3,
2015
 
September 27,
2014
United States
$
22,302

 
$
22,919

 
 
 
 
Honduras
13,072

 
14,234

El Salvador
3,276

 
2,689

Mexico
1,003

 
1,163

All foreign countries
17,351

 
18,086

 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
$
39,653

 
$
41,005