Annual report pursuant to Section 13 and 15(d)

Business Segments

v2.4.0.6
Business Segments
 12 Months Ended
Jun. 30, 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®, The Game®, Salt Life® and Realtree Outfitters® as well as other labels. The results of The Cotton Exchange and Art Gun have been included in the branded segment since their acquisitions on July 12, 2010 and December 28, 2009, respectively.
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 allocates 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).
 
Basics
 
Branded
 
Consolidated
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
4,913

 
2,346

 
7,259

 
 
 
 
 
 
Fiscal Year 2010:
 
 
 
 
 
Net sales
$
226,590

 
$
197,821

 
$
424,411

Segment operating income
2,360

 
17,802

 
20,162

Segment assets **
131,012

 
120,321

 
251,333

Equity investment in joint venture
2,682

 
—

 
2,682

Purchases of property and equipment
4,476

 
2,479

 
6,955

Depreciation and amortization
5,060

 
1,728

 
6,788

______________________
*
 
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 (Loss) Income to the consolidated (loss) income before income taxes (in thousands):
 
Year Ended
 
June 30,
2012
 
July 2,
2011

 
July 3,
2010

Segment operating (loss) income
$
(6,222
)
 
$
25,296

 
$
20,162

Unallocated interest expense
4,132

 
2,616

 
3,509

Consolidated (loss) income before taxes
$
(10,354
)
 
$
22,680

 
$
16,653



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 30,
2012
 
July 2,
2011

 
July 3,
2010

United States
$
484,419

 
$
470,909

 
$
412,938

Foreign
5,504

 
4,327

 
11,473

Total net sales
$
489,923

 
$
475,236

 
$
424,411


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 30, 2012
 
July 2, 2011
United States
$
22,146

 
$
21,834

 
 
 
 
Honduras
13,220

 
14,635

El Salvador
2,979

 
2,066

Mexico
1,080

 
1,221

All foreign countries
17,279

 
17,922

 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
$
39,425

 
$
39,756