Quarterly report pursuant to Section 13 or 15(d)

Business Segments

v3.4.0.3
Business Segments
 6 Months Ended
Apr. 02, 2016
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. In the second quarter of 2016, in connection with the ongoing evaluation of our current and future strategic initiatives, the Chief Operating Decision Maker began reviewing the performance of the branded and basics segments excluding general corporate expenses. Therefore, we will report our financial performance on the two reportable segments, branded and basics, with corporate activities stated separately. Our financial statements reflect this new reporting with prior periods adjusted accordingly.
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 the 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 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. Typically our private label products are sold with value-added services such as hangtags, ticketing, hangers, and embellishment so that they are fully ready for retail. Using digital print equipment and its proprietary technology, Art Gun embellishes garments to create private label, custom decorated apparel servicing the fast-growing e-retailer channels.
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 earnings (loss)”). Our segment operating earnings (loss) 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.
Information about our operations as of and for the three months ended April 2, 2016, and March 28, 2015, by operating segment, is as follows (in thousands):
 
Basics
 
Branded
 
Corporate
 
Consolidated
Three months ended April 2, 2016
 
 
 
 
 
 
 
Net sales
$
69,840

 
$
39,320

 
$
—

 
$
109,160

Segment operating income (loss)
6,939

 
2,466

 
(3,474
)
 
5,931

Segment assets
173,025

 
157,870

 
9,783

 
340,678

 
 
 
 
 
 
 
 
Three months ended March 28, 2015
 
 
 
 
 
 
 
Net sales
$
71,388

 
$
43,654

 
$
—

 
$
115,042

Segment operating income (loss) *
1,707

 
8,089

 
(2,468
)
 
7,328

Segment assets
175,581

 
160,078

 
13,995

 
349,654


 
Basics
 
Branded
 
Corporate
 
Consolidated
Six months ended April 2, 2016
 
 
 
 
 
 
 
Net sales
$
131,356

 
$
67,975

 
$
—

 
$
199,331

Segment operating income (loss)
12,976

 
1,513

 
(6,333
)
 
8,156

 
 
 
 
 
 
 
 
Six months ended March 28, 2015
 
 
 
 
 
 
 
Net sales
$
129,068

 
$
79,354

 
$
—

 
$
208,422

Segment operating income (loss) *
1,362

 
7,313

 
(4,565
)
 
4,110


*The net gain from the sale of The Game that is included in the branded segment operating income is $5.6 million. Excluding the gain the branded the segment's operating income was $2.5 million and $1.7 million for the three and six months ended March 28, 2015, respectively.
The following table reconciles the segment operating earnings to the Company's consolidated income before provision from income taxes (in thousands):
 
Three Months Ended
 
Six Months Ended
 
April 2,
2016
 
March 28,
2015
 
April 2,
2016
 
March 28,
2015
Segment operating income
$
5,931

 
$
7,328

 
$
8,156

 
$
4,110

Unallocated interest expense
1,396

 
1,491

 
2,671

 
3,019

Consolidated income before provision for income taxes
$
4,535

 
$
5,837

 
$
5,485

 
$
1,091