Annual report pursuant to Section 13 and 15(d)

Business Segments

v3.5.0.2
Business Segments
 12 Months Ended
Oct. 01, 2016
Segment Reporting [Abstract]  
Business Segments
BUSINESS SEGMENTS
We operate our business in two distinct segments: basics and branded 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, Robert W. Humphreys, our Chief Operating Decision Maker, began reviewing the performance of the basics and branded segments excluding general corporate expenses. Therefore, we report our financial performance on the two reportable segments, basics and branded, with corporate activities stated separately. Our financial statements reflect this reporting with prior periods adjusted accordingly.
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 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, trendy regional brands, 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.
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, Soffe, and Coast 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®, Soffe®, and COAST®, as well as other labels. The results of the Coast business have been included in the branded segment since acquisition on August 30, 2016.
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. 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).
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Segment net sales:
 
 
 
 
 
Basics
$
277,146

 
$
282,467

 
$
265,882

Branded
148,103

 
166,675

 
187,019

Total net sales
425,249

 
449,142

 
452,901

 
 
 
 
 
 
Segment operating income:
 
 
 
 
 
Basics
22,307

 
13,060

 
6,785

Branded
6,950

 
12,379

 
3,070

Total segment operating income
29,257

 
25,439

 
9,855

 
 
 
 
 
 
Purchases of property, plant and equipment:
 
 
 
 
 
Basics
10,734

 
6,037

 
6,436

Branded
1,501

 
689

 
1,458

Corporate
80

 
1,047

 
1,000

Total purchases of property, plant and equipment
12,315

 
7,773

 
8,894

 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
Basics
6,437

 
6,208

 
6,096

Branded
2,772

 
2,902

 
2,948

Corporate
416

 
432

 
449

Total depreciation and amortization
9,625

 
9,542

 
9,493


The following reconciles the segment operating income to the consolidated income (loss) before provision for (benefit from) income taxes (in thousands):
 
Fiscal Year Ended
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
Segment operating income
$
29,257

 
$
25,439

 
$
9,855

Unallocated corporate expenses
12,925

 
9,320

 
11,516

Unallocated interest expense
5,287

 
6,021

 
5,792

Consolidated income (loss) before provision for (benefit from) income taxes
$
11,045

 
$
10,098

 
$
(7,453
)

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
 
October 1, 2016
 
October 3, 2015
 
September 27, 2014
United States
$
418,627

 
$
442,207

 
$
442,062

Foreign
6,622

 
6,935

 
10,839

Total net sales
$
425,249

 
$
449,142

 
$
452,901


Our total assets and equity investment by segment are as follows (in thousands):
 
As of
 
October 1, 2016
 
October 3, 2015
Total assets by segment:
 
 
 
Basics
178,347

 
160,902

Branded
156,119

 
152,210

Corporate
10,186

 
11,791

Total assets
344,652

 
324,903

 
 
 
 
Equity investment in joint venture:
 
 
 
Basics
3,593

 
3,195

Branded
—

 
—

Total equity investment in joint venture
3,593

 
3,195

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 1, 2016
 
October 3, 2015
 
 
 
 
United States
$
18,523

 
$
22,302

 
 
 
 
Honduras
19,650

 
13,072

El Salvador
4,215

 
3,276

Mexico
1,115

 
1,003

All foreign countries
24,980

 
17,351

 
 
 
 
Total long-lived assets, excluding goodwill and intangibles
$
43,503

 
$
39,653