Note 20 - Business Segment Information

6 Months Ended

Dec. 27, 2015

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

20

. Business Segment Information

The Company has three reportable segments. Operations and revenues for each segment are described below:

● The Polyester Segment manufactures Chip, POY, textured, dyed, twisted, beamed and draw wound yarns, both virgin and recycled, with sales primarily to other yarn manufacturers and knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive upholstery, home furnishings, industrial and other end-use markets. The Polyester Segment consists of sales and manufacturing operations in the U.S. and El Salvador.

● The Nylon Segment manufactures textured yarns (both nylon and polyester) and spandex covered yarns, with sales to knitters and weavers that produce fabric primarily for the apparel and hosiery markets. The Nylon Segment consists of sales and manufacturing operations in the U.S. and Colombia.

● The International Segment’s products primarily include textured polyester and various types of resale yarns and staple fiber. The International Segment sells its yarns to knitters and weavers that produce fabric for the apparel, automotive upholstery, home furnishings, industrial and other end-use markets primarily in the South American and Asian regions. This segment includes a manufacturing location and sales offices in Brazil and a sales office in China.

In addition to its reportable segments, the Company’s selected financial information includes an All Other category. All Other consists primarily of Renewables (an operating segment that does not meet quantitative thresholds for reporting), for-hire transportation services and consulting services. Revenue for Renewables is primarily derived from (i) facilitating the use of miscanthus grass as bio-fuel through service agreements and (ii) delivering harvested miscanthus grass to poultry producers for animal bedding. For-hire transportation services revenues are derived from performing common carrier services utilizing the Company’s fleet of transportation equipment. Revenues for consulting services are derived from providing process improvement and change management consulting services to entities across various industries.

The operations within All Other (i) are not subject to review by the chief operating decision maker at a level consistent with the Company’s other operations, (ii) are not regularly evaluated using the same metrics applied to the Company’s other operations and (iii) do not qualify for aggregation with an existing reportable segment. Therefore, such operations are excluded from reportable segments.

The Company evaluates the operating performance of its segments based upon Segment Profit, which represents segment gross profit plus segment depreciation expense. This measurement of segment profit or loss best aligns segment reporting with the current assessments and evaluations performed by, and information provided to, the chief operating decision maker.

In fiscal year 2015, the Company evaluated the operating performance of its segments based upon a different metric, referred to as Segment Adjusted Profit, which was defined as segment gross profit, plus segment depreciation and amortization, less segment SG&A expenses, plus segment other adjustments. SG&A expenses and other adjustments are no longer significant to the segment evaluations performed by the chief operating decision maker. The Company is providing current and comparative selected financial information below under the current method of evaluating segment profitability.

The accounting policies for the segments are consistent with the Company’s accounting policies. Intersegment sales are omitted from the below financial information, as they are (i) insignificant to the Company’s segments and consolidated operations and (ii) excluded from segment evaluations performed by the chief operating decision maker.

Selected financial information is presented below. As described in note 2, certain amounts previously reported, which comprise operating income for the three and six months ended December 28, 2014, have been revised to reflect reclassification into the All Other category.

	For the Three Months Ended Dec ember 27, 2015
	Polyester		Nylon		International		All Other			Total
Net sales	$	89,814	$	40,367	$	24,812	$	1,343		$	156,336
Cost of sales		78,001		34,653		20,431		1,438			134,523
Gross profit (loss)		11,813		5,714		4,381		(95	)		21,813
Segment depreciation expense		2,736		515		192		162			3,605
Segment Profit	$	14,549	$	6,229	$	4,573	$	67		$	25,418

	For the Three Months Ended Dece mber 28, 2014
	Polyester		Nylon		International		All Other			Total
Net sales	$	90,431	$	39,212	$	33,506	$	1,273		$	164,422
Cost of sales		78,099		33,584		28,429		1,381			141,493
Gross profit (loss)		12,332		5,628		5,077		(108	)		22,929
Segment depreciation expense		2,442		470		658		109			3,679
Segment Profit	$	14,774	$	6,098	$	5,735	$	1		$	26,608

The reconciliations of segment gross profit (loss) to consolidated income before income taxes are as follows:

	For the Three Months Ended
	Dec ember 27, 2015			Dec ember 28, 2014
Polyester	$	11,813		$	12,332
Nylon		5,714			5,628
International		4,381			5,077
All Other category		(95	)		(108	)
Segment gross profit		21,813			22,929
SG&A expenses		12,419			12,971
Provision for bad debts		559			62
Other operating expense (income), net		206			(38	)
Operating income		8,629			9,934
Interest income		(166	)		(309	)
Interest expense		816			1,209
Equity in earnings of unconsolidated affiliates		(303	)		(3,281	)
Income before income taxes	$	8,282		$	12,315

	For the Six Months Ended Dec ember 27, 2015
	Polyester		Nylon		International		All Other			Total
Net sales	$	180,382	$	81,043	$	54,183	$	2,893		$	318,501
Cost of sales		159,280		69,147		44,211		3,066			275,704
Gross profit (loss)		21,102		11,896		9,972		(173	)		42,797
Segment depreciation expense		5,547		1,033		413		314			7,307
Segment Profit	$	26,649	$	12,929	$	10,385	$	141		$	50,104

	For the Six Months Ended Dece mber 28, 2014
	Polyester		Nylon		International		All Other			Total
Net sales	$	183,409	$	83,922	$	70,000	$	2,652		$	339,983
Cost of sales		160,801		73,145		59,610		3,048			296,604
Gross profit (loss)		22,608		10,777		10,390		(396	)		43,379
Segment depreciation expense		4,856		932		1,385		219			7,392
Segment Profit (Loss)	$	27,464	$	11,709	$	11,775	$	(177	)	$	50,771

The reconciliations of segment gross profit (loss) to consolidated income before income taxes are as follows:

	For the Six Months Ended
	Dec ember 27, 2015			Dec ember 28, 2014
Polyester	$	21,102		$	22,608
Nylon		11,896			10,777
International		9,972			10,390
All Other category		(173	)		(396	)
Segment gross profit		42,797			43,379
SG&A expenses		23,249			24,620
Provision for bad debts		1,172			646
Other operating expense (income), net		60			562
Operating income		18,316			17,551
Interest income		(329	)		(626	)
Interest expense		1,800			2,028
Equity in earnings of unconsolidated affiliates		(3,163	)		(7,002	)
Income before income taxes	$	20,008		$	23,151

The reconciliations of segment capital expenditures to consolidated capital expenditures are as follows:

	For the Six Months Ended
	December 27, 2015		December 28, 2014
Polyester	$	23,437	$	12,026
Nylon		996		475
International		891		735
All Other category		1,716		43
Segment capital expenditures		27,040		13,279
Other capital expenditures		379		163
Capital expenditures	$	27,419	$	13,442

The reconciliations of segment total assets to consolidated total assets are as follows:

	December 2 7 , 201 5		June 2 8 , 2015
Polyester	$	222,835	$	203,574
Nylon		76,033		71,332
International		54,648		63,031
Segment total assets		353,516		337,937
Other current assets		8,898		4,687
Other PP&E		17,156		13,544
Other non-current assets		4,461		6,303
Investments in unconsolidated affiliates		113,710		113,901
Total assets	$	497,741	$	476,372