Note 20 - Business Segment Information

9 Months Ended

Mar. 27, 2016

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 nine months ended March 29, 2015, have been revised to reflect reclassification into the All Other category.

	For the Three Months Ended March 27, 201 6
	Polyester		Nylon		International		All Other			Total
Net sales	$	94,659	$	33,871	$	31,092	$	1,656		$	161,278
Cost of sales		81,865		29,820		24,443		1,786			137,914
Gross profit (loss)		12,794		4,051		6,649		(130	)		23,364
Segment depreciation expense		2,690		509		236		242			3,677
Segment Profit	$	15,484	$	4,560	$	6,885	$	112		$	27,041

	For the Three Months Ended March 2 9 , 201 5
	Polyester		Nylon		International		All Other			Total
Net sales	$	98,759	$	40,754	$	31,017	$	1,657		$	172,187
Cost of sales		85,917		36,567		26,003		1,693			150,180
Gross profit (loss)		12,842		4,187		5,014		(36	)		22,007
Segment depreciation expense		2,578		482		353		105			3,518
Segment Profit	$	15,420	$	4,669	$	5,367	$	69		$	25,525

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

	For the Three Months Ended
	March 27, 201 6			March 2 9 , 201 5
Polyester	$	12,794		$	12,842
Nylon		4,051			4,187
International		6,649			5,014
All Other category		(130	)		(36	)
Segment gross profit		23,364			22,007
SG&A expenses		12,142			12,647
Provision for bad debts		411			—
Other operating expense, net		819			329
Operating income		9,992			9,031
Interest income		(190	)		(247	)
Interest expense		908			1,209
Loss on extinguishment of debt		—			1,040
Equity in earnings of unconsolidated affiliates		(4,167	)		(5,459	)
Income before income taxes	$	13,441		$	12,488

	For the Nine Months Ended March 27, 201 6
	Polyester		Nylon		International		All Other			Total
Net sales	$	275,041	$	114,914	$	85,275	$	4,549		$	479,779
Cost of sales		241,145		98,967		68,654		4,852			413,618
Gross profit (loss)		33,896		15,947		16,621		(303	)		66,161
Segment depreciation expense		8,237		1,542		649		556			10,984
Segment Profit	$	42,133	$	17,489	$	17,270	$	253		$	77,145

	For the Nine Months Ended March 2 9 , 201 5
	Polyester		Nylon		International		All Other			Total
Net sales	$	282,168	$	124,676	$	101,017	$	4,309		$	512,170
Cost of sales		246,718		109,712		85,613		4,741			446,784
Gross profit (loss)		35,450		14,964		15,404		(432	)		65,386
Segment depreciation expense		7,434		1,414		1,738		324			10,910
Segment Profit (Loss)	$	42,884	$	16,378	$	17,142	$	(108	)	$	76,296

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

	For the Nine Months Ended
	March 27, 201 6			March 2 9 , 201 5
Polyester	$	33,896		$	35,450
Nylon		15,947			14,964
International		16,621			15,404
All Other category		(303	)		(432	)
Segment gross profit		66,161			65,386
SG&A expenses		35,391			37,266
Provision for bad debts		1,583			647
Other operating expense, net		879			891
Operating income		28,308			26,582
Interest income		(519	)		(873	)
Interest expense		2,708			3,237
Loss on extinguishment of debt		—			1,040
Equity in earnings of unconsolidated affiliates		(7,330	)		(12,461	)
Income before income taxes	$	33,449		$	35,639

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

	For the Nine Months Ended
	March 2 7 , 201 6		March 2 9 , 201 5
Polyester	$	31,306	$	16,707
Nylon		1,622		1,415
International		1,395		807
Segment capital expenditures		34,323		18,929
Other capital expenditures		2,446		464
Capital expenditures	$	36,769	$	19,393

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

	March 27, 201 6		June 28, 2015
Polyester	$	229,561	$	203,574
Nylon		71,690		71,332
International		61,424		63,031
Segment total assets		362,675		337,937
Other current assets		5,709		4,687
Other PP&E		16,951		13,544
Other non-current assets		5,669		6,303
Investments in unconsolidated affiliates		117,952		113,901
Total assets	$	508,956	$	476,372