Operating Segments

12 Months Ended

Sep. 28, 2013

Operating Segments

Operating Segments

M.  Operating Segments

The Company has two operating segments: book manufacturing and publishing. The book manufacturing segment offers a full range of services from production through storage and distribution for religious, educational and specialty trade book publishers.  In April 2013, the Company acquired FastPencil, Inc. (“FastPencil”), which was included in the book manufacturing segment (see Note I).  The publishing segment consists of Dover, Creative Homeowner and REA.

Segment performance is evaluated based on several factors, of which the primary financial measure is operating income.  Operating income is defined as gross profit (sales less cost of sales) less selling and administrative expenses, and includes severance and other restructuring costs but excludes stock-based compensation.  As such, segment performance is evaluated exclusive of interest, income taxes, stock-based compensation, intersegment profit, other income, and impairment charges.  The elimination of intersegment sales and related profit represents sales from the book manufacturing segment to the publishing segment.

Stock-based compensation, as well as the elimination of intersegment sales and related profit, are reflected as “unallocated” in the following table.  Impairment charges (discussed more fully in Note G) are also included in “unallocated” in the following table.  Corporate expenses that are allocated to the segments include various support functions such as information technology services, finance, legal, human resources and engineering, and include depreciation and amortization expense related to corporate assets.  The corresponding corporate asset balances are not allocated to the segments.  Unallocated corporate assets consist primarily of cash and cash equivalents and fixed assets used by the corporate support functions.  Dollar amounts in the following table are presented in thousands.

	Total Company			Book Manufacturing		Publishing			Unallocated
Fiscal 2013
Net sales	$	274,919		$	247,406	$	37,635		$	(10,122	)
Operating income (loss)	18,615			21,953		(2,069		)	(1,269		)
Total assets	216,994			177,313		28,610			11,071
Goodwill, net	21,820			21,820		—			—
Depreciation	19,058			17,865		463			730
Amortization	4,468			629		3,839			—
Capital expenditures and prepublication costs	25,589			21,294		3,857			438
Interest expense, net	803			—		—			803
Fiscal 2012
Net sales	$	261,320		$	233,040	$	38,355		$	(10,075	)
Operating income (loss)	15,070			20,713		(4,364		)	(1,279		)
Total assets	197,360			155,487		28,968			12,905
Goodwill, net	15,988			15,988		—			—
Depreciation	20,381			19,317		394			670
Amortization	4,679			410		4,269			—
Capital expenditures and prepublication costs	14,003			8,661		4,670			672
Interest expense, net	895			—		—			895
Fiscal 2011
Net sales	$	259,375		$	230,229	$	40,829		$	(11,683	)
Operating income (loss)	(21		)	14,822		(4,821		)	(10,022		)
Total assets	213,026			169,758		32,874			10,394
Goodwill, net	16,025			16,025		—			—
Depreciation	18,129			17,061		355			713
Amortization	5,033			410		4,623			—
Capital expenditures and prepublication costs	20,011			15,128		4,522			361
Interest expense, net	921			—		—			921

Export sales as a percentage of consolidated sales were approximately 23% in 2013, 21% in 2012 and 20% in 2011.  Approximately 95% of export sales were in the book manufacturing segment in fiscal year 2013, 92% in 2012, and 90% in 2011.  Sales to the Company’s largest customer amounted to approximately 33% of consolidated sales in 2013, and 30% in both 2012 and 2011.  In addition, sales to another customer amounted to approximately 23% of consolidated sales in fiscal 2013, 25% in 2012 and 23% in 2011.  These two customers are in the book manufacturing segment and no other customer accounted for more than 10% of consolidated sales.  Customers are granted credit on an unsecured basis.  Receivables for the customers that account for more than 10% of consolidated sales, as a percentage of consolidated accounts receivable, were 48% and 43% at September 28, 2013 and September 29, 2012, respectively.