Note 15 - Operating Segments

12 Months Ended

Dec. 01, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

15

: Operating Segments

We are required to report segment information in the same way that we internally organize our business for assessing performance and making decisions regarding allocation of resources. For segment evaluation by the chief operating decision maker, segment operating income is identified as gross profit less SG&A expenses. Corporate expenses are fully allocated to each operating segment. Corporate assets are

not

allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs. Operating results of each of these segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance.

For the year ended

December 2, 2017,

we had

six

reportable segments: Americas Adhesives, EIMEA, Asia Pacific, Construction Adhesives, Engineering Adhesives and Royal Adhesives. As of the beginning of fiscal

2018,

in connection with the integration of the operations of Royal Adhesives with the Company’s other segments, we modified our operating segment structure by allocating the Royal Adhesives segment into each of the

five

other segments. We began reporting results in

five

segments for the quarter ended

March 3, 2018:

Americas Adhesives, EIMEA, Asia Pacific, Construction Adhesives and Engineering Adhesives.

The business components within each operating segment are managed to maximize the results of the overall operating segment rather than the results of any individual business component of the operating segment. Results of individual components of each operating segment are subject to numerous allocations of segment-wide costs that

may

or

may

not

have been focused on that particular component for a particular reporting period. The costs for these allocated resources are

not

tracked on a “where-used” basis as financial performance is assessed at the total operating segment level.

Reportable operating segment financial information for all periods presented is as follows:

	2018		2017			2016
Net revenue
Americas Adhesives	$	1,099,918	$	907,765		$	806,062
EIMEA		738,553		568,658			545,135
Asia Pacific		278,079		264,692			241,827
Construction Adhesives		446,101		260,330			256,346
Engineering Adhesives		478,351		304,598			245,235
Total	$	3,041,002	$	2,306,043		$	2,094,605
Inter-segment sales
Americas Adhesives	$	18,717	$	15,943		$	16,064
EIMEA		19,765		19,153			19,165
Asia Pacific		6,952		6,498			4,716
Segment operating income
Americas Adhesives	$	115,363	$	91,198		$	121,998
EIMEA		40,060		18,821			40,121
Asia Pacific		17,995		14,826			15,410
Construction Adhesives		32,917		(12,975	)		3,265
Engineering Adhesives		48,427		16,170			17,390
Total	$	254,762	$	128,040		$	198,184
Depreciation and amortization
Americas Adhesives	$	39,558	$	22,999		$	18,979
EIMEA		32,184		21,071			21,441
Asia Pacific		8,483		8,162			7,484
Construction Adhesives		37,885		18,656			14,977
Engineering Adhesives		27,015		16,427			14,804
Total	$	145,125	$	87,315		$	77,685
Total assets 1
Americas Adhesives	$	1,092,622	$	1,188,027
EIMEA		782,831		837,313
Asia Pacific		272,735		289,191
Construction Adhesives		843,847		867,574
Engineering Adhesives		855,189		880,310
Corporate		328,047		310,828
Total	$	4,175,271	$	4,373,243
Capital expenditures
Americas Adhesives	$	28,983	$	19,022
EIMEA		16,407		16,110
Asia Pacific		5,005		4,910
Construction Adhesives		4,876		4,369
Engineering Adhesives		2,534		2,484
Corporate		10,458		8,039
Total	$	68,263	$	54,934

Segment assets include primarily inventory, accounts receivable, property, plant and equipment and other miscellaneous assets. Corporate assets include primarily corporate property, plant and equipment, deferred tax assets, certain investments and other assets.

Reconciliation of segment operating income to income before income taxes and income from equity method investments:

	2018			2017			2016
Segment operating income	$	254,762		$	128,040		$	198,184
Special charges, net		-			-			168
Other income (expense), net		1,184			(27,667	)		(9,594	)
Interest expense		(110,994	)		(43,701	)		(27,359	)
Interest income		11,774			3,927			2,045
Income before income taxes and income from equity method investments	$	156,726		$	60,599		$	163,444

Financial information about geographic areas

	Net Revenue
	2018		2017		2016
United States	$	1,374,147	$	969,346	$	869,919
China		343,960		302,009		257,779
Countries with more than 10 percent of total		1,718,107		1,271,355		1,127,698
All other countries with less than 10 percent of total		1,322,895		1,034,688		966,907
Total	$	3,041,002	$	2,306,043	$	2,094,605

	Property, Plant and Equipment, net
	2018		2017		2016
United States	$	286,639	$	212,078	$	202,944
Germany		137,677		149,269		99,229
China		77,861		83,808		83,548
All other countries with less than 10 percent of total		134,371		225,039		129,554
Total	$	636,548	$	670,194	$	515,275