Note 16 - Operating Segments

6 Months Ended

May 30, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 16: 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 assets are not allocated to the operating segments. Operating results of each of our 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.

As of November 30, 2019, we had five reportable segments: Americas Adhesives, EIMEA, Asia Pacific, Construction Adhesives and Engineering Adhesives. As of the beginning of fiscal 2020, we realigned our operating segment structure and now have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. The change in operating segments is based on how we have organized the company to make operating decisions and assess business performance. Prior period segment information has been recast retrospectively to reflect the realignment.

The table below provides certain information regarding net revenue and segment operating income (loss) for each of our operating segments.

	Three Months Ended
	May 30, 2020					June 1, 2019
			Segment					Segment
	Net		Operating			Net		Operating
	Revenue		Income (Loss)			Revenue		Income (Loss)
Hygiene, Health and Consumable Adhesives	$	344,673	$	35,009		$	337,892	$	32,048
Engineering Adhesives		236,063		20,149			303,922		39,313
Construction Adhesives		93,866		6,527			111,791		8,252
Total segment		674,602		61,685			753,605		79,613
Corporate Unallocated		-		(4,782	)		5,978		(7,233	)
Total	$	674,602	$	56,903		$	759,583	$	72,380

	Six Months Ended
	May 30, 2020					June 1, 2019
			Segment					Segment
	Net		Operating			Net		Operating
	Revenue		Income (Loss)			Revenue		Income (Loss)
Hygiene, Health and Consumable Adhesives	$	657,185	$	57,673		$	657,746	$	52,938
Engineering Adhesives		484,958		35,514			568,294		61,299
Construction Adhesives		179,023		5,152			194,581		6,596
Total segment		1,321,166		98,339			1,420,621		120,833
Corporate Unallocated		-		(12,683	)		11,897		(14,241	)
Total	$	1,321,166	$	85,656		$	1,432,518	$	106,592

Consistent with our internal management reporting, Corporate Unallocated amounts in the tables above include charges that are not allocated to the Company’s reportable segments. For the three and six months ended June 1, 2019, Corporate Unallocated also includes operating results related to our surfactants and thickeners business, which we divested during the third quarter of 2019.

The table below provides a reconciliation of segment operating income to income before income taxes and income from equity method investments:

	Three Months Ended						Six Months Ended
	May 30,			June 1,			May 30,			June 1,
	2020			2019			2020			2019
Operating income	$	56,903		$	72,380		$	85,656		$	106,592
Other income, net		3,049			2,986			8,018			6,351
Interest expense		(21,644	)		(26,940	)		(44,401	)		(53,747	)
Interest income		2,898			3,023			5,816			6,076
Income before income taxes and income from equity method investments	$	41,206		$	51,449		$	55,089		$	65,272

We view the following disaggregation of net revenue by geographic region as useful to understanding the composition of revenue recognized during the respective reporting periods:

	Three Months Ended May 30, 2020
	Hygiene, Health
	and Consumable		Engineering		Construction		Corporate
	Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	190,581	$	90,012	$	84,047	$	-	$	364,640
EIMEA		98,222		71,643		4,506		-		174,371
Asia Pacific		55,870		74,408		5,313		-		135,591
	$	344,673	$	236,063	$	93,866	$	-	$	674,602

	Three Months Ended June 1, 2019
	Hygiene, Health
	and Consumable		Engineering		Construction		Corporate
	Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	185,683	$	119,036	$	99,887	$	5,978	$	410,584
EIMEA		100,225		100,188		5,806		-		206,219
Asia Pacific		51,984		84,698		6,098		-		142,780
	$	337,892	$	303,922	$	111,791	$	5,978	$	759,583

	Six Months Ended May 30, 2020
	Hygiene, Health
	and Consumable		Engineering		Construction		Corporate
	Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	363,855	$	195,385	$	158,306	$	-	$	717,546
EIMEA		190,606		155,318		10,631		-		356,555
Asia Pacific		102,724		134,255		10,086		-		247,065
	$	657,185	$	484,958	$	179,023	$	-	$	1,321,166

	Six Months Ended June 1, 2019
	Hygiene, Health
	and Consumable		Engineering		Construction		Corporate
	Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	360,548	$	224,655	$	172,234	$	11,897	$	769,334
EIMEA		195,652		193,989		10,687		-		400,328
Asia Pacific		101,546		149,650		11,660		-		262,856
	$	657,746	$	568,294	$	194,581	$	11,897	$	1,432,518