Note 18 - Operations and Industry Segments and Geographic Areas

12 Months Ended

Oct. 03, 2015

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

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.  OPERATIONS AND INDUSTRY SEGMENTS AND GEOGRAPHIC AREAS

For management and reporting purposes, we divide our business into two segments: medical and custom products. This industry segment information corresponds to the markets in the United States and Canada for which we manufacture and distribute our various products. The following table summarizes certain information on industry segments:

	2015			2014			2013
Net sales:
Medical	$	47,810,988		$	42,334,896		$	47,531,676
Custom products		16,504,008			13,522,479			26,301,873
	$	64,314,996		$	55,857,375		$	73,833,549
Operating profit:
Medical	$	6,342,253		$	3,966,605		$	5,446,274
Custom products		(234,948	)		257,997			2,509,105
		6,107,305			4,224,602			7,955,379
Corporate expense		(849,853	)		(614,022	)		(660,940	)
Other income (expense)		407,946			18,187			(9,022	)
Income before income taxes	$	5,665,398		$	3,628,767		$	7,285,417
Identifiable assets:
Medical	$	20,886,470		$	22,221,526		$	22,512,205
Custom products		7,172,290			3,991,467			5,769,403
Corporate		4,122,862			9,633,841			8,095,020
	$	32,181,622		$	35,846,834		$	36,376,628

		2015		2014		2013
Depreciation and amortization expenses:
Operating:
Medical	$	977,922	$	1,069,882	$	987,851
Custom products		243,342		218,234		296,754
Corporate		514		409		409
	$	1,221,778	$	1,288,525	$	1,285,014
Capital expenditures:
Medical	$	428,206	$	595,002	$	476,928
Custom products		226,659		75,843		80,935
	$	654,865	$	670,845	$	557,863

Geographic Areas:
Net sales:
United States	$	56,470,245	$	49,804,659	$	66,222,867
Canada		7,704,410		5,922,543		7,506,498
Other		140,341		130,173		104,184
	$	64,314,996	$	55,857,375	$	73,833,549
Property and equipment, net:
United States	$	3,927,018	$	4,181,361	$	4,515,702
Canada		609,086		706,735		620,833
	$	4,536,104	$	4,888,096	$	5,136,535
Goodwill:
United States	$	1,924,131	$	1,924,131	$	1,924,131
Canada		2,006,151		2,367,712		2,563,415
	$	3,930,282	$	4,291,843	$	4,487,546
Intangibles, net:
United States	$	309,164	$	303,456	$	326,465
Canada		1,905,598		2,556,804		3,103,884
	$	2,214,762	$	2,860,260	$	3,430,349

Total sales by industry segment include sales to unaffiliated customers as reported in our statements of income. In calculating operating profit, non-allocable general corporate expenses, interest expense, other income and income taxes are not included, but certain corporate operating expenses incurred for the benefit of all segments are included on an allocated basis.

Identifiable assets are those assets that are used in the operations of each segment on an allocated basis. Amounts shown for corporate assets consist primarily of cash and cash surrender value of life insurance.

Included in the consolidated balance sheet at October 3, 2015 and September 27, 2014, are the net assets of Span-Canada’s operations located in a single facility in Canada, which totaled approximately $10,000,000 at each balance sheet date noted.

We have several customers whose sales represent significant portions of sales in their respective business segments. One of our medical customers acquired another of our medical customers during fiscal 2013. If the customers had been under common ownership since the beginning of fiscal 2013, sales to that customer would have been 21% of net medical sales in fiscal 2013. Sales to this customer were 24% of net medical sales in fiscal 2015 and 22% of net medical sales in fiscal 2014. Sales to another medical customer accounted for 11% of net medical sales in fiscal years 2015 and 2014 and 9% in fiscal year 2013. In the custom products segment, sales to one customer accounted for 29% of net custom products sales in fiscal 2015, 66% in fiscal 2014 and 88% in fiscal year 2013. Fiscal year 2015 sales to a new custom products customer were 40% of net custom products sales.

The manufacturing employees of our Span-Canada subsidiary, representing 14% of our workforce, are subject to a Collective Agreement with a Union that expires October 31, 2018.