Note 18 - Operations and Industry Segments and Geographic Areas

12 Months Ended

Oct. 01, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

1

8

. 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, Canada and other countries for which we manufacture and distribute our various products. The following table summarizes certain information on industry segments:

	2016			2015			2014
Net sales:
Medical	$	46,345,525		$	47,810,988		$	42,334,896
Custom products		21,281,645			16,504,008			13,522,479
	$	67,627,170		$	64,314,996		$	55,857,375
Operating profit:
Medical	$	6,040,202		$	6,342,253		$	3,966,605
Custom products		801,548			(234,948	)		257,997
		6,841,750			6,107,305			4,224,602
Corporate expense		(759,486	)		(849,853	)		(614,022	)
Other income (expense)		(7,933	)		407,946			18,187
Income before income taxes	$	6,074,331		$	5,665,398		$	3,628,767
Identifiable assets:
Medical	$	22,299,011		$	20,886,470		$	22,221,526
Custom products		4,344,914			7,172,290			3,991,467
Corporate		6,917,614			4,122,862			9,633,841
	$	33,561,539		$	32,181,622		$	35,846,834
Depreciation and amortization expenses:
Operating:
Medical	$	909,972		$	977,922		$	1,069,882
Custom products		269,405			243,342			218,234
Corporate		655			514			409
	$	1,180,032		$	1,221,778		$	1,288,525
Capital expenditures:
Medical	$	322,310		$	428,206		$	595,002
Custom products		117,383			226,659			75,843
	$	439,693		$	654,865		$	670,845

Geographic Areas:	2016		2015		2014
Net sales:
United States	$	60,850,466	$	56,470,245	$	49,804,659
Canada		5,798,244		7,704,410		5,922,543
Other		978,460		140,341		130,173
	$	67,627,170	$	64,314,996	$	55,857,375
Property and equipment, net:
United States	$	3,541,623	$	3,927,018	$	4,181,361
Canada		574,447		609,086		706,735
	$	4,116,070	$	4,536,104	$	4,888,096
Goodwill:
United States	$	1,924,131	$	1,924,131	$	1,924,131
Canada		2,013,545		2,006,151		2,367,712
	$	3,937,676	$	3,930,282	$	4,291,843
Intangibles, net:
United States	$	308,710	$	309,164	$	303,456
Canada		1,681,189		1,905,598		2,556,804
	$	1,989,899	$	2,214,762	$	2,860,260

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

1,

2016

and

October

3,

2015,

are the net assets of Span - Canada’s operations located in a single facility in Canada, which totaled approximately

$11,000,000

and

$10,000,000,

respectively. See Item

1A.

“Risk Factors” above for more information on risks involved in our international operations.

We have several customers whose sales represent significant portions of sales in their respective business segments. Sales to

one

of our medical customers were

24%

of net medical sales in fiscal  

2016

and 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

2016,

2015

and

2014.

In the custom products segment, sales to

one

customer accounted for

57%

of net custom products sales in fiscal

2016,

29%

in fiscal

2015

and

66%

in fiscal

2014.

Sales to a former custom products customer were

19%

of net custom products sales in fiscal

2016

and

40%

of net custom products sales in fiscal

2015.

The manufacturing employees of our Span - Canada subsidiary, representing

18%

of our workforce, are subject to a Collective Agreement with a union that expires

October

31,

2018.