Business Segments

6 Months Ended

Jun. 25, 2016

Business Segments

Business Segments

8.Business Segments

Our operations consist of two reportable segments: frozen products and snack products.  The frozen products segment produces frozen fruits, vegetables, beverages and desserts for sale primarily to groceries, club stores and mass merchandisers.  The snack products segment produces potato chips, kettle chips, potato crisps, potato skins, pellet snacks, sheeted dough products, popcorn and extruded products for sale primarily to snack food distributors and retailers.  Our reportable segments offer different products and services.  The majority of our revenues are attributable to external customers in the United States.  We also sell to external customers internationally. However, the revenues attributable to such customers are immaterial.  All of our assets are located in the United States.

All products sold under our frozen products segment are considered part of the healthy/natural food category.  The products sold under our snack products segment include products considered part of the indulgent specialty snack food category, as well as products considered part of the healthy/natural food category. 

For the three months ended June 25, 2016 and June 27, 2015, net revenues of our healthy/natural food category totaled $59.4 million and $54.3 million, respectively.  For the three months ended June 25, 2016 and June 27, 2015, net revenues of our indulgent specialty snack food category totaled $9.9 million and $12.1 million, respectively.

For the six months ended June 25, 2016 and June 27, 2015, net revenues of our healthy/natural food category totaled $119.3 million and $120.3 million, respectively.  For the six months ended June 25, 2016 and June 27, 2015, net revenues of our indulgent specialty snack food category totaled $19.8 million and $23.7 million, respectively.

We do not allocate assets, selling, general and administrative expenses, income taxes or other income and expense to our reportable segments.  The following table present information about our reportable segments for the quarters and six months ended June 25, 2016 and June 27, 2015 (in thousands):

	Frozen		Snack
	Products		Products		Consolidated
Quarter Ended June 25, 2016
Net revenues from external customers	$	41,779	$	27,484	$	69,263
Depreciation and amortization included in segment gross profit		603		534		1,137
Segment gross profit		4,848		5,419		10,267
Quarter Ended June 27, 2015
Net revenues from external customers	$	34,900	$	31,522	$	66,422
Depreciation and amortization included in segment gross profit		569		601		1,170
Segment gross profit		2,592		5,433		8,025
Six Months Ended June 25, 2016
Net revenues from external customers	$	86,749	$	52,369	$	139,118
Depreciation and amortization included in segment gross profit		1,188		1,041		2,229
Segment gross profit		9,169		9,915		19,084
Six Months Ended June 27, 2015
Net revenues from external customers	$	86,249	$	57,780	$	144,029
Depreciation and amortization included in segment gross profit		1,125		1,207		2,332
Segment gross profit		(4,897)		9,222		4,325

The following table reconciles reportable segment gross profit to our consolidated loss before income taxes for the quarters and six months ended June 25, 2016 and June 27, 2015 (in thousands):

	Quarter Ended				Six Months Ended
	June 25,		June 27,		June 25,		June 27,
	2016		2015		2016		2015
Segment gross profit	$	10,267	$	8,025	$	19,084	$	4,325
Unallocated amounts:
Operating expenses		(8,493)		(10,217)		(16,602)		(28,646)
Interest expense, net		(2,320)		(928)		(4,676)		(1,658)
Loss before income tax provision	$	(546)	$	(3,120)	$	(2,194)	$	(25,979)

The table below presents information about revenues for each group of similar products within our reportable segments for the quarters and six months ended June 25, 2016 and June 27, 2015 (in thousands):

	Quarter Ended June 25, 2016				Quarter Ended June 27, 2015
			% of Net				% of Net
	Net Revenue		Revenues		Net Revenue		Revenues
Frozen Products:
Berries, beverages, blends and desserts	$	30,312	43.7	%	$	29,038	43.8	%
Vegetables		11,467	16.6	%		5,862	8.8	%
Total frozen		41,779	60.3	%		34,900	52.6	%
Snack Products:
Indulgent specialty snacks (1)		9,872	14.3	%		12,107	18.2	%
Healthy/natural snacks (2)		17,612	25.4	%		19,415	29.2	%
Total snack		27,484	39.7	%		31,522	47.4	%
Consolidated	$	69,263	100.0	%	$	66,422	100.0	%
	Six Months Ended June 25, 2016				Six Months Ended June 27, 2015
			% of Net				% of Net
	Net Revenue		Revenues		Net Revenue		Revenues
Frozen Products:
Berries, beverages, blends and desserts	$	62,608	45.0	%	$	64,376	44.7	%
Vegetables		24,141	17.4	%		21,873	15.2	%
Total frozen		86,749	62.4	%		86,249	59.9	%
Snack Products:
Indulgent specialty snacks (1)		19,799	14.2	%		23,657	16.4	%
Healthy/natural snacks (2)		32,570	23.4	%		34,123	23.7	%
Total snack		52,369	37.6	%		57,780	40.1	%
Consolidated	$	139,118	100.0	%	$	144,029	100.0	%

(1) Indulgent specialty snacks includes T.G.I. Friday’s® brand snacks under license from T.G.I. Friday’s, Nathan’s Famous® brand snack products under license from Nathan’s Famous Corporation, Vidalia® brand snack products under license from Vidalia Brands, Inc., Poore Brothers® brand kettle cooked potato chips, Bob’s Texas Style® brand kettle cooked chips, and Tato Skins® brand potato snacks.

(2) Healthy/natural snacks includes Boulder Canyon® brand kettle cooked potato chips, other snack and food items and private label healthy/natural snacks.