Business Segments and Significant Customers

12 Months Ended

Dec. 31, 2016

Business Segments and Significant Customers

Business Segments and Significant Customers

12.     Business Segments and Significant Customers

For the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014, Costco was the only customer accounting for more than 10% of our total net revenue.  Costco accounted for $52.2 million, or 19% of our total net revenue; $66.4 million, or 23% of our total net revenue; and $75.3 million, or 26% or our total net revenue; for fiscal 2016, 2015 and 2014, respectively.

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 grocery stores, 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 fiscal 2016, 2015 and 2014, net revenues of our healthy/natural food category totaled $230.8 million, $238.1 million and $236.6 million, respectively.  For fiscal 2016, 2015 and 2014, net revenues of our indulgent specialty snack food category totaled $38.2 million, $44.5 million and $49.1 million, respectively.

The accounting policies of our reportable segments are the same as those described in Note 1 “Operations and Summary of Significant Accounting Policies.”  We do not allocate assets, selling, general and administrative expenses, income taxes or other income and expense to our reportable segments. The following tables present information about our reportable segments for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands):

	Frozen		Snack
	Products		Products		Consolidated
2016
Net revenues from external customers	$	160,550	$	108,462	$	269,012
Depreciation and amortization included in segment gross profit		1,933		2,193		4,126
Segment gross profit		15,067		17,692		32,759
Goodwill		8,999		5,986		14,985
2015
Net revenues from external customers	$	167,166	$	115,392	$	282,558
Depreciation and amortization included in segment gross profit		2,336		2,410		4,746
Segment gross profit		2,729		17,608		20,337
Goodwill		17,300		5,986		23,286
2014
Net revenues from external customers	$	179,518	$	106,145	$	285,663
Depreciation and amortization included in segment gross profit		2,103		2,533		4,636
Segment gross profit		32,329		20,792		53,121
Goodwill		17,300		5,986		23,286

The following table reconciles our reportable segment gross profit to our consolidated income before income tax provision for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands):

	December 31,		December 26,		December 27,
	2016		2015		2014
Segment gross profit	$	32,759	$	20,337	$	53,121
Unallocated amounts:
Operating expenses		34,994		37,559		34,188
Impairment of goodwill and intangible assets		15,446		9,277		—
Interest expense		9,874		6,330		2,604
Income (loss) before income tax provision	$	(27,555)	$	(32,829)	$	16,329

The table below presents information about revenues for each group of similar products within our reportable segments for the fiscal years ended December 31, 2016, December 26, 2015 and December 27, 2014 (in thousands):

`	2016				2015				2014
			% of Net				% of Net				% of Net
	Net Revenue		Revenues		Net Revenue		Revenues		Net Revenue		Revenues
Snack Products:
Indulgent Specialty Snacks (1)	$	38,187	14.2	%	$	44,482	15.7	%	$	49,091	17.2	%
Healthy/Natural Snacks (2)		70,275	26.1	%		70,910	25.1	%		57,054	20.0	%
Total Snack		108,462	40.3	%		115,392	40.8	%		106,145	37.2	%
Frozen Products:
Berries, Beverages, Blends and Desserts		112,099	41.7	%		121,632	43.1	%		118,473	41.5	%
Vegetables		48,451	18.0	%		45,534	16.1	%		61,045	21.3	%
Total Frozen		160,550	59.7	%		167,166	59.2	%		179,518	62.8	%
Consolidated	$	269,012	100	%	$	282,558	100	%	$	285,663	100	%

(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® kettle cooked potato chips, Bob’s Texas Style® kettle cooked chips, and Tato Skins® brand potato snacks.

(2) Healthy/Natural Snacks includes Boulder Canyon® Authentic Foods brand kettle cooked potato chips and private label healthy/natural snacks.