Business Segments

6 Months Ended

Jul. 01, 2017

Business Segments and Significant Customers

Business Segments and Significant Customers

8.Business Segments

Our operations consist of two reportable segments: frozen products and snack products.  The frozen products segment includes frozen fruits, fruit and vegetable blends, beverages, side dishes 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 the fiscal quarters ended July 1, 2017 and June 25, 2016, net revenues of our healthy/natural food category totaled $41.2 million and $47.9 million, respectively. For the fiscal quarters ended July 1, 2017 and June 25, 2016, net revenues of our indulgent specialty snack food category totaled $10.1 million and $9.9 million, respectively.

For the six months ended July 1, 2017 and June 25, 2016, net revenues of our healthy/natural food category totaled $81.9 million and $95.2 million, respectively.  For the six months ended July 1, 2017 and June 25, 2016, net revenues of our indulgent specialty snack food category totaled $19.0 million and $19.8 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 presents information about our reportable segments for the fiscal quarters  and six months ended July 1, 2017 and June 25, 2016 (in thousands):

	Frozen		Snack
	Products		Products		Consolidated
Quarter Ended July 1, 2017
Net revenues from external customers	$	20,692	$	30,664	$	51,356
Depreciation and amortization included in segment gross profit		225		576		801
Segment gross profit		3,607		6,505		10,112
Quarter Ended June 25, 2016
Net revenues from external customers	$	30,312	$	27,485	$	57,797
Depreciation and amortization included in segment gross profit		241		534		775
Segment gross profit		4,283		5,420		9,703
Six Months Ended July 1, 2017
Net revenues from external customers	$	44,154	$	56,820	$	100,974
Depreciation and amortization included in segment gross profit		451		1,155		1,606
Segment gross profit		8,348		10,278		18,626
Six Months Ended June 25, 2016
Net revenues from external customers	$	62,608	$	52,369	$	114,977
Depreciation and amortization included in segment gross profit		522		1,041		1,563
Segment gross profit		9,068		9,915		18,983

The following table reconciles reportable segment gross profit to our consolidated income (loss) from continuing operations before income taxes for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands):

	Quarter Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
	2017		2016		2017		2016
Segment gross profit	$	10,112	$	9,703	$	18,626	$	18,983
Unallocated amounts:
Operating expenses		(8,668)		(7,609)		(15,924)		(14,763)
Interest expense		(2,425)		(1,967)		(4,787)		(3,968)
Income (loss) from continuing operations before income tax expense	$	(981)	$	127	$	(2,085)	$	252

The table below presents information about revenues for each group of similar products within our reportable segments for the fiscal quarters and six months ended July 1, 2017 and June 25, 2016 (in thousands):

	Quarter Ended July 1, 2017				Quarter Ended June 25, 2016
			% of Net				% of Net
	Net Revenue		Revenues		Net Revenue		Revenues
Frozen Products:
Berries, blends, beverages and desserts	$	20,475	39.9	%	$	30,312	52.4	%
Riced Vegetables		217	0.4	%		—	—	%
Total Frozen		20,692	40.3	%		30,312	52.4	%
Snack Products:
Indulgent specialty snacks (1)		10,106	19.7	%		9,873	17.1	%
Healthy/natural snacks (2)		20,558	40.0	%		17,612	30.5	%
Total snack	$	30,664	59.7	%	$	27,485	47.6	%
Consolidated	$	51,356	100.0	%	$	57,797	100.0	%
	Six Months Ended July 1, 2017				Six Months Ended June 25, 2016
			% of Net				% of Net
	Net Revenue		Revenues		Net Revenue		Revenues
Frozen Products:
Berries, beverages, blends and desserts	$	43,553	43.2	%	$	62,608	54.5	%
Vegetables		601	0.6	%		—	—	%
Total frozen		44,154	43.8	%		62,608	54.5	%
Snack Products:
Indulgent specialty snacks (1)		19,033	18.8	%		19,799	17.2	%
Healthy/natural snacks (2)		37,787	37.4	%		32,570	28.3	%
Total snack	$	56,820	56.2	%	$	52,369	45.5	%
Consolidated	$	100,974	100.0	%	$	114,977	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.