Annual report pursuant to Section 13 and 15(d)

Industry Segments

v2.4.0.6
Industry Segments
 12 Months Ended
Dec. 29, 2012
Segment Reporting [Abstract]  
Industry Segments
Industry Segments
The Company operates in two principal industry segments: metals and specialty chemicals. The Company identifies such segments based on products and services. The Metals Segment consists of Synalloy Metals, Inc. a wholly-owned subsidiary which owns 100 percent of Bristol Metals, LLC, Ram-Fab, LLC and Palmer of Texas Tanks, Inc., both wholly-owned subsidiaries of the Company. The Metals Segment manufactures pipe from stainless steel and other alloys, fabricates piping systems from carbon, chrome, stainless steel and other alloys, and produces fiberglass and steel storage tanks. The Metal Segment's products, many of which are custom-produced to individual orders and required for corrosive and high-purity processes, are used principally by the chemical, petrochemical, pulp and paper, mining, power generation (including nuclear), water and wastewater treatment, liquid natural gas, brewery, food processing, petroleum, pharmaceutical and other industries. Products include pipe, piping systems, storage tanks and a variety of other components. The Specialty Chemicals Segment consists of Manufacturers Soap and Chemical Company, a wholly owned subsidiary of the Company which owns 100 percent of Manufacturers Chemicals, LLC. The Specialty Chemicals Segment manufactures a wide variety of specialty chemicals and dyes for the carpet, chemical, paper, metals, mining, agricultural, fiber, paint, textile, automotive, petroleum, cosmetics, mattress, furniture, janitorial and other industries.
Segment operating income is the segment's total revenue less operating expenses, excluding interest expense and income taxes. Identifiable assets, all of which are located in the United States, are those assets used in operations by each segment. The Metals Segment's identifiable assets include goodwill of $16,898,000 in 2012 and $1,000,000 in 2011, and the Chemicals Segment's identifiable assets include goodwill of $1,355,000 in 2012 and 2011. Centralized data processing and accounting expenses are allocated to the two segments based upon estimates of their percentage of usage. Unallocated corporate expenses include environmental charges of $46,000 and $8,000 for 2012 and 2011, respectively. There were no environmental charges during 2010.  Corporate assets consist principally of cash, certain investments, and equipment.
The Metals Segment has one domestic customer that accounted for approximately ten and eleven percent of the Metals Segment's revenues in 2011 and 2010, respectively, and less than ten percent for 2012. Loss of this customers' revenues would have an adverse effect on both the Metals Segment and the Company. The Specialty Chemicals Segment has one domestic customer that accounted for approximately 28 percent of revenues for 2012 and 24 percent of revenues in 2011 and 2010. However, this customer is a large global company, and the purchases by this customer are derived from several different business units that operate autonomously from each other.  Even so, loss of this customer's revenues would have a material adverse effect on the Specialty Chemicals Segment and the Company.
In order to establish stronger business relationships, the Metals Segment uses only a few raw material suppliers. Four suppliers furnish about 79 percent of total dollar purchases of raw materials, with two suppliers furnishing 34 percent and 30 percent of material purchases. However, the Company does not believe that the loss of any of these suppliers would have a materially adverse effect on the Company as raw materials are readily available from a number of different sources, and the Company anticipates no difficulties in fulfilling its requirements. For the Specialty Chemicals Segment, most raw materials are generally available from numerous independent suppliers and about 50 percent of total purchases are from its top eight suppliers. While some raw material needs are met by a sole supplier or only a few suppliers, the Company anticipates no difficulties in fulfilling its raw material requirements. 
Segment Information:
(Amounts in thousands)
2012
 
2011
 
2010
Net sales
 
 
 
 
 
Metals Segment
$
146,285

 
$
127,727

 
$
108,544

Specialty Chemicals Segment
51,374

 
42,848

 
42,577

 
$
197,659

 
$
170,575

 
$
151,121

Operating income
 

 
 

 
 

Metals Segment
$
6,138

 
$
9,253

 
$
3,774

Specialty Chemicals Segment
4,843

 
2,221

 
3,960

 
10,981

 
11,474

 
7,734

Less unallocated corporate expenses
3,193

 
2,668

 
1,541

Operating income
7,788

 
8,806

 
6,193

Acquisition related costs
881

 
—

 
—

Other expense, net
566

 
56

 
43

Pretax income
$
6,341

 
$
8,750

 
$
6,150

 
 
 
 
 
 
Identifiable assets
 

 
 

 
 

Metals Segment
$
117,340

 
$
72,722

 
 
Specialty Chemicals Segment
21,949

 
18,465

 
 
Corporate
9,218

 
7,729

 
 
 
$
148,507

 
$
98,916

 
 
Depreciation and amortization
 

 
 

 
 

Metals Segment
$
2,776

 
$
2,073

 
$
2,067

Specialty Chemicals Segment
435

 
419

 
416

Corporate
188

 
167

 
159

 
$
3,399

 
$
2,659

 
$
2,642

Capital expenditures
 

 
 

 
 

Metals Segment
$
3,551

 
$
2,097

 
$
3,995

Specialty Chemicals Segment
1,066

 
930

 
1,035

Corporate
123

 
158

 
65

 
$
4,740

 
$
3,185

 
$
5,095

Geographic sales
 

 
 

 
 

United States
$
188,292

 
$
159,820

 
$
144,340

Elsewhere
9,367

 
10,755

 
6,781

 
$
197,659

 
$
170,575

 
$
151,121