Annual report pursuant to Section 13 and 15(d)

Industry Segments

v2.4.0.8
Industry Segments
 12 Months Ended
Dec. 28, 2013
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 and CRI Tolling, LLC, a wholly owned subsidiary of the Company. 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 2013 and 2012, and the Specialty Chemicals Segment's identifiable assets include goodwill of $1,355,000 in 2013 and 2012. 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 $17,000, $46,000 and $8,000 for 2013, 2012 and 2011 respectively. Corporate assets consist principally of cash, certain investments, and equipment.
The Metals Segment has one domestic customer that accounted for approximately eleven percent of the Metals Segment's revenues in 2013. These revenues were for the Bechtel project which will not recur in the future. The Company believes that it will be able to grow base stainless steel pipe sales to completely offset the loss of these revenues in 2014. A different customer accounted for ten percent of the Metals Segment's revenues in 2011. There were no customers representing more than ten percent of the Metals Segment's revenues for 2012. The Specialty Chemicals Segment has one domestic customer that accounted for approximately 40 percent of revenues for 2013, 28 percent of revenues for 2012, and 24 percent of revenues in 2011. 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. Seven suppliers furnish about 71 percent of total dollar purchases of raw materials, with one supplier furnishing 24 percent. However, the Company does not believe that the loss of this supplier 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 seven 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)
2013
 
2012
 
2011
Net sales
 
 
 
 
 
Metals Segment
$
164,232

 
$
146,285

 
$
127,727

Specialty Chemicals Segment
56,518

 
51,374

 
42,848

 
$
220,750

 
$
197,659

 
$
170,575

Operating (loss) income
 

 
 

 
 

Metals Segment
$
(732
)
 
$
6,138

 
$
9,253

Specialty Chemicals Segment
5,743

 
4,843

 
2,221

 
5,011

 
10,981

 
11,474

Less unallocated corporate expenses
3,197

 
3,193

 
2,668

Operating income
1,814

 
7,788

 
8,806

Acquisition related costs
264

 
881

 
—

Interest expense
1,357

 
601

 
141

Change in fair value of interest rate swap
(741
)
 
114

 
—

Gain on bargain purchase, net of taxes
(1,077
)
 
—

 
—

Other income, net
(148
)
 
(149
)
 
(85
)
Income before income taxes
$
2,159

 
$
6,341

 
$
8,750

 
 
 
 
 
 
Identifiable assets
 

 
 

 
 

Metals Segment
$
124,720

 
$
117,340

 
 
Specialty Chemicals Segment
28,041

 
21,949

 
 
Corporate
10,499

 
9,218

 
 
 
$
163,260

 
$
148,507

 
 
Depreciation and amortization
 

 
 

 
 

Metals Segment
$
4,251

 
$
2,776

 
$
2,073

Specialty Chemicals Segment
659

 
435

 
419

Corporate
204

 
188

 
167

 
$
5,114

 
$
3,399

 
$
2,659

Capital expenditures
 

 
 

 
 

Metals Segment
$
4,312

 
$
3,551

 
$
2,097

Specialty Chemicals Segment
1,397

 
1,066

 
930

Corporate
57

 
123

 
158

 
$
5,766

 
$
4,740

 
$
3,185

Geographic sales
 

 
 

 
 

United States
$
212,816

 
$
188,292

 
$
159,820

Elsewhere
7,934

 
9,367

 
10,755

 
$
220,750

 
$
197,659

 
$
170,575