Note 5. Segment Reporting

We have organized our business into five segments which meet the definition of reportable segments under ASC 280-10, Segment Reporting: Commercial, Live Events, High School Park and Recreation, Transportation, and International. These segments are based on the customer type or geography and are the same as our business units.

Our Commercial business unit primarily consists of sales of our integrated video display systems, digital billboards, Galaxy^® and Fuelight^™ product lines, and dynamic messaging systems to resellers (primarily sign companies), Out-of-Home ("OOH") companies, national retailers, quick-serve restaurants, casinos, commercial building owners, and petroleum retailers. Our Live Events business unit primarily consists of sales of integrated scoring and video display systems to college and professional sports facilities and convention centers and sales of our mobile display technology to video rental organizations and other live events type venues. Our High School Park and Recreation business unit primarily consists of sales of scoring systems, Galaxy^® displays and video display systems to primary and secondary education facilities and resellers (primarily sign companies). Our Transportation business unit primarily consists of sales of intelligent transportation systems dynamic messaging signs for road management, mass transit, and aviation applications and other electronic signage for advertising and way-finding needs, which includes our Vanguard^® and Galaxy^® product lines and other intelligent transportation systems dynamic message signs, to governmental transportation departments, transportation industry contractors, airlines and other transportation related customers. Our International business unit consists of sales of all product lines outside the United States and Canada. In our International business unit, we focus on product lines related to integrated scoring and video display systems for sports and commercial applications, OOH advertising products, architectural lighting, and transportation related products.

We evaluate segment performance based on operating results through contribution margin, which is comprised of gross profit less selling expense. Gross profit is net sales less cost of sales. Cost of sales consists primarily of inventory and components, consumables, salaries, other employee-related costs, facilities-related costs for manufacturing locations, machinery and equipment maintenance and depreciation, site sub-contractors, warranty costs, enterprise resource and service management systems, inventory obsolescence and write-downs, inventory procurement and handling costs, and other manufacturing, installation, and service delivery expenses. Selling expenses consist primarily of salaries, other employee-related costs, travel and entertainment expenses, facilities-related costs for sales and service offices, bad debt expenses, third-party commissions and expenditures for marketing efforts, including the costs of collateral materials, conventions and trade shows, product demonstrations, customer relationship management systems, and supplies. Contribution margin excludes general and administration expense, product design and development expense, non-operating income and expense and income tax expense. Some expenses or services are not directly allocable to a sale or segment or the resources and related expenses are shared across business segment areas. These expenses are allocated using estimates and allocation methodologies based on some financial measures and professional judgment. Shared or unabsorbed manufacturing costs are allocated to the business unit benefiting most from that manufacturing location's production capabilities. Shared or unabsorbed costs of domestic field sales and services infrastructure, including most field administrative staff, are allocated to the Commercial, Live Events, High School Park and Recreation, and Transportation business units based on cost of sales. Shared manufacturing, buildings and utilities, and procurement costs are allocated based on payroll dollars, square footage and various other financial measures. Assets are not allocated to the segments. Depreciation and amortization are allocated to each segment based on various financial measures; however, some depreciation and amortization are corporate in nature and remain unallocated. Our segments follow the same accounting policies as those described in Note 1 of our Annual Report on Form 10-K for the fiscal year ended April 28, 2018.

We do not maintain information on sales by products; therefore, disclosure of such information is not practical.

The following table sets forth certain financial information for each of our five reporting segments for the periods indicated:



	Three Months Ended
	July 28, 2018			July 29, 2017
Net sales:
Commercial	$	30,569		$	32,863
Live Events	49,472			77,612
High School Park and Recreation	28,120			28,479
Transportation	17,157			18,912
International	28,870			14,862
	154,188			172,728

Gross profit:
Commercial	6,894			8,268
Live Events	10,233			17,054
High School Park and Recreation	9,502			10,351
Transportation	5,451			6,945
International	6,167			2,028
	38,247			44,646

Contribution margin: (1)
Commercial	2,474			3,573
Live Events	6,985			13,737
High School Park and Recreation	6,552			7,747
Transportation	4,295			5,908
International	1,563			(1,258		)
	21,869			29,707

Non-allocated operating expenses:
General and administrative	8,537			8,935
Product design and development	9,292			9,047
Operating income	4,040			11,725

Nonoperating income (expense):
Interest income	197			211
Interest expense	(39		)	(86		)
Other (expense) income, net	(154		)	145

Income before income taxes	4,044			11,995
Income tax (benefit) expense	(530		)	3,566
Net income	$	4,574		$	8,429

Depreciation and amortization:
Commercial	$	1,178		$	1,534
Live Events	1,172			1,238
High School Park and Recreation	443			422
Transportation	274			294
International	700			281
Unallocated corporate depreciation	721			691
	$	4,488		$	4,460

(1) Contribution margin consists of gross profit less selling expense.

No single geographic area comprises a material amount of our net sales or property and equipment, net of accumulated depreciation, other than the United States. The following table presents information about net sales and property and equipment, net of accumulated depreciation, in the United States and elsewhere:



	Three Months Ended
	July 28, 2018		July 29, 2017
Net sales:
United States	$	121,697	$	155,438
Outside United States	32,491		17,289
	$	154,188	$	172,728


	July 28, 2018		April 28, 2018
Property and equipment, net of accumulated depreciation:
United States	$	60,356	$	61,206
Outside United States	6,934		6,853
	$	67,290	$	68,059

We have numerous customers worldwide for sales of our products and services, and no customers accounted for 10% or more of net sales; therefore, we are not economically dependent on a limited number of customers for the sale of our products and services except with respect to our dependence on two major digital billboard customers in our Commercial business unit.

We have numerous raw material and component suppliers, and no supplier accounts for 10% or more of our cost of sales; however, we have a number of single-source suppliers that could limit our supply or cause delays in obtaining raw material and components needed in manufacturing.