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SEGMENT INFORMATION
 12 Months Ended
Apr. 29, 2012
SEGMENT INFORMATION
18.
SEGMENT INFORMATION
 
The company’s operations are classified into two business segments:  mattress fabrics and upholstery fabrics.  The mattress fabrics segment manufactures and sells fabrics to bedding manufacturers.  The upholstery fabrics segment manufactures and sells fabrics primarily to residential and commercial (contract) furniture manufacturers.

Net sales denominated in U.S. dollars accounted for 86%, 83% and 84% of total consolidated net sales in 2012, 2011, and 2010, respectively. International sales accounted for 21%, 22% and 22% of net sales in 2012, 2011, and 2010, respectively, and are summarized by geographic area as follows:
 
 (dollars in thousands)
  
2012
    
2011
    
2010
  
north america (excluding USA)
   $  10,417       10,505       11,654  
far east and asia
     38,279       36,587       31,856  
all other areas
     5,353       1,502       2,546  
    $  54,049       48,594       46,056  

The company evaluates the operating performance of its segments based upon income from operations before restructuring and related charges (credits), certain unallocated corporate expenses, and other non-recurring items. Cost of sales in both segments include costs to manufacture or source our products, including costs such as raw material and finished goods purchases, direct and indirect labor, overhead and incoming freight charges. Unallocated corporate expenses primarily represent compensation and benefits for certain executive officers and all costs related to being a public company. Segment assets include assets used in operations of each segment and primarily consist of accounts receivable, inventories, and property, plant, and equipment. The mattress fabrics segment also includes in segment assets, assets held for sale, goodwill, and non-compete agreements associated with certain acquisitions. The upholstery fabrics segment also includes assets held for sale in segment assets.
 
Statements of operations for the company’s operating segments are as follows:
 
 (dollars in thousands)
  
2012
    
2011
    
2010
  
net sales:
                  
    upholstery fabrics
   $ 108,924       94,375       91,568  
    mattress fabrics
     145,519       122,431       114,848  
    $ 254,443       216,806       206,416  
                         
gross profit:
                        
    upholstery fabrics
   $ 14,984       13,592       15,183  
    mattress fabrics
     24,825       23,248       23,652  
      total segment gross profit
     39,809       36,840       38,835  
      other non-recurring charges
     (77 ) (1)     -       (58 ) (3)
    $ 39,732       36,840       38,777  
                         
(dollars in thousands)
     2012       2011       2010  
selling, general, and administrative expenses:
                        
    upholstery fabrics
   $ 11,453       9,233       9,227  
    mattress fabrics
     9,061       7,875       8,178  
    unallocated corporate
     4,512       3,961       5,400  
          total selling, general, and administrative
                        
           expenses
   $ 25,026       21,069       22,805  
                         
Income from operations:
                        
    upholstery fabrics
   $ 3,531       4,359       5,956  
    mattress fabrics
     15,764       15,373       15,474  
          total segment income from operations
     19,295       19,732       21,430  
          unallocated corporate expenses
     (4,512 )     (3,961 )     (5,400 )
          other non-recurring charges
     (77 ) (1)     (28 ) (2)     312  (4)
          total income from operations
     14,706       15,743       16,342  
                  interest expense
     (780 )     (881 )     (1,314 )
                  interest income
     508       240       116  
                  other expense
     (236 )     (40 )     (828 )
         income before income taxes
   $ 14,198       15,062       14,316  
 
(1)  
The $77 represents employee termination benefits associated with our Anderson, SC plant facility. This charge was recorded in cost of sales in the 2012 Consolidated Statement of Net Income and relates to the upholstery fabrics segment.

(2)  
The $28 represents an impairment charge related to equipment that is classified as held for sale, a charge of $24 for lease termination and other exit costs, offset by a credit of $14 for employee termination benefits, and a credit of $10 for sales proceeds received on equipment with no carrying value. This charge was recorded in restructuring expense in the 2011 Consolidated Statement of Net Income and relates to the upholstery fabrics segment.
 
(3)  
The $58 represents a restructuring related charge of $108 for other operating costs associated with closed plant facilities, offset by a credit of $50 for the sale of inventory previously reserved for. This charge was recorded in cost of sales in the 2010 Consolidated Statement of Net Income and relates to the upholstery fabrics segment.
 
(4)  
The $312 represents a restructuring credit of $186 for employee termination benefits, a credit of $170 for sales proceeds received on equipment with no carrying value, a credit of $50 for the sale of inventory previously reserved for, a credit of $14 for lease termination and other exit costs, offset by a charge of $108 for other operating costs associated with closed plant facilities.  Of this total credit, a charge of $58 was recorded to cost of sales and a credit of $370 was recorded in restructuring credit in the 2010 Consolidated Statement of Net Income. This credit relates to the upholstery fabrics segment.
 
One customer within the upholstery fabrics segment represented 13%, 12%, and 12% of consolidated net sales in each of fiscal 2012, 2011, and 2010, respectively.  Two customers within the mattress fabrics segment represented 22%, 23%, and 22% of consolidated net sales in fiscal 2012, 2011 and 2010, respectively. One customer within the upholstery fabrics segment represented 12% and 13% of net accounts receivable at April 29, 2012 and May 1, 2011, respectively. No customers within the mattress fabrics accounted for 10% or more of net accounts receivable as of April 29, 2012 or May 1, 2011.

Balance sheet information for the company’s operating segments follow:

(dollars in thousands)
  
2012
    
2011
    
2010
  
segment assets
                  
   mattress fabrics
                  
       current assets (5)
   $ 29,909       25,455       22,307  
       assets held for sale
     15       15       34  
       non-compete agreements, net
     333       480       843  
       goodwill
     11,462       11,462       11,462  
       property, plant, and equipment
     29,237  (6)     28,581  (7)     26,720  (8)
            total mattress fabrics assets
   $ 70,956       65,993       61,366  
   upholstery fabrics
                        
       current assets (5)
   $ 31,519       23,477       23,517  
       assets held for sale
     -       60       89  
       property, plant, and equipment
     1,124  (9)     967  (10)     989  (11)
            total upholstery fabrics assets
   $ 32,643       24,504       24,595  
            total segment assets
     103,599       90,497       85,961  
non-segment assets
                        
     cash and cash equivalents
     25,023       23,181       18,295  
     short-term investments
     5,941       7,699       3,023  
     income taxes receivable
     -       79       728  
     deferred income taxes
     5,672       3,899       474  
     other current assets
     1,989       2,376       1,698  
     property, plant, and equipment
     918  (12)     748  (12)     694  (12)
     other assets
     1,574       1,572       1,725  
            total assets
   $ 144,716       130,051       112,598  
capital expenditures (13):
                        
    mattress fabrics
   $ 4,875       5,714       6,600  
    upholstery fabrics
     512       311       481  
    unallocated corporate
     532       277       316  
    $ 5,919       6,302       7,397  
depreciation expense
                        
    mattress fabrics
   $ 4,275       3,820       3,458  
    upholstery fabrics
     590       552       552  
             total segment depreciation expense
   $ 4,865       4,372       4,010  
 
(5)  
Current assets represent accounts receivable and inventory.
 
(6)  
The $29.2 million at April 29, 2012 represents property, plant, and equipment located in the U.S. of $21.2 million and located in Canada of $8.0 million. The increase in this segment’s property, plant, and equipment balance at April 29, 2012, compared with May 1, 2011 is primarily due to fiscal 2011 capital spending of $4.9 million, offset by depreciation expense of $4.3 million.
 
(7)  
The $28.6 million at May 1, 2011, represents property, plant, and equipment located in the U.S. of $20.0 million and located in Canada of $8.6 million. The increase in this segment’s property, plant, and equipment balance at May 1, 2011 compared with May 2, 2010 is primarily due to fiscal 2011 capital spending of $5.7 million, offset by depreciation expense of $3.8 million.
 
(8)  
The $26.7 million at May 2, 2010, represents property, plant, and equipment located in the U.S. of $18.8 million and located in Canada of $7.9 million.
 
(9)  
The $1.1 million at April 29, 2012, represents property, plant, and equipment located in the U.S. of $837, located in China of $183, and located in Poland of $104.
 
(10)  
The $967 at May 1, 2011, represents property, plant, and equipment located in the U.S. of $727, located in China of $184, and located in Poland of $56.
 
(11)  
The $989 at May 2, 2010 represents property, plant, and equipment located in the U.S. of $887 and China of $102.
 
(12)  
The $918, $748 and $694 balance at April 29, 2012, May 1, 2011 and May 2, 2010, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress and upholstery fabric segments.
 
(13)  
Capital expenditure amounts are stated on an accrual basis. See Consolidated Statement of Cash Flows for capital expenditure amounts on a cash basis.