12. Segment Information

Our operations are classified into two business segments: mattress fabrics and upholstery fabrics. The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers to bedding manufacturers. The upholstery fabrics segment manufactures, sources, develops, and sells fabrics primarily to residential and commercial furniture manufacturers.

We evaluate the operating performance of our segments based upon income from operations before certain unallocated corporate expenses and other non-recurring items. Cost of sales in both segments include costs to manufacture, develop, 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, all costs related to being a public company, and other miscellaneous expenses. Segment assets include assets used in the 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, goodwill, investment in an unconsolidated joint venture, a non-compete agreement, and customer relationships associated with an acquisition.

Financial information for the company’s operating segments follows:


	Three months ended
	October 29, 2017			October 30, 2016
Net sales:
Mattress Fabrics	$	48,601		$	45,527
Upholstery Fabrics		32,097			29,816
	$	80,698		$	75,343
Gross profit:
Mattress Fabrics	$	9,730		$	10,756
Upholstery Fabrics		6,074			6,145
	$	15,804		$	16,901

Mattress Fabrics	$	3,168		$	3,296
Upholstery Fabrics		3,700			3,652
Total segment selling, general, and administrative expenses		6,868			6,948
Unallocated corporate expenses		2,547			2,654
	$	9,415		$	9,602
Income from operations:
Mattress Fabrics	$	6,562		$	7,460
Upholstery Fabrics		2,374			2,493
Total segment income from operations		8,936			9,953
Unallocated corporate expenses		(2,547	)		(2,654	)
Total income from operations		6,389			7,299
Interest expense		(37	)		-
Interest income		128			15
Other expense		(321	)		(155	)
Income before income taxes	$	6,159		$	7,159


	Six months ended
(dollars in thousands)	October 29, 2017			October 30, 2016
Net sales:
Mattress Fabrics	$	97,030		$	96,057
Upholstery Fabrics		63,200			59,969
	$	160,230		$	156,026
Gross profit:
Mattress Fabrics	$	19,495		$	22,657
Upholstery Fabrics		12,773			12,664
	$	32,268		$	35,321
Selling, general, and administrative expenses:
Mattress Fabrics	$	6,559		$	6,795
Upholstery Fabrics		7,511			7,185
Total segment selling, general, and administrative expenses		14,070			13,980
Unallocated corporate expenses		4,846			5,368
	$	18,916		$	19,348
Income from operations:
Mattress Fabrics	$	12,936		$	15,862
Upholstery Fabrics		5,262			5,479
Total segment income from operations		18,198			21,341
Unallocated corporate expenses		(4,846	)		(5,368	)
Total income from operations		13,352			15,973
Interest expense		(37)			-
Interest income		259			40
Other expense		(674	)		(307	)
Income before income taxes	$	12,900		$	15,706

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


(dollars in thousands)	October 29, 2017		October 30, 2016		April 30, 2017
Segment assets:
Mattress Fabrics
Current assets (1)	$	42,728	$	38,062	$	47,038
Non-compete agreement		790		866		828
Customer relationships		638		689		664
Investment in unconsolidated joint venture		1,522		-		1,106
Goodwill		11,462		11,462		11,462
Property, plant and equipment (2)		49,965		43,228		48,916
Total mattress fabrics assets		107,105		94,307		110,014
Upholstery Fabrics
Current assets (1)		31,701		26,931		29,021
Property, plant and equipment (3)		2,063		1,480		1,879
Total upholstery fabrics assets		33,764		28,411		30,900
Total segment assets		140,869		122,718		140,914
Non-segment assets:
Cash and cash equivalents		15,739		13,910		20,795
Short-term investments (Available for Sale)		2,478		2,430		2,443
Short-term investments (Held-to-Maturity)		4,015		-		-
Deferred income taxes		491		581		419
Other current assets		2,263		1,675		2,894
Property, plant and equipment (4)		502		829		856
Long-term investments (Held-to-Maturity)		26,853		31,050		30,945
Long-term investments (Rabbi Trust)		6,921		4,994		5,466
Other assets		912		940		902
Total assets	$	201,043	$	179,127	$	205,634


	Six months ended
(dollars in thousands)	October 29, 2017		October 30, 2016
Capital expenditures (5):
Mattress Fabrics	$	4,364	$	8,857
Upholstery Fabrics		203		165
Unallocated Corporate		30		62
Total capital expenditures	$	4,597	$	9,084
Depreciation expense:
Mattress Fabrics	$	3,310	$	3,101
Upholstery Fabrics		403		410
Total depreciation expense	$	3,713	$	3,511

(1)	Current assets represent accounts receivable and inventory for the respective segment.

(2)

The $50.0 million at October 29, 2017, represents property, plant, and equipment of $35.8 million and $14.2 million located in the U.S. and Canada, respectively. The $43.2 million at October 30, 2016, represents property, plant, and equipment of $28.5 million and $14.7 million located in the U.S. and Canada, respectively. The $48.9 million at April 30, 2017, represents property, plant, and equipment of $34.0 million and $14.9 million located in the U.S. and Canada, respectively.

(3)

The $2.1 million at October 29, 2017, represents property, plant, and equipment of $1.4 million and $722 located in the U.S. and China, respectively. The $1.5 million at October 30, 2016, represents property, plant, and equipment of $890 and $590 located in the U.S. and China, respectively. The $1.9 million at April 30, 2017, represents property, plant, and equipment of $1.2 million and $655 located in the U.S. and China, respectively.

(4)

The $502, $829, and $856 at October 29, 2017, October 30, 2016 and April 30, 2017, respectively, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress and upholstery fabric segments. Property, plant, and equipment associated with corporate are located in the U.S.

(5)	Capital expenditure amounts are stated on the accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis.