Segment Information

6 Months Ended

Oct. 27, 2013

Segment Information

13.  Segment Information

Our 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 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 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 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, a non-compete agreement, and customer relationships associated with an acquisition.

Financial information for the company’s operating segments follows:

		Three months ended
(dollars in thousands)		October 27, 2013			October 28, 2012
Net sales:
	Mattress Fabrics	$	40,331		$	39,697
	Upholstery Fabrics		30,258			25,863
		$	70,589		$	65,560
Gross profit:
	Mattress Fabrics	$	7,322		$	7,539
	Upholstery Fabrics		4,913			4,338
		$	12,235		$	11,877
Selling, general, and administrative expenses:
	Mattress Fabrics	$	2,620		$	2,424
	Upholstery Fabrics		3,170			3,157
	Total segment selling, general, and
	administrative expenses		5,790			5,581
	Unallocated corporate expenses		1,410			1,628
		$	7,200		$	7,209
Income from operations:
	Mattress Fabrics	$	4,702		$	5,115
	Upholstery Fabrics		1,743			1,181
	Total segment income from operations		6,445			6,296
	Unallocated corporate expenses		(1,410	)		(1,628	)
	Total income from operations		5,035			4,668
	Interest expense		(99	)		(156	)
	Interest income		102			96
	Other expense		(224	)		(76	)
	Income before income taxes	$	4,814		$	4,532

			Six months ended
(dollars in thousands)		October 27, 2013				October 28, 2012
Net sales:
	Mattress Fabrics	$	78,494		$	77,662
	Upholstery Fabrics		62,236			57,082
		$	140,730		$	134,744
Gross profit:
	Mattress Fabrics	$	14,713		$	15,161
	Upholstery Fabrics		10,595			9,837
		$	25,308		$	24,998
Selling, general, and administrative expenses:
	Mattress Fabrics	$	4,994		$	4,814
	Upholstery Fabrics		6,436			6,498
	Total segment selling, general, and
	administrative expenses		11,430			11,312
	Unallocated corporate expenses		2,869			3,538
		$	14,299		$	14,850
Income from operations:
	Mattress Fabrics	$	9,719		$	10,347
	Upholstery Fabrics		4,159			3,339
	Total segment income from operations		13,878			13,686
	Unallocated corporate expenses		(2,869	)		(3,538	)
	Total income from operations		11,009			10,148
	Interest expense		(239	)		(346	)
	Interest income		195			222
	Other expense		(616	)		(121	)
	Income before income taxes	$	10,349		$	9,903

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

(dollars in thousands)	October 27, 2013		October 28, 2012		April 28, 2013
Segment assets:
Mattress Fabrics
Current assets (1)	$	37,372	$	33,553	$	33,323
Non-compete agreement		1,055		259		185
Customer relationships		842		-		-
Goodwill		11,462		11,462		11,462
Property, plant and equipment (2)		28,307		28,737		28,578
Total mattress fabrics assets		79,038		74,011		73,548
Upholstery Fabrics
Current assets (1)		32,447		25,386		28,487
Property, plant and equipment (3)		1,612		1,028		1,230
Total upholstery fabrics assets		34,059		26,414		29,717
Total segment assets		113,097		100,425		103,265
Non-segment assets:
Cash and cash equivalents		24,267		23,464		23,530
Short-term investments		6,220		5,241		5,286
Deferred income taxes		8,406		9,208		8,462
Income taxes receivable		-		-		318
Other current assets		2,550		1,640		2,093
Property, plant and equipment (4)		640		856		786
Other assets		1,062		1,609		966
Total assets	$	156,242	$	142,443	$	144,706

		Six months ended
(dollars in thousands)		October 27, 2013		October 28, 2012
Capital expenditures (5):
	Mattress Fabrics	$	1,199	$	1,720
	Upholstery Fabrics		521		40
	Unallocated Corporate		20		121
	Total capital expenditures	$	1,740	$	1,881
Depreciation expense:
	Mattress Fabrics	$	2,331	$	2,219
	Upholstery Fabrics		305		320
	Total depreciation expense	$	2,636	$	2,539

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

(2) The $28.3 million at October 27, 2013, represents property, plant, and equipment of $20.5 million and $7.8 million located in the U.S. and Canada, respectively. The $28.7 million at October 28, 2012, represents property, plant, and equipment of $21.2 million and $7.5 million located in the U.S. and Canada, respectively. The $28.6 million at April 28, 2013, represents property, plant, and equipment of $20.4 million and $8.2 million located in the U.S. and Canada, respectively.

(3) The $1.6 million at October 27, 2013, represents property, plant, and equipment located in the U.S. of $1.1 million, located in China of $464, and located in Poland of $49. The $1.0 million at October 28, 2012, represents property, plant, and equipment located in the U.S. of $776, located in China of $160, and located in Poland of $92. The $1.2 million at April 28, 2013, represents property, plant, and equipment located in the U.S. of $908, located in China of $265, and located in Poland of $57.

(4) The $640, $856, and $786 at October 27, 2013, October 28, 2012, and April 28, 2013, 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 Statement of Cash Flows for capital expenditure amounts on a cash basis.