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, 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 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
(dollars in thousands)	July 30, 2017		July 31, 2016
Net sales:
Mattress Fabrics	$	48,429	$	50,530
Upholstery Fabrics		31,104		30,152
	$	79,533	$	80,682
Gross profit:
Mattress Fabrics	$	9,760	$	11,901
Upholstery Fabrics		6,705		6,518
	$	16,465	$	18,419

Selling, general, and administrative expenses:

Mattress Fabrics	$	3,391		$	3,499
Upholstery Fabrics		3,811			3,534
Total segment selling, general, and
administrative expenses		7,202			7,033
Unallocated corporate expenses		2,299			2,713
	$	9,501		$	9,746

Income from operations:
Mattress Fabrics	$	6,368		$	8,402
Upholstery Fabrics		2,895			2,984
Total segment income from operations		9,263			11,386
Unallocated corporate expenses		(2,299	)		(2,713	)
Total income from operations		6,964			8,673
Interest income		131			25
Other expense		(353	)		(152	)
Income before income taxes	$	6,742		$	8,546

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

(dollars in thousands)	July 30, 2017		July 31, 2016		April 30, 2017
Segment assets:
Mattress Fabrics
Current assets (1)	$	46,750	$	39,800	$	47,038
Non-compete agreement		809		885		828
Customer relationships		651		702		664
Investment in unconsolidated joint venture		1,477		-		1,106
Goodwill		11,462		11,462		11,462
Property, plant and equipment (2)		50,270		39,435		48,916
Total mattress fabrics assets		111,419		92,284		110,014
Upholstery Fabrics
Current assets (1)		30,617		31,021		29,021
Property, plant and equipment (3)		1,857		1,459		1,879
Total upholstery fabrics assets		32,474		32,480		30,900
Total segment assets		143,893		124,764		140,914
Non-segment assets:
Cash and cash equivalents		18,322		45,549		20,795
Short-term investments		2,469		2,434		2,443
Deferred income taxes		436		1,942		419
Other current assets		3,441		2,294		2,894
Property, plant and equipment (4)		785		851		856
Long-term investments (Held-to-Maturity)		30,907		-		30,945
Long-term investments (Rabbi Trust)		6,714		4,611		5,466
Other assets		937		915		902
Total assets	$	207,904	$	183,360	$	205,634

	Three months ended
(dollars in thousands)	July 30, 2017		July 31, 2016
Capital expenditures (5):
Mattress Fabrics	$	2,967	$	3,521
Upholstery Fabrics		85		14
Unallocated Corporate		16		8
Total capital expenditures	$	3,068	$	3,543
Depreciation expense:
Mattress Fabrics	$	1,612	$	1,556
Upholstery Fabrics		195		205
Total depreciation expense	$	1,807	$	1,761

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

(2)

The $50.3 million at July 30, 2017, represents property, plant, and equipment of $35.8 million and $14.5 million located in the U.S. and Canada, respectively. The $39.4 million at July 31, 2016, represents property, plant, and equipment of $25.5 million and $13.9 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 $1.9 million at July 30, 2017, represents property, plant, and equipment of $1.2 million and $684 located in the U.S. and China, respectively. The $1.5 million at July 31, 2016, represents property, plant, and equipment of $847 and $612 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 $785, $851, and $856 at July 30, 2017, July 31, 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.