Inventories

Inventory is valued at the lower of cost (determined on a first-in, first-out basis) or Net Realizable Value and includes material, labor, and factory overhead. The Company maintains allowances for estimated slow moving and obsolete inventory to reflect the difference between the cost of inventory and the estimated market value. Allowances for slow moving and obsolete inventory are determined through a physical inspection of the product in connection with a physical inventory, a review of slow-moving product, and consideration of active marketing programs. The market for education furniture is traditionally driven by value, not style, and the Company has not typically incurred significant obsolescence expenses. If market conditions are less favorable than those anticipated by management, additional allowances may be required. Due to reductions in sales volume in the past years, the Company’s manufacturing facilities are operating at reduced levels of capacity. The Company records the cost of excess capacity as a period expense, not as a component of capitalized inventory valuation.

The following table presents an updated breakdown of the Company’s net inventory (in thousands) as of April 30, 2017, January 31, 2017 and April 30, 2016:



	4/30/2017	1/31/2017	4/30/2016
Finished goods	21,829	11,174	21,984
WIP	20,977	13,486	21,086
Raw materials	11,982	11,029	10,854
Inventories, net	54,788	35,689	53,924

Management continually monitors production costs, material costs and inventory levels to determine that interim inventories are fairly stated.