SEGMENT INFORMATION | 16. SEGMENT INFORMATION The company’s operations are classified into two business segments: mattress fabrics and upholstery fabrics. The mattress fabrics segment manufacturers, sources, and sells fabrics and mattress covers to bedding manufacturers. The upholstery fabrics segment manufacturers, sources, and sells fabrics primarily to residential furniture manufacturers. Net sales denominated in U.S. dollars accounted for 93%, 92% and 88% of total consolidated net sales in 2016, 2015, and 2014, respectively. International sales accounted for 22%, 22% and 19% of net sales in 2016, 2015, and 2014, respectively, and are summarized by geographic area as follows: (dollars in thousands) 2016 2015 2014 north america (excluding USA) (1) $ 31,667 30,758 15,556 far east and asia (2) 31,927 31,855 33,487 all other areas 4,336 4,720 6,041 $ 67,930 67,333 55,084 (1) Of this amount, $24.2 million, $24.1 million, and $9.3 million are attributable to shipments to Mexico in fiscal 2016, 2015, and 2014, respectively. (2) Of this amount $23.1 million, $26.5 million, and $32.2 million are attributable to shipment to China in fiscal 2016, 2015, and 2014, respectively. Sales are attributed to individual countries based upon location that the company ships its products to for delivery to customers. The company evaluates the operating performance of its 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 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 Statements of operations for the company’s operating segments are as follows: (dollars in thousands) 2016 2015 2014 net sales: upholstery fabrics $ 126,441 130,427 126,457 mattress fabrics 186,419 179,739 160,705 $ 312,860 310,166 287,162 gross profit: upholstery fabrics $ 26,393 22,690 21,429 mattress fabrics 38,718 32,877 27,477 $ 65,111 55,567 48,906 (dollars in thousands) 2016 2015 2014 selling, general, and administrative expenses: upholstery fabrics $ 15,094 14,562 13,393 mattress fabrics 12,223 11,206 9,962 unallocated corporate 9,456 7,010 5,302 total selling, general, and administrative expenses $ 36,773 32,778 28,657 Income from operations: upholstery fabrics $ 11,298 8,128 8,036 mattress fabrics 26,496 21,671 17,515 total segment income from operations 37,794 29,799 25,551 unallocated corporate expenses (9,456 ) (7,010 ) (5,302 ) total income from operations 28,338 22,789 20,249 interest expense - (64 ) (427 ) interest income 176 622 482 other expense (616 ) (391 ) (1,261 ) income before income taxes $ 27,898 22,956 19,043 One customer within the upholstery fabrics segment represented 13% of consolidated net sales in fiscal years 2016, 2015, and 2014, respectively. Two customers within the mattress fabrics segment represented 22%, 20%, and 21% of consolidated net sales in fiscal 2016, 2015, and 2014, respectively. No customers within the upholstery fabrics segment accounted for 10% or more of net accounts receivable as of May 1, 2016 and May 3, 2015, respectively. One customer within the mattress fabrics segment accounted for 16% and 10% of net accounts receivable balance as of May 1, 2016 and May 3, 2015, respectively. Balance sheet information for the company’s operating segments follow: (dollars in thousands) 2016 2015 2014 segment assets mattress fabrics current assets (1) $ 43,472 41,328 36,229 non-compete agreements, net 903 979 1,041 customer relationships 715 766 817 goodwill 11,462 11,462 11,462 property, plant, and equipment 37,480 (2) 33,773 (3) 29,040 (4) total mattress fabrics assets $ 94,032 88,308 78,589 upholstery fabrics current assets (1) $ 26,540 29,905 31,854 property, plant, and equipment 1,564 (5) 1,467 (6) 1,573 (7) total upholstery fabrics assets $ 28,104 31,372 33,427 total segment assets 122,136 119,680 112,016 non-segment assets cash and cash equivalents 37,787 29,725 29,303 short-term investments 4,359 10,004 6,294 income taxes receivable 155 229 121 deferred income taxes 2,319 5,169 8,270 other current assets 2,477 2,440 2,344 property, plant, and equipment 929 (8) 838 (8) 763 (8) long-term investments 4,025 2,415 765 other assets 955 800 1,059 total assets $ 175,142 171,300 160,935 capital expenditures (9): mattress fabrics $ 9,666 10,454 4,380 upholstery fabrics 626 468 827 unallocated corporate 416 252 103 $ 10,708 11,174 5,310 depreciation expense mattress fabrics $ 5,837 5,034 4,694 upholstery fabrics 834 739 618 total segment depreciation expense $ 6,671 5,773 5,312 (1) Current assets represent accounts receivable and inventory. (2) The $37.5 million at May 1, 2016, represents property, plant, and equipment located in the U.S. of $24.8 million and located in Canada of $12.7 million. (3) The $33.8 million at May 3, 2015, represents property, plant, and equipment located in the U.S. of $23.8 million and located in Canada of $10.0 million. (4) The $29.0 million at April 27, 2014, represents property, plant, and equipment located in the U.S. of $20.6 million and located in Canada of $8.4 million. (5) The $1.6 million at May 1, 2016, represents property, plant, and equipment located in the U.S. of $893 and located in China of $671. (6) The $1.5 million at May 3, 2015, represents property, plant, and equipment located in the U.S. of $848 and located in China of $619. (7) The $1.6 million at April 27, 2014, represents property, plant, and equipment located in the U.S. of $957, China of $572, and located in Poland of $44. (8) The $929, $838, and $763 balance at May 1, 2016, May 3, 2015, and April 27, 2014, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress and upholstery fabric segments. (9) Capital expenditure amounts are stated on an accrual basis. See Consolidated Statement of Cash Flows for capital expenditure amounts on a cash basis. |