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Segment Information | 6 Months Ended
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Oct. 28, 2018
Segment Reporting [Abstract] |
Segment Information |
18. | Segment Information
Our operations are classified into two business segments: mattress fabrics and upholstery fabrics. The mattress fabrics segment manufactures, sources, and primarily 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. Effective April 1, 2018, we acquired Read (see Note 3 for further details), a turn key provider of window treatments that offer the sourcing of upholstery fabrics and other products, measuring, and installation services of their own products for the hospitality and commercial industries. Read’s financial information is aggregated with our upholstery fabrics segment. Effective June 22, 2018, we acquired eLuxury (see Note 3 for further details), a company that offers bedding accessories and home goods directly to consumers. eLuxury’s primary products include a line of mattress pads, and also offer handmade platform beds, cotton bed sheets, and other bedding items. Currently, eLuxury’s financial information is aggregated with our mattress fabrics segment. We evaluate the operating performance of our segments based upon income from operations before certain unallocated corporate expenses, restructuring expense (credit) and related charges, 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 associated with 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 their investment in an unconsolidated joint venture. During fiscal 2019, we elected to no longer include goodwill and intangible assets in segment assets, as these assets are not used by the CODM to evaluate the respective segment’s operating performance, to allocate resources to the individual segments, or to determine executive compensation. Financial information for the company’s operating segments follows:
|  | Three months ended |
|  | October 28, 2018 |  |  | October 29, 2017 |
Net sales: |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 41,989 |  |  | $ | 48,601 |
Upholstery Fabrics |  |  | 35,017 |  |  |  | 32,097 |
|  | $ | 77,006 |  |  | $ | 80,698 |
Gross profit: |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 7,498 |  |  | $ | 9,730 |
Upholstery Fabrics |  |  | 6,257 |  |  |  | 6,074 |
Total segment gross profit |  | $ | 13,755 |  |  | $ | 15,804 |
Other non-recurring charges (1) |  |  | (159 | ) |  |  | — |
Restructuring related charges (2) |  |  | (270 | ) |  |  | — |
|  | $ | 13,326 |  |  | $ | 15,804 |
Selling, general, and administrative expenses |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 4,566 |  |  | $ | 3,168 |
Upholstery Fabrics |  |  | 3,535 |  |  |  | 3,700 |
Total segment selling, general, and administrative expenses |  |  | 8,101 |  |  |  | 6,868 |
Other non-recurring charges (1) |  |  | 89 |  |  |  | — |
Unallocated corporate expenses |  |  | 1,913 |  |  |  | 2,547 |
|  | $ | 10,103 |  |  | $ | 9,415 |
Income from operations: |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 2,932 |  |  | $ | 6,562 |
Upholstery Fabrics |  |  | 2,722 |  |  |  | 2,374 |
Total segment income from operations |  |  | 5,654 |  |  |  | 8,936 |
Unallocated corporate expenses |  |  | (1,913 | ) |  |  | (2,547 | )
Other non-recurring charges (1) |  |  | (248 | ) |  |  | — |
Restructuring credit and related charges (3) |  |  | 791 |  |  |  | — |
Total income from operations |  |  | 4,284 |  |  |  | 6,389 |
Interest expense |  |  | (18 | ) |  |  | (37 | )
Interest income |  |  | 151 |  |  |  | 128 |
Other expense |  |  | (142 | ) |  |  | (321 | )
Income before income taxes |  | $ | 4,275 |  |  | $ | 6,159 |
(1) | During the three-month and six-month periods ending October 28, 2018, our mattress fabrics segment incurred non-recurring charges totaling $248 that pertained to employee termination benefits and other operational reorganization costs. Of the $248 total non-recurring charge, $159 and $89 were recorded in cost of sales and selling, general, and administrative expenses, respectively.
(2) | The $270 represents a restructuring related charge for other operating costs associated with our closed upholstery fabrics plant facility located in Anderson, SC.
(3) | The $791 pertains to a $1.1 million restructuring credit that represents a $1.1 million gain on the sale of equipment, partially offset by a restructuring charge of $63 for employee termination benefits and a restructuring related charge of $270 for other operating costs associated with our closed upholstery fabrics plant facility located in Anderson, SC.
|  | Six months ended |
|  | October 28, 2018 |  |  | October 29, 2017 |
Net sales: |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 78,972 |  |  | $ | 97,030 |
Upholstery Fabrics |  |  | 69,507 |  |  |  | 63,200 |
|  | $ | 148,479 |  |  | $ | 160,230 |
Gross profit: |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 13,470 |  |  | $ | 19,495 |
Upholstery Fabrics |  |  | 12,410 |  |  |  | 12,773 |
Total segment gross profit |  | $ | 25,880 |  |  | $ | 32,268 |
Other non-recurring charges (1) |  |  | (159 | ) |  |  | — |
Restructuring related charges (4) |  |  | (1,836 | ) |  |  | — |
|  | $ | 23,885 |  |  | $ | 32,268 |
Selling, general, and administrative expenses |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 7,714 |  |  | $ | 6,559 |
Upholstery Fabrics |  |  | 7,161 |  |  |  | 7,511 |
Total segment selling, general, and administrative expenses |  |  | 14,875 |  |  |  | 14,070 |
Other non-recurring charges (1) |  |  | 89 |  |  |  | — |
Unallocated corporate expenses |  |  | 3,172 |  |  |  | 4,846 |
|  | $ | 18,136 |  |  | $ | 18,916 |
Income from operations: |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 5,755 |  |  | $ | 12,936 |
Upholstery Fabrics |  |  | 5,249 |  |  |  | 5,262 |
Total segment income from operations |  |  | 11,004 |  |  |  | 18,198 |
Unallocated corporate expenses |  |  | (3,172 | ) |  |  | (4,846 | )
Other non-recurring charges (1) |  |  | (248 | ) |  |  | — |
Restructuring credit and related charges (5) |  |  | (1,225 | ) |  |  | — |
Total income from operations |  |  | 6,359 |  |  |  | 13,352 |
Interest expense |  |  | (38 | ) |  |  | (37 | )
Interest income |  |  | 301 |  |  |  | 259 |
Other expense |  |  | (399 | ) |  |  | (674 | )
Income before income taxes |  | $ | 6,223 |  |  | $ | 12,900 |
(4) | The $1.8 million represents restructuring related charges, of which $1.6 million pertains to inventory markdowns and $270 for other operating costs associated with our closed upholstery fabrics plant facility located in Anderson, SC.
(5) | The $1.2 million pertains to restructuring related charges totaling $1.8 million, partially offset by a restructuring credit of $610 associated with our closed upholstery fabrics plant facility located in Anderson, SC. The $1.8 million restructuring related charge represents $1.6 million for inventory markdowns and $270 for other operating costs. The $610 restructuring credit represents a $1.1 million gain on sale of equipment, partially offset by a charge for employee termination benefits totaling $513.
Balance sheet information for the company’s operating segments follows:
(dollars in thousands) |  | October 28, 2018 |  |  | October 29, 2017 |  |  | April 29, 2018 |
Segment assets: |  |  |  |  |  |  |  |  |  |  |  |
Mattress Fabrics |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  | $ | 10,740 |  |  | $ | 13,645 |  |  | $ | 15,195 |
Inventory |  |  | 29,836 |  |  |  | 29,083 |  |  |  | 28,740 |
Property, plant and equipment (1) |  |  | 48,825 |  |  |  | 49,965 |  |  |  | 48,797 |
Investment in unconsolidated joint venture |  |  | 1,470 |  |  |  | 1,522 |  |  |  | 1,501 |
Total mattress fabrics assets |  |  | 90,871 |  |  |  | 94,215 |  |  |  | 94,233 |
Upholstery Fabrics |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  |  | 13,622 |  |  |  | 10,575 |  |  |  | 11,112 |
Inventory |  |  | 20,765 |  |  |  | 21,126 |  |  |  | 24,714 |
Property, plant and equipment (2) |  |  | 2,048 |  |  |  | 2,063 |  |  |  | 2,445 |
Total upholstery fabrics assets |  |  | 36,435 |  |  |  | 33,764 |  |  |  | 38,271 |
Total segment assets |  |  | 127,306 |  |  |  | 127,979 |  |  |  | 132,504 |
Non-segment assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 14,768 |  |  |  | 15,739 |  |  |  | 21,228 |
Short-term investments (Available for Sale) |  |  | — |  |  |  | 2,478 |  |  |  | 2,451 |
Short-term investments (Held-to-Maturity) |  |  | 26,719 |  |  |  | 4,015 |  |  |  | 25,759 |
Assets held for sale |  |  | 237 |  |  |  | — |  |  |  | — |
Other current assets |  |  | 2,461 |  |  |  | 2,263 |  |  |  | 2,870 |
Deferred income taxes |  |  | 3,614 |  |  |  | 491 |  |  |  | 1,458 |
Property, plant and equipment (3) |  |  | 452 |  |  |  | 502 |  |  |  | 552 |
Goodwill |  |  | 27,222 |  |  |  | 11,462 |  |  |  | 13,569 |
Intangible assets |  |  | 10,636 |  |  |  | 1,428 |  |  |  | 4,275 |
Long-term investments (Held-to-Maturity) |  |  | — |  |  |  | 26,853 |  |  |  | 5,035 |
Long-term investments (Rabbi Trust) |  |  | 7,851 |  |  |  | 6,921 |  |  |  | 7,326 |
Other assets |  |  | 945 |  |  |  | 912 |  |  |  | 957 |
Total assets |  | $ | 222,211 |  |  | $ | 201,043 |  |  | $ | 217,984 |
|  | Six months ended |
(dollars in thousands) |  | October 28, 2018 |  |  | October 29, 2017 |
Capital expenditures (4): |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 1,578 |  |  | $ | 4,364 |
Upholstery Fabrics |  |  | 267 |  |  |  | 203 |
Unallocated Corporate |  |  | — |  |  |  | 30 |
Total capital expenditures |  | $ | 1,845 |  |  | $ | 4,597 |
Depreciation expense: |  |  |  |  |  |  |  |
Mattress Fabrics |  | $ | 3,644 |  |  | $ | 3,310 |
Upholstery Fabrics |  |  | 412 |  |  |  | 403 |
Total depreciation expense |  | $ | 4,056 |  |  | $ | 3,713 |
(1) | The $48.8 million at October 28, 2018, represents property, plant, and equipment of $36.1 million and $12.7 million located in the U.S. and Canada, respectively. 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 $48.8 million at April 29, 2018, represents property, plant, and equipment of $35.4 million and $13.4 million located in the U.S. and Canada, respectively.
(2) | The $2.0 million at October 28, 2018, represents property, plant, and equipment of $1.4 million and $636 located in the U.S. and China, respectively. 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 $2.4 million at April 29, 2018, represents property, plant, and equipment of $1.8 million and $661 located in the U.S. and China, respectively.
(3) | The $452, $502, and $552 at October 28, 2018, October 29, 2017 and April 29, 2018, 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.
(4) | Capital expenditure amounts are stated on the accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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