REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Apr. 28, 2019

Revenue from Contract with Customer [Abstract]

4.	REVENUE FROM CONTRACTS WITH CUSTOMERS

On April 30, 2018, we adopted ASC Topic 606 using the modified retrospective method. The modified retrospective method requires an adjustment to the opening balance of retained earnings for the cumulative effect of initially applying the new revenue standard. As permitted by the transition guidance, we elected to apply the new standard only to contracts that were not completed at the date of initial application, and therefore, we only evaluated those contracts that were in-process and not completed before April 30, 2018.

The application of the new standard did not result in a material impact to the opening balance of retained earnings, and therefore no adjustment to retained earnings was recorded. The largest impact of applying the new standard are the required qualitative and quantitative disclosures and the presentation and classification related to estimates of allowances for sales returns. The cumulative effect of the classification changes related to our allowances for sales returns on our April 30, 2018, balance sheet are as follows:

(dollars in thousands)	Balance at April 29, 2018		Adjustments Due to ASC 606 Adoption (1)		Balance at April 30, 2018
Balance Sheet
Assets:
Accounts Receivable	$	26,307	$	1,145	$	27,452
Other Current Assets		2,870		27		2,897
Liabilities:
Accrued Expenses		9,325		1,172		10,497

(1)

The adjustments associated with the adoption of the new standard are related to classifying allowances for estimated sales returns as a liability rather than as a contra account to accounts receivable on the consolidated balance sheet for the current year’s presentation only. As required under the new standard, we also recorded the estimated allowance for sales returns on a gross basis rather than a net basis by separately reflecting a return goods asset within other current assets rather than netting such amounts with the estimated sales returns liability.

Currently, we expect the adoption of this new standard to be immaterial to our net income on an ongoing basis. The effect of adopting ASC 606 on our Consolidated Statements of Net Income for fiscal 2019, are as follows:

(dollars in thousands)	Fiscal 2019		Adjustments Due to ASC 606 Adoption (1)			BalancesWithout ASC 606 Adoption
Statements of Net Income
Net Sales	$	296,669	$	(28	)	$	296,641
Cost of Sales		246,471		(28	)		246,443

The effect of adopting ASC 606 on our Consolidated Balance Sheets at April 28, 2019 is as follows:

(dollars in thousands)	April 28, 2019		Adjustments Due to ASC 606 Adoption (1)			BalancesWithout ASC 606 Adoption
Balance Sheet
Assets:
Accounts Receivable	$	23,751	$	(854	)	$	22,897
Other Current Assets		2,849		(28	)		2,821
Liabilities:
Accrued Expenses	$	9,192		(882	)	$	8,310

Nature of Performance Obligations

Our operations are classified into three business segments: mattress fabrics, upholstery fabrics, and home accessories. The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. The upholstery fabrics segment develops, manufactures, sources, and sells fabrics primarily to residential and commercial furniture manufacturers. Effective April 1, 2018, we acquired Read (see Note 2 for further details), a turn-key provider of window treatments that offers sourcing of upholstery fabrics and other products, measuring, and installation services of their own products for the hospitality and commercial industries. In addition, Read supplies soft goods such as decorative top sheets, coverlets, duvet covers, bed skirts, bolsters and pillows. The home accessories segment is our new finished products business that manufactures, sources, and sells bedding accessories and home goods directly to consumers and businesses through global e-commerce, business-to-business and other sales channels.

Our primary performance obligations include the sale of mattress fabrics, upholstery fabrics, bedding and home accessories products, as well as the performance of customized fabrication and installation services of our own products associated with window treatments.

Significant Judgments

See Note 1 for disclosure of our accounting policies regarding our significant judgements associated with revenue recognition, determining our transaction prices, and revenue measurement.

Contract Assets & Liabilities

Certain contracts, primarily those for customized fabrication and installation services, require upfront customer deposits that result in a contract liability which is recorded on the Consolidated Balance Sheet as deferred revenue. If upfront deposits or prepayment are not required, customers may be granted credit terms which generally range from 15 – 45 days. Such terms are common within the industries in which we are associated and are not considered financing arrangements. There were

contract assets recognized as of April 28, 2019.

A summary of the activity of deferred revenue for fiscal 2019 follows:

(dollars in thousands)	Fiscal 2019
Balance as of April 29, 2018	$	809
Revenue recognized on contract liabilities during the period		(2,725	)
Payments received for services not yet rendered during the period		2,315
Balance as of April 28, 2019	$	399

Disaggregation of Revenue

The following table presents our disaggregated revenue by segment, timing of revenue recognition, and product sales versus services rendered for fiscal 2019:

(dollars in thousands)	Mattress Fabrics		Upholstery Fabrics		Home Accessories		Total
Products transferred at a point in time	$	145,059	$	125,294	$	15,956	$	286,309
Services transferred over time		—		10,360		—		10,360
Total Net Sales	$	145,059	$	135,654	$	15,956	$	296,669