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Segment Information
 3 Months Ended
Aug. 02, 2020
Segment Reporting [Abstract]  
Segment Information

14. Segment Information

Overall

Continuing Operations

Our continuing operations are classified into two business segments: mattress fabrics and upholstery fabrics.

Mattress Fabrics

The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers.

Upholstery Fabrics

The upholstery fabrics segment develops, manufactures, sources, and sells fabrics primarily to residential and commercial furniture manufacturers. Additionally, the segment includes Read, a wholly-owned subsidiary, which is a turn-key provider of window treatments and sourcing of upholstery fabrics and other products, as well as measuring, and installation services of Read’s own products for the hospitality and commercial industries. Read also supplies soft goods such as decorative top sheets, coverlets, duvet covers, bed skirts, bolsters, and pillows.

Discontinued Operation – Home Accessories Segment

As disclosed in Note 3 of the consolidated financial statements, we sold our entire ownership interest in eLuxury on March 31, 2020, and consequently our home accessories segment was eliminated at such time. Thus, the results of operations associated with our home accessories segment were excluded from our continuing operations and presented as a discontinued operation in our consolidated financial statements.

Our former home accessories segment was our finished products business that manufactured, sourced, and sold bedding accessories and home goods directly to consumers and businesses through global e-commerce, business-to-business, and other sales channels.

See Note 3 of the consolidated financial statements for detailed financial information of our former home accessories segment. As disclosed in Note 3, a reconciliation is provided that has detailed balance sheet information as of August 4, 2019, that is reconciled to captions titled “current assets – discontinued operation”, “noncurrent assets – discontinued operation”, current liabilities – discontinued operation”, and “noncurrent liabilities – discontinued operation” presented in the Consolidated Balance Sheet as of August 4, 2019. Also, a reconciliation is provided that pertains to detailed income statement information disclosed in Note 3 and is reconciled to net loss from discontinued operation presented in the Consolidated Statements of Net Income for the three-month period ending August 4, 2019.  

Financial Information

We evaluate the operating performance of our current business segments based upon income (loss) from continuing operations before certain unallocated corporate expenses, asset impairments, restructuring credit (expense) and restructuring related charges, and other non-recurring items. Cost of sales for each segment includes costs to develop, 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 and their staff, 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, property, plant, and equipment, and right of use assets. The mattress fabrics segment also includes in segment assets its investment in an unconsolidated joint venture. Goodwill and intangible assets are not included in segment assets, as these assets are not used by the Chief Operating Decision Maker to evaluate the respective segment’s operating performance, allocate resources to the individual segments, or determine executive compensation.

Statements of operations for our current operating segments are as follows:

 

 

 

Three months ended

 

 

 

August 2, 2020

 

 

August 4, 2019

 

net sales by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

36,103

 

 

$

38,859

 

upholstery fabrics

 

 

28,361

 

 

 

31,860

 

net sales

 

$

64,464

 

 

$

70,719

 

gross profit from continuing operations by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

4,608

 

 

$

5,691

 

upholstery fabrics

 

 

5,293

 

 

 

6,721

 

gross profit from continuing operations

 

$

9,901

 

 

$

12,412

 

selling, general, and administrative expenses by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

2,763

 

 

$

3,071

 

upholstery fabrics

 

 

3,180

 

 

 

3,846

 

unallocated corporate expenses

 

 

2,075

 

 

 

2,232

 

selling, general, and administrative expenses

 

$

8,018

 

 

$

9,149

 

income (loss) from continuing operations by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

1,845

 

 

$

2,620

 

upholstery fabrics

 

 

2,113

 

 

 

2,875

 

unallocated corporate expenses

 

 

(2,075

)

 

 

(2,232

)

subtotal

 

 

1,883

 

 

 

3,263

 

restructuring credit

 

 

—

 

 

 

35

 

total income from continuing operations

 

$

1,883

 

 

$

3,298

 

interest expense

 

 

(51

)

 

 

—

 

interest income

 

 

58

 

 

 

260

 

other expense

 

 

(366

)

 

 

(95

)

income before income taxes from continuing operations

 

$

1,524

 

 

$

3,463

 

 

Balance sheet information for our current operating segments follows:

 

(dollars in thousands)

 

August 2, 2020

 

 

August 4, 2019

 

 

May 3, 2020

 

Segment assets:

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

15,585

 

 

$

12,632

 

 

$

12,212

 

Inventory

 

 

20,070

 

 

 

24,410

 

 

 

26,620

 

Property, plant and equipment (1)

 

 

39,597

 

 

 

43,211

 

 

 

40,682

 

Right of use assets (2)

 

 

832

 

 

 

235

 

 

 

362

 

Investment in unconsolidated joint venture

 

 

1,759

 

 

 

1,520

 

 

 

1,602

 

Total mattress fabrics assets

 

 

77,843

 

 

 

82,008

 

 

 

81,478

 

Upholstery Fabrics

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

14,308

 

 

 

11,029

 

 

 

12,881

 

Inventory

 

 

20,332

 

 

 

23,183

 

 

 

21,287

 

Property, plant and equipment (3)

 

 

1,634

 

 

 

1,856

 

 

 

1,633

 

Right of use assets (4)

 

 

3,802

 

 

 

3,054

 

 

 

1,633

 

Total upholstery fabrics assets

 

 

40,076

 

 

 

39,122

 

 

 

37,434

 

Total segment assets

 

 

117,919

 

 

 

121,130

 

 

 

118,912

 

Non-segment assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

39,986

 

 

 

44,236

 

 

 

69,790

 

Short-term investments - available for sale

 

 

983

 

 

 

—

 

 

 

923

 

Short-term investments - held-to-maturity

 

 

5,092

 

 

 

—

 

 

 

4,271

 

Current income taxes receivable

 

 

782

 

 

 

776

 

 

 

1,585

 

Current assets - discontinued operation

 

 

—

 

 

 

3,557

 

 

 

—

 

Other current assets

 

 

3,547

 

 

 

2,617

 

 

 

2,116

 

Deferred income taxes

 

 

593

 

 

 

486

 

 

 

793

 

Property, plant and equipment (5)

 

 

820

 

 

 

408

 

 

 

832

 

Right of use assets (6)

 

 

1,809

 

 

 

2,199

 

 

 

1,908

 

Goodwill

 

 

—

 

 

 

13,569

 

 

 

—

 

Intangible assets

 

 

3,286

 

 

 

3,805

 

 

 

3,380

 

Long-term investments - rabbi trust

 

 

7,916

 

 

 

7,347

 

 

 

7,834

 

Long-term investments - held-to-maturity

 

 

1,314

 

 

 

—

 

 

 

2,076

 

Noncurrent income taxes receivable

 

 

—

 

 

 

733

 

 

 

—

 

Other assets

 

 

540

 

 

 

526

 

 

 

664

 

Long-term note receivable affiliated with discontinued operation

 

 

—

 

 

 

1,800

 

 

 

—

 

Noncurrent assets - discontinued operation

 

 

—

 

 

 

23,058

 

 

 

—

 

Total assets

 

$

184,587

 

 

$

226,247

 

 

$

215,084

 

 

 

 

Three months ended

 

(dollars in thousands)

 

August 2, 2020

 

 

August 4, 2019

 

Capital expenditures (7):

 

 

 

 

 

 

 

 

Mattress Fabrics

 

$

545

 

 

$

669

 

Upholstery Fabrics

 

 

113

 

 

 

184

 

Unallocated Corporate

 

 

68

 

 

 

56

 

Total capital expenditures

 

$

726

 

 

$

909

 

Depreciation expense:

 

 

 

 

 

 

 

 

Mattress Fabrics

 

$

1,631

 

 

$

1,620

 

Upholstery Fabrics

 

 

191

 

 

 

190

 

Discontinued Operation

 

 

—

 

 

 

95

 

Total depreciation expense

 

$

1,822

 

 

$

1,905

 

 

(1)

The $39.6 million as of August 2, 2020, represents property, plant, and equipment of $27.0 million and $12.6 million located in the U.S. and Canada, respectively. The $43.2 million as of August 4, 2019, represents property, plant, and equipment of $31.2 million and $12.0 million located in the U.S. and Canada, respectively.   The $40.7 million as of May 3, 2020, represents property, plant, and equipment of $27.7 million and $13.0 million located in the U.S. and Canada, respectively.

(2)

The $832 as of August 2, 2020 represents right of use assets of $297 and $535 located in the U.S. and Canada, respectively.  The $235 as of August 4, 2019, and the $362 as of May 3, 2020, represents right of use assets located in the U.S.

(3)

The $1.6 million as of August 2, 2020, represents property, plant, and equipment of $1.2 million and $456 located in the U.S. and China, respectively. The $1.9 million as of August 4, 2019, represents property, plant, and equipment of $1.3 million and $548 located in the U.S. and China, respectively.   The $1.6 million as of May 3, 2020, represents property, plant, and equipment of $1.2 million and $471 located in the U.S. and China, respectively.

(4)

The $3.8 million as of August 2, 2020, represents right of use assets of $3.1 million and $710 located in China and the U.S., respectively.  The $3.1 million as of August 4, 2019, represents right of use assets of $1.8 million and $1.3 million located in China and the U.S., respectively.  The $1.6 million as of May 3, 2020, represents right of use assets of $857 and $776 located in the U.S. and China, respectively.

(5)

The $820, $408, and $832 as of August 2, 2020, August 4, 2019, and May 3, 2020, respectively, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by our mattress fabrics and upholstery fabrics segments. Property, plant, and equipment associated with our corporate departments reside in the U.S.

(6)

The $1.8 million, $2.2 million, and $1.9 million as of August 2, 2020, August 4, 2019, and May 3, 2020, respectively, represents right of use assets located in the U.S

(7)

Capital expenditure amounts are stated on the accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis.