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Segment Information
 6 Months Ended
Nov. 01, 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 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 November 3, 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 November 3, 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 and six-month periods ending November 3, 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 individual segments, or determine executive compensation.

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

 

 

 

Three months ended

 

 

 

November 1, 2020

 

 

November 3, 2019

 

net sales by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

40,030

 

 

$

35,666

 

upholstery fabrics

 

 

36,821

 

 

 

33,884

 

net sales

 

$

76,851

 

 

$

69,550

 

gross profit from continuing operations by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

7,584

 

 

$

6,247

 

upholstery fabrics

 

 

6,677

 

 

 

7,279

 

gross profit from continuing operations

 

$

14,261

 

 

$

13,526

 

selling, general, and administrative expenses by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

3,202

 

 

$

2,953

 

upholstery fabrics

 

 

3,390

 

 

 

3,806

 

unallocated corporate expenses

 

 

3,151

 

 

 

2,358

 

selling, general, and administrative expenses

 

$

9,743

 

 

$

9,117

 

income (loss) from continuing operations by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

4,382

 

 

$

3,294

 

upholstery fabrics

 

 

3,287

 

 

 

3,473

 

unallocated corporate expenses

 

 

(3,151

)

 

 

(2,358

)

total income from continuing operations

 

 

4,518

 

 

 

4,409

 

interest expense

 

 

—

 

 

 

(21

)

interest income

 

 

59

 

 

 

258

 

other expense

 

 

(680

)

 

 

(99

)

income before income taxes from continuing operations

 

$

3,897

 

 

$

4,547

 

 

 

 

 

Six months ended

 

 

 

November 1, 2020

 

 

November 3, 2019

 

net sales by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

76,133

 

 

$

74,525

 

upholstery fabrics

 

 

65,182

 

 

 

65,744

 

net sales

 

$

141,315

 

 

$

140,269

 

gross profit from continuing operations by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

12,191

 

 

$

11,938

 

upholstery fabrics

 

 

11,971

 

 

 

14,000

 

gross profit from continuing operations

 

$

24,162

 

 

$

25,938

 

selling, general, and administrative expenses by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

5,964

 

 

$

6,025

 

upholstery fabrics

 

 

6,570

 

 

 

7,652

 

unallocated corporate expenses

 

 

5,227

 

 

 

4,589

 

selling, general, and administrative expenses

 

$

17,761

 

 

$

18,266

 

income (loss) from continuing operations by segment:

 

 

 

 

 

 

 

 

mattress fabrics

 

$

6,227

 

 

$

5,913

 

upholstery fabrics

 

 

5,401

 

 

 

6,348

 

unallocated corporate expenses

 

 

(5,227

)

 

 

(4,589

)

subtotal

 

 

6,401

 

 

 

7,672

 

restructuring credit

 

 

—

 

 

 

35

 

total income from continuing operations

 

 

6,401

 

 

 

7,707

 

interest expense

 

 

(51

)

 

 

(21

)

interest income

 

 

117

 

 

 

518

 

other expense

 

 

(1,046

)

 

 

(194

)

income before income taxes from continuing operations

 

$

5,421

 

 

$

8,010

 

 

Balance sheet information for our current operating segments follows:

 

(dollars in thousands)

 

November 1, 2020

 

 

November 3, 2019

 

 

May 3, 2020

 

Segment assets:

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

15,914

 

 

$

11,224

 

 

$

12,212

 

Inventory

 

 

24,200

 

 

 

27,751

 

 

 

26,620

 

Property, plant and equipment (1)

 

 

38,818

 

 

 

42,899

 

 

 

40,682

 

Right of use assets (2)

 

 

1,186

 

 

 

170

 

 

 

362

 

Investment in unconsolidated joint venture

 

 

1,859

 

 

 

1,504

 

 

 

1,602

 

Total mattress fabrics assets

 

 

81,977

 

 

 

83,548

 

 

 

81,478

 

Upholstery Fabrics

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

17,046

 

 

 

12,666

 

 

 

12,881

 

Inventory

 

 

23,526

 

 

 

23,692

 

 

 

21,287

 

Property, plant and equipment (3)

 

 

2,014

 

 

 

1,774

 

 

 

1,633

 

Right of use assets (4)

 

 

3,269

 

 

 

2,610

 

 

 

1,633

 

Total upholstery fabrics assets

 

 

45,855

 

 

 

40,742

 

 

 

37,434

 

Total segment assets

 

 

127,832

 

 

 

124,290

 

 

 

118,912

 

Non-segment assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

45,288

 

 

 

46,955

 

 

 

69,790

 

Short-term investments - available for sale

 

 

5,462

 

 

 

—

 

 

 

923

 

Short-term investments - held-to-maturity

 

 

5,005

 

 

 

—

 

 

 

4,271

 

Current income taxes receivable

 

 

—

 

 

 

776

 

 

 

1,585

 

Current assets - discontinued operation

 

 

—

 

 

 

4,760

 

 

 

—

 

Other current assets

 

 

3,509

 

 

 

2,745

 

 

 

2,116

 

Deferred income taxes

 

 

645

 

 

 

511

 

 

 

793

 

Property, plant and equipment (5)

 

 

767

 

 

 

548

 

 

 

832

 

Right of use assets (6)

 

 

1,710

 

 

 

2,103

 

 

 

1,908

 

Goodwill

 

 

—

 

 

 

13,569

 

 

 

—

 

Intangible assets

 

 

3,192

 

 

 

3,711

 

 

 

3,380

 

Long-term investments - rabbi trust

 

 

8,060

 

 

 

7,575

 

 

 

7,834

 

Long-term investments - held-to-maturity

 

 

759

 

 

 

—

 

 

 

2,076

 

Noncurrent income taxes receivable

 

 

—

 

 

 

733

 

 

 

—

 

Other assets

 

 

547

 

 

 

496

 

 

 

664

 

Long-term note receivable affiliated with discontinued operation

 

 

—

 

 

 

1,800

 

 

 

—

 

Noncurrent assets - discontinued operation

 

 

—

 

 

 

22,950

 

 

 

—

 

Total assets

 

$

202,776

 

 

$

233,522

 

 

$

215,084

 

 

 

 

 

Six months ended

 

(dollars in thousands)

 

November 1, 2020

 

 

November 3, 2019

 

Capital expenditures (7):

 

 

 

 

 

 

 

 

Mattress Fabrics

 

$

1,710

 

 

$

2,212

 

Upholstery Fabrics

 

 

181

 

 

 

229

 

Unallocated Corporate

 

 

111

 

 

 

266

 

Discontinued Operation

 

 

—

 

 

 

33

 

Total capital expenditures

 

$

2,002

 

 

$

2,740

 

Depreciation expense:

 

 

 

 

 

 

 

 

Mattress Fabrics

 

$

3,132

 

 

$

3,321

 

Upholstery Fabrics

 

 

406

 

 

 

382

 

Discontinued Operation

 

 

—

 

 

 

190

 

Total depreciation expense

 

$

3,538

 

 

$

3,893

 

(1)

The $38.8 million as of November 1, 2020, represents property, plant, and equipment of $26.5 million and $12.3 million located in the U.S. and Canada, respectively. The $42.9 million as of November 3, 2019, represents property, plant, and equipment of $30.5 million and $12.4 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 $1.2 million as of November 1, 2020, represents right of use assets of $696,000 and $490,000 located in the U.S. and Canada, respectively.  The $170,000 as of November 3, 2019, and the $362,000 as of May 3, 2020, represents right of use assets located in the U.S.

(3)

The $2.0 million as of November 1, 2020, represents property, plant, and equipment of $1.1 million and $904,000 located in the U.S. and China, respectively. The $1.8 million as of November 3, 2019, represents property, plant, and equipment of $1.3 million and $500,000 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 $471,000 located in the U.S. and China, respectively.

(4)

The $3.3 million as of November 1, 2020, represents right of use assets of $2.7 million and $561,000 located in China and the U.S., respectively.  The $2.6 million as of November 3, 2019, represents right of use assets of $1.5 million and $1.1 million located in China and the U.S., respectively.  The $1.6 million as of May 3, 2020, represents right of use assets of $857,000 and $776,000 located in the U.S. and China, respectively.

(5)

The $767,000, $548,000, and $832,000 as of November 1, 2020, November 3, 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 $1.7 million, $2.1 million, and $1.9 million as of November 1, 2020, November 3, 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.