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Segment Information
 12 Months Ended
Apr. 30, 2023
Segment Reporting [Abstract]  
Segment Information
17.
SEGMENT INFORMATION

Overall

Our 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. In addition, this segment includes Read, which provides window treatments and sourcing of upholstery fabrics and other products, as well as measuring and installation services for Read’s products, to customers in the hospitality and commercial industries. Read also supplies soft goods such as decorative top sheets, coverlets, duvet covers, bed skirts, bolsters, and pillows.

Net Sales Geographic Concentration

Net sales denominated in U.S. dollars accounted for 91%, 90%, and 91% of total consolidated net sales in fiscal 2023, 2022, and 2021, respectively. International sales accounted for 29%, 31%, and 27% of net sales during fiscal 2023, 2022, and 2021, respectively, and are summarized by geographic area as follows:

 

(dollars in thousands)

 

2023

 

 

2022

 

 

2021

 

north america (excluding USA) (1)

 

$

29,756

 

 

$

39,256

 

 

$

32,925

 

far east and asia (2)

 

 

31,339

 

 

 

43,015

 

 

 

43,764

 

all other areas

 

 

8,032

 

 

 

8,114

 

 

 

5,558

 

 

 

$

69,127

 

 

$

90,385

 

 

$

82,247

 

 

 

(1)
Of this amount, $24.9 million, $33.5 million, and $27.2 million are attributable to shipments to Mexico in fiscal 2023, 2022, and 2021, respectively.
(2)
Of this amount $20.0 million, $26.9 million, and $28.1 million are attributable to shipments to China in fiscal 2023, 2022, and 2021, respectively.

Sales attributed to individual countries are based upon the location that the company ships its products to for delivery to customers.

Customer Concentration

One customer within the upholstery fabrics segment represented 15%, 13%, and 13% of consolidated net sales during fiscal 2023, 2022, and 2021, respectively. No customers within the upholstery fabrics segment accounted for greater than 10% of the consolidated net accounts receivable balance as of April 30, 2023, or May 1, 2022.

No customers within the mattress fabrics segment represented greater than 10% of consolidated net sales during fiscal 2023, 2022, or fiscal 2021. No customers within the mattress fabrics segment accounted for greater than 10% of the consolidated net accounts receivable balance as of April 30, 2023, or May 1, 2022.

Employee Workforce Concentration

The hourly employees associated with our manufacturing facility located in Canada (approximately 11% of our workforce) are represented by a local, unaffiliated union. The collective bargaining agreement for these employees expires on February 1, 2026. We are not aware of any efforts to organize any more of our employees, and we believe our relations with our employees are good.

Financial Information

We evaluate the operating performance of our business segments based upon (loss) income from operations before certain unallocated corporate expenses and other items that are not expected to occur on a regular basis, such as restructuring expense and restructuring related charges. Cost of sales in each of our business segments include 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 senior executives and their support staff, all costs associated with being a public company, amortization of intangible assets, and other miscellaneous expenses. Segment assets include assets used in the operations of each segment and consist of accounts receivable, inventories, property, plant, and equipment, and right of use assets.

Statements of operations for our business segments are as follows:

 

(dollars in thousands)

 

2023

 

 

2022

 

 

2021

 

net sales by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

110,995

 

 

$

152,159

 

 

$

157,671

 

upholstery fabrics

 

 

123,939

 

 

 

142,680

 

 

 

142,049

 

net sales

 

$

234,934

 

 

$

294,839

 

 

$

299,720

 

gross (loss) profit:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

(6,739

)

 

$

16,458

 

 

$

23,864

 

upholstery fabrics

 

 

17,733

 

 

 

19,635

 

 

 

25,968

 

total segment gross profit

 

 

10,994

 

 

 

36,093

 

 

 

49,832

 

restructuring related charge (2)

 

 

(98

)

 

 

—

 

 

 

—

 

gross profit

 

$

10,896

 

 

$

36,093

 

 

$

49,832

 

selling, general, and administrative expenses by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

11,942

 

 

$

12,246

 

 

$

12,066

 

upholstery fabrics

 

 

15,739

 

 

 

14,009

 

 

 

14,092

 

unallocated corporate

 

 

10,297

 

 

 

9,160

 

 

 

11,598

 

selling, general, and administrative expenses

 

$

37,978

 

 

$

35,415

 

 

$

37,756

 

(loss) income from operations by segment:

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

(18,681

)

 

$

4,212

 

 

$

11,798

 

upholstery fabrics

 

 

1,994

 

 

 

5,626

 

 

 

11,876

 

unallocated corporate expenses

 

 

(10,297

)

 

 

(9,160

)

 

 

(11,598

)

total segment (loss) income from operations

 

 

(26,984

)

 

 

678

 

 

 

12,076

 

     restructuring expense (1)

 

 

(1,396

)

 

 

—

 

 

 

—

 

     restructuring related charge (2)

 

 

(98

)

 

 

—

 

 

 

—

 

(loss) income from operations

 

$

(28,478

)

 

$

678

 

 

$

12,076

 

interest expense

 

 

—

 

 

 

(17

)

 

 

(51

)

interest income

 

 

531

 

 

 

373

 

 

 

244

 

other expense

 

 

(443

)

 

 

(1,359

)

 

 

(2,208

)

gain on bargain purchase (3)

 

 

—

 

 

 

—

 

 

 

819

 

(loss) income before income taxes

 

$

(28,390

)

 

$

(325

)

 

$

10,880

 
(1)
Restructuring expense totaling $1.4 million for fiscal 2023 relates to both our restructuring activities for our cut and sew upholstery fabrics operations (i) located in Shanghai, China, which occurred during the second quarter of fiscal 2023, and (ii) located in Ouanaminthe, Haiti, which occurred during the third and fourth quarters of fiscal 2023. Restructuring expense represents employee termination benefits of $507,000, lease termination costs of $481,000, impairment losses totaling $357,000 that relate to leasehold improvements and equipment, and $51,000 for other associated costs.
(2)
Cost of sales for fiscal 2023 includes a restructuring related charge totaling $98,000, which pertained to a loss on disposal and markdowns of inventory related to the exit of our cut and sew upholstery fabrics operation located in Shanghai, China.
(3)
Effective February 1, 2021, we acquired the remaining fifty percent ownership interest in our former unconsolidated joint venture located in Haiti. Pursuant to this transaction, we are now the sole owner with full control over this operation. The gain on bargain purchase represents the net assets acquired from this transaction that exceeded the fair value of our previously held 50% ownership interest of $1.7 million and the $954,000 total purchase price for the remaining 50% ownership interest.

Balance sheet information for our business segments follow:

 

(dollars in thousands)

 

April 30,
2023

 

 

 

May 1,
2022

 

 

segment assets

 

 

 

 

 

 

 

 

mattress fabrics

 

 

 

 

 

 

 

 

accounts receivable

 

$

12,396

 

 

 

$

9,865

 

 

inventory

 

 

25,674

 

 

 

 

39,028

 

 

property, plant, and equipment

 

 

33,749

 

(1)

 

 

38,731

 

(2)

right of use assets

 

 

2,308

 

(3)

 

 

3,469

 

(4)

total mattress fabrics assets

 

 

74,127

 

 

 

 

91,093

 

 

 

 

 

 

 

 

 

 

upholstery fabrics

 

 

 

 

 

 

 

 

accounts receivable

 

 

12,382

 

 

 

 

12,361

 

 

inventory

 

 

19,406

 

 

 

 

27,529

 

 

property, plant, and equipment

 

 

1,671

 

(5)

 

 

2,030

 

(6)

right of use assets

 

 

2,618

 

(7)

 

 

8,124

 

(8)

total upholstery fabrics assets

 

 

36,077

 

 

 

 

50,044

 

 

total segment assets

 

 

110,204

 

 

 

 

141,137

 

 

 

 

 

 

 

 

 

 

non-segment assets

 

 

 

 

 

 

 

 

cash and cash equivalents

 

 

20,964

 

 

 

 

14,550

 

 

short-term investments – rabbi trust

 

 

1,404

 

 

 

 

—

 

 

short-term note receivable

 

 

219

 

 

 

 

—

 

 

current income taxes receivable

 

 

—

 

 

 

 

857

 

 

other current assets

 

 

3,071

 

 

 

 

2,986

 

 

long-term note receivable

 

 

1,726

 

 

 

 

—

 

 

deferred income taxes

 

 

480

 

 

 

 

528

 

 

property, plant, and equipment (9)

 

 

691

 

 

 

 

941

 

 

right of use assets (10)

 

 

3,265

 

 

 

 

3,984

 

 

intangible assets

 

 

2,252

 

 

 

 

2,628

 

 

long-term investments - rabbi trust

 

 

7,067

 

 

 

 

9,357

 

 

other assets

 

 

840

 

 

 

 

595

 

 

total assets

 

$

152,183

 

 

 

$

177,563

 

 

Capital expenditures and depreciation expense information for our business segments follow:

 

(dollars in thousands)

 

2023

 

 

2022

 

 

2021

 

capital expenditures (11):

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

1,125

 

 

$

3,383

 

 

$

6,226

 

upholstery fabrics

 

 

467

 

 

 

1,032

 

 

 

347

 

unallocated corporate

 

 

97

 

 

 

1,406

 

 

 

332

 

total capital expenditures

 

$

1,689

 

 

$

5,821

 

 

$

6,905

 

 

 

 

 

 

 

 

 

 

depreciation expense

 

 

 

 

 

 

 

 

 

mattress fabrics

 

$

6,050

 

 

$

6,200

 

 

$

6,014

 

upholstery fabrics

 

 

795

 

 

 

794

 

 

 

832

 

total depreciation expense

 

$

6,845

 

 

$

6,994

 

 

$

6,846

 

 

(1)
The $33.7 million as of April 30, 2023, represents property, plant, and equipment of $22.7 million, $10.4 million, and $608,000 located in the U.S., Canada, and Haiti, respectively.
(2)
The $38.7 million as of May 1, 2022, represents property, plant, and equipment of $25.6 million, $12.4 million, and $757,000 located in the U.S., Canada, and Haiti, respectively.
(3)
The $2.3 million as of April 30, 2023, represents right of use assets of $1.5 million and $776,000 located in Haiti and Canada, respectively.
(4)
The $3.5 million as of May 1, 2022, represents right of use assets of $2.0 million, $1.2 million, and $291,000 located in Haiti, the U.S., and Canada, respectively.
(5)
The $1.7 million as of April 30, 2023, represents property, plant, and equipment of $974,000, $592,000, and $105,000 located in the U.S., Haiti, and China, respectively
(6)
The $2.0 million as of May 1, 2022, represents property, plant, and equipment of $1.0 million, $756,000, and $255,000 located in the U.S., Haiti, and China, respectively.
(7)
The $2.6 million as of April 30, 2023, represents right of use assets of $1.5 million and $1.1 million located in China and the U.S., respectively.
(8)
The $8.1 million as of May 1, 2022, represents right of use assets of $3.7 million, $2.6 million, and $1.8 million located in China, Haiti, and the U.S., respectively.
(9)
The $691,000 as of April 30, 2023, and $941,000 as of May 1, 2022, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress fabrics and upholstery fabrics segments located in the U.S.
(10)
The $3.3 million as of April 30, 2023, and $4.0 million as of May 1, 2022, represent right of use assets located in the U.S. associated with unallocated corporate departments and corporate departments shared by both the mattress fabrics and upholstery fabrics segments located in the U.S.
(11)
Capital expenditure amounts are stated on an accrual basis. See the Consolidated Statement of Cash Flows for capital expenditure amounts on a cash basis.