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Segment Information | 3 Months Ended
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Jul. 28, 2024
Segment Reporting [Abstract] |
Segment Information | 13. 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 to customers in the residential, commercial, and hospitality industries. 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. 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. 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 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. The mattress fabrics segment also includes assets held for sale associated with a right of use asset and equipment related to the fiscal 2025 restructuring plan announced on April 29, 2024 (see Note 9 to the consolidated financial statements for further details regarding this restructuring plan). 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 operating segments are as follows:
|  | Three months ended |
|  | July 28, 2024 |  |  | July 30, 2023 |
Net sales by segment: |  |  |  |  |  |
Mattress fabrics |  | $ | 28,076 |  |  | $ | 29,222 |
Upholstery fabrics |  |  | 28,461 |  |  |  | 27,440 |
Net sales |  | $ | 56,537 |  |  | $ | 56,662 |
Gross (loss) profit: |  |  |  |  |  |
Mattress fabrics |  | $ | (326 | ) |  | $ | 1,994 |
Upholstery fabrics |  |  | 5,518 |  |  |  | 5,270 |
Segment gross profit |  |  | 5,192 |  |  |  | 7,264 |
Restructuring related charge (1) (3) |  |  | (116 | ) |  |  | (179 | )
Gross profit |  | $ | 5,076 |  |  | $ | 7,085 |
Selling, general, and administrative expenses by segment: |  |  |  |  |  |
Mattress fabrics |  | $ | 3,223 |  |  | $ | 3,393 |
Upholstery fabrics |  |  | 3,806 |  |  |  | 3,941 |
Unallocated corporate expenses |  |  | 2,267 |  |  |  | 2,495 |
Selling, general, and administrative expenses |  | $ | 9,296 |  |  | $ | 9,829 |
(Loss) income from operations by segment: |  |  |  |  |  |
Mattress fabrics |  | $ | (3,549 | ) |  | $ | (1,398 | )
Upholstery fabrics |  |  | 1,712 |  |  |  | 1,328 |
Unallocated corporate expenses |  |  | (2,267 | ) |  |  | (2,495 | )
Total segment loss from operations |  | $ | (4,104 | ) |  | $ | (2,565 | )
Restructuring related charge (1) (3) |  |  | (116 | ) |  |  | (179 | )
Restructuring expense (2) (4) |  |  | (2,631 | ) |  |  | (338 | )
Loss from operations |  | $ | (6,851 | ) |  | $ | (3,082 | )
Interest expense |  |  | (28 | ) |  |  | — |
Interest income |  |  | 262 |  |  |  | 345 |
Other (expense) income |  |  | (404 | ) |  |  | 96 |
Loss before income taxes |  | $ | (7,021 | ) |  | $ | (2,641 | )
(1) During the three-month period ending July 28, 2024, gross profit included a restructuring related charge totaling $116,000 for losses on the disposal of obsolete inventory related to the gradual discontinuation of operations at our manufacturing facility located in Quebec, Canada. (2) During the three-month period ending July 28, 2024, restructuring expense of $2.6 million represents $2.5 million and $132,000, related to the mattress fabrics and upholstery fabrics segments, respectively. The $2.6 million represents (i) $1.9 million related to the gradual discontinuation of operations and the process of selling the manufacturing facility located in Quebec, Canada, which includes $875,000 of additional depreciation related to the shortening of useful lives of equipment, employee termination benefits of $539,000, lease termination costs of $264,000, impairment charges and losses on the disposal of equipment totaling $95,000, and other associated costs of $90,000; (ii) $470,0000 related to the consolidation of two leased facilities at our mattress c over operation located in Ouanaminthe, Haiti, which includes lease termination costs of $406,000, employee termination benefits of $48,000, and other associated costs of $16,000; (iii) $167,000 of other associated costs related to the relocation of certain equipment from the mattress fabrics manufacturing facility located in Quebec, Canada to the U.S. facility located in Stokesdale, N.C; (iv) $132,000 related to reducing costs within our upholstery fabrics segment which includes employee termination benefits of $102,000 and other associated costs from our U.S. and China operations of $30,000. (3) During the three-month period ending July 30, 2023, gross profit included a restructuring related charge totaling $179,000 for markdowns of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility located in Ouanaminthe, Haiti. (4) During the three-month period ending July 30, 2023, restructuring expense of $338,000 represents an impairment charge of $237,000 related mostly to machinery and equipment and $101,000 of employee termination benefits related to the discontinuation of production of cut and sewn upholstery kits at the company's facility located in Ouanaminthe, Haiti. Balance sheet information for our operating segments follows:
(dollars in thousands) |  | July 28, 2024 |  |  | July 30, 2023 |  |  | April 28, 2024 |
Segment assets: |  |  |  |  |  |  |  |  |
Mattress Fabrics: |  |  |  |  |  |  |  |  |
Accounts receivable |  | $ | 10,094 |  |  | $ | 11,058 |  |  | $ | 10,003 |
Inventory |  |  | 25,278 |  |  |  | 24,579 |  |  |  | 27,671 |
Property, plant and equipment (5) |  |  | 28,844 |  |  |  | 32,792 |  |  |  | 31,472 |
Right of use assets (6) |  |  | 568 |  |  |  | 2,139 |  |  |  | 1,627 |
Assets held for sale |  |  | 607 |  |  |  | — |  |  |  | — |
Total mattress fabrics assets |  |  | 65,391 |  |  |  | 70,568 |  |  |  | 70,773 |
Upholstery Fabrics: |  |  |  |  |  |  |  |  |
Accounts receivable |  |  | 11,493 |  |  |  | 11,554 |  |  |  | 11,135 |
Inventory |  |  | 16,390 |  |  |  | 19,238 |  |  |  | 17,172 |
Property, plant and equipment (7) |  |  | 1,098 |  |  |  | 1,491 |  |  |  | 1,125 |
Right of use assets (8) |  |  | 1,478 |  |  |  | 2,237 |  |  |  | 1,952 |
Total upholstery fabrics assets |  |  | 30,459 |  |  |  | 34,520 |  |  |  | 31,384 |
Total segment assets |  |  | 95,850 |  |  |  | 105,088 |  |  |  | 102,157 |
Non-segment assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 13,472 |  |  |  | 16,812 |  |  |  | 10,012 |
Short-term investments - rabbi trust |  |  | 954 |  |  |  | 791 |  |  |  | 903 |
Short-term note receivable |  |  | 268 |  |  |  | 252 |  |  |  | 264 |
Current income taxes receivable |  |  | 532 |  |  |  | 202 |  |  |  | 350 |
Other current assets |  |  | 3,590 |  |  |  | 3,578 |  |  |  | 3,371 |
Long-term note receivable |  |  | 1,394 |  |  |  | 1,661 |  |  |  | 1,462 |
Deferred income taxes |  |  | 528 |  |  |  | 476 |  |  |  | 518 |
Property, plant and equipment (9) |  |  | 534 |  |  |  | 646 |  |  |  | 585 |
Right of use assets (10) |  |  | 2,437 |  |  |  | 3,090 |  |  |  | 2,624 |
Intangible assets |  |  | 1,782 |  |  |  | 2,158 |  |  |  | 1,876 |
Long-term investments - rabbi trust |  |  | 7,089 |  |  |  | 7,204 |  |  |  | 7,102 |
Other assets |  |  | 709 |  |  |  | 944 |  |  |  | 830 |
Total assets |  | $ | 129,139 |  |  | $ | 142,902 |  |  | $ | 132,054 |
(5) The $28.8 million as of July 28, 2024, represents property, plant, and equipment of $20.9 million, $7.4 million, and $511,000 located in the U.S., Canada, and Haiti, respectively. The $32.8 million as of July 30, 2023, represents property, plant, and equipment of $22.1 million, $10.1 million, and $594,000 located in the U.S., Canada, and Haiti, respectively. The $31.5 million as of April 28, 2024, represents property, plant, and equipment of $21.5 million, $9.4 million, and $555,000 located in the U.S., Canada, and Haiti, respectively. (6) The $568,000 as of July 28, 2024, represents right of use assets of $350,000 and $218,000 located in Haiti and Canada, respectively. The $2.1 million as of July 30, 2023, represents right of use assets of $1.4 million and $720,000 located in Haiti, and Canada, respectively. The $1.6 million as of April 28, 2024, represents right of use assets of $1.1 million and $545,000 located in Haiti and Canada, respectively. (7) The $1.1 million as of July 28, 2024, represents property, plant, and equipment of $990,000 and $108,000 located in the U.S., and China, respectively. The $1.5 million as of July 30, 2023, represents property, plant, and equipment of $1.0 million, $327,000, and $159,000 located in the U.S., Haiti, and China, respectively. The $1.1 million as of April 28, 2024, represents property, plant, and equipment of $1.0 million and $120,000 located in the U.S., and China, respectively. (8) The $1.5 million as of July 28, 2024, represents right of use assets of $1.1 million and $393,000 located in the U.S., and China, respectively. The $2.2 million as of July 30, 2023, represents right of use assets of $1.2 million and $977,000 located in China and the U.S., respectively. The $2.0 million as of April 28, 2024, represents right of use assets of $1.3 million and $709,000 located in China and the U.S., respectively. (9) The $534,000, $646,000, and $585,000 as of July 28, 2024, July 30, 2023, and April 28, 2024, respectively, represents 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. (10) The $2.4 million, $3.1 million, and $2.6 million as of July 28, 2024, July 30, 2023, and April 28, 2024, respectively, represent right of use assets located in the U.S. Information about capital expenditures and depreciation expense for our operating segments follows:
|  | Three months ended |
(dollars in thousands) |  | July 28, 2024 |  |  | July 30, 2023 |
Capital expenditures (11): |  |  |  |  |  |
Mattress Fabrics |  | $ | 134 |  |  | $ | 523 |
Upholstery Fabrics |  |  | 68 |  |  |  | 158 |
Unallocated Corporate |  |  | 12 |  |  |  | 33 |
Total capital expenditures |  | $ | 214 |  |  | $ | 714 |
Depreciation expense: |  |  |  |  |  |
Mattress Fabrics (12) |  | $ | 2,297 |  |  | $ | 1,455 |
Upholstery Fabrics |  |  | 159 |  |  |  | 180 |
Total depreciation expense |  | $ | 2,456 |  |  | $ | 1,635 |
(11) Capital expenditure amounts are stated on the accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis. (12) During the three-month period ending July 28, 2024, depreciation expense for the mattress fabrics segment included additional depreciation expense related to the shortening of useful lives of equipment associated with the gradual discontinuation of operations regarding our manufacturing facility located in Quebec, Canada. The amount of additional depreciation expense was $875,000 and was classified as restructuring expense.

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