Segment Information

12 Months Ended

May 03, 2020

Segment Reporting [Abstract]

Segment Information

21. 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. Effective April 1, 2018, we acquired Read (see Note 2 of the consolidated financial statements 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.

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. Additionally, 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 March 31, 2020 (the disposal date) and April 28, 2019, that is reconciled to captions titled “current assets held for sale – discontinued operation”, “noncurrent assets held for sale – discontinued operation”, current liabilities held for sale – discontinued operation”, and “noncurrent liabilities held for sale – discontinued operation” presented in the Consolidated Balance Sheets as of May 3, 2020 and April 28, 2019, respectively. 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 (Loss) Income for fiscal years 2020, 2019, and 2018.

Net Sales Geographic Concentration

Net sales denominated in U.S. dollars accounted for 93%, 90% and 90% of total consolidated net sales in fiscal 2020, 2019, and 2018, respectively. International sales accounted for 26%, 26%, and 23% of net sales during fiscal 2020, 2019, and 2018, respectively, and are summarized by geographic area as follows:

(dollars in thousands)	2020		2019		2018
north america (excluding USA) (1)	$	27,637	$	29,247	$	27,844
far east and asia (2)		36,470		39,277		40,671
all other areas		2,986		3,712		5,681
	$	67,093	$	72,236	$	74,196

(1) Of this amount, $21.7 million, $22.5 million, and $21.9 million are attributable to shipments to Mexico in fiscal 2020, 2019, and 2018, respectively.

(2) Of this amount $21.4 million, $29.8 million, and $32.6 million are attributable to shipments to China in fiscal 2020, 2019, and 2018, respectively.

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

Customer Concentration

One customer within the upholstery fabrics segment represented 12%, 11%, and 12% of consolidated net sales in fiscal 2020, 2019 and 2018, respectively. No customers within the upholstery fabrics segment accounted for greater than 10% of the consolidated net accounts receivable balance as of May 3, 2020 or April 28, 2019.

No customers within the mattress fabrics segment represented greater than 10% of consolidated net sales during fiscal 2020 or fiscal 2019. One customer within the mattress fabrics segment represented 13% of consolidated net sales during 2018. No customers within the mattress fabrics segment accounted for greater than 10% of the consolidated net accounts receivable balance as of May 3, 2020 or April 28, 2019.

Employee Workforce Concentration

The hourly employees at our manufacturing facility in Canada (approximately 12% of our workforce) are represented by a local, unaffiliated union. The collective bargaining agreement for these employees expired on February 1, 2020. However, the provisions of this collective bargaining agreement remained in effect as negotiations for a new collective bargaining agreement were delayed due to government mandated shutdowns in response to the COVID-19 pandemic. A new collective bargaining agreement is expected to be executed during the first half of fiscal 2021. 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 current business segments based upon income from operations before certain unallocated corporate expenses, restructuring expense (credit) and related charges, and other non-recurring items. Cost of sales in all of our current business segments include costs to manufacture, develop, 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, all costs related with being a public company, and other miscellaneous expenses. Segment assets include assets used in operations of each segment and primarily consist of accounts receivable, inventories, and property, plant, and equipment. The mattress fabrics segment also includes in segment assets their investment in an unconsolidated joint venture.  During fiscal 2019, we elected to no longer include goodwill and intangible assets in segment assets, as these assets are not used by the Chief Operating Decision Maker to evaluate the respective segment’s operating performance, to allocate resources to the individual segments, or determine executive compensation.

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

(dollars in thousands)	2020			2019			2018
net sales by segment:
upholstery fabrics	$	124,754			135,654			131,128
mattress fabrics		131,412			145,671			192,597
total net sales	$	256,166			281,325			323,725
gross profit from continuing operations by segment:
upholstery fabrics	$	24,220			25,373			25,836
mattress fabrics		16,278			22,904			38,797
total segment gross profit		40,498			48,277			64,633
other non-recurring charges (1)		—			(159	)		—
restructuring related charges (2)		—			(2,349	)		—
total gross profit from continuing operations	$	40,498			45,769			64,633
selling, general, and administrative expenses by segment:
upholstery fabrics	$	14,353			14,551			14,881
mattress fabrics		11,354			11,296			12,935
unallocated corporate		8,717			6,838			9,356
total segment selling, general, and administrative expenses		34,424			32,685			37,172
other non-recurring charges (3)		—			518			—
restructuring related charges (4)		—			40			—
total selling, general, and administrative expenses	$	34,424			33,243			37,172
income (loss) from continuing operations:
upholstery fabrics	$	9,867			10,823			10,956
mattress fabrics		4,924			11,607			25,861
unallocated corporate expenses		(8,717	)		(6,838	)		(9,356	)
total segment income from continuing operations		6,074			15,592			27,461
asset impairments (7)		(13,712	)		—			—
other non-recurring charges (1) (3)		—			(678	)		—
restructuring credit and related charges (5) (6)		70			(1,563	)		—
total (loss) income from continuing operations		(7,568	)		13,351			27,461
interest expense		(106	)		(35	)		(94	)
interest income		897			789			534
other expense		(902	)		(1,383	)		(1,018	)
(loss) income before income taxes from continuing operations	$	(7,679	)		12,722			26,883

(1) The $159 represents employee termination benefits and other operational reorganization costs associated with our mattress fabrics segment.

(2) The $2.3 million represents a restructuring related charge of $1.6 million for inventory markdowns and $784 for other operating costs associated with our closed Anderson, SC upholstery fabrics facility.

(3) The $518 represents a non-recurring charge of $429 for the accelerated vesting of certain stock-based compensation agreements associated with a senior executive and was recorded in unallocated corporate expenses. Additionally, the $518 includes $89 for employee termination benefits and operational reorganizational costs associated with our mattress fabrics segment.

(4) The $40 represents a restructuring related charge for the accelerated vesting for certain stock-based compensation agreements associated with an employee that was located at our closed Anderson, SC upholstery fabrics facility.

(5) The $1.6 million represent charges and credits that were associated our closed Anderson, SC upholstery fabrics facility and include $1.6 million for inventory markdowns, $784 for other operating costs, $661 for employee termination benefits, and $40 for the accelerated vesting of certain stock-based compensation agreements associated an employee, partially offset by a $1.5 million gain on the sale of property, plant, and equipment.

(6) Of this total net charge, a charge of $2.3 million, a charge of $40, and a credit of $825 were recorded in cost of sales, selling, general, and administrative expenses, and restructuring credit, respectively, in the fiscal 2019 Consolidated Statement of Net Income.

(7) During fiscal 2020, we incurred asset impairment charges totaling $13.7 million, of which $13.6 million and $143,000 were associated with goodwill and a tradename associated Read, respectively. Of this $13.7 million, $11.5 million and $2.2 million pertained to the mattress fabrics segment and upholstery fabrics segment, respectively.

Balance sheet information for our current operating segments follow:

(dollars in thousands)	May 3, 2020			April 28, 2019
segment assets
mattress fabrics
accounts receivable	$	12,212		$	12,098
inventory		26,620			24,649
property, plant, and equipment		40,682	(1)		44,266	(2)
right of use asset		362	(3)		—
investment in unconsolidated joint venture		1,602			1,508
total mattress fabrics assets		81,478			82,521
upholstery fabrics
accounts receivable		12,881			11,274
inventory		21,287			22,915
property, plant, and equipment		1,633	(4)		1,795	(5)
right of use asset		1,633	(6)		—
total upholstery fabrics assets		37,434			35,984
total segment assets		118,912			118,505
non-segment assets
cash and cash equivalents		69,790			40,008
short-term investments – available for sale		923			—
short-term investments – held-to-maturity		4,271			5,001
current income taxes receivable		1,585			776
current assets held for sale - discontinued operation		—			3,707
deferred income taxes		793			457
other current assets		2,116			2,816
property, plant, and equipment (7)		832			419
right of use asset (8)		1,908			—
goodwill		—			13,569
intangible assets		3,380			3,899
long-term investments - held-to-maturity		2,076			—
long-term investments - rabbi trust		7,834			7,081
noncurrent income taxes receivable		—			733
long-term note receivable affiliated with discontinued operation		—			830
other assets		664			643
noncurrent assets held for sale - discontinued operation		—			22,112
total assets	$	215,084		$	220,556

(dollars in thousands)	2020		2019		2018
capital expenditures (9):
mattress fabrics	$	3,475	$	2,526	$	6,713
upholstery fabrics		348		382		488
discontinued operation		135		53		—
unallocated corporate		675		14		238
total capital expenditures	$	4,633	$	2,975	$	7,439
depreciation expense
mattress fabrics	$	6,712	$	7,008	$	6,850
upholstery fabrics		765		787		822
discontinued operation		350		322		—
total depreciation expense	$	7,827	$	8,117	$	7,672

(1) The $40.7 million at May 3, 2020, represents property, plant, and equipment located in the U.S. of $27.7 million and located in Canada of $13.0 million.

(2) The $44.3 million at April 28, 2019, represents property, plant, and equipment located in the U.S. of $32.4 million and located in Canada of $11.9 million.

(3) The $362 at May 3, 2020, represents right of use assets located in the U.S.

(4) The $1.6 million at May 3, 2020, represents property, plant, and equipment located in the U.S. of $1.2 million and located in China of $471.

(5) The $1.8 million at April 28, 2019, represents property, plant, and equipment located in the U.S. of $1.2 million and located in China of $591.

(6) The $1.6 million at May 3, 2020, represents right of use assets of $857 and $776 located in the U.S. and China, respectively.

(7) The $832 and $419 at May 3, 2020, and April 28, 2019, 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.

(8) The $1.9 million at May 3, 2020, represents right of use assets located in the U.S.

(9) Capital expenditure amounts are stated on an accrual basis. See the Consolidated Statement of Cash Flows for capital expenditure amounts on a cash basis.