Segment Information

9 Months Ended

Jan. 31, 2021

Segment Reporting [Abstract]

Segment Information

15. 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, this 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 February 2, 2020, 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 February 2, 2020. 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 (Loss) for the three-month and nine-month periods ending February 2, 2020.  

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 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
	January 31, 2021			February 2, 2020
net sales by segment:
mattress fabrics	$	38,600		$	33,531
upholstery fabrics		40,741			34,987
net sales	$	79,341		$	68,518
gross profit from continuing operations by segment:
mattress fabrics	$	6,458		$	4,614
upholstery fabrics		7,414			6,906
gross profit from continuing operations	$	13,872		$	11,520
selling, general, and administrative expenses by segment:
mattress fabrics	$	3,161		$	2,836
upholstery fabrics		3,551			3,876
unallocated corporate expenses		3,123			2,119
selling, general, and administrative expenses	$	9,835		$	8,831
income (loss) from continuing operations by segment:
mattress fabrics	$	3,297		$	1,778
upholstery fabrics		3,863			3,030
unallocated corporate expenses		(3,123	)		(2,119	)
subtotal		4,037			2,689
restructuring credit		—			35
total income from continuing operations		4,037			2,724
interest income		90			258
other expense		(1,010	)		(282	)
income before income taxes from continuing operations	$	3,117		$	2,700

	Nine months ended
	January 31, 2021			February 2, 2020
net sales by segment:
mattress fabrics	$	114,733		$	108,057
upholstery fabrics		105,923			100,730
net sales	$	220,656		$	208,787
gross profit from continuing operations by segment:
mattress fabrics	$	18,650		$	16,553
upholstery fabrics		19,385			20,905
gross profit from continuing operations	$	38,035		$	37,458
selling, general, and administrative expenses by segment:
mattress fabrics	$	9,125		$	8,860
upholstery fabrics		10,122			11,528
unallocated corporate expenses		8,350			6,709
selling, general, and administrative expenses	$	27,597		$	27,097
income (loss) from continuing operations by segment:
mattress fabrics	$	9,525		$	7,692
upholstery fabrics		9,263			9,378
unallocated corporate expenses		(8,350	)		(6,709	)
subtotal		10,438			10,361
restructuring credit		—			70
total income from continuing operations		10,438			10,431
interest expense		(51	)		(21	)
interest income		208			776
other expense		(2,057	)		(476	)
income before income taxes from continuing operations	$	8,538		$	10,710

Balance sheet information for our current operating segments follows:

(dollars in thousands)	January 31, 2021		February 2, 2020		May 3, 2020
Segment assets:
Mattress Fabrics
Accounts receivable	$	17,722	$	12,940	$	12,212
Inventory		30,326		29,753		26,620
Property, plant and equipment (1)		39,550		42,368		40,682
Right of use assets (2)		1,077		426		362
Investment in unconsolidated joint venture		1,723		1,668		1,602
Total mattress fabrics assets		90,398		87,155		81,478
Upholstery Fabrics
Accounts receivable		18,675		12,908		12,881
Inventory		27,468		24,256		21,287
Property, plant and equipment (3)		1,953		1,675		1,633
Right of use assets (4)		3,519		2,143		1,633
Total upholstery fabrics assets		51,615		40,982		37,434
Total segment assets		142,013		128,137		118,912
Non-segment assets:
Cash and cash equivalents		35,987		21,640		69,790
Short-term investments - available for sale		5,548		7,580		923
Short-term investments - held-to-maturity		9,785		3,171		4,271
Current income taxes receivable		—		776		1,585
Current assets - discontinued operation		—		4,738		—
Other current assets		3,116		3,112		2,116
Deferred income taxes		640		920		793
Property, plant and equipment (5)		882		609		832
Right of use assets (6)		1,610		2,005		1,908
Goodwill		—		13,569		—
Intangible assets		3,098		3,617		3,380
Long-term investments - rabbi trust		8,232		7,804		7,834
Long-term investments - held-to-maturity		512		2,224		2,076
Noncurrent income taxes receivable		—		733		—
Other assets		555		464		664
Long-term note receivable affiliated with discontinued operation		—		1,800		—
Noncurrent assets - discontinued operation		—		9,241		—
Total assets	$	211,978	$	212,140	$	215,084

	Nine months ended
(dollars in thousands)	January 31, 2021		February 2, 2020
Capital expenditures (7):
Mattress Fabrics	$	3,886	$	3,416
Upholstery Fabrics		259		253
Unallocated Corporate		308		398
Discontinued Operation		—		104
Total capital expenditures	$	4,453	$	4,171
Depreciation expense:
Mattress Fabrics	$	4,579	$	5,017
Upholstery Fabrics		624		577
Discontinued Operation		—		286
Total depreciation expense	$	5,203	$	5,880

(1) The $39.6 million as of January 31, 2021, represents property, plant, and equipment of $27.3 million and $12.3 million located in the U.S. and Canada, respectively. The $42.4 million as of February 2, 2020, represents property, plant, and equipment of $28.7 million and $13.7 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 $1.1 million as of January 31, 2021, represents right of use assets of $632,000 and $445,000 located in the U.S. and Canada, respectively.  The $426,000 as of February 2, 2020, 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 January 31, 2021, represents property, plant, and equipment of $1.1 million and $881,000 located in the U.S. and China, respectively. The $1.7 million as of February 2, 2020, represents property, plant, and equipment of $1.2 million and $469,000 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 $3.5 million as of January 31, 2021, represents right of use assets of $2.4 million and $1.1 million located in China and the U.S., respectively.  The $2.1 million as of February 2, 2020, represents right of use assets of $1.1 million and $1.0 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 $882,000, $609,000 and $832,000 as of January 31, 2021, February 2, 2020, 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 $1.6 million, $2.0 million, and $1.9 million as of January 31, 2021, February 2, 2020, and May 3, 2020, respectively, represent 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.