Segment Information

3 Months Ended

Jul. 31, 2022

Segment Reporting [Abstract]

Segment Information

11. Segment Information

Overall

Our operations are classified into two business segments: mattress fabrics and upholstery fabrics. The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers primarily to bedding manufacturers. 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.

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. 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 31, 2022			August 1, 2021
net sales by segment:
mattress fabrics	$	29,371		$	43,058
upholstery fabrics		33,233			39,989
net sales	$	62,604		$	83,047
gross (loss) profit:
mattress fabrics	$	(37	)	$	6,795
upholstery fabrics		4,165			5,704
gross profit	$	4,128		$	12,499
selling, general, and administrative expenses by segment:
mattress fabrics	$	2,885		$	3,184
upholstery fabrics		3,622			3,437
unallocated corporate expenses		2,359			2,560
selling, general, and administrative expenses	$	8,866		$	9,181
(loss) income from operations by segment:
mattress fabrics	$	(2,921	)	$	3,611
upholstery fabrics		542			2,267
unallocated corporate expenses		(2,359	)		(2,560	)
(loss) income from operations		(4,738	)		3,318
interest income		17			74
other expense		(82	)		(237	)
(loss) income before income taxes	$	(4,803	)	$	3,155

Balance sheet information for our operating segments follows:

(dollars in thousands)	July 31, 2022		August 1, 2021		May 1, 2022
Segment assets:
Mattress Fabrics:
Accounts receivable	$	12,382	$	18,016	$	9,865
Inventory		36,471		31,778		39,028
Property, plant and equipment (1)		37,354		41,311		38,731
Right of use assets (2)		3,232		4,058		3,469
Total mattress fabrics assets		89,439		95,163		91,093
Upholstery Fabrics:
Accounts receivable		12,430		16,992		12,361
Inventory		27,278		26,835		27,529
Property, plant and equipment (3)		2,271		1,650		2,030
Right of use assets (4)		7,520		5,984		8,124
Total upholstery fabrics assets		49,499		51,461		50,044
Total segment assets		138,938		146,624		141,137
Non-segment assets:
Cash and cash equivalents		18,874		26,061		14,550
Short-term investments - available for sale		—		9,698		—
Short-term investments - held-to-maturity		—		1,661		—
Current income taxes receivable		798		524		857
Other current assets		3,840		3,889		2,986
Deferred income taxes		546		455		528
Property, plant and equipment (5)		865		969		941
Right of use assets (6)		3,804		1,405		3,984
Intangible assets		2,534		2,910		2,628
Long-term investments - rabbi trust		9,567		8,841		9,357
Long-term investments - held-to-maturity		—		6,629		—
Other assets		724		2,582		595
Total assets	$	180,490	$	212,248	$	177,563

	Three months ended
(dollars in thousands)	July 31, 2022		August 1, 2021
Capital expenditures (7):
Mattress Fabrics	$	197	$	1,117
Upholstery Fabrics		360		262
Unallocated Corporate		26		274
Total capital expenditures	$	583	$	1,653
Depreciation expense:
Mattress Fabrics	$	1,568	$	1,521
Upholstery Fabrics		202		205
Total depreciation expense	$	1,770	$	1,726

(1) The $37.4 million as of July 31, 2022, represents property, plant, and equipment of $24.7 million, $11.9 million, and $718,000 located in the U.S., Canada, and Haiti, respectively. The $41.3 million as of August 1, 2021, represents property, plant, and equipment of $28.0 million, $12.4 million, and $875,000 located in the U.S., Canada, and Haiti, respectively. 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.

(2) The $3.2 million as of July 31, 2022, represents right of use assets of $1.9 million, $1.1 million, and $228,000 located in Haiti, the U.S., and Canada, respectively.  The $4.1 million as of August 1, 2021, represents right of use assets of $2.3 million, $1.4 million, and $355,000 located in Haiti, the U.S., and Canada, respectively.  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.  

(3) The $2.3 million as of July 31, 2022, represents property, plant, and equipment of $1.1 million, $988,000, and $232,000 located in the U.S., Haiti, and China, respectively.  The $1.7 million as of August 1, 2021, represents property, plant, and equipment of $1.1 million, $400,000, and $130,000 located in the U.S., China, and Haiti, respectively. 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.

(4) The $7.5 million as of July 31, 2022, represents right of use assets of $3.4 million, $2.5 million and $1.6 million located in China, Haiti, and the U.S., respectively.  The $6.0 million as of August 1, 2021, represents right of use assets of $4.6 million and $1.4 million located in China and the U.S., respectively.  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.

(5) The $865,000, $969,000, and $941,000 as of July 31, 2022, August 1, 2021, and May 1, 2022, 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 $3.8 million, $1.4 million, and $4.0 million as of July 31, 2022, August 1, 2021, and May 1, 2022, 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.