Company: CULP
Filing Date: 2025-03-07
Form Type: 10-Q
Source: 0000950170-25-035191
Chunk: 11

Company: CULP INC
Filing Date: 2025-03-07
Form: 10-Q
Item: Item 1
Chunk 11
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.The gross carrying amount of our non-compete agreement was $2.0 million as of January 26, 2025, January 28, 2024, and April 28, 2024, respectively.  Accumulated amortization for our non-compete agreement was $1.8 million, $1.7 million, and $1.7 million as of January 26, 2025, January 28, 2024, and April 28, 2024, respectively. The remaining amortization expense for each of the next five years and thereafter are as follows: FY 2025 - $19,000; FY 2026 - $76,000; FY 2027 - $76,000; FY 2028 - $74,000.The weighted average amortization period for the non-compete agreement was 3.3 years as of January 26, 2025.Impairment of Definite Lived Assets - Mattress Fabrics SegmentAs of January 26, 2025, management reviewed the long-lived assets associated with our mattress fabrics segment, which consisted of property, plant, and equipment, right of use assets, and definite-lived intangible assets (collectively known as the "Mattress Asset Group"), for impairment, as events and changes in circumstances occurred that indicated the carrying amount of the Mattress Asset Group may not be recoverable. The mattress fabrics segment experienced a significant cumulative operating loss totaling $35.3 million commencing in the second quarter of fiscal 2023, and continuing through the third quarter of fiscal 2025. We believe this significant cumulative operating loss stemmed from a decline in consumer discretionary spending on mattress products, which we believe was driven by the following factors: (i) inflationary effects of commodities such as gas, food, and other necessities; (ii) a significant increase in interest rates; (iii) the pulling forward of demand for home goods products during the early years of the COVID-19 pandemic, which demand has now shifted to travel, leisure, and other services; and (iv) excess inventory held by customers due to the decline in consumer demand. Based on the above evidence, we were required to determine the recoverability of the Mattress Asset Group, which is classified as held and used, by comparing the carrying amount of the Mattress Asset Group to the sum of the future undiscounted cash flows expected to result from its use and eventual disposition. If the carrying amount of an asset group exceeds its estimated future cash flows