Company: CULP
Filing Date: 2025-03-07
Form Type: 10-Q
Source: 0000950170-25-035191
Chunk: 163

Company: CULP INC
Filing Date: 2025-03-07
Form: 10-Q
Item: Item 8
Chunk 163
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) associated costs of $3.3 million mostly related to relocating equipment from our facility in Quebec, Canada to our facility in Stokesdale, North Carolina, (ii) additional depreciation expense related to the shortening of useful lives of equipment associated with the gradual discontinuance of our operations located in Canada noted above totaling $1.3 million, (iii) employee termination benefits of $1.4 million, (iv) $1.5 million related to losses on disposal and valuation of inventory, and (v) lease termination costs of $849,000, partially offset by net gains on the disposal of equipment totaling $42,000. These restructuring and restructuring related charges exclude any expected gain from the sale of the Canadian facility, which is expected to ultimately reduce the amount of the restructuring charges incurred. Based on changes in business and current unfavorable economic conditions related to the home furnishings and bedding industries, it is possible that the above estimates provided by management to determine restructuring and restructuring related charges incurred during fiscal 2025 could be materially different from our actual results, and therefore could adversely affect the success of this restructuring plan. 

The above-referenced conditional agreement for the sale of our Canadian facility includes a purchase price of $15.5 million CAD ($10.8 million USD as of January 26, 2025) contingent on the satisfaction of certain due diligence and closing conditions.  Assuming the completion of the transaction, the company currently expects the proceeds from the sale (net of all taxes and commissions) to exceed the amount of cash restructuring charges incurred.   

The following summarizes the restructuring and restructuring related charges for the mattress fabrics segment for the three-month and nine-month periods ended January 26, 2025:

    Three Months Ended
     
    Nine Months Ended

    (dollars in thousands)
     
    January 26, 2025
     
    January 26, 2025

    Additional depreciation expense for shortened useful lives of equipment
     
    $
    —
     
    $
    1,339

    Employee termination benefits

    176

    1,326

    Lease termination costs

    —

    849

    Other associated costs

    1,504

    2,676

    Loss on disposal, valuation, and markdowns of inventory

    624

    1,509

    Net gain on disposal of equipment

    (33
    )
     
    (42
    )

    Restructuring expense and restructuring related charges