CULP INC Fair Value Disclosure
16. FAIR VALUE
ASC Topic 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the company’s assumptions (unobservable inputs). Determining where an asset or liability falls within that hierarchy depends on the lowest level input that is significant to the fair value measurement as a whole. An adjustment to the pricing method used within either level 1 or level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy.
The hierarchy consists of three broad levels, as follows:
Level 1 – Quoted market prices in active markets for identical assets or liabilities,
Level 2 – Inputs other than level 1 inputs that are either directly or indirectly observable, and
Level 3 – Unobservable inputs developed using the company’s estimates and assumptions, which reflect those that market participants would use.
The determination of where an asset or liability falls in the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter based on various factors, and it is possible that an asset or liability may be classified differently from quarter to quarter. However, we expect that changes in classifications between different levels will be rare.
Recurring Basis
The following tables present information about assets measured at fair value on a recurring basis:
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Fair value measurements as of April 27, 2025, using: |
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Quoted |
|
|
Significant |
|
Significant |
|
|
|
||
(amounts in thousands) |
|
Level 1 |
|
|
Level 2 |
|
Level 3 |
|
Total |
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Assets: |
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U.S. Government Money Market Fund |
|
$ |
5,682 |
|
|
N/A |
|
N/A |
|
$ |
5,682 |
|
Growth Allocation Mutual Funds |
|
|
808 |
|
|
N/A |
|
N/A |
|
|
808 |
|
S&P 500 Index Fund |
|
|
275 |
|
|
N/A |
|
N/A |
|
|
275 |
|
Other |
|
|
282 |
|
|
N/A |
|
N/A |
|
|
282 |
|
|
|
Fair value measurements as of April 28, 2024, using: |
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|
Quoted |
|
|
Significant |
|
Significant |
|
|
|
||
(amounts in thousands) |
|
Level 1 |
|
|
Level 2 |
|
Level 3 |
|
Total |
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Assets: |
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|
|
|
|
|
|
|
|
|
||
U.S. Government Money Market Fund |
|
$ |
6,910 |
|
|
N/A |
|
N/A |
|
$ |
6,910 |
|
Growth Allocation Mutual Funds |
|
|
691 |
|
|
N/A |
|
N/A |
|
|
691 |
|
S&P 500 Index Fund |
|
|
176 |
|
|
N/A |
|
N/A |
|
|
176 |
|
Other |
|
|
228 |
|
|
N/A |
|
N/A |
|
|
228 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jul 11, 2025 | Showing above |
| 2024 | Jul 12, 2024 | |
| 2023 | Jul 14, 2023 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.