CULP INC Leases Disclosure
13. LEASES
Leases
Overview
As of April 27, 2025, we leased manufacturing facilities, showroom and office space, distribution centers, and equipment under operating leases. Our operating leases have remaining lease terms of to seven years, with renewal options for additional periods ranging up to nine years.
Balance Sheet
The right of use assets and lease liabilities associated with our operating leases as of April 27, 2025, and April 28, 2024, are as follows:
(dollars in thousands) |
|
April 27, |
|
|
April 28, |
|
||
Right of use assets |
|
$ |
5,908 |
|
|
$ |
6,203 |
|
Operating lease liability - current |
|
|
2,394 |
|
|
|
2,061 |
|
Operating lease liability – noncurrent |
|
|
2,535 |
|
|
|
2,422 |
|
Supplemental Cash Flow Information
(dollars in thousands) |
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Operating lease liability payments |
$ |
2,391 |
|
|
$ |
2,663 |
|
|
$ |
2,497 |
|
Right of use assets exchanged for lease liabilities |
|
2,837 |
|
|
|
978 |
|
|
|
731 |
|
Operating lease costs were $2.9 million, $3.1 million, and $3.6 million during fiscal 2025, 2024, and 2023, respectively. Short-term lease costs were $13,000, $34,000, and $44,000 during fiscal 2025, 2024, and 2023, respectively. Variable lease expense was immaterial for each of fiscal 2025, 2024, and 2023.
As of April 27, 2025, the weighted average remaining lease term and discount rate for our operating leases follows:
Weighted average lease term |
|
2.92 years |
|
|
Weighted average discount rate |
|
|
5.55 |
% |
As of April 28, 2024, the weighted average remaining lease term and discount rate for our operating leases follows:
Weighted average lease term |
|
3.77 years |
|
|
Weighted average discount rate |
|
|
3.71 |
% |
Other Information
Maturity of our operating lease liabilities for the next five fiscal years and thereafter follows:
(dollars in thousands) |
|
Amount |
|
|
2026 |
|
$ |
2,593 |
|
2027 |
|
|
1,554 |
|
2028 |
|
|
388 |
|
2029 |
|
|
227 |
|
2030 |
|
|
229 |
|
Thereafter |
|
|
348 |
|
|
|
|
5,339 |
|
Less: interest |
|
|
(410 |
) |
Present value of lease liabilities |
|
$ |
4,929 |
|
Related Party Lease - Mattress Fabrics Segment
On March 23, 2023, we terminated an agreement with a partnership owned by an immediate family member of an officer of the company, pursuant to which we leased a 63,522 square foot facility for our domestic mattress cover operation. Prior to the termination of the lease agreement, rent payments totaled $123,000 during fiscal 2023. In accordance with the termination of the lease agreement, we were reimbursed $67,000 during fiscal 2023 for leasehold improvements we made to the leased property.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.