CULP INC Revenue Disclosure
Nature of Performance Obligations
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, sources, manufactures, and sells fabrics primarily to residential, commercial, and hospitality manufacturers. In addition, the upholstery fabrics segment includes Read and our facility located in Burlington, North Carolina, which provides window treatments and sourcing of upholstery fabrics and other products, as well as related measuring and installation services to customers in the hospitality and commercial markets. Read also supplies soft goods such as decorative top sheets, coverlets, duvet covers, bed skirts, bolsters, and pillows.
Our primary performance obligations include the sale of mattress fabrics and upholstery fabrics, as well as the performance of customized fabrication and installation services for products associated with window treatments.
Significant Judgments
See Note 1 of the consolidated financial statements for disclosure of our accounting policies regarding our significant judgments associated with revenue recognition, determining our transaction prices, and revenue measurement.
Contract Assets & Liabilities
Certain contracts relating to customized fabrication and installation services associated with Read require upfront customer deposits that result in a contract liability which is recorded on the Consolidated Balance Sheets as deferred revenue. Revenue on contract liabilities associated with customized fabrication and installation services is generally recognized within one year as the satisfaction of performance obligations is generally one year or less. If upfront deposits or prepayments are not required, customers may be granted terms which generally range from 15-60 days. Our terms are customary within the industries in which we operate and are not considered financing arrangements.
During the fourth quarter of fiscal 2023, we entered into a contract with an upholstery fabrics customer that required the customer to pay us an upfront license fee totaling $250,000 to use a certain trademark for a period of three years commencing in fiscal 2024 and extending through fiscal 2026.
There were no contract assets recognized as of April 27, 2025, or April 28, 2024.
A summary of the activity of deferred revenue follows:
(dollars in thousands) |
|
Fiscal 2025 |
|
|
Fiscal 2024 |
|
|
Fiscal 2023 |
|
|||
Beginning Balance |
|
$ |
1,495 |
|
|
$ |
1,192 |
|
|
$ |
520 |
|
Revenue recognized on contract liabilities |
|
|
(3,980 |
) |
|
|
(3,932 |
) |
|
|
(4,885 |
) |
Payments received for services not yet rendered |
|
|
2,907 |
|
|
|
4,235 |
|
|
|
5,557 |
|
Ending Balance |
|
$ |
422 |
|
|
$ |
1,495 |
|
|
$ |
1,192 |
|
As of April 27, 2025, deferred revenue of $422,000 pertained to: (i) upfront customer deposits associated with customized fabrication and installation services related to Read totaling $339,000, and (ii) an upfront license fee paid to us for the licensing of a certain trademark to be used by an upholstery fabrics customer totaling $83,000. As of April 28, 2024, deferred revenue of $1.5 million pertained to: (i) upfront customer deposits associated with customized fabrication and installation services related to Read totaling $1.3 million, and (ii) an upfront license fee paid to us for the licensing of a certain trademark to be used by an upholstery fabrics customer totaling $167,000. As of April 30, 2023, deferred revenue of $1.2 million pertained to: (i) upfront customer deposits associated with customized fabrication and installation services related to Read totaling $942,000, and (ii) an upfront license fee paid to us for the licensing of a certain trademark to be used by an upholstery fabrics customer totaling $250,000. Revenue recognized during the period that was included in the contract liability balance at the beginning of the period was $1.4 million, $1.0 million, and $520,000 for fiscal years 2025, 2024, and 2023, respectively
Disaggregation of Revenue
The following table presents our disaggregated revenue related to operations by segment, timing of revenue recognition, and product sales versus services rendered for fiscal 2025:
(dollars in thousands) |
|
Mattress |
|
|
Upholstery |
|
|
Total |
|
|||
Products transferred at a point in time |
|
$ |
113,906 |
|
|
$ |
87,322 |
|
|
$ |
201,228 |
|
Services transferred over time |
|
|
— |
|
|
|
12,009 |
|
|
|
12,009 |
|
Total Net Sales |
|
$ |
113,906 |
|
|
$ |
99,331 |
|
|
$ |
213,237 |
|
The following table presents our disaggregated revenue related to operations by segment, timing of revenue recognition, and product sales versus services rendered for fiscal 2024:
(dollars in thousands) |
|
Mattress |
|
|
Upholstery |
|
|
Total |
|
|||
Products transferred at a point in time |
|
$ |
116,370 |
|
|
$ |
98,976 |
|
|
$ |
215,346 |
|
Services transferred over time |
|
|
— |
|
|
|
9,987 |
|
|
|
9,987 |
|
Total Net Sales |
|
$ |
116,370 |
|
|
$ |
108,963 |
|
|
$ |
225,333 |
|
The following table presents our disaggregated revenue related to operations by segment, timing of revenue recognition, and product sales versus services rendered for fiscal 2023:
(dollars in thousands) |
|
Mattress |
|
|
Upholstery |
|
|
Total |
|
|||
Products transferred at a point in time |
|
$ |
110,995 |
|
|
$ |
114,996 |
|
|
$ |
225,991 |
|
Services transferred over time |
|
|
— |
|
|
|
8,943 |
|
|
|
8,943 |
|
Total Net Sales |
|
$ |
110,995 |
|
|
$ |
123,939 |
|
|
$ |
234,934 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jul 11, 2025 | Showing above |
| 2024 | Jul 12, 2024 | |
| 2023 | Jul 14, 2023 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.