Home Accessories Segment (Tables)

12 Months Ended

May 03, 2020

Summary of Disposal of Discontinued Operation on Consolidated Balance Sheet

The following is a summary of the assets and liabilities that were sold on March 31, 2020, and a reconciliation of the assets and liabilities disclosed in the notes to the consolidated financial statements to the assets and liabilities of the disposal group that are presented separately as held for sale – discontinued operation on the Consolidated Balance Sheet as of April 28, 2019:

	March 31,		April 28,
(dollars in thousands)	2020		2019
ASSETS
current assets:
cash and cash equivalents	$	285	$	—
accounts receivable		588		378
inventories		3,344		3,296
other current assets		170		33
total current assets held for sale - discontinued operation		4,387		3,707
property, plant, and equipment		1,694		1,910
goodwill		—		13,653
intangible asset		—		6,549
right of use asset		918		—
total noncurrent assets held for sale - discontinued operation		2,612		22,112
total assets	$	6,999	$	25,819
LIABILITIES AND NET ASSETS
current liabilities:
accounts -payable trade	$	1,394	$	1,653
operating lease liability - current		195		—
accrued expenses		351		560
total current liabilities held for sale - discontinued operation		1,940		2,213
loan payable - Culp Inc.		1,500		830
subordinated loan payable - noncontrolling interest		925		675
operating lease liability - long-term		743		—
total noncurrent liabilities held for sale - discontinued operation		3,168		1,505
total liabilities		5,108		3,718
total net assets of discontinued operation	$	1,891	$	22,101

Summary of Loss from Discontinued Operation on Consolidated Statements of Net (Loss) Income

The following is a reconciliation of the major classes of financial statement line items constituting loss before income taxes from discontinued operation that are disclosed in the notes to the financial statements to loss from discontinued operation that are presented in the Consolidated Statements of Net (Loss) Income for fiscal years 2020, 2019, and 2018:

							(1)
(dollars in thousands)	2020			2019			2018
net sales	$	13,763		$	15,956		$	—
cost of sales		(10,953	)		(11,527	)		—
gross profit		2,810			4,429			—
selling, general and administrative expenses		(4,100	)		(5,162	)		—
asset impairments (2)		(20,202	)		—			—
reversal of contingent consideration - earn-out obligation (3)		5,856			—			—
interest expense (4)		(84	)		(30	)		—
other income		34			37			—
loss from discontinued operation related to major classes    of loss before income taxes		(15,686	)		(726	)		—
loss on disposal of discontinued operation		(1,891	)		—			—
loss before income taxes from discontinued operation (5)		(17,577	)		(726	)		—
income tax benefit		68			113			—
net loss from discontinued operation	$	(17,509	)	$	(613	)	$	—

(1) Discontinued operations were not presented in fiscal 2018 as we acquired eLuxury on June 22, 2018, which was during our fiscal 2019.

(2) During fiscal 2020, we recorded asset impairment charges totaling $20.2 million, of which $13.6 million and $6.6 million pertained to the goodwill and tradename, respectively. Of the total asset impairment charge totaling $20.2 million, $13.6 million, and $6.6 million were recorded in the 3^rd and 4^th quarters, respectively. See notes 8, 9, and 17 located in the notes to the consolidated financial statements for further details of our assessments that resulted in the impairment of the goodwill and tradename associated with this discontinued operation.

(3) See separate section below titled “Contingent Consideration” for further details.

(4) Interest expense is directly attributable to our discontinued operations as it pertains to loans payable assumed by the buyer, (the noncontrolling interest) or required to be paid to Culp Inc. based on the terms of the sale agreement.

(5) See separate section below titled “Consolidation and Deconsolidation” for further details.

Summary of Net (Loss) Income from Continuing Operations, Loss from Discontinued Operation, and Net (Loss) Income Attributable to Common Shareholders and Noncontrolling Interest

The following is a summary of net (loss) income from continuing operations, loss from discontinued operation, and net (loss) income attributable Culp Inc. common shareholders and the noncontrolling interest for fiscal years 2020, 2019, and 2018:

(dollars in thousands)	2020			2019			2018
net (loss) income from continuing operations	$	(11,158	)	$	6,071		$	20,877
net (loss) income from continuing operations attributable to    noncontrolling interest		—			—			—
net (loss) income from continuing operations attributable    to Culp Inc. common shareholders	$	(11,158	)	$	6,071		$	20,877
net loss from discontinued operation	$	(17,509	)	$	(613	)	$	—
net loss from discontinued operation attributable to    noncontrolling interest		4,674			218			—
net loss from discontinued operation attributable to Culp Inc.    common shareholders	$	(12,835	)	$	(395	)	$	—
net loss (income)	$	(28,667	)	$	5,458		$	20,877
net loss from noncontrolling interest		4,674			218			—
net (loss) income attributable to Culp Inc.    common shareholders	$	(23,993	)	$	5,676		$	20,877

eLuxury [Member]

Schedule of Allocation of Acquisition Cost to Assets Acquired and Liabilities Assumed

The following table presents the final allocation of the acquisition cost to the assets acquired and liabilities assumed based on their fair values.

(dollars in thousands)	Fair Value
Goodwill	$	13,653
Tradename		6,549
Equipment		2,179
Inventory		1,804
Accounts receivable and other current assets		108
Accounts payable		(1,336	)
Accrued expenses		(295	)
Non-controlling interest in eLuxury		(4,532	)
	$	18,130