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Cloud Computing Hosting Arrangement

3 Months Ended

Apr. 28, 2024

Disclosure Text Block Supplement [Abstract]

6. Cloud Computing Hosting Arrangement

We are in the process of implementing a common Enterprise Resource Planning (ERP) system across all divisions. The ERP system went live at Sunset West in December 2022 and in the legacy Hooker divisions and for consolidated reporting in early September 2023. We expect the new ERP system to go live in the Home Meridian segment during fiscal 2026.

Based on the provisions of ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software, we capitalize implementation costs associated with hosting arrangements that are service contracts. These costs are recorded in other noncurrent assets of our consolidated balance sheets. We amortize on a straight-line basis over a 10-year term as the system went live at Sunset West and the legacy Hooker divisions. The amortization expenses are recorded as a component of selling and administrative expenses in our consolidated statements of operations. Additionally, we recorded capitalized interest as we entered into new term loans in July 2022. Implementation costs of $1.3 million and interest expense of $55,000 were capitalized in fiscal 2025 first quarter. Implementation costs of $1.3 million and interest expense of $66,000 were capitalized in fiscal 2024 first quarter. The capitalized implementation costs at April 28, 2024 and January 28, 2024 were as follows:

	April 28, 2024					January 28, 2024
	Gross carrying amount		Accumulated amortization			Gross carrying amount		Accumulated amortization
Implementation Costs	$	15,019	$	(701	)	$	13,736	$	(414	)
Interest Expenses		412		(13	)		357		(8	)