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Commitments and Contingencies | 12 Months Ended
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May 02, 2021
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies |
1 3. | COMMITMENTS AND CONTINGENCIES
Leases Balance Sheet The right of use assets and lease liabilities associated with our operating leases as of May 2, 2021, and May 3, 2020, are as follows:
(dollars in thousands) |  | May 2, 2021 |  |  | May 3, 2020 |
Right of use assets |  | $ | 11,730 |  |  | $ | 3,903 |
Operating lease liability - current |  |  | 2,736 |  |  |  | 1,805 |
Operating lease liability – noncurrent |  |  | 6,821 |  |  |  | 2,016 |
Supplemental Cash Flow Information
(dollars in thousands) |  | 2021 |  |  | 2020 |
Operating lease liability payments |  | $ | 2,634 |  |  | $ | 2,524 |
Right of use assets exchanged for lease liabilities |  |  | 8,014 |  |  |  | 344 |
Operating lease costs associated with continuing operations were $2.9 million and $2.6 million during fiscal 2021 and 2020, respectively. During fiscal 2020, operating lease costs totaling $204,000 were associated with our former home accessories segment and were presented within loss from discontinued operations in the fiscal 2020 Consolidated Statement of Net Loss. Short-term lease costs were $55,000 and $148,000 during fiscal 2021 and fiscal 2020, respectively. Variable lease costs were immaterial for fiscal 2021 and fiscal 2020. As of May 2, 2021, the weighted average remaining lease term and discount rate for our operating leases follows:
Weighted average lease term |  | 4.36 years |
Weighted average discount rate |  |  | 2.41 | %
As of May 3, 2020, the weighted average remaining lease term and discount rate for our operating leases follows:
Weighted average lease term |  | 2.98 years |
Weighted average discount rate |  |  | 3.60 | %
Other Information Maturity of our operating lease liabilities for the next five fiscal years and thereafter follows:
(dollars in thousands) |  |  |  |
2022 |  | $ | 2,821 |
2023 |  |  | 2,647 |
2024 |  |  | 2,341 |
2025 |  |  | 1,409 |
2026 |  |  | 158 |
Thereafter |  |  | 541 |
|  |  | 9,917 |
Less: interest |  |  | (360 | )
Present value of lease liabilities |  | $ | 9,557 |
Lease Contracts Culp Upholstery Fabrics – Haiti, Ltd. Effective April 9, 2021, we entered into an agreement to lease a 90,000 square foot facility located in a modern industrial park on the northeastern border of Haiti. This facility will be dedicated to the production of cut and sewn upholstery kits and is expected to be operational during the second quarter of fiscal 2022. The lease agreement has an initial non-cancelable lease term of eight years, which will commence after the construction of the facility has been completed, and at such time we will have control of the facility based on the terms of the lease. The rent payments for the initial term of the lease total $2.8 million and will be paid in advance of the commencement of the lease. Of the $2.8 million rent payments, $1.4 million was paid in April 2021, $558,000 is due June 30, 2021, $418,500 is due August 30, 2021, and $418,500 is due October 30, 2021, or 30 days after commencement of the lease as defined in the agreement. As of May 2, 2021, the $1.4 million paid in April 2021 was classified as other assets in the accompanying Consolidated Balance Sheets. The initial non-cancelable term of the lease can be subsequently renewed and extended for successive eight-year periods by written communication as defined in the lease agreement. High Point, NC – Design and Innovation Campus Effective May 7, 2021, we entered into an agreement to lease showroom and office space approximating 21,000 square feet located in downtown High Point, NC. This facility will be used to advance synergies between our upholstery fabrics and mattress fabrics business segments by bringing our creative talent together to collaborate, develop new products through shared innovation and technology, and meet new and existing customers. The lease agreement has an initial non-cancelable lease term of ten years, which will commence once certain lessor-owned leasehold improvements have been completed, and at such time we will have control of the facility based on the terms of the lease. The rent payments for the initial term of the lease total $2.2 million and will be paid in monthly installments beginning at the commencement of the lease, which is expected to occur during the third quarter of fiscal 2022. The initial non-cancelable term of the lease can be subsequently renewed and extended up to four additional periods of three years each by written communication as defined in the lease agreement. Related Party Lease – Mattress Fabrics Segment We have an agreement to lease a plant facility totaling 65,886 square feet from a partnership owned by an immediate family member of an officer of the company. The current non-cancelable lease term for this facility ends September 30, 2023. Effective February 1, 2021, we amended this lease agreement to include options to renew and extend this lease for up to two additional periods of three-years each. In accordance with ASC Topic 842, we determined that these options to renew are reasonably certain to be exercised, and therefore are now included in the lease term of the amended agreement. In addition, the amendment provided us with an allowance for reimbursement associated with certain leasehold improvements we previously paid on behalf of the lessor totaling $92,400. The lease payments during the non-cancelable term and the two optional renewal periods are $13,200 per month and are being partially offset by the $92,400 reimbursement allowance over the period covering the remaining non-cancelable lease term and the two additional three-year renewal periods. Rents paid to the entity owned by an immediate family of an officer totaled $151,000, $157,000, $158,000 in fiscal 2021, 2020, and 2019, respectively. As of May 2, 2021, the remaining amount of the allowance for reimbursement of certain leasehold improvements was $86,000. Other Litigation The company is involved in legal proceedings and claims which have arisen in the ordinary course of business. Management has determined that it is not reasonably possible that these actions, when ultimately concluded and settled, will have a material adverse effect upon the financial position, results of operations, or cash flows of the company. Accounts Payable – Capital Expenditures As of May 2, 2021, we had total amounts due regarding capital expenditures totaling $348,000 which pertained to outstanding vendor invoices, none of which were financed. As of May 3, 2020, we had total amounts due regarding capital expenditures totaling $107,000, which pertained to outstanding vendor invoices, none of which were financed. Purchase Commitments - Capital Expenditures As of May 2, 2021, we had open purchase commitments to acquire equipment for our U.S. and Canadian mattress fabrics operations totaling $1.6 million.

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