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Intangible Assets | 12 Months Ended
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Apr. 30, 2023
Goodwill And Intangible Assets Disclosure [Abstract] |
Intangible Assets | 7. INTANGIBLE ASSETS A summary of intangible assets follows:
(dollars in thousands) |  | April 30, 2023 |  |  | May 1, 2022 |  |
Tradename |  | $ | 540 |  |  | $ | 540 |  |
Customer relationships, net |  |  | 1,335 |  |  |  | 1,636 |  |
Non-compete agreement, net |  |  | 377 |  |  |  | 452 |  |
|  | $ | 2,252 |  |  | $ | 2,628 |  |
Tradename Our tradename pertains to Read, a separate reporting unit within our upholstery fabrics segment. This tradename was determined to have an indefinite useful life at the time of its acquisition, and therefore is not being amortized. However, we are required to assess this tradename annually or between annual tests if we believe indicators of impairment exist. Accordingly, we performed an annual assessment of Read's tradename as of April 30, 2023. First, we performed a qualitative assessment to determine if any impairment indicators existed. Based on this assessment we concluded that indicators of impairment did exist, such as unfavorable financial performance in that we have incurred net operating losses during the last two fiscal years, which stem from (i) tight labor supply and wage inflation; (ii) processing and pricing inefficiencies associated with customization and installation services; (iii) an unfavorable mix of small scale and larger scale projects; and (iv) changes in management and key personnel. Consequently, we conducted a quantitative impairment test to determine the fair value of Read's tradename by calculating Read's future discounted cash flows based on management's assumptions that involve unobservable inputs such as (i) discount rate, (ii) future growth rates, (iii) changes in working capital, and (iv) effect of strategic actions to be performed by management to address recent operating inefficiencies. Based on the results of our quantitative impairment test, the fair value of Read's tradename exceeded its carrying amount, and therfore, no impairment was noted as of April 30, 2023. Customer Relationships A summary of the change in the carrying amount of our customer relationships follows:
(dollars in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
beginning balance |  | $ | 1,636 |  |  | $ | 1,937 |  |  | $ | 2,238 |
amortization expense |  |  | (301 | ) |  |  | (301 | ) |  |  | (301 | )
ending balance |  |  | 1,335 |  |  |  | 1,636 |  |  |  | 1,937 |
Our customer relationships are amortized on a straight-line basis over useful lives ranging from nine to seventeen years. The gross carrying amount of our customer relationships was $3.1 million as of April 30, 2023, and May 1, 2022. Accumulated amortization for these customer relationships was $1.8 million and $1.5 million as of April 30, 2023, and May 1, 2022, respectively. The remaining amortization expense for the next five fiscal years and thereafter follows: FY 2024 - $301,000; FY 2025 - $301,000; FY 2026 - $301,000; FY 2027 - $278,000; FY 2028 - $52,000; and thereafter - $102,000. The weighted average amortization period for our customer relationships is 4.8 years as of April 30, 2023. Non-Compete Agreement A summary of the change in the carrying amount of our non-compete agreement follows:
(dollars in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
beginning balance |  | $ | 452 |  |  | $ | 527 |  |  | $ | 602 |
amortization expense |  |  | (75 | ) |  |  | (75 | ) |  |  | (75 | )
ending balance |  | $ | 377 |  |  | $ | 452 |  |  |  | 527 |
Our non-compete agreement is associated with a prior acquisition by our mattress fabrics segment and is amortized on a straight-line basis over the fifteen-year life of the agreement. The gross carrying amount of this non-compete agreement was $2.0 million as of April 30, 2023, and May 1, 2022. Accumulated amortization for this non-compete agreement was $1.6 million as of April 30, 2023, and May 1, 2022. The remaining amortization expense for the next five years and thereafter follows: FY 2024 - $76,000; FY 2025 - $76,000; FY 2026 - $76,000; FY 2027 - $76,000; and FY 2028 - $73,000. The weighted average amortization period for the non-compete agreement is 5.0 years as of April 30, 2023. Impairment - Mattress Fabrics Segment As of October 30, 2022 (the end of our second quarter of fiscal 2023), management reviewed the long-lived assets associated with our mattress fabrics segment, which consisted of property, plant, and equipment, right of use assets, and finite-lived intangible assets (collectively known as the "Mattress Asset Group"), for impairment, as events and changes in circumstances occurred that indicated the carrying amount of the Mattress Asset Group may not be recoverable. During the second quarter of fiscal 2023, our mattress fabrics segment experienced a 35.8% decline in net sales compared with the second quarter of fiscal 2022. This decline in net sales led to a significant decrease in gross margin to (23.1%) during the second quarter of 2023, compared with gross margin of 15.0% during second quarter of fiscal 2022. The significant decline in net sales and profitability during the second quarter of fiscal 2023 stemmed from a greater than anticipated decline in consumer discretionary spending on mattress products, which we believed was due to the following factors: (i) inflationary effects of commodities such as gas, food, and other necessities; (ii) a significant increase in interest rates; (iii) the pulling forward of demand for home goods products during the early years of the COVID-19 pandemic, which demand subsequently shifted to travel, leisure, and other services; and (iv) excess inventory held by customers due to a decline in consumer demand. Based on the above evidence, we were required to determine the recoverability of the Mattress Asset Group, which was classified as held and used, by comparing the carrying amount of the Mattress Asset Group to the sum of the future undiscounted cash flows expected to result from its use and eventual disposition. If the carrying amount of an asset group exceeds its estimated future undiscounted cash flows, an impairment charge is recognized for the excess of the carrying amount over the sum of the future undiscounted cash flows of the asset group. As of October 30, 2022, the carrying amount of the Mattress Asset Group totaled $38.8 million, which related to property, plant, and equipment of $35.9 million, right of use assets of $2.1 million, a non-compete agreement of $414,000, and customer relationships of $383,000. The total carrying amount of the Mattress Asset Group did not exceed the sum of its future undiscounted cash flows from its use and eventual disposition. As a result, we determined no impairment associated with the Mattress Asset Group existed as of October 30, 2022. Since the end of the second quarter on October 30, 2022, and through the end of fiscal 2023, our mattress fabrics segment remained unprofitable, as it incurred operating losses totaling $(4.2) million and $(2.5) million during the third quarter and fourth quarter of fiscal 2023, respectively. As of April 30, 2023, the carrying amount of the Mattress Asset Group totaled $36.8 million, which represents property, plant, and equipment of $33.7 million, right use assets of $2.3 million, a non-compete agreement of $377,000, and customer relationships of $358,000. The total carrying amount of the Mattress Asset Group did not exceed the sum of its future undiscounted cash flows from its use and eventual disposition. As result, we maintain our position that no impairment associated with the Mattress Asset Group existed as of April 30, 2023. Impairment - Read As of April 30, 2023, management reviewed the long-lived assets associated with Read, a separate reporting unit within our upholstery fabrics segment. Read's long-lived assets consist of property, plant, and equipment, a right of use asset, and finite-lived intangible assets (collectively known as "Read's Asset Group"). Read's Asset Group was reviewed for impairment because events and changes in circumstances occurred that indicated the carrying amount of the Read's Asset Group may not be recoverable. As a result, we performed a qualitative assessment to determine if any impairment indicators existed. Based on this assessment we concluded that indicators of impairment did exist, such as unfavorable financial performance in that we have incurred net operating losses during the last two fiscal years, which stem from (i) tight labor supply and wage inflation, (ii) processing and pricing inefficiencies associated with customization and installation services, (iii) an unfavorable mix of small scale and larger scale projects; and (iv) changes in management and key personnel. Based on the above evidence, we were required to determine the recoverability of Read's Asset Group, which was classified as held and used, by comparing the carrying amount of Read's Asset Group to the sum of the future undiscounted cash flows expected to result from its use and eventual disposition. If the carrying amount of an asset group exceeds its estimated future undiscounted cash flows, an impairment charge is recognized for the excess of the carrying amount over the sum of the future undiscounted cash flows of the asset group. As of April 30, 2023, the carrying amount of Read's Asset Group totaled $1.5 million, which represents customer relationships of $978,000, property, plant, and equipment of $329,000, and a right of use asset of $215,000. The total carrying amount of Read's Asset Group did not exceed the sum of its future undiscounted cash flows from its use and eventual disposition. As a result, we determined no impairment associated with Read's Asset Group existed as of April 30, 2023.

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- Definition The entire disclosure for all or part of the information related to intangible assets. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -URI https://asc.fasb.org/subtopic&trid=2144471 + Details
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