11-K 1 CULP, INC. 80763 11-K FORM 11K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1994 COMMISSION FILE NO. 0-12781 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: CULP, INC. 101 SOUTH MAIN STREET P.O. BOX 2686 HIGH POINT, NORTH CAROLINA 27261-2686 There were no material changes in the Plan or the Investment Policy of the Plan. Culp, Inc. has made no profit sharing contributions during the past five years. The approximate number of employees participating in the Plan at December 31, 1994 was 2,072. The Retirement Committee administers the Plan, and its members are Franklin N. Saxon, Kenneth M. Ludwig and Robert G. Culp, III, all employees of Culp, Inc. Financial Statements and Exhibits. (a) Financial Statements. A list of all financial statements filed as part of this report, beginning on page 1, is set forth below: Financial Statement Page of Report Report of Independent Accountants 1 Statements of Net Assets Available 2 for Plan Benefits Statements of Changes in Net Assets 3 Available for Plan Benefits Notes to Financial Statements 4 (b) Exhibits. No exhibits are filed with this annual report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the plan administrator has duly caused this annual report to be signed by the undersigned thereunto duly authorized. CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN By: Culp, Inc. Plan Administrator By: The Culp, Inc. Retirement Committee Date: March 29, 1995 Robert G. Culp, III Franklin N. Saxon Kenneth M. Ludwig CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION Years Ended December 31, 1994 and 1993 INDEPENDENT AUDITORS' REPORT To the Retirement Committee of the Culp, Inc. Employees' Retirement Builder Plan High Point, North Carolina We have audited the accompanying statements of net assets available for plan benefits of the Culp, Inc. Employees' Retirement Builder Plan as of December 31, 1994 and 1993 and the related statements of changes in net assets available for plan benefits for each of the years in the three year period ended December 31, 1994. These financial statements are the responsibility of the Plan Administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Culp, Inc. Employees' Retirement Builder Plan as of December 31, 1994 and 1993 and the changes in net assets available for plan benefits for each of the years in the three year period ended December 31, 1994 in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules presented on pages 13 through 16 are presented for the purpose of additional analysis and are not a required part of the basic financial statements. The supplemental schedules on pages 13 and 14 are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplementary information for the years ended December 31, 1994, 1993 and 1992 have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The supplementary information for the years ended December 31, 1991, 1990 and 1989 was audited by us and our report dated February 24, 1992 expressed an unqualified opinion on such information in relation to the basic financial statements for those years taken as a whole. The supplementary information for the periods ended December 31, 1988 and prior were audited by other auditors whose report dated April 7, 1989 expressed an unqualified opinion on such information in relation to the basic financial statements for those periods taken as a whole. (Signature of Dixon, Odom & Co., L.L.P.) March 23, 1995 Page 1 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1994 and 1993
ASSETS 1994 1993 Cash and cash equivalents $ - $ 77,409 Investments 13,589,467 12,634,677 Receivables Employer contributions 69,747 51,635 Employee contributions 166,447 122,010 Accrued interest - 2,846 TOTAL ASSETS 13,825,661 12,888,577 LIABILITIES Accounts payable 14,517 13,206 NET ASSETS AVAILABLE FOR PLAN BENEFITS $13,811,144 $12,875,371
See accompanying notes. Page 2 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992 ADDITIONS TO NET ASSETS ATTRIBUTED TO Investment income Interest $ 14,259 $ 66,938 $ 87,770 Dividends 261,978 122,105 79,468 Net appreciation (depreciation) in fair value of investments (979,242) 2,061,332 230,337 Realized gain on sale of investments 167,092 111,902 159,466 (535,913) 2,362,277 557,041 Contributions Employer 773,080 596,836 585,130 Employees 1,851,363 1,395,843 1,349,596 TOTAL ADDITIONS 2,088,530 4,354,956 2,491,767 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 1,074,390 926,870 549,742 Insurance 11,353 13,748 15,564 Trustee fees 67,014 68,921 40,059 TOTAL DEDUCTIONS 1,152,757 1,009,539 605,365 NET INCREASE 935,773 3,345,417 1,886,402 NET ASSETS AVAILABLE FOR PLAN BENEFITS Beginning of year 12,875,371 9,529,954 7,643,552 END OF YEAR $13,811,144 $12,875,371 $9,529,954
See accompanying notes. Page 3 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN NOTES TO FINANCIAL STATEMENTS NOTE A - SIGNIFICANT ACCOUNTING POLICIES Valuation of Investments Investments in common trust funds are stated at fair value based on the values of the respective instruments held by each fund as determined by the quoted market prices on the last day of the plan year. Investments in common stocks are stated at fair value as determined by the quoted market prices on the last day of the plan year. Allocated Insurance Contracts Assets related to life insurance purchased through the Plan are excluded from plan assets. Other Purchases and sales of investments are reported on a trade date basis. Income from investments is reported as earned on the accrual basis. NOTE B - DESCRIPTION OF PLAN The following description of the Culp, Inc. Employees' Retirement Builder Plan provides only general information. Participants should refer to the summary plan description for a more complete description of the Plan's provisions. General The Plan is a defined contribution plan covering all full-time employees of Culp, Inc. (the Company) and its subsidiaries who have one year of service and are age twenty-one or older, except for hourly employees of Rossville Mills who are covered under a union benefit plan. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Contributions The Plan was established in 1982 as a profit-sharing plan to which contributions determined by the Board of Directors of Culp, Inc. could be made on a discretionary basis. No profit-sharing contributions were made during 1994, 1993 or 1992. In November 1986, the Plan was amended to include provisions for 401(k) contributions and several related investment options. Participants may contribute from 2% to 15% of their annual compensation as 401(k) contributions, not to exceed a base limit of $9,240 in 1994, $8,994 in 1993, and $8,728 in 1992. The Company makes a matching contribution equal to 50% of the participant's contribution up to the first 5% of annual compensation. Participants may elect to have contributions invested in 25% increments in a guaranteed insurance contract fund, a Culp, Inc. stock fund, a balanced fund, or a value fund. Page 4 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN NOTES TO FINANCIAL STATEMENTS NOTE A - SIGNIFICANT ACCOUNTING POLICIES (Continued) In addition to its contributions to the Plan, the Company paid administrative expenses on behalf of the Plan which totaled $21,941 for the year ended December 31, 1994, $15,128 for the year ended December 31, 1993, and $50,162 for the year ended December 31, 1992. NOTE B - DESCRIPTION OF PLAN (Continued) Participant Accounts 401(k) contributions are credited on a specific identification basis. Income of the respective funds is allocated based on participants' account balances. Upon retirement, death or termination, the participant or beneficiary may elect to receive either a lump sum amount equal to the vested portion of his account, or an annuity contract of equivalent value. Upon termination, life insurance coverage purchased through the Plan may be either converted to cash or transferred to the participant. Vesting Participants are immediately vested in their profit-sharing accounts and their 401(k) contributions, including the matching contributions from the Company and actual earnings thereon. NOTE C - INVESTMENT FUNDS The following information summarizes the financial condition of the Plan by fund type as of December 31, 1994 and 1993:
December 31, 1994 Guaranteed Insurance Life Value Contract Insurance Stock Balanced Fund Fund Fund Fund Fund Total ASSETS Investments $ 1,274,731 $ 7,183,949 $ - $ 2,421,213 $ 2,709,574 $13,589,467 Receivables Employer contributions 7,200 34,722 - 12,947 14,878 69,747 Employee contributions 18,634 79,619 964 31,760 35,470 166,447 TOTAL ASSETS 1,300,565 7,298,290 964 2,465,920 2,759,922 13,825,661 LIABILITIES Accounts payable 1,068 8,425 964 2,044 2,016 14,517 NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 1,299,497 $ 7,289,865 $ - $ 2,463,876 $ 2,757,906 $13,811,144
Page 5 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN NOTES TO FINANCIAL STATEMENTS NOTE C - INVESTMENT FUNDS (Continued)
December 31, 1993 Guaranteed Insurance Life Contract Insurance Stock Balanced Fund Fund Fund Fund Total ASSETS Cash and cash equivalents $ 644 $ - $ 76,674 $ 91 $ 77,409 Investments 7,779,322 - 2,371,250 2,484,105 12,634,677 Receivables Employer contributions 38,116 - 4,384 9,135 51,635 Employee contributions 86,775 1,081 10,483 23,671 122,010 Accrued interest - - 2,846 - 2,846 TOTAL ASSETS 7,904,857 1,081 2,465,637 2,517,002 12,888,577 LIABILITIES Accounts payable 7,455 1,081 2,298 2,372 13,206 NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 7,897,402 $ - $ 2,463,339 $ 2,514,630 $12,875,371
Page 6 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN NOTES TO FINANCIAL STATEMENTS NOTE C - INVESTMENT FUNDS (Continued) The following information summarizes the changes in net assets available for plan benefits by fund type for the years ended December 31, 1994, 1993 and 1992:
Year Ended December 31, 1994 Guaranteed Insurance Life Value Contract Insurance Stock Balanced Fund Fund Fund Fund Fund Total ADDITIONS TO NET ASSETS ATTRIBUTED TO Investment income Interest $ - $ 8,456 $ - $ 5,629 $ 174 $ 14,259 Dividends 81,585 - - 14,684 165,709 261,978 Net appreciation (depreciation) in fair value of investments (41,468) 123,857 - (865,783) (195,848) (979,242) Realized gain (loss) on sale of investments 116 241,046 - (43,582) (30,488) 167,092 40,233 373,359 - (889,052) (60,453) (535,913) Contributions Employer 40,402 406,128 - 145,741 180,809 773,080 Employees 105,230 925,415 11,353 365,464 443,901 1,851,363 TOTAL ADDITIONS 185,865 1,704,902 11,353 (377,847) 564,257 2,088,530 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 3,015 624,715 - 158,265 288,395 1,074,390 Insurance - - 11,353 - - 11,353 Trustee fees 2,937 39,774 - 9,542 14,761 67,014 TOTAL DEDUCTIONS 5,952 664,489 11,353 167,807 303,156 1,152,757 NET INCREASE (DECREASE) 179,913 1,040,413 - (545,654) 261,101 935,773 NET ASSETS AVAILABLE FOR PLAN BENEFITS Beginning of year - 7,897,402 - 2,463,339 2,514,630 12,875,371 Fund transfers 1,119,584 (1,647,950) - 546,191 (17,825) - END OF YEAR $ 1,299,497 $ 7,289,865 $ - $ 2,463,876 $ 2,757,906 $13,811,144
Page 7 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN NOTES TO FINANCIAL STATEMENTS NOTE C - INVESTMENT FUNDS (Continued)
Year Ended December 31, 1993 Guaranteed Insurance Life Contract Insurance Stock Balanced Fund Fund Fund Fund Total ADDITIONS TO NET ASSETS ATTRIBUTED TO Investment income Interest $ 64,070 $ - $ 2,644 $ 224 $ 66,938 Dividends - - 10,821 111,284 122,105 Net appreciation in fair value of investments 304,949 - 1,648,817 107,566 2,061,332 Realized gain on sale of investments 29,435 - 72,521 9,946 111,902 398,454 - 1,734,803 229,020 2,362,277 Contributions Employer 420,798 - 56,927 119,111 596,836 Employees 953,420 13,748 130,726 297,949 1,395,843 TOTAL ADDITIONS 1,772,672 13,748 1,922,456 646,080 4,354,956 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 649,474 - 164,599 112,797 926,870 Insurance - 13,748 - - 13,748 Trustee fees 46,574 - 8,415 13,932 68,921 TOTAL DEDUCTIONS 696,048 13,748 173,014 126,729 1,009,539 NET INCREASE 1,076,624 - 1,749,442 519,351 3,345,417 NET ASSETS AVAILABLE FOR PLAN BENEFITS Beginning of year 6,781,347 - 847,417 1,901,190 9,529,954 Fund transfers 39,431 - (133,520) 94,089 - END OF YEAR $ 7,897,402 $ - $ 2,463,339 $ 2,514,630 $12,875,371
Page 8 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN NOTES TO FINANCIAL STATEMENTS NOTE C - INVESTMENT FUNDS (Continued)
Year Ended December 31, 1992 Guaranteed Insurance Life Contract Insurance Stock Balanced Fund Fund Fund Fund Total ADDITIONS TO NET ASSETS ATTRIBUTED TO Investment income Interest $ 84,028 $ - $ 3,443 $ 299 $ 87,770 Dividends - - 6,043 73,425 79,468 Net appreciation in fair value of investments 156,526 - 6,886 66,925 230,337 Realized gain (loss) on sale of investments 152,544 - 8,507 (1,585) 159,466 393,098 - 24,879 139,064 557,041 Contributions Employer 428,883 - 48,085 108,162 585,130 Employees 966,370 15,564 107,603 260,059 1,349,596 TOTAL ADDITIONS 1,788,351 15,564 180,567 507,285 2,491,767 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 434,826 - 28,945 85,971 549,742 Insurance - 15,564 - - 15,564 Trustee fees 30,003 - 3,065 6,991 40,059 TOTAL DEDUCTIONS 464,829 15,564 32,010 92,962 605,365 NET INCREASE 1,323,522 - 148,557 414,323 1,886,402 NET ASSETS AVAILABLE FOR PLAN BENEFITS Beginning of year 6,447,523 - 373,894 822,135 7,643,552 Fund transfers (989,698) - 324,966 664,732 - END OF YEAR $ 6,781,347 $ - $ 847,417 $ 1,901,190 $ 9,529,954
Page 9 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN NOTES TO FINANCIAL STATEMENTS NOTE D - INVESTMENTS Investments held by the Plan at December 31, 1994 and 1993 are summarized as follows:
December 31, 1994 Units Cost Fair Value Value Fund First Union Funds Value Portfolio Trust 76,745 $1,316,199 $1,274,731 Guaranteed Insurance Contract Fund Common trust fund - Money Market Stable Investment Fund 529,790 7,060,347 7,183,949 Stock Fund Culp, Inc. common stock 245,785 3,286,742 2,421,213 Balanced Fund First Union Funds Balanced Portfolio Trust 242,575 2,905,421 2,709,574 $14,568,709 $13,589,467
December 31, 1993 Units Cost Fair Value Guaranteed Insurance Contract Fund Common trust fund - Money Market Stable Investment Fund 445,261 $7,317,848 7,779,322 Stock Fund Culp, Inc. common stock 94,850 637,292 2,371,250 Balanced Fund First Union Funds Balanced Portfolio Trust 205,808 2,246,550 2,484,105 $10,201,690 $12,634,677
Page 10 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN NOTES TO FINANCIAL STATEMENTS NOTE D - INVESTMENTS (Continued) Realized gain on investments relates to the Plan's investments in guaranteed insurance contracts, common trust funds and common stock and is comprised of the following for each of the years in the three year period ended December 31, 1994: 1994 1993 1992 Aggregate proceeds $13,927,199 $ 1,057,031 $6,463,290 Aggregate cost 13,760,107 945,129 6,303,824 NET GAIN $ 167,092 $ 111,902 $ 159,466 The cost of securities sold is determined based on average cost. Net unrealized appreciation (depreciation) in fair value of investments for each of the years in the three year period ended December 31, 1994 is as follows: 1994 1993 1992 Common trust funds $ (113,459) $ 412,514 $ 223,451 Common stocks (865,783) 1,648,818 6,886 $ (979,242) $ 2,061,332 $ 230,337 NOTE E - ACCOUNTS OF TERMINATED PARTICIPANTS Included in net assets available for plan benefits at December 31, 1994 and 1993 is $541,000 and $1,140,000, respectively, allocated to the accounts of persons who elected to withdraw from the plan or who were terminated but have not yet been paid. NOTE F - TERMINATION PRIORITIES While the Company expects to continue the Plan indefinitely, should the Plan be terminated, the net assets available for plan benefits at the termination date would be distributed to participants based on amounts which have been allocated to their respective accounts. Page 11 CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN NOTES TO FINANCIAL STATEMENTS NOTE G - INCOME TAX STATUS The Plan obtained its last determination letter on April 29, 1994, in which the Internal Revenue Service stated that the Plan, as then designed, constituted a qualified trust under Section 401(a) of the Internal Revenue Code and is therefore exempt from federal income taxes under provisions of Section 501. The Plan has been amended since receiving the determination letter. However, the plan administrator and the Plan's tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, they believe that the Plan was qualified and the related trust was tax-exempt as of the financial statement date. Except for a portion of the amounts paid as premiums for life insurance coverage, contributions are exempt from federal income taxes until they are distributed to the participants or their beneficiaries. Page 12