-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LdhoPKCFlcpPwQCVg38kOXDdjX99iNpa1Yokq5wcxjnzSWqC1HlqWwUln77kq1gK mc6Vj+H9ZVNuI7UBRcOhng== 0001157523-07-002449.txt : 20070307 0001157523-07-002449.hdr.sgml : 20070307 20070307171435 ACCESSION NUMBER: 0001157523-07-002449 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070307 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070307 DATE AS OF CHANGE: 20070307 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CULP INC CENTRAL INDEX KEY: 0000723603 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 561001967 STATE OF INCORPORATION: NC FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12597 FILM NUMBER: 07678578 BUSINESS ADDRESS: STREET 1: 101 S MAIN ST CITY: HIGH POINT STATE: NC ZIP: 27260 BUSINESS PHONE: 3368895161 MAIL ADDRESS: STREET 1: P O BOX 2686 STREET 2: 101 S MAIN ST CITY: HIGH POINT STATE: NC ZIP: 27261 8-K 1 a5349533.txt CULP, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) March 7, 2007 Culp, Inc. (Exact Name of Registrant as Specified in its Charter) North Carolina 0-12781 56-1001967 - ----------------------------- ------------------------ --------------------- (State or Other Jurisdiction (Commission File Number) (I.R.S. Employer of Incorporation) Identification No.) 1823 Eastchester Drive High Point, North Carolina 27265 ---------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (336) 889-5161 ----------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable -------------------------------------------------------------------------- (Former name or address, if changed from last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) INDEX Page Item 2.02 - Results of Operations and Financial Condition 3 Item 9.01(d) - Exhibits 3 Signature 4 Exhibits 2 Item 2.02 - Results of Operations and Financial Condition On March 7, 2007, the Company issued a news release to announce its financial results for the third quarter ended January 28, 2007. The news release is attached hereto as Exhibit 99(a). Also on March 7, 2007, the Company released a Financial Information Release containing additional financial information and disclosures about the Company's third quarter ended January 28, 2007. The Financial Information Release is attached hereto as Exhibit 99(b). The news release and Financial Information Release contain disclosures about free cash flow, a non-GAAP performance measure, that management believes provides useful information to investors because it measures the Company's available cash flow for potential debt repayment, stock repurchases and additions to cash and cash equivalents. In addition, the news release and Financial Information Release contain proforma income statement information, which reconciles the reported and projected income statement information with proforma results, which exclude restructuring and related charges. The Company has included this proforma information in order to show operational performance excluding the effects of restructuring and related charges that are not expected to occur on a regular basis. Management believes this presentation aids in the comparison of financial results among comparable financial periods. In addition, this information is used by management to make operational decisions about the Company's business, is used in certain financial covenants in the Company's loan agreements, and is used by the Company as a financial goal for purposes of determining management incentive bonuses. FORWARD LOOKING INFORMATION. This report and the exhibits hereto contain statements that may be deemed "forward-looking statements" within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 27A of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties. Further, forward-looking statements are intended to speak only as of the date on which they are made. Forward-looking statements are statements that include projections, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as "expect," "believe," "estimate," "plan" and "project" and their derivatives, and include but are not limited to statements about the company's future operations, production levels, sales, SG&A or other expenses, margins, gross profit, operating income, earnings or other performance measures. Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on the company's business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect the Company adversely. Changes in consumer tastes or preferences toward products not produced by the Company could erode demand for the Company's products. In addition, strengthening of the U.S. dollar against other currencies could make the Company's products less competitive on the basis of price in markets outside the United States. Also, economic and political instability in international areas could affect the company's operations or sources of goods in those areas, as well as demand for the company's products in international markets. The Company's level of success in integrating the acquisition of assets from the International Textile Group, Inc. and in capturing and retaining sales to customers related to the acquisition will affect the Company's ability to meet its sales goals. Finally, unanticipated delays or costs in executing restructuring actions could cause the cumulative effect of restructuring actions to fail to meet the objectives set forth by management. Other factors that could affect the matters discussed in forward-looking statements are included in the company's periodic reports filed with the Securities and Exchange Commission, including the "Risk Factors" section in the company's most recent annual report of Form 10-K filed with the Securities and Exchange Commission on July 26, 2006 for the fiscal year ended April 30, 2006. Item 9.01 (d) -- Exhibits 99(a) News Release dated March 7, 2007 99(b) Financial Information Release dated March 7, 2007 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CULP, INC. (Registrant) By: Franklin N. Saxon --------------------- President By: Kenneth R. Bowling ---------------------- Vice President-Finance, Treasurer Dated: March 7, 2007 - --------------------- 4 EXHIBIT INDEX Exhibit Number Exhibit - -------------- ------- 99(a) News release dated March 7, 2007 99(b) Financial Information Release dated March 7, 2007 EX-99 2 a5349533ex99a.txt EXHIBIT 99(A) Exhibit 99(a) Culp Announces Third Quarter Fiscal 2007 Results HIGH POINT, N.C.--(BUSINESS WIRE)--March 7, 2007--Culp, Inc. (NYSE: CFI) today reported financial and operating results for the fiscal 2007 third quarter and nine months ended January 28, 2007. Overview For the three months ended January 28, 2007, net sales were $55.7 million compared with $61.0 million a year ago. The company reported a net loss of $2.2 million, or $0.19 per diluted share, for the third quarter of fiscal 2007. Included in these results is a non-cash income tax charge of $452,000, or $0.04 per diluted share, related to the exercise of non-qualified stock options. The financial results for the third quarter of fiscal 2007 also include $2.1 million, or $0.18 per diluted share, in restructuring and related charges, after taxes. Excluding these restructuring and related charges, net loss for the third fiscal quarter was $99,000, or $0.01 per diluted share. The company reported a net loss of $2.2 million, or $0.19 per diluted share, for the third quarter of fiscal 2006. The financial results for the third quarter of fiscal 2006 included $1.0 million, or $0.09 per diluted share, in restructuring and related charges, after taxes. Excluding these charges, net loss for the third fiscal quarter of fiscal 2006 was $1.1 million, or $0.10 per diluted share. (A reconciliation of the net loss and net loss per share calculations has been set forth on Page 6.) For the nine months ended January 28, 2007, the company reported net sales of $177.3 million compared with $190.4 million for the same period a year ago. Net loss for the first nine months of fiscal 2007 was $1.3 million, or $0.11 per diluted share, compared with a net loss of $10.3 million, or $0.89 per diluted share, for the same period last year. Excluding restructuring and related charges, net income for the first nine months of fiscal 2007 was $2.1 million, or $0.18 per diluted share. Excluding restructuring and related charges, net loss for the first nine months of fiscal 2006 was $2.1 million, or $0.18 per diluted share. Robert G. Culp, III, chairman of the board and chief executive officer of Culp, Inc., said, "Our third quarter performance reflects continued progress for Culp in fiscal 2007. We are pleased with our execution as we continue to work through a number of important operational changes in each of our operating segments. We believe we are creating a sustainable upholstery fabrics business model that will meet current customer demand. With the substantial investments we have made in our mattress fabrics segment and the recent acquisition of the mattress fabrics product line of International Textile Group, Inc.'s Burlington House Division ("ITG"), we are firmly committed to the future of the mattress fabrics business. We have a strong competitive position and are excited about the significant opportunities ahead for Culp in mattress fabrics. We continue to move Culp forward and believe we are taking the right steps to extend the leadership positions we enjoy in both of our operating segments." Mattress Fabrics Segment Mattress fabric (known as mattress ticking) sales for the third quarter were $24.4 million, a 7.6 percent increase compared with $22.7 million for the third quarter of fiscal 2006. On a unit volume basis, total yards sold increased by nine percent compared with the third quarter of fiscal 2006. These results include $1.0 million in incremental sales related to the company's acquisition of ITG's mattress fabrics product line. This transaction closed on January 22, 2007. The average selling price for mattress fabrics was $2.32 per yard for the third quarter compared with $2.35 per yard for same period last year. Operating income for this segment was $2.5 million, or 10.3 percent of sales, compared with $1.8 million, or 7.9 percent of sales, for the prior-year period. "Mattress fabric has become an increasingly important part of our business and accounted for 44 percent of the company's sales in our third fiscal quarter," added Frank Saxon, president of Culp. "We are pleased with the performance in this segment with operating income up nearly 40 percent over the same period last year and operating margins over 10 percent for the second consecutive quarter. Our recently announced acquisition of ITG's mattress fabrics business extends our leadership position in the mattress fabrics industry. We believe this transaction provides the opportunity to increase our annual sales in mattress fabrics by approximately $30 to $40 million with only a modest investment in fixed assets. We will be transitioning the ITG production to Culp facilities and suppliers over the next several months and we are pleased with the excellent cooperation from ITG which is helping to ensure an orderly transition for our customers." Upholstery Fabrics Segment Sales for this segment were $31.3 million, an 18 percent decline compared with $38.4 million in the third quarter of fiscal 2006. Total yards sold declined by 17 percent, while average selling prices were down one percent compared with the third quarter of fiscal 2006. Sales of upholstery fabrics reflect continued soft demand industrywide for U.S. produced fabrics, driven by consumer preference for leather and suede furniture and other imported fabrics, including cut and sewn kits. Sales of U.S. produced fabrics were $14.0 million, down 41 percent from the third quarter of fiscal 2006, while sales of non-U.S. produced fabrics were $17.4 million, up 18 percent over the prior year period. Operating loss for the upholstery fabrics segment for the third quarter of fiscal 2007 was $496,000, a significant improvement compared with an operating loss of $1.6 million for the same period a year ago. These results reflect higher gross profit of non-U.S. produced fabrics, but continued low gross profit levels related to sales of U.S. produced fabrics. "The results for our upholstery fabric segment continue to reflect growth in sales of non-U.S. produced fabrics and very weak demand for U.S. produced fabrics," added Saxon. "Sales of non-U.S. produced fabrics represented 55 percent of total upholstery fabric sales for the third quarter, compared with 38 percent a year ago. We have been highly successful with our China platform and we are excited about the potential growth opportunities as we expand our capabilities. As our customers have continued to aggressively source fabrics produced outside the U.S., we believe Culp is well positioned to meet this demand with a strong focus on product innovation, quality and global logistics. "With respect to the U.S. produced upholstery fabrics business, since the beginning of fiscal 2007 we have made considerable progress in changing our product strategy, reducing our manufacturing complexities and improving our cost structure. However, the declining sales volumes have continued to affect the profitability of our overall upholstery fabrics business. During the third quarter, we made the decision to further consolidate our U.S. upholstery fabrics manufacturing facilities and outsource our specialty yarn production. As a result, we are closing the company's weaving plant located in Graham, North Carolina, and closing the yarn plant located in Lincolnton, North Carolina. We are transferring certain production from the Graham plant to our Anderson, South Carolina, and Shanghai, China, facilities as well as a small portion to contract weavers. We will continue to operate one upholstery fabrics plant in Anderson, which will primarily produce velvets and a limited amount of decorative fabrics. This facility has a book value of fixed assets of approximately $2.2 million. By further consolidating our U.S. manufacturing operations and utilizing lower-cost manufacturing alternatives, we are reducing our operating costs and improving our domestic capacity utilization. We expect to substantially complete these moves by the end of fiscal 2007." Balance Sheet "We have continued to strengthen our balance sheet with the prepayment of debt and issuance of equity," Saxon noted. "During December 2006 and February 2007, we prepaid a total of $7.5 million in long-term debt scheduled for payment in March 2007. In January 2007, we issued common stock valued at $5.1 million related to the ITG acquisition. At the end of the third fiscal quarter, our balance sheet reflected $10.7 million in cash and cash equivalents and a debt to capital ratio of 37 percent. Our capital spending plans for fiscal year 2008 are expected to be approximately $4.0 million and depreciation is expected to be approximately $6.0 million." Outlook Commenting on the outlook for the fourth quarter of fiscal 2007, Saxon remarked, "The current trends in our mattress fabrics segment are strong, while business conditions remain very soft in our upholstery fabrics segment due to weak retail furniture demand and sharply lower demand for U.S. produced fabrics. Overall, we expect our fourth quarter sales to be down slightly from the fourth quarter of last year, and for the first time ever, we believe mattress fabric sales will be greater than 50 percent of total company sales. We expect sales in our mattress fabrics segment to be up 45 to 55 percent for the fourth quarter, reflecting the incremental sales from the ITG acquisition and some organic growth. Operating income in this segment is also expected to improve substantially due to higher sales volume, strong knitted ticking business and the benefits from our recent capital project. We expect to exceed the third quarter operating income margin for mattress ticking, even though we are incurring one-time transition costs related to the integration of the ITG business. "In our upholstery fabrics segment, we expect sales to be down approximately 25 percent for the fourth quarter, with modest growth in non US produced fabrics and sharply lower sales of U.S. produced fabrics. We believe the upholstery fabric segment's operating results will reflect a small operating loss due to the significantly lower sales and gross profit in U.S. produced fabrics and transition issues associated with the previously announced closing of two U.S. plants. However, we are expecting higher gross profit in our non U.S. produced business and lower selling, general and administrative expenses on a sequential basis for this segment. "Considering these factors, we expect the company to report net income in the fourth quarter in the range of $0.07 to $0.11 per diluted share, excluding restructuring and related charges for previously announced restructuring initiatives. This is management's best estimate at present, recognizing that future financial results are difficult to predict because the upholstery fabrics industry is undergoing a dramatic transition and many internal changes are still underway within the company. The actual results will depend primarily upon the level of demand throughout the quarter, the company's progress with respect to restructuring activities and the integration of the ITG acquisition," said Saxon. The company estimates that restructuring and related charges for previously announced restructuring initiatives of approximately $1.8 million ($1.1 million net of taxes, or $0.09 per diluted share) will be incurred during the fourth fiscal quarter. Including these restructuring and related charges, the company expects to report results for the fourth fiscal quarter in the range of a net loss of ($0.02) to net income of $0.02 per diluted share. (A reconciliation of the projected net income per share calculation has been set forth on Page 6.) In closing, Culp added, "We continue to execute our strategy to move the company forward and believe that fiscal 2007 will represent a period of significant progress for Culp. We are working through a number of operational changes that we believe will further enhance our competitive position in both business segments. We have built a solid competitive position in mattress fabrics and are very excited about the incremental value the ITG acquisition will bring to this business. We believe mattress fabrics will be a key driver of the company's growth going forward. Our upholstery fabrics business is transitioning into a vibrant global platform and we continue to pursue opportunities for enhancing the capabilities of our China operation. Together, these factors are designed to position the company for profitable growth over the long term in today's global marketplace." About the Company Culp, Inc. is one of the world's largest marketers of mattress fabrics for bedding and upholstery fabrics for furniture. The company's fabrics are used principally in the production of bedding products and residential and commercial upholstered furniture. This release contains statements that may be deemed "forward-looking statements" within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 27A of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties. Further, forward-looking statements are intended to speak only as of the date on which they are made. Forward-looking statements are statements that include projections, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as "expect," "believe," "estimate," "plan" and "project" and their derivatives, and include but are not limited to statements about the company's future operations, production levels, sales, SG&A or other expenses, margins, gross profit, operating income, earnings or other performance measures. Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on the company's business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect the company adversely. Changes in consumer tastes or preferences toward products not produced or marketed by the company could erode demand for the company's products. The company's level of success in integrating its recent acquisition and in capturing and retaining sales to customers related to the acquisition will affect the company's ability to meet its sales and profit goals. In addition, strengthening of the U.S. dollar against other currencies could make the company's products less competitive on the basis of price in markets outside the United States. Also, economic and political instability in international areas could affect the company's operations or sources of goods in those areas, as well as demand for the company's products in international markets. Finally, unanticipated delays or costs in executing restructuring actions could cause the cumulative effect of restructuring actions to fail to meet the objectives set forth by management. Other factors that could affect the matters discussed in forward-looking statements are included in the company's periodic reports filed with the Securities and Exchange Commission, including the "Risk Factors" section in the company's most recent annual report on Form 10-K. CULP, INC. Condensed Financial Highlights (Unaudited) Three Months Ended Nine Months Ended ------------------------- --------------------------- January 28, January 29, January 28, January 29, 2007 2006 2007 2006 ------------ ------------ ------------- ------------- Net sales $55,712,000 $61,035,000 $177,337,000 $190,383,000 Net loss $(2,221,000) $(2,169,000) $(1,276,000) $(10,261,000) Net loss per share: Basic $(0.19) $(0.19) $(0.11) $(0.89) Diluted $(0.19) $(0.19) $(0.11) $(0.89) Net income (loss) per share, diluted, excluding restructuring and related charges (1) $(0.01) $(0.10) $0.18 $(0.18) Average shares outstanding: Basic 11,773,000 11,562,000 11,710,000 11,557,000 Diluted 11,773,000 11,562,000 11,710,000 11,557,000 (1) Excludes restructuring and related charges of $4.1 million ($2.1 million, or $0.18 per diluted share, after taxes) for the third quarter of fiscal 2007. Excludes restructuring and related charges of $5.6 million ($3.3 million or $0.29 per diluted share, after taxes) for the first nine months of fiscal 2007. Excludes restructuring and related charges of $1.7 million ($1.0 million, or $0.09 per diluted share, after taxes) for the third quarter of fiscal 2006. Excludes restructuring and related charges of $13.2 million ($8.2 million or $0.71 per diluted share, after taxes) for the first nine months of fiscal 2006. CULP, INC. Reconciliation of Net Loss as Reported to Pro Forma Net Income (Loss) (Unaudited) Three Months Ended Nine Months Ended ------------------------- -------------------------- January 28, January 29, January 28, January 29, 2007 2006 2007 2006 ------------ ------------ ------------ ------------- Net loss, as reported $(2,221,000) $(2,169,000) $(1,276,000) $(10,261,000) Restructuring and related charges, net of income taxes 2,122,000 1,041,000 3,340,00 8,174,000 ------------ ------------ ------------ ------------- Pro forma net income (loss) $(99,000) $(1,128,000) $2,064,000 $(2,087,000) ============ ============ ============ ============= Reconciliation of Net Loss Per Share as Reported to Pro Forma Net Income (Loss) Per Share (Unaudited) Three Months Ended (1) Nine Months Ended (1) ------------------------- -------------------------- January 28, January 29, January 28, January 29, 2007 2006 2007 2006 ------------ ------------ ------------ ------------- Net loss per diluted share as reported $(0.19) $(0.19) $(0.11) $(0.89) Restructuring and related charges, net of income taxes 0.18 0.09 0.29 0.71 ------------ ------------ ------------ ------------- Net income (loss) per diluted share, adjusted $(0.01) $(0.10) $0.18 $(0.18) ============ ============ ============ ============= (1) Per share numbers have been rounded Culp Inc. Reconciliation of Projected Range of Net Income (Loss) Per Share to Projected Range of Pro Forma Net Income Per Share (Unaudited) Three Months Ending April 29, 2007 --------------- Projected range of net income (loss) per diluted share $(0.02)- $0.02 Projected restructuring and related charges, net of income taxes 0.09 Projected range of pro forma net income per diluted share $0.07 - $0.11 =============== CONTACT: Culp, Inc. Investor Contact: Kenneth R. Bowling, Vice President of Finance 336-881-5630 or Media Contact: Kenneth M. Ludwig, Senior Vice President, Human Resources 336-889-5161 EX-99 3 a5349533ex99b.txt EXHIBIT 99(B) Exhibit 99(b) Page 1 of 7 CULP, INC. FINANCIAL INFORMATION RELEASE CONSOLIDATED STATEMENTS OF LOSS FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 28, 2007 AND JANUARY 29, 2006 (UNAUDITED) (Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED ------------------------------------------------------------------------ Amounts Percent of Sales -------------------------- ---------------------------- January 28, January 29, % Over January 28, January 29, 2007 2006 (Under) 2007 2006 ------------ ------------ ------------ ------------- ------------- Net sales $ 55,712 61,035 (8.7)% 100.0 % 100.0 % Cost of sales 51,001 56,858 (10.3)% 91.5 % 93.2 % ------------ ------------ ------------ ------------- ------------- Gross profit 4,711 4,177 12.8 % 8.5 % 6.8 % Selling, general and administrative expenses 6,394 6,098 4.9 % 11.5 % 10.0 % Restructuring expense 1,275 343 271.7 % 2.3 % 0.6 % ------------ ------------ ------------ ------------- ------------- Loss from operations (2,958) (2,264) (30.7)% (5.3)% (3.7)% Interest expense 952 1,063 (10.4)% 1.7 % 1.7 % Interest income (50) (43) 16.3 % (0.1)% (0.1)% Other (income) expense (157) 135 216.3 % (0.3)% 0.2 % ------------ ------------ ------------ ------------- ------------- Loss before income taxes (3,703) (3,419) (8.3)% (6.6)% (5.6)% Income taxes* (1,482) (1,250) 18.6 % 40.0 % 36.6 % ------------ ------------ ------------ ------------- ------------- Net loss $ (2,221) (2,169) (2.4)% (4.0)% (3.6)% ============ ============ ============ ============= ============= Net loss per share-basic ($0.19) ($0.19) 0.0 % Net loss per share-diluted ($0.19) ($0.19) 0.0 % Net loss per share, diluted, excluding restructuring ($0.01) ($0.10) (90.0)% and related charges (see proforma statement on page 6) Average shares outstanding-basic 11,773 11,562 1.8 % Average shares outstanding-diluted 11,773 11,562 1.8 % NINE MONTHS ENDED ------------------------------------------------------------------------ Amounts Percent of Sales -------------------------- ---------------------------- January 28, January 29, % Over January 28, January 29, 2007 2006 (Under) 2007 2006 ------------ ------------ ------------ ------------- ------------- Net sales $ 177,337 190,383 (6.9)% 100.0 % 100.0 % Cost of sales 156,575 174,098 (10.1)% 88.3 % 91.4 % ------------ ------------ ------------ ------------- ------------- Gross profit 20,762 16,285 27.5 % 11.7 % 8.6 % Selling, general and administrative expenses 19,240 22,480 (14.4)% 10.8 % 11.8 % Restructuring expense 1,742 6,581 (73.5)% 1.0 % 3.5 % ------------ ------------ ------------ ------------- ------------- Loss from operations (220) (12,776) 98.3 % (0.1)% (6.7)% Interest expense 2,841 2,955 (3.9)% 1.6 % 1.6 % Interest income (147) (78) 88.5 % (0.1)% (0.0)% Other (income) expense (98) 481 120.4 % (0.1)% 0.3 % ------------ ------------ ------------ ------------- ------------- Loss before income taxes (2,816) (16,134) 82.5 % (1.6)% (8.5)% Income taxes* (1,540) (5,873) (73.8)% 54.7 % 36.4 % ------------ ------------ ------------ ------------- ------------- Net loss $ (1,276) (10,261) 87.6 % (0.7)% (5.4)% ============ ============ ========== ============ =========== Net loss per share-basic ($0.11) ($0.89) 87.6 % Net loss per share-diluted ($0.11) ($0.89) 87.6 % Net income (loss) per share, diluted, excluding restructuring $0.18 ($0.18) 200.0 % and related charges (see proforma statement on page 7) Average shares outstanding-basic 11,710 11,557 1.3 % Average shares outstanding-diluted 11,710 11,557 1.3 % * Percent of sales column for income taxes is calculated as a % of loss before income taxes.
Page 2 of 7 CULP, INC. FINANCIAL INFORMATION RELEASE CONSOLIDATED BALANCE SHEETS JANUARY 28, 2007, JANUARY 29, 2006 AND APRIL 30, 2006 (UNAUDITED) (Amounts in Thousands)
Amounts Increase ------------------------------------ (Decrease) January 28, January 29, ------------------------------- * April 30, 2007 2006 Dollars Percent 2006 ------------------- --------------- --------------- ------------ ----------- Current assets Cash and cash equivalents $ 10,675 12,870 (2,195) (17.1)% 9,714 Accounts receivable 23,755 28,485 (4,730) (16.6)% 29,049 Inventories 42,717 42,099 618 1.5 % 36,693 Deferred income taxes 7,120 7,054 66 0.9 % 7,120 Assets held for sale 1,231 - 1,231 100.0 % 3,111 Other current assets 2,710 1,649 1,061 64.3 % 1,287 ------------------- --------------- --------------- ------------ ----------- Total current assets 88,208 92,157 (3,949) (4.3)% 86,974 Property, plant & equipment, net 40,784 52,562 (11,778) (22.4)% 44,639 Goodwill 4,114 4,114 - 0.0 % 4,114 Deferred income taxes 23,232 15,731 7,501 47.7 % 20,176 Other assets 2,683 1,775 908 51.2 % 1,564 ------------------- --------------- --------------- ------------ ----------- Total assets $ 159,021 166,339 (7,318) (4.4)% 157,467 =================== =============== =============== ============ =========== Current liabilities Current maturities of long-term debt $ 4,744 8,049 (3,305) (41.1)% 8,060 Accounts payable 18,051 20,669 (2,618) (12.7)% 20,835 Accrued expenses 7,704 9,751 (2,047) (21.0)% 7,845 Accrued restructuring 3,490 4,299 (809) (18.8)% 4,054 Income taxes payable 4,136 635 3,501 551.3 % 2,488 ------------------- --------------- --------------- ------------ ----------- Total current liabilities 38,125 43,403 (5,278) (12.2)% 43,282 Long-term debt , less current maturities 41,965 47,229 (5,264) (11.1)% 39,662 ------------------- --------------- --------------- ------------ ----------- Total liabilities 80,090 90,632 (10,542) (11.6)% 82,944 Shareholders' equity 78,931 75,707 3,224 4.3 % 74,523 ------------------- --------------- --------------- ------------ ----------- Total liabilities and shareholders' equity $ 159,021 166,339 (7,318) (4.4)% 157,467 =================== =============== =============== ============ =========== Shares outstanding 12,555 11,566 989 8.6 % 11,655 =================== =============== =============== ============ =========== * Derived from audited financial statements
Page 3 of 7 CULP, INC. FINANCIAL INFORMATION RELEASE CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JANUARY 28, 2007 AND JANUARY 29, 2006 (UNAUDITED) (Amounts in Thousands)
NINE MONTHS ENDED Amounts -------------------------------- January 28, January 29, 2007 2006 --------------- -------------- Cash flows from operating activities: Net loss $ (1,276) (10,261) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 5,651 12,275 Amortization of other assets 59 70 Stock-based compensation 406 139 Deferred income taxes (3,056) (5,645) Restructuring expenses, net of gain on sale of related assets (546) 3,057 Changes in assets and liabilities: Accounts receivable 5,294 339 Inventories (1,270) 8,400 Other current assets 787 1,042 Other assets (46) (129) Accounts payable (2,507) (1,695) Accrued expenses (141) 195 Accrued restructuring (564) (1,551) Income taxes payable 1,648 (909) --------------- -------------- Net cash provided by operating activities 4,439 5,327 --------------- -------------- Cash flows from investing activities: Capital expenditures (2,492) (5,428) Acquisition of assets (2,500) - Proceeds from the sale of buildings and equipment 3,260 3,950 --------------- -------------- Net cash used in investing activities (1,732) (1,478) --------------- -------------- Cash flows from financing activities: Payments on vendor-financed capital expenditures (927) (871) Payments on long-term debt (3,513) (292) Proceeds from issuance of long-term debt 2,500 5,020 Proceeds from common stock issued 194 57 --------------- -------------- Net cash (used in) provided by financing activities (1,746) 3,914 --------------- -------------- Increase in cash and cash equivalents 961 7,763 Cash and cash equivalents at beginning of period 9,714 5,107 --------------- -------------- Cash and cash equivalents at end of period $ 10,675 12,870 =============== ============== Free Cash Flow (1) $ 4,280 2,978 =============== ============== - ----------------------------------------------------------------------------------------------------------------------- (1) Free Cash Flow reconciliation is as follows: 3rd Qtr 3rd Qtr FY 2007 FY 2006 ----------------------------------- A) Net cash provided by operating activities $ 4,439 5,327 B) Minus: Capital expenditures (2,492) (5,428) C) Add: Proceeds from the sale of buildings and equipment 3,260 3,950 D) Minus: Payments on vendor-financed capital expenditures (927) (871) --------------- -------------- $ 4,280 2,978 =============== ============== - -----------------------------------------------------------------------------------------------------------------------
Page 4 of 7 CULP, INC. FINANCIAL INFORMATION RELEASE SALES, GROSS PROFIT AND OPERATING INCOME (LOSS) BY SEGMENT FOR THE THREE MONTHS ENDED JANUARY 28, 2007 AND JANUARY 29, 2006 (Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED) ------------------------------------------------------------------------- Amounts Percent of Total Sales --------------------------- ------------------------------ January 28, January 29, % Over January 28, January 29, Net Sales by Segment 2007 2006 (Under) 2007 2006 - ------------------------------------------------ ------------- ----------- ---------- ------------- -------------- Mattress Fabrics $ 24,396 22,681 7.6 % 43.8 % 37.2 % Upholstery Fabrics 31,316 38,354 (18.4)% 56.2 % 62.8 % ------------- ----------- ---------- ------------------------------ Net Sales $ 55,712 61,035 (8.7)% 100.0 % 100.0 % ============= =========== ========== ============================== Gross Profit by Segment Gross Profit Margin - ------------------------------------------------ ------------------------------ Mattress Fabrics $ 4,215 3,442 22.5 % 17.3 % 15.2 % Upholstery Fabrics 3,269 2,070 57.9 % 10.4 % 5.4 % ------------- ----------- ---------- ------------------------------ Subtotal 7,484 5,512 35.8 % 13.4 % 9.0 % Restructuring related charges (2,773)(1) (1,335)(3) 107.7 % (5.0)% (2.2)% ------------- ----------- ---------- ------------------------------ Gross Profit $ 4,711 4,177 12.8 % 8.5 % 6.8 % ============= =========== ========== ============================== Selling, General and Administrative expenses by Segment Percent of Sales - ------------------------------------------------------------------- ------------------------------ Mattress Fabrics $ 1,706 1,643 3.8 % 7.0 % 7.2 % Upholstery Fabrics 3,765 3,717 1.3 % 12.0 % 9.7 % Unallocated Corporate expenses 895 738 21.3 % 1.6 % 1.2 % ------------- ----------- ---------- ------------------------------ 6,366 6,098 4.4 % 11.4 % 10.0 % Restructuring related charges 28 (1) - 100.0 % 0.1 % 0.0 % ------------- ----------- ---------- ------------------------------ Selling, General and Administrative expenses$ 6,394 6,098 4.9 % 11.5 % 10.0 % ============= =========== ========== ============================== Operating Income (loss) by Segment Operating Income (Loss) Margin - ------------------------------------------------ ------------------------------ Mattress Fabrics $ 2,509 1,799 39.5 % 10.3 % 7.9 % Upholstery Fabrics (496) (1,647) 69.9 % (1.6)% (4.3)% Unallocated corporate expenses (895) (738) 21.3 % (1.6)% (1.2)% ------------- ----------- ---------- ------------------------------ Subtotal 1,118 (586) (290.8)% 2.0 % (1.0)% Restructuring expense (1,275)(2) (343)(4) 271.7 % (2.3)% (0.6)% Restructuring related charges (2,801)(1) (1,335)(3) 109.8 % (5.0)% (2.2)% ------------- ----------- ---------- ------------------------------ Loss from operations $ (2,958) (2,264) (30.7)% (5.3)% (3.7)% ============= =========== ========== ============================== Depreciation by Segment - ------------------------------------------------ Mattress Fabrics $ 912 965 (5.5)% Upholstery Fabrics 710 1,366 (48.0)% ------------- ----------- ---------- Subtotal 1,622 2,331 (30.4)% Accelerated Depreciation 665 108 515.7 % ------------- ----------- ---------- Total Depreciation $ 2,287 2,439 (6.2)% ============= =========== ==========
Notes: (1) The $2.8 million represents restructuring related charges of $2.2 million for inventory markdowns, $665,000 for accelerated deprecation, and a credit of $24,000 for other operating costs associated with the closing of plant facilities. (2) The $1.3 million represents restructuring expenses of $1.2 million for employee termination benefits, $272,000 for write-downs of equipment, $181,000 for asset movement costs, $61,000 for lease termination costs, and a credit of $455,000 for sales proceeds received on equipment with no carrying value. (3) The $1.3 million represents restructuring related charges of $838,000 for inventory markdowns, $389,000 for other operating costs associated with the closing of plant facilities, and $108,000 for accelerated depreciation. (4) The $343,000 represents restructuring expenses of $371,000 for asset movement costs, $133,000 for employee termination benefits, $51,000 for lease termination costs, a credit of $77,000 for sales proceeds received on equipment with no carrying value, and a credit of $135,000 to reflect current estimates of sub-lease income. Page 5 of 7 CULP, INC. FINANCIAL INFORMATION RELEASE SALES, GROSS PROFIT AND OPERATING INCOME (LOSS) BY SEGMENT FOR THE NINE MONTHS ENDED JANUARY 28, 2007 AND JANUARY 29, 2006 (Amounts in thousands)
NINE MONTHS ENDED (UNAUDITED) ------------------------------------------------------------------------- Amounts Percent of Total Sales -------------------------- ----------------------------- January 28, January 29, % Over January 28, January 29, Net Sales by Segment 2007 2006 (Under) 2007 2006 - ---------------------------------------------- ------------ ---------- ----------- ------------- ------------- Mattress Fabrics $ 69,734 69,586 0.2 % 39.3 % 36.6 % Upholstery Fabrics 107,603 120,797 (10.9)% 60.7 % 63.4 % ------------ ---------- ----------- ------------- ------------- Net Sales $ 177,337 190,383 (6.9)% 100.0 % 100.0 % ============ ========== =========== ============= ============= Gross Profit by Segment Gross Profit Margin - ---------------------------------------------- ----------------------------- Mattress Fabrics $ 11,880 9,839 20.7 % 17.0 % 14.1 % Upholstery Fabrics 12,691 10,027 26.6 % 11.8 % 8.3 % ------------ ---------- ----------- ------------- ------------- Subtotal 24,571 19,866 23.7 % 13.9 % 10.4 % Restructuring related charges (3,809)(1) (3,581) (3) 6.4 % (2.1)% (1.9)% ------------ ---------- ----------- ------------- ------------- Gross Profit $ 20,762 16,285 27.5 % 11.7 % 8.6 % ============ ========== =========== ============= ============= Selling, General and Administrative expenses by Segment Percent of Sales - ------------------------------------------------------------ ----------------------------- Mattress Fabrics $ 5,043 5,016 0.5 % 7.2 % 7.2 % Upholstery Fabrics 11,219 12,120 (7.4)% 10.4 % 10.0 % Unallocated Corporate expenses 2,920 2,322 25.8 % 1.6 % 1.2 % ------------ ---------- ----------- ------------- ------------- Subtotal 19,182 19,458 (1.4)% 10.8 % 10.2 % Restructuring related charges 58 (1) 3,022 (4) (98.1)% 0.0 % 1.6 % ------------ ---------- ----------- ------------- ------------- Selling, General and Administrative expens$s 19,240 22,480 (14.4)% 10.8 % 11.8 % ============ ========== =========== ============= ============= Operating Income (loss) by Segment Operating Income (Loss) Margin - ---------------------------------------------- ------------------------------ Mattress Fabrics $ 6,837 4,823 41.8 % 9.8 % 6.9 % Upholstery Fabrics 1,472 (2,093) 170.3 % 1.4 % (1.7)% Unallocated corporate expenses (2,920) (2,322) 25.8 % (1.6)% (1.2)% ------------ ---------- ----------- ------------- ------------- Subtotal 5,389 408 1,220.8 % 3.0 % 0.2 % Restructuring expense (1,742)(2) (6,581)(5) (73.5)% (1.0)% (3.5)% Restructuring related charges (3,867)(1) (6,603)(3)(4) (41.4)% (2.2)% (3.5)% ------------ ---------- ----------- ------------- ------------- Loss from operations $ (220) (12,776) 98.3 % (0.1)% (6.7)% ============ ========== =========== ============= ============= Depreciation by Segment - ---------------------------------------------- Mattress Fabrics $ 2,771 2,714 2.1 % Upholstery Fabrics 2,215 4,582 (51.7)% ------------ ---------- ----------- Subtotal 4,986 7,296 (31.7)% Accelerated Depreciation 665 4,979 (86.6)% ------------ ---------- ----------- Total Depreciation $ 5,651 12,275 (54.0)% ============ ========== ===========
Notes: (1) The $3.9 million represents restructuring related charges of $2.3 million for inventory markdowns, $802,000 for other operating costs associated with the closing of plant facilities, and $665,000 for accelerated depreciation. (2) The $1.7 million represents restructuring expenses of $990,000 for employee termination benefits, $914,000 for asset movement costs, $395,000 for lease termination and other exit costs, $334,000 for write-downs of buildings and equipment, and a credit of $890,000 for sales proceeds on equipment with no carrying value. (3) The $3.6 million represents restructuring related charges of $1.9 million for accelerated depreciation, $1.2 million for inventory markdowns, and $455,000 other operating costs associated with the closing of plant facilities. (4) The $3.0 million represents accelerated depreciation. (5) The $6.6 million represents restructuring charges of $2.8 million for write-downs of buildings and equipment, $1.9 million for asset movement costs, $1.5 million for employee termination benefits, and $292,000 for lease termination costs. Page 6 of 7 CULP, INC. PROFORMA CONSOLIDATED STATEMENTS OF LOSS FOR THE THREE MONTHS ENDED JANUARY 28, 2007 AND JANUARY 29, 2006 (UNAUDITED) (Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED ------------------------------------------------------------------------ As Reported January 28, 2007 January 28, % of % of Proforma Net % of 2007 Sales Adjustments Sales of Adjustment Sales -------------------- -------------------- --------------------- Net sales $ 55,712 100.0% - 0.0% 55,712 100.0% Cost of sales 51,001 91.5% (2,773) -5.0% (1) 48,228 86.6% -------------------- -------------------- --------------------- Gross profit 4,711 8.5% (2,773) -5.0% 7,484 13.4% Selling, general and administrative expenses 6,394 11.5% (28) -0.1% (1) 6,366 11.4% Restructuring expense 1,275 2.3% (1,275) -2.3% (2) - 0.0% -------------------- -------------------- --------------------- Income (loss) from operations (2,958) -5.3% (4,076) -7.3% 1,118 2.0% Interest expense 952 1.7% - 0.0% 952 1.7% Interest income (50) -0.1% - 0.0% (50) -0.1% Other (income) expense (157) -0.3% - 0.0% (157) -0.3% -------------------- -------------------- --------------------- Income (loss) before income taxes (3,703) -6.6% (4,076) -7.3% 373 0.7% Income taxes (6) (1,482) 40.0% (1,954) 47.9% 472 126.5% (5) -------------------- -------------------- --------------------- Net loss $ (2,221) -4.0% (2,122) -3.8% (99) -0.2% ==================== ==================== ===================== Net loss per share-basic ($0.19) ($0.18) ($0.01) Net loss per share-diluted ($0.19) ($0.18) ($0.01) Average shares outstanding-basic 11,773 11,773 11,773 Average shares outstanding-diluted 11,773 11,773 11,773 THREE MONTHS ENDED -------------------------------------------------------------------------------- As Reported January 29, 2006 Proforma January 29, % of % of Proforma Net % of % Over 2006 Sales Adjustments Sales of Adjustments Sales (Under) --------------------- --------------------------------------------- -------- Net sales $ 61,035 100.0% - 0.0% 61,035 100.0% -8.7% Cost of sales 56,858 93.2% (1,335) -2.2% (3) 55,523 91.0% -13.1% --------------------- --------------------- --------------------- -------- Gross profit 4,177 6.8% (1,335) -2.2% 5,512 9.0% 35.8% Selling, general and administrative expenses 6,098 10.0% - 0.0% 6,098 10.0% 4.4% Restructuring expense 343 0.6% (343) -0.6% (4) - 0.0% 0.0% --------------------- --------------------- --------------------- -------- Income (loss) from operations (2,264) -3.7% (1,678) -2.7% (586) -1.0% 290.8% Interest expense 1,063 1.7% - 0.0% 1,063 1.7% -10.4% Interest income (43) -0.1% - 0.0% (43) -0.1% -16.3% Other (income) expense 135 0.2% - 0.0% 135 0.2% -216.3% --------------------- --------------------- --------------------- -------- Income (loss) before income taxes (3,419) -5.6% (1,678) -2.7% (1,741) -2.9% 121.4% Income taxes (6) (1,250) 36.6% (637) 38.0% (613) 35.2% 177.0% --------------------- --------------------- --------------------- -------- Net loss $ (2,169) -3.6% (1,041) -1.7% (1,128) -1.8% 91.2% ===================== ===================== ===================== ======== Net loss per share-basic ($0.19) ($0.09) ($0.10) Net loss per share-diluted ($0.19) ($0.09) ($0.10) Average shares outstanding-basic 11,562 11,562 11,562 Average shares outstanding-diluted 11,562 11,562 11,562
Notes: (1) The $2.8 million represents restructuring related charges of $2.2 million for inventory markdowns, $665,000 for accelerated depreciation, and a credit of $24,000 for other operating costs associated with the closing of plant facilities. (2) The $1.3 million represents restructuring expenses of $1.2 million for employee termination benefits, $272,000 for write-downs of equipment, $181,000 for asset movement costs, $61,000 for lease termination costs, and a credit of $455,000 for sales proceeds received on equipment with no carrying value. (3) The $1.3 million represents restructuring related charges of $838,000 for inventory markdowns, $389,000 for other operating costs associated with the closing of plant facilities, and $108,000 for accelerated depreciation. (4) The $343,000 represents restructuring expenses of $371,000 for asset movement costs, $133,000 for employee termination benefits, $51,000 for lease termination costs, a credit of $77,000 for sales proceeds received on equipment with no carrying value and a credit of $135,000 to reflect current estimates of sub-lease income. (5) The effective income tax rate includes income tax expense for the exercise of share options relating to the company's non-qualified stock option plan in the third quarter of fiscal 2007. Without these transactions, the third quarter fiscal 2007 effective income tax rate would have been 5.3%. (6) The percent of net sales column for income taxes is calculated as % of income (loss) before income taxes. Page 7 of 7 CULP, INC. PROFORMA CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) FOR THE NINE MONTHS ENDED JANUARY 28, 2007 AND JANUARY 29, 2006 (UNAUDITED) (Amounts in Thousands, Except for Per Share Data)
NINE MONTHS ENDED ---------------------------------------------------------------------------- As Reported January 28, 2007 January 28, % of % of Proforma Net % of 2007 Sales Adjustments Sales of Adjustments Sales ----------------------- ---------------------- ----------------------- Net sales $ 177,337 100.0% - 0.0% 177,337 100.0% Cost of sales 156,575 88.3% (3,809) -2.1% (1) 152,766 86.1% ----------------------- ---------------------- ----------------------- Gross profit 20,762 11.7% (3,809) -2.1% 24,571 13.9% Selling, general and administrative expenses 19,240 10.8% (58) 0.0% (1) 19,182 10.8% Restructuring expense 1,742 1.0% (1,742) -1.0% (2) - 0.0% ----------------------- ---------------------- ----------------------- Income (loss) from operations (220) -0.1% (5,609) -3.2% 5,389 3.0% Interest expense 2,841 1.6% - 0.0% 2,841 1.6% Interest income (147) -0.1% - 0.0% (147) -0.1% Other (income) expense (98) -0.1% - 0.0% (98) -0.1% ----------------------- ---------------------- ----------------------- Income (loss) before income taxes (2,816) -1.6% (5,609) -3.2% 2,793 1.6% Income taxes (7) (1,540) 54.7% (2,269) 40.5% 729 26.1% (6 ----------------------- ---------------------- ----------------------- Net income (loss) $ (1,276) -0.7% (3,340) -1.9% 2,064 1.2% ======================= ====================== ======================= Net income (loss) per share-basic ($0.11) ($0.29) $0.18 Net income (loss) per share-diluted ($0.11) ($0.29) $0.18 Average shares outstanding-basic 11,710 11,710 11,710 Average shares outstanding-diluted 11,710 11,710 11,713 NINE MONTHS ENDED ------------------------------------------------------------------------------------ As Reported January 29, 2006 Proforma January 29, % of % of Proforma Net % of % Over 2006 Sales Adjustments Sales of Adjustments Sales (Under) ---------------------- ------------------------------------------------- --------- Net sales $ 190,383 100.0% - 0.0% 190,383 100.0% -6.9% Cost of sales 174,098 91.4% (3,581) -1.9% (3) 170,517 89.6% -10.4% ---------------------- ----------------------- ---------------------- --------- Gross profit 16,285 8.6% (3,581) -1.9% 19,866 10.4% 23.7% Selling, general and administrative expenses 22,480 11.8% (3,022) -1.6% (4) 19,458 10.2% -1.4% Restructuring expense 6,581 3.5% (6,581) -3.5% (5) - 0.0% 0.0% ---------------------- ----------------------- ---------------------- --------- Income (loss) from operations (12,776) -6.7% (13,184) -6.9% 408 0.2% 1220.8% Interest expense 2,955 1.6% - 0.0% 2,955 1.6% -3.9% Interest income (78) 0.0% - 0.0% (78) 0.0% -88.5% Other (income) expense 481 0.3% - 0.0% 481 0.3% -120.4% ---------------------- ----------------------- ---------------------- --------- Income (loss) before income taxes (16,134) -8.5% (13,184) -6.9% (2,950) -1.5% 194.7% Income taxes (7) (5,873) 36.4% (5,010) 38.0% (863) 29.3% 184.5% ---------------------- ----------------------- ---------------------- --------- Net income (loss) $ (10,261) -5.4% (8,174) -4.3% (2,087) -1.1% 198.9% ====================== ======================= ====================== ========= Net income (loss) per share-basic ($0.89) ($0.71) ($0.18) Net income (loss) per share-diluted ($0.89) ($0.71) ($0.18) Average shares outstanding-basic 11,557 11,557 11,557 Average shares outstanding-diluted 11,557 11,557 11,557
Notes: (1) The $3.9 million represents restructuring related charges of $2.3 million for inventory markdowns, $802,000 for other operating costs associated with the closing of plant facilities, and $665,000 for accelerated depreciation. (2) The $1.7 million represents restructuring expenses of $990,000 for employee termination benefits, $914,00 for asset movement costs, $395,000 for lease termination and other exit costs, $334,000 for write-downs of buildings and equipment, and a credit of $890,000 for sales proceeds on equipment with no carrying value. (3) The $3.6 million represents restructuring related charges of $1.9 million for accelerated depreciation, $1.2 million for inventory markdowns, and $455,000 for other operating costs associated with the closing of plant facilities. (4) The $3.0 million represents accelerated depreciation. (5) The $6.6 million represents restructuring charges of $2.8 million for write-downs of buildings and equipment, $1.9 million for asset movement costs, $1.5 million for employee termination benefits, and $292,000 for lease termination costs. (5) The effective income tax rate includes income tax expense for the exercise of share options relating to the company's non-qualified stock option plan in the third quarter of fiscal 2007. Without these transactions the effective income tax rate for the nine-month period ending January 28, 2007 would have been 9.9%. (7) The percent of net sales column for income taxes is calculated as a % of loss before income taxes. -----END PRIVACY-ENHANCED MESSAGE-----