EX-99 3 a5479061ex99b.txt EXHIBIT 99 (B) Exhibit 99(b) Page 1 of 5
CULP, INC. FINANCIAL INFORMATION RELEASE CONSOLIDATED STATEMENTS OF NET INCOME FOR THE THREE MONTHS ENDED JULY 29, 2007 AND JULY 30, 2006 (Amounts in Thousands, Except for Per Share Data) THREE MONTHS ENDED (UNAUDITED) ------------------------------------------------------- Amounts Percent of Sales ------------------------ ------------------ July 29, July 30, % Over July 29, July 30, 2007 2006 (1) (Under) 2007 2006 ----------- ----------- --------- -------- -------- Net sales $ 65,230 62,585 4.2 % 100.0 % 100.0 % Cost of sales 56,174 54,525 3.0 % 86.1 % 87.1 % ----------- ----------- --------- -------- -------- Gross profit 9,056 8,060 12.4 % 13.9 % 12.9 % Selling, general and administrative expenses 6,321 6,575 (3.9)% 9.7 % 10.5 % Restructuring expense 432 423 2.1 % 0.7 % 0.7 % ----------- ----------- -------- -------- -------- Income from operations 2,303 1,062 116.9 % 3.5 % 1.7 % Interest expense 818 950 (13.9)% 1.3 % 1.5 % Interest income (58) (46) 26.1 % (0.1)% (0.1)% Other expense 232 29 700.0 % 0.4 % 0.0 % ----------- ----------- --------- -------- -------- Income before income taxes 1,311 129 916.3 % 2.0 % 0.2 % Income taxes* 460 (3) N.M. 35.1 % (2.3)% ----------- ----------- --------- -------- -------- Net income $ 851 132 544.7 % 1.3 % 0.2 % =========== =========== ========= ======== ======== Net income per share-basic $ 0.07 0.01 600.0 % Net income per share-diluted $ 0.07 0.01 600.0 % Net income per share, diluted, excluding restructuring and related charges (see pro-forma statement on page 5) $ 0.12 0.09 33.3 % Average shares outstanding-basic 12,583 11,672 7.8 % Average shares outstanding-diluted 12,728 11,770 8.1 % * Percent of sales column for income taxes is calculated as a % of income before income taxes.
(1) Certain prior year amounts have been corrected to conform to current year presentation. A credit of $307,000 regarding sales proceeds received on equipment with no carrying value was reclassified from other expense to restructuring expense to conform to current year presentation. Page 2 of 5
CULP, INC. FINANCIAL INFORMATION RELEASE CONSOLIDATED BALANCE SHEETS JULY 29, 2007, JULY 30, 2006 AND APRIL 29, 2007 Unaudited (Amounts in Thousands) Increase Amounts (Decrease) ----------------------- ---------------------- July 29, July 30, * April 29, 2007 2006 Dollars Percent 2007 ----------- ----------- --------- ---------- ------------ Current assets Cash and cash equivalents $ 9,017 8,387 630 7.5 % 10,169 Accounts receivable 23,903 26,044 (2,141) (8.2)% 29,290 Inventories 42,159 43,055 (896) (2.1)% 40,630 Deferred income taxes 5,376 7,120 (1,744) (24.5)% 5,376 Assets held for sale 1,906 2,531 (625) (24.7)% 2,499 Other current assets 1,649 2,789 (1,140) (40.9)% 1,824 ----------- ----------- --------- ---------- ------------ Total current assets 84,010 89,926 (5,916) (6.6)% 89,788 Property, plant & equipment, net 36,901 42,835 (5,934) (13.9)% 37,773 Goodwill 4,114 4,114 - 0.0 % 4,114 Deferred income taxes 26,220 21,513 4,707 21.9 % 25,683 Other assets 2,831 1,542 1,289 83.6 % 2,588 ----------- ----------- --------- ---------- ------------ Total assets $ 154,076 159,930 (5,854) (3.7)% 159,946 =========== =========== ========= ========== ============ Current liabilities Current maturities of long-term debt $ 13,849 7,739 6,110 79.0 % 16,046 Lines of credit 2,641 - 2,641 100.0 % 2,593 Accounts payable 17,995 21,247 (3,252) (15.3)% 23,585 Accrued expenses 8,484 9,130 (646) (7.1)% 8,670 Accrued restructuring 3,047 3,745 (698) (18.6)% 3,282 Income taxes payable - current 856 3,561 (2,705) (76.0)% 4,579 ----------- ----------- --------- ---------- ------------ Total current liabilities 46,872 45,422 1,450 3.2 % 58,755 Income taxes payable - long-term 3,765 - 3,765 100.0 % - Long-term debt, less current maturities 22,094 39,601 (17,507) (44.2)% 22,114 ----------- ----------- --------- ---------- ------------ Total liabilities 72,731 85,023 (12,292) (14.5)% 80,869 Shareholders' equity 81,345 74,907 6,438 8.6 % 79,077 ----------- ----------- --------- ---------- ------------ Total liabilities and shareholders' equity $ 154,076 159,930 (5,854) (3.7)% 159,946 =========== =========== ========= ========== ============ Shares outstanding 12,635 11,685 950 8.1 % 12,569 =========== =========== ========= ========== ============ * Derived from audited financial statements.
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CULP, INC. FINANCIAL INFORMATION RELEASE CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JULY 29, 2007 AND JULY 30, 2006 Unaudited Amounts in Thousands) THREE MONTHS ENDED ------------------------ Amounts ------------------------ July 29, July 30, 2007 2006 (1) ----------- ----------- Cash flows from operating activities: Net income $ 851 132 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 1,447 1,702 Amortization of other assets 90 23 Stock-based compensation 140 132 Excess tax benefit related to stock options exercised (21) - Deferred income taxes (518) (1,337) Restructuring expenses, net of gain on sale of related assets 160 (237) Changes in assets and liabilities: Accounts receivable 5,387 3,005 Inventories (1,529) (6,362) Other current assets 175 (1,502) Other assets (327) (6) Accounts payable (5,251) 796 Accrued expenses (186) 1,285 Accrued restructuring (235) (309) Income taxes payable 889 1,073 ----------- ----------- Net cash provided by (used in) operating activities 1,072 (1,605) ----------- ----------- Cash flows from investing activities: Capital expenditures (1,113) (637) Proceeds from the sale of buildings and equipment 702 1,600 ----------- ----------- Net cash (used in) provided by investing activities (411) 963 ----------- ----------- Cash flows from financing activities: Payments on vendor-financed capital expenditures (70) (428) Payments on long-term debt (2,169) (382) Proceeds from common stock issued 405 125 Excess tax benefit related to stock options exercised 21 - ----------- ----------- Net cash used in financing activities (1,813) (685) ----------- ----------- Decrease in cash and cash equivalents (1,152) (1,327) Cash and cash equivalents at beginning of period 10,169 9,714 ----------- ----------- Cash and cash equivalents at end of period $ 9,017 8,387 =========== =========== Free Cash Flow (1) $ 591 (1,070) =========== =========== ----------------------------------------------------------------------------------------------- (1) Free Cash Flow reconciliation is as follows: FY 2008 FY 2007 ----------- ----------- A) Net cash provided by (used in) operating activities $ 1,072 (1,605) B) Minus: Capital Expenditures (1,113) (637) C) Add: Proceeds from the sale of buildings and equipment 702 1,600 C) Minus: Payments on vendor-financed capital expenditures (70) (428) ----------- ----------- $ 591 (1,070) =========== =========== -----------------------------------------------------------------------------------------------
(1) Certain prior year amounts have been corrected to conform to current year presentation. A gain of $307,000 regarding sales proceeds received on equipment with no carrying value was reclassified from gain on sale of equipment to restructuring expenses, net of gain on sale of related assets within net cash provided by (used in) operating activities. Page 4 of 5
CULP, INC. FINANCIAL INFORMATION RELEASE SALES, GROSS PROFIT AND OPERATING INCOME (LOSS) BY SEGMENT FOR THE THREE MONTHS ENDED JULY 29, 2007 AND JULY 30, 2006 (Amounts in thousands) THREE MONTHS ENDED (UNAUDITED) ---------------------------------------------------------- Amounts Percent of Sales ------------------- ------------------- July 29, July 30, % Over July 29, July 30, Net Sales by Segment 2007 2006 (Under) 2007 2006 ---------------------------------- -------- -------- ------- -------- -------- Mattress Fabrics $ 36,536 21,845 67.3% 56.0% 34.9% Upholstery Fabrics 28,694 40,740 (29.6)% 44.0% 65.1% -------- -------- -------- -------- -------- Net Sales $ 65,230 62,585 4.2% 100.0% 100.0% ======== ======== ======== ======== ======== Gross Profit by Segment Gross Profit Margin ---------------------------------- -------------------- Mattress Fabrics $ 5,805 3,521 64.9% 15.9% 16.1% Upholstery Fabrics 3,768 5,285 (28.7)% 13.1% 13.0% -------- -------- -------- -------- -------- Subtotal 9,573 8,806 8.7% 14.7% 14.1% Restructuring related charges (517)(1) (746)(4) -30.7% (0.8)% (1.2)% -------- -------- -------- -------- -------- Gross Profit $ 9,056 8,060 12.4% 13.9% 12.9% ======== ======== ======== ======== ======== Sales, General and Administrative expenses by Segment Percent of Sales ------------------------------------------------------- ------------------- Mattress Fabrics $ 2,042 1,663 22.8% 5.6% 7.6% Upholstery Fabrics 3,318 3,710 (10.6)% 11.6% 9.1% Unallocated Corporate expenses 935 1,202 (22.2)% 1.4% 1.9% -------- -------- -------- -------- -------- Subtotal 6,295 6,575 (4.3)% 9.7% 10.5% Restructuring related charges 26(2) - 0.0% 0.0% 0.0% -------- -------- -------- -------- -------- Selling, General and Administrative expenses $ 6,321 6,575 (3.9)% 9.7% 10.5% ======== ======== ======== ======== ======== Operating Income Operating income (loss) by Segment (Loss) Margin ---------------------------------- ------------------ Mattress Fabrics $ 3,763 1,858 102.5% 10.3% 8.5% Upholstery Fabrics 450 1,575 (71.4)% 1.6% 3.9% Unallocated corporate expenses (935) (1,202) 22.2% (1.4)% (1.9)% -------- -------- -------- -------- -------- Subtotal 3,278 2,231 46.9% 5.0% 3.6% Restructuring expense and restructuring related charges (975)(3) (1,169)(5) (16.6)% (1.5)% (1.9)% -------- -------- -------- -------- -------- Operating income $ 2,303 1,062 116.9% 3.5% 1.7% ======== ======== ======== ======== ======== Depreciation by Segment ---------------------------------- Mattress Fabrics $ 897 942 (4.8)% Upholstery Fabrics 550 760 (27.6)% -------- -------- -------- Total Depreciation 1,447 1,702 (15.0)% ======== ======== ======== (1) The $517,000 represents restructuring related charges of $460,000 for other operating costs associated with closed plant facilities and $57,000 for inventory markdowns. (2) The $26,000 represents other operating costs associated with a closed plant facility. (3) The $975,000 represents $486,000 for other operating costs associated with closed plant facilities, $367,000 for lease termination costs, $362,000 for write-downs of a building and equipment, $57,000 for inventory markdowns, $54,000 for asset movement costs, a credit of $149,000 for employee termination benefits, and a credit of $202,000 for sales proceeds received on equipment with no carrying value. Of this total charge, $517,000, $26,000, and $432,000 are included in cost of sales, selling, general, and administrative expense, and restructuring expense, respectively. (4) The $746,000 represents restructuring related charges of $507,000 for other operating costs associated with closed plant facilities and $239,000 for inventory markdowns. (5) The $1.2 million represents $507,000 for other operating costs associated with closed plant facilities, $385,000 for asset movement costs, $239,000 for inventory markdowns, $235,000 for employee termination benefits, $116,000 for write-downs of equipment, a credit of $6,000 for lease termination costs, and a credit of $307,000 for proceeds received on equipment with no carrying value. Certain prior year amounts have been corrected to conform to current year presentation. A credit of $307,000 regarding sales proceeds received on equipment with no carrying value was reclassified from other expense to restructuring expense to conform to current year presentation. Of this total charge, $746,000 and $423,000 are included in cost of sales and restructuring expense, respectively.
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CULP, INC. PROFORMA CONSOLIDATED STATEMENTS OF NET INCOME FOR THE THREE MONTHS ENDED JULY 29, 2007 AND JULY 30, 2006 (Amounts in Thousands, Except for Per Share Data) THREE MONTHS ENDED (UNAUDITED) ----------------------------------------------------------------- As Reported July 29, 2007 July 29, % of % of Proforma Net % of 2007 Sales Adjustments Sales of Adjustments Sales ------------------ ------------------- -------------- ------ Net sales $ 65,230 100.0% - 0.0% 65,230 100.0% Cost of sales 56,174 86.1% (517) -0.8% (1) 55,657 85.3% ------------------ ------------------- -------------- ------ Gross profit 9,056 13.9% (517) -0.8% 9,573 14.7% Selling, general and administrative expenses 6,321 9.7% (26) 0.0% (2) 6,295 9.7% Restructuring expense 432 0.7% (432) -0.7% (3) - 0.0% ------------------ ------------------- -------------- ------ Income from operations 2,303 3.5% (975) -1.5% 3,278 5.0% Interest expense 818 1.3% - 0.0% 818 1.3% Interest income (58) -0.1% - 0.0% (58) -0.1% Other expense 232 0.4% - 0.0% 232 0.4% ------------------ ------------------- -------------- ------ Income before income taxes 1,311 2.0% (975) -1.5% (7) 2,286 3.5% Income taxes (6) 460 35.1% (351) 36.0% 811 35.5% ------------------ ------------------- -------------- ------ Net income $ 851 1.3% (624) -1.0% 1,475 2.3% ================== =================== ============== ====== Net income per share-basic $ 0.07 ($0.05) $ 0.12 Net income per share-diluted $ 0.07 ($0.05) $ 0.12 Average shares outstanding-basic 12,583 12,583 12,583 Average shares outstanding-diluted 12,728 12,583 12,728
As Reported July 30, 2006 Proforma July 30, % of % of Proforma Net % of % Over 2006 Sales Adjustments Sales of Adjustments Sales (Under) ------------------ ------------------- -------------- ------ -------- Net sales 62,585 100.0% - 0.0% 62,585 100.0% 4.2% Cost of sales 54,525 87.1% (746) -1.2% (4) 53,779 85.9% 3.5% ------------------ ------------------- -------------- ------ -------- Gross profit 8,060 12.9% (746) -1.2% 8,806 14.1% 8.7% Selling, general and administrative expenses 6,575 10.5% - 0.0% 6,575 10.5% -4.3% Restructuring expense 423 0.7% (423) -0.7% (5) - 0.0% 0.0% ------------------ ------------------- -------------- ------ -------- Income from operations 1,062 1.7% (1,169) -1.9% 2,231 3.6% 46.9% Interest expense 950 1.5% - 0.0% 950 1.5% -13.9% Interest income (46) -0.1% - 0.0% (46) -0.1% 26.1% Other expense 29 0.0% - 0.0% 29 0.0% 700.0% ------------------ ------------------- -------------- ------ -------- Income before income taxes 129 0.2% (1,169) -1.9% (8) 1,298 2.1% 76.1% Income taxes (6) (3) -2.3% (184) 15.7% 181 13.9% 348.1% ------------------ ------------------- -------------- ------ -------- Net income 132 0.2% (985) -1.6% 1,117 1.8% 32.1% ================== =================== ============== ====== ======== Net income per share-basic $ 0.01 ($0.08) $ 0.10 Net income per share-diluted $ 0.01 ($0.08) $ 0.09 Average shares outstanding-basic 11,672 11,672 11,672 Average shares outstanding-diluted 11,770 11,672 11,770 Notes: (1) The $517,000 represents restructuring related charges of $460,000 for other operating costs associated with closed plant facilities and $57,000 for inventory markdowns. (2) The $26,000 represents other operating costs associated with a closed plant facility. (3) The $432,000 represents $367,000 for lease termination costs, $362,000 for write-downs of a building and equipment, $54,000 for asset movement costs, a credit of $149,000 for employee termination benefits, and a credit of $202,000 for sales proceeds received on equipment with no carring value. (4) The $746,000 represents restructuring related charges of $507,000 for other operating costs and $239,000 for inventory markdowns. (5) The $423,000 represents $385,000 for asset movement costs, $235,000 for employee termination benefits, $116,000 for write-downs of equipment, a credit of $6,000 for lease termination costs, and a credit of $307,000 for sales proceeds received on equipment with no carrying value. Certain prior year amounts have been corrected to conform to current year presentation. A credit of $307,000 regarding sales proceeds received on equipment with no carrying value was reclassified from other expense to restructuring expense to conform to current year presentation. (6) The percent of net sales column for income taxes is calculated as a % of income before income taxes. (7) Of this total charge, $556,000 and $419,000 represent cash and non-cash charges, respectively. (8) Of this total charge, $815,000 and $354,000 represent cash and non-cash charges, respectively.